But with efficient distribution network and extensive brand building investments, Munchee has been able to dominate the biscuits market in the island. Current trend in the biscuits market in Sri Lanka is that Munchee is continuing its expansion of the market share while Maliban is still loosing the ground. Local chocolate manufactures like Edna, Kandos and Diana are major competitors in the local market and furthermore imported chocolate brands like Nestle and Cadbury are also competing in the market.
Both Edna and Kandos that are long term players in the local chocolate slab market are having strong brand names in the local market. Both Diana and Ritzbury. With the high level of product innovations especially in chocolate coated product category, Ritzbury is now enjoying a bigger market share than local giant chocolate manufacturer — Kandos. Chocolate market of the country which is having estimated demand of around tons per month is highly price sensitive. Furthermore major players of the market are having excess production capacities also.
So there is a price competition in the industry. After some 8years, still the same packet goes to 20rupees. Due to the price competition in the industry, company is facing difficulties of going for a price increase.
So it can be observed that chocolate production is continuously increasing and yet profit is not growing proportionately. As Tiara is the only cake which can be kept as long as 6month period even without a refrigerator, in the market there is no other cake brand capable of same level of value to the customers.
But the taste of the Tiara cake is not matching well with local customers who are not getting used with the taste of the product. Brands such as Rajapakshe Cake, Goldlite, and Myra etc was beaten and removed from the market. So the competition for the Tiara cake is not high as there is no other brand giving same value to the customers.
Cecil fruit drinks was came under CBL control recently and it is still not a wide spread product around the country. Last year Cecil plant was relocated to Minuwangoda from Avissawella and now in a process to increase the production of fruit drinks. Dominant player in the local fruit drink market is Smak. Although the Name of the brand Smak has. Insufficient production capacities and insufficient distributions have limited possible success of strong brand name of Smak. The gap of the market is filled by dozens of regional small scale fruit drinks manufactures.
Furthermore the giant global player Coca-Cola is also trying to enter Sri Lankan fruit drinks market with its brand name called Minute Maid. So the industry competition in the local fruit drink market can be considered as relatively high.
Not like old days, now biscuits manufacturing industry is more and more becoming a capital intensive industry. Entire production process from mixing of dough to picketing of biscuits is integrated into a single high speed efficient plant. Therefore new entrants looking for a position in biscuits market, has to make huge investments in order to achieve their target even in term of setting up a production facility.
Tiara cake plant of the CBL, is located inside a bacteria free specially air conditioned room having very high level of air quality, is state of the art high tech production plant capable of producing 14tons of cake per day. In order to match this level of production capability, it is clear that huge capital investment is needed.
For the chocolate industry is also the situation is more or less is same to that of biscuits and cake industries. Therefore in terms of capital investment required, barriers for new entrants for entering into the market are high. Next barrier is present in terms of distribution network. If somebody is investing heavily for a mass production biscuits or a cake plant, efficient and large distribution network covering the entire island is also needed.
For an instance, munchee is having 60 agencies and dealers distributing products to over sales outlets in the island. Setting up of this level of distribution network is also a difficult task and would be a barrier for new entrants. Obtaining product formulas necessary for biscuits, cake or chocolate production is also a barrier for new entrants. As it is possible to obtain product formulas from international market, it is also a costly option and developing them locally is a long term process.
But for fruit drink industry which is not a capital intensive industry, barriers for new entrants is relatively low and further it can be seen that many small scale players are operating regionally in the fruit drinks market. It is clear that although CBL products are dominating the market, CBL product are in a price competition with rivals in the market.
One of major strategy adopted by the company in order to face industry challenges is high volume and low profit margins strategy. So the company is mass producing its products through capturing the biggest market share and continuously pressing harder to increase its market share while keeping prices of products in line or slightly higher to the competitors and thus CBL has been able to achieve high sales volumes while continuously capturing market share of competitors.
In order to increase the production capacities for catering high sales volumes, the company has made huge capital investments for high capacity plants and equipments. The company has relied heavily on advertising for positioning in target market segments and widening the market share of products. Seeking opportunities in new market segments is also being done. Furthermore value innovation is playing crucial role in CBL strategy. In chocolate market in the country also earlier perception was chocolate means chocolate slabs.
But Ritzbury introduced chocolate coated product such as chocolate coated wafer Chit Chat , chocolate coated peanut Go Nut , chocolate coated biscuits Chunky Choc etc in to the Sri Lankan market.
Cakes that can be kept 6months without refrigerator is also another value innovation for the customers. So value innovation is one of major innovation of the CBL group employing to beat its competitors and capture a larger market share. Company is doing some backward integration of its value chain.
