Kudler_Fine_Foods_Strategic_Plan

Running Head: KUDLER FINE FOODS Kudler Fine Foods: Strategic Plan December 14, 2009 Dear Kathy, Enclosed you will find an updated copy of the original strategic plan for Kudler Fine Foods. Due to the ever-changing marketplace and consumer needs it is critical for the company to review its original mission, vision and values to ensure the organization is heading in the direction originally intended. Furthermore, many companies spend valuable time and money reacting to unexpected changes using crises management techniques instead of using strategic planning as a means of anticipating and positively reacting to change (Ahoy, 2009). In addition to taking a proactive approach to business improvements, growth and management, strategic planning: Defines the overall mission of the organization and allows the management team to focus on the objectives identified; Provides a sense of direction, continuity, and leadership; Provides awareness of company facilities and workforce-related issues; and Provides a standard of accountability (Ahoy, 2009). The enclosed plan identifies several potential strategic alternatives for KFF and an implementation plan for one option viewed as providing the most value for the company. According to Ahoy (2009), the major keys to successful implementation of a strategic plan are commitment, credibility, and communication: everyone in the organization must be on board with the plan and continually provide feedback and vital information necessary to ensure its success. Finally, strategic thinking within the company must be encouraged in order to keep the strategic plan current. Where strategic planning is about analysis, strategic thinking is about synthesis: the KFF team must continually use intuition and creativity to keep a clear vision of where the organization should be heading (Morrison, 1994). Strategic planning is vital to ensuring that KFF is prepared for the challenges of tomorrow and will allow for the effective management the future direction of the business. Sincerely, Jeffrey Spry {draw:frame} STRATEGIC PLAN Table of Contents Executive Summary Kudler Fine Foods was introduced to La Jolla, CA, in 1998 by Kathy Kudler who was in search of gourmet cooking products and fresh produce to compliment her culinary skills. The store boasts several departments, including: Fresh Bakery and Pastries; Fresh Produce; Fresh Meat & Seafood; Condiments and Packaged Foods; and Cheese's and Specialty Dairy Products. Riding on the success of the first Kudler Fine Foods Kathy expanded the company, adding two more stores by 2003. As the company has grown so have the challenges and opportunities for KFF: in order to remain competitive in the industry and the organization’s specific target market, Kathy’s original strategic plan must be updated in order to provide the foundation, motivation, and detailed information to continue forward progress and ongoing success. Strategic management involves the major business decisions and actions that lay the foundation of a business: in order to sustain competitive advantage it is sometimes necessary to update the original plan to guide the future of the company. When revising a company’s strategic plan it is important to revisit the original mission, vision and values to ensure adequate reflection of the organization’s direction. The following statements reflect Kathy’s goals and direction for her company. Mission Statement - _Kudler Fine Foods is committed to providing customers with the finest selection of the very best foods, wines, and personal service so culinary visions can come true._ Vision Statement - Kudler Fine Foods will be the premiere gourmet _market for savvy shoppers searching for the finest culinary ingredients and products._ Selling only the highest quality gourmet products available. Satisfying and delighting our customers in every department, every day. Contributing to the local economy by purchasing local products whenever possible. Supporting and promoting the well being of our team members. A company’s mission, vision and values are a framework for success. In order to remain the path intended by Kathy Kudler the company must do more than display these theories for all to see: each must be lived up to by every member of the organization. Kudler Fine Foods (KFF) has a vision for the company’s future and a strategic plan is in place to help guide these goals. To assess the viability and timing of plan implementation it is important for KFF to perform an environmental scan to evaluate potential strategic options. In terms of organizations and strategic planning, an environmental scan involves consideration of factors capable of affecting the direction and goals of an organization taking into consideration internal and external factors as well as present and future factors that might affect the organization (Bacal, 2009). Proper analysis of the company and identification of possible assets and barriers will prove to be a valuable tool in the decision-making process. Over the past several years Kathy has successfully grown her small business from a single store into a multi-store organization with three locations in the San Diego area. KFF is ready to accelerate their rate of growth and secure their foothold in the market space: to best plan for the future the company must identify strategic plan options and select the best option for the company at this time to increase profitability and expand market share within the industry. Once a strategic plan has been selected for implementation the work really begins. In order to properly manage a project through all phases of implementation it is critical to create and follow a work breakdown structure (WBS), and Gantt chart, as well as clearly defining the plan objectives, action items, milestones, resource allocation, and deadlines for each phase of the plan’s progress. Other items to consider in the implementation of a strategic plan include: identification of key factors to