Environmental Scan and Summary
Kathy Kudler is the sole owner and operator of Kudler Fine Foods (University of Phoenix, 2008), a gourmet food shop located in La Jolla, California. Her business was such a success that she opened two additional stores, one in Del Mar and the other in Encinitas. Kathy has expressed her desire to expand to another location with the opening of another store. This paper will illustrate the importance of an environmental scan of Kudler Fine Foods. Environmental Scan
Before any new shops are in consideration for an opening, there should be an environmental scan performed for a review of the current strategic management processes. A strategic management process is comprised of critical tasks that include the conducting of an analysis that reflects the company’s internal conditions and capabilities and external environment (Pearce & Robinson, 2009). Kudler Fine Foods’ current strategy contains many internal and external factors which have demonstrated their ability to establish themselves in the specialty food industry. While providing a unique experience to customers, Kudler Fine Foods can make use of additional tactics and techniques to identify threats posed by competitors and identify opportunities to increase customer loyalty. Internal Environment Analysis
The internal scan analyzes the quantity and quality of the company’s financial, human, and physical resources and provides an assessment of the strengths and weaknesses of a company’s management and organizational structure. Also, it contrasts a company’s past successes and traditional concerns with their current capabilities in an attempt to identify the future capabilities (Pearce & Robinson, 2009). The internal environmental analysis of Kudler Fine Foods reveals a strong mission and vision to provide their customers with the finest selection of the very best foods and wines. The human resource strategy is to acquire, train, manage,and retain personnel for specialized positions who take the time to understand a customer’s individual needs and then strive to meet those needs. Total quality management is the key to remain competitive in today’s market as quality is the key to success. Kudler Fine Foods strives for quality that will bring customer satisfaction, which in turn leads to customer loyalty.These customers may be internal or external as they are all affected by the processes and services of Kudler Fine Foods.
Some other internal factors are the increase in opportunities provided by the utilization of newer technology in stores, such as self check-out lanes and the ability of tracking information such as dollar value and profit margin per transaction, dollar sales and profit levels by day, and dollar sales and profit margins by item. Kudler’s new initiative (Frequent Shoppers Program) is tracking purchase behavior at the individual customer level and providing high value incentives through a partnership with a loyalty points program. The tracking of customer purchase behavior patters will assist Kudler in refining its processes and offerings to better satisfy their most valued customers. As price is not the primary factor for these consumers; they are more focused on quality and finding specialized items. Therefore, instead of providing everyday discounts to the customers for their frequency of purchases, Kudler has established a loyalty points program to provide customers with points that can be redeemed for high end gift items, airline first-class upgrades, or other specialty foods. Also, other internal factors are the addition of in-store catering, cooking demonstrations by well trainined chefs, and a bigger selection of organic produce grown by local farmers.
External Environmental Analysis
An external environment includes competitors, suppliers, increasingly scarce resources, government agencies and their ever more numerous regulations, and customers whose preferences often shift inexplicably. A remote external environment is comprised of economic and social conditions, political priorities, competitors, requirements of its stakeholders: communities, and customers. A firm’s external environment consists of all the conditions and forces that affect its strategic options and define its competitivesituation and must begin with the development or reevaluation of a company’s mission (Pearce & Robinson, 2009).
The local competition is minimal and consists of a few specialty shops, major supermarket chains and various online gourmet shops. These stores sell many of the products that Kudler’s sells and are beginning to offer specialized sections of organic food items. As of yet, Kudler Fine Foods is not in direct competition with the traditional supermarkets.
There is always the possibility of an occurrence of a change in economic conditions. Customers could stop buying gourmet foods. Gourmet foods are imported, organically grown, and cost a little more than what is usually sold in a grocery store. In the event the economy declines and customers’ cash flow is decreased, customers may buy fewer gourmet items and purchase their products at the local grocery store.
The suppliers that are used by Kudler Fine Foods are local, national and international growers. Only fresh, organic fruits and vegetables are purchased locally from distributors who ensure that the product is of the highest quality. Dairy products are also purchased from local dairies and meats are purchased from all over the country. Some of the wine and cheese is imported through national and international wholesalers. Conclusion
The mission of an organization can be best achieved through a systematic and comprehensive assessment of both its internal capabilities and its external environment. The results of this analysis must be anticipated, monitored, assessed, and incorporated into the decision making that will result in the formulation and implementation of plans designed to achieve Kudler Fine Food’s objectives. To effectively manage the factors that affect growth and profitability, processes must be put in place that will position Kudler Fine Foods optimally it a competitive environment by maximizing the anticipation of environmental changes and of unexpected internal and competitive demands. For the expansion of Kudler Fine Foods to be successful, Kathy must perform an environmental scan to be able to adapt to changes, both internally and externally, to retain a substainable competitive advantage (Pearce &