Earlier agro products were purchased from wholesalers and now the company has set up a farmer network and products are directly purchased from farmers. As a company which consumes big amount of flexible packing materials, the CBL has set up close ties with plastic and flexible packaging manufacturers like Modernpack. The company has completely outsourced distribution of its products.
Distributors and agencies are doing distribution of CBL products in the island. Export distribution is also done through export distributors in India and Singapore.
So the company has not engaged in non core operations. For an instance, the company does not have its own vehicle fleet or intermediate warehouses. Entire transport of finished products is carried out by distributors.
Furthermore the company is in the process of value chain integration and already an ERP system has set up in the Ranala factory and further expansion of the ERP system covering the entire group of companies is in progress. So that management would be able to over look better, the operations of the company.
Generally it can be observed that the CBL group is following two generic strategies explained in the literature. One is the company trying to achieve cost leadership in the industry. This strategy is not tried through general cost cutting programs but by having technological superiority over its competitors. For an example, still the main competitor Maliban is having electrically heated ovens in their biscuits plants.
Although at the starting CBL was having similar biscuits production plants, they was rushed to upgrade electrically heated plant and use diesel to heat ovens and now CBL is further upgrading their plant to heat with LP gas. Switching to diesel or LP gas mean cost saving is tremendous.
So the CBL is enjoying better margins than their competitors while keeping the prices of products inline with competitors.
Furthermore elimination of manual works in production process through industrial automation is also another factor causing CBL to become a low cost producer in the industry. Setting up a farmer network. Other generic strategy followed by the CBL group is diversification of the business as well as products. Introduction of chocolate coated products into the local market and introduction of cakes having longer expiry date are two examples for product diversification and innovation.
CBL group is in the process of business diversification also. Originally CBL was a local biscuits producer. Then they entered in to chocolate manufacturing. And cake manufacturing was started next. After that jelly production was started. Later controlling share of Samaposha and Lanka Soy was taken. Then entry into fruit drink market was made by acquiring the fruit drink company — Cecil. This shows how the business diversification went on. And also CBL has expressed its intension of entering into the real state market in the county also.
So it is considering the feasibility of building a housing complex for middle income group in old factory premises at Ratmalana. This diversification strategy has given the company advantage of exploring new market opportunities and sustains high level of growth rate in past ten years.
As company has been able to grow continuously and make profits, business reengineering approaches are not in consideration at the moment. Balance Score Cards are only employed to monitor sales progress and BSC has not been implemented into manufacturing and operations areas. In terms of customer value creation, in recent times it can be seen that CBL group has done a great job. CBL is striving to maintain an international level of product quality while keeping the cost attractive to the local customers.
Case of Tiara cake can be shown as a best example for better customer value creation. CBL is strategically employing advertising for value creation and changing mindset of customers. So in. Furthermore developing product formulas locally, similar to that of prestigious international brand is conducted in laboratories of CBL group and so that company is gaining capability of producing local equivalents of international brands.
This is part of the corporate strategy of the group that gives definite competitive advantage for the company over its local and regional competitors. As the vision of the company targets, becoming the leader of confectionary manufacturing would be a long journey for the company. One prerequisite for achieving the target is huge capital investments in sub continental India. As a privately owned company this would be a really difficult task and so the company now has correctly identified and expressed openly its intention of going public in the near future.
This can be mentioned as a farsighted alignment of corporate strategy with long term company objectives. Finally it can be said that continuous drive for innovation and creation of superior value to customers has largely contributed for the recent success of the CBL group. Another important factor notable in the success story of CBL is, correctly understanding the power of advertising in the event of building a brand.
Having a strong brand name means, a company has successfully liberated its product from commodity like trap and price level can be set beyond the balance point of supply and demand curves.
CBL is heading to that direction. Open navigation menu. Close suggestions Search Search. User Settings. Skip carousel. Carousel Previous. Carousel Next. What is Scribd? Explore Ebooks. Bestsellers Editors' Picks All Ebooks. Explore Audiobooks. Bestsellers Editors' Picks All audiobooks. Explore Magazines. Editors' Picks All magazines. Explore Podcasts All podcasts. Difficulty Beginner Intermediate Advanced. Explore Documents.
Strategic Management Practices at Munchee. Uploaded by thilangac. Document Information click to expand document information Description: strategic management practices at munchee.
Did you find this document useful? Is this content inappropriate? Report this Document. Description: strategic management practices at munchee. Flag for inappropriate content. Download now. Related titles. Carousel Previous Carousel Next. Jump to Page. Search inside document. Part 1- Organizational Analysis: Ceylon Biscuits Ltd was founded in late nineteen sixties by under taking contract from Sri Lankan government and Care International USA to manufacture protein enriched biscuits for Sri Lankan school children as a mid day meal.
Fig: 1 Munchee Biscuits market share in the market. As a summary, following things can be observed as strengths of CBL group.
As a summary, following can be seen as opportunities existing for the company. LEGAL: The group is conducting its business according to government regulations and always following proper legal procedures of the country in the event of doing its businesses. Reference: 1. AC Neilson Retail Audit, Related Interests Economies Business.
Iroshan Priyantha. Karthik Sivanesarajah. Rishard Mohamed. Hashanthi Dangalle. Nayomi Ekanayake. Anonymous 0HycR Sudu Putha. Balachandran Navaratnasamy. Parag Shetty. Shamika Uduwella. Indika Jayaweera. Gabriel Tiron. More From thilangac. Political Marketing of presidential election Mac Gerrard. Popular in Marketing. Tameem Nadeem. Jannatul Ferdaus. Bubli Awan. Joe D. Kristy Le. Ajinkya Anita Anil Patil. Akshay Khimasia. Purblicity Coordinator. Faseeh Sohail FastNU. Karan Veer Singh. Piash Saha Stephanie Yip.
Vivek Yadav. Ritika Diwakar. Imam Ardiansyah. JuanPaolo C Aquino. Hameed Rusaifa. Manuel Calderon. Marcela Pizzi Prevatto. Miharu Kim. Robert Nacu. Maria Lyn Arandia. Quick navigation Home. According to Ngui , organizational performance measured by its actual output against intended output Ngui, Carton , stated that successful performance of the organization can be compared with successful value creation for stockholders Carton, Organizational performance is the achievement of an organization with respects to some criterion like quantified objectives or profitability Otieno, The combination of both financial and non-financial performance help the owners or top managers to gain insights on measuring and comparing their organization performance, especially the extent of effectiveness and efficiency in utilizing the resources, competitiveness and readiness to face the growing external pressure Chong, To know how an organization is performing, the performance should be compared with the similar firms in the same industry Njeru, Strategic management and organizational performance:- Theoretical and empirical evidence supports that strategic management practices affect the performance of an organization.
However the effect of strategic management depends on the effectiveness of strategy formulation, implementation, and strategy evaluation Wanjiku, Most studies have dealt with large firms and put diverse condition for the benefit of strategic management to be experienced Lawal et al. This study therefore attempts to contribute to the existing body of empirical studies on the relationship strategic management and performance of SMEs in Bangladesh.
Research model:- Form the existing literature and empirical study, it has been found that strategic management practices affect the performance of an organization. Therefore we considered strategic management strategy formulation, implementation, and evaluation as a predictor of SMEs performance in Bangladesh in our research model.
Methodology:- The major objective of this study is to examine the relationship between strategic management practices and their performance on SMEs in Bangladesh. The study has adopted quantitative method. In order to develop meaningful result, this research used statistical techniques. This study uses cross-sectional survey design. Five Likert scales are used for research questions. Appendix A shows strategy formulation, strategy implementation, strategy evaluation, and organizational performance measurement scale questions.
Data Analysis:- Background Information:- The study collected various background data which include the sector, and size. Strategic management is a diverse process consist of developing a strategic mission, setting objectives, situation analysis, formulating strategy, implementing strategy, and evaluating strategy.
The strategic management process is a dynamic and continuous process; a changes in one component can require a change in the entire organization strategy. The study sought to determine the situation analysis of strategic management practices put into place by studied firms. Most of the firms do it annually, on the other hand other firms do it monthly, quarterly, semi-annually, and continuously. This means that majority of SMEs had adopted good strategic management practices in strategy formulation and specifically situational analysis.
Table Frequency of carrying out situational analysis. Frequency Percent Monthly 12 This indicates that studied SMEs pay a lot of attention to strategic management practices but do not engage all the employees.
Question Frequency Yes No Does the company have a vision statement? Table presents the descriptive statistics such as mean values, standard deviation, and skewness, and kurtosis of the variables. D Skewness Kurtosis Strategy Formulation 3. These objectives were to determine the influence of strategy formulation on organization performance, to determine the effect of strategy implementation on organization performance and to examine the influence of strategy evaluation on organization performance.
Table 7 implies the correlation between strategy formulation and organization performance, strategy implementation and organization performance, strategy evaluation and organization performance, and the whole strategic management practices adopted by firms on the performance.
Table Correlation Matrix. This indicates that formulation of a good strategy will improve the performance of small and medium size enterprises.
Strategy implementation had a coefficient of 0. Hence adopting implementing superior strategy can improve the performance of organization. Regression Analysis:- A regression analysis was used to examine the hypothesized relationship between independent and dependent variables Kass, Table 8 shows the regression analysis of Hypotheses 1 to 4.
Coefficient of determination 0. So, hypotheses 1 has been supported by results. Hypotheses 2 has been accepted. If SMEs have good strategy evaluation practice that can improve the performance of their organization significantly. Hypotheses 3 has been well supported by evidence.
Study found that most of the studied firms various strategic management practices like situational analysis, strategy formulation, implementation and evaluation. Almost all the studied SMEs periodically gathered and analyzed data about internal and external environment but most of the firms In the majority The overall objective of the study was to determine the influence of strategic management practices adopted by the studied SMEs on organization performance in Bangladesh.
Multiple regression analysis was used where organization performance was regressed against strategic management practices adopted by the SMEs. These findings were supported by the previous literature and empirical studies Lawal et al. Conclusion:- SMEs play an important role in employment, driving economic growth, accelerated industrialization, reducing poverty, and overall infrastructure development of the country.
SMEs normally are reluctant to adopt strategic management practices due to the constraints of resources. But this study found that most of the SMEs are applying some aspect of strategic management concept. SMEs are now adopting strategic management practices relation to situational analysis, strategy formulation, implementation, and evaluation. All the SMEs have mission and vision statement but not all of them are written.
In the most of the SMEs of Bangladesh, top management are responsible to develop the mission and vision of the organization as well as make strategic decisions. The study concludes that adoption of strategicmanagement practices influence the organization performance. Superior strategy formulation, implementation, evaluation, and overall strategic management practices have a very strong positive relationship with SMEs performance. Adoption of effective strategic management practices provide small and medium size firms with new tools for survival and growth as well as sustainable competitive advantages.
Strategic management practices applicable for big organizations only, it can be very effective for SMEs performance as well and our study has confirmed it. Recommendations:- For Policy and Practice:- The study objective was to determine strategic management practices adapted by small and medium size enterprises in Bangladesh and their influence on organization performance.
Mission and vision statements state what is the ultimate goal of the organization and what do they do, which should be communicated to members of staff during the rolling out of strategy The study revealed that involvement of all levels top, middle, lower of staff is important for successful strategic management process. Therefore, this study recommends that strategic management process should be as inclusive as possible from the lower level employees to top level employees to create belongings and ensure that all the employees feel the part of entire process.
This study also recommends the management of all SMEs to ensure that their organizationsadopt strategic management process by carrying out accurate situation analysis, involvement of all level employees in strategy formulation, implementation, and evaluation, asour studies proved that it improves the performance of the SMEs.
Therefore this study was limited by inadequate literature in the study model and study variables. The 69 SMEs in Bangladesh were randomly selected, so the findings may not represent the whole population. The study is based on correlation and regression analysis, and it has some natural limitation. The hypotheses comprised in this research focus on individual cognition, perception and attitudes. The study is conducted on the 69 SMEs of Bangladesh and future study could re-examine the expressed relationship between strategic management practices and performance of SMEs with bigger sample.
This study is a vital step towards findings relationship between strategic management practices and performance of SMEs in Bangladesh as notenough studies found on this topic in Bangladesh. Appendix A:-Measurement Items. References:- 1.
Abdin, M. Role of SME clusters in Bangladesh economy, theindependent. Alchian, A. Production, information costs, and economic organization. The American economic review, 62 5 , Barney, J. Looking inside for competitive advantage. Academy of Management Perspectives, 9 4 , Burnes, B.
Managing change: A strategic approach to organisational dynamics: Pearson Education. Carton, R. Measuring organizational performance: An exploratory study. University of Georgia. Chong, H. Measuring performance of small-and-medium sized enterprises: the grounded theory approach. Journal of Business and Public affairs, 2 1 , Covin, J. Strategic management of small firms in hostile and benign environments. Strategic management journal, 10 1 , Dansoh, A. Strategic planning practice of construction firms in Ghana.
Construction Management and Economics, 23 2 , David, F. Dess, G. Strategic management: Creating competitive advantages. Dharmasiri, A. Strategic orientation of HR managers in commercial banks in South Asia.
International Review of Business Research Papers, 5 6 , Fink, K.
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