success; establishing a cash budget and forecasted financials; a risk management plan; and a contingency plan for the identified risks. Proper planning will allow the team at Kudler Fine Foods to track the strategy implementation progress, mitigate risk, and make the best use of available resources. Close monitoring of the project’s progress during implementation is the main factor in its success. Company Background Fresh Bakery and Pastries Fresh Produce Fresh Meat & Seafood Condiments and Packaged Foods Cheese's and Specialty Dairy Products Each store employs a manager, assistant manager, culinary specialists to assist customers, and stocking associates and cashiers. Kathy manages all the buying for all three stores, and ensures all products are pulled from the shelf and replaced as soon as possible if the turnover rate is less than expected. Kathy intends to continue providing fine quality foods to the local area while expanding and opening new stores in the process. Cash flow is good, buildings are leased and not purchased, and thus far, Kudler Fine Foods (KFF) has been able to operate without any outside investors. (Apollo Group, 2008). Organizational Mission, Vision, and Value Statements Strategic management involves the major business decisions and actions that lay the foundation of a business: in order to sustain competitive advantage it is sometimes necessary to update the original plan to guide the future of the company. When revising a company’s strategic plan it is important to revisit the original mission, vision and values to ensure adequate reflection of the organization’s direction. Finally, values are important in the strategic planning process, representing the core priorities of the organizational culture (McNamara, 2008). With this in mind the core values of the company should be added: Selling only the highest quality gourmet products available. Satisfying and delighting our customers in every department, every day. _Contributing to the local economy by purchasing local products whenever possible._ Supporting and promoting the well being of our team members. A company’s mission, vision and values are a framework for success. In order to remain the path intended by Kathy Kudler the company must do more than display these theories for all to see: each must be lived up to by every member of the organization. Environmental Scan Kudler Fine Foods (KFF) has a vision for the company’s future and a strategic plan is in place to help guide these goals. To assess the viability and timing of plan implementation, it is important for KFF to perform an environmental scan to best evaluate all potential strategic options. In terms of organizations and strategic planning, an environmental scan involves consideration of factors capable of affecting the direction and goals of an organization taking into consideration both internal and external factors as well as present and future factors that might affect the organization (Bacal, 2009). Proper analysis of the company and identification of possible assets and barriers will prove to be a valuable tool in the decision-making process. Internal Environment The company has no direct competitors; Kudler is very customer oriented, offering a comprehensive product line and encouraging repeat business; and Strategic store locations (Apollo Group, 2008). Conversely, there are internal weaknesses for KFF to address, including: The company deals mainly in perishable goods; KFF has a high payroll; One of the locations is underperforming and will close; The management team is small with many responsibilities; and Limited potential for geographic expansion (Apollo Group, 2008). External Environment An important part of an environmental scan is identifying external events with the ability to impact a company, by exposing opportunities and threats in the environment. The KFF 2003 Strategic Plan identifies the company’s external opportunities as: Potential expansion through California (and other states, as well); Ability to expand product lines and services offered; and Delegation of purchasing process to someone with more time and experience (Apollo Group, 2008). The main external threats to KFF as identified by the company are the expansion of existing gourmet shops in the area and the declining economy. {text:bookmark} {text:toc-mark-start} Analysis {text:toc-mark-end} KFF must update the old SWOT analysis to best plan for the future of the company. For example, externally Kudler has focused on the important factors of competition and the economy, but have excluded technology and how new technologies can enhance the business and help it to grow outside of its brick-and-mortar structures. Because business environments are dynamic, it is vital to success to monitor continually the changes in and means of making organizational improvements. According to Abels (2002) this can be accomplished through: Gathering data through market research studies and surveys; Meeting informally with other business owners/company executives in the area; Reading newspapers and magazines in the target markets to remain current on neighborhood events; Monitoring demographic data of existing and proposed sites; and Implementing benchmarking initiatives to compare KFF’s performance to its closest competitors. In addition, as the company updates the strategic plan environmental forces affecting strategic outcomes (such as competitive advantage and financial success) to consider include: Social - demographic data; Economic - consumer income and spending trends; Technological - new technological tools available to help progress the business; Competitive - monitoring existing and potential business rivals; and KFF must monitor and be aware of its operating environments, both internally and externally, to best recognize and manage strengths, weaknesses, opportunities, and threats (Abels, 2002). An environmental scan will allow the company to the potential strategic options, and analysis of the data gathered in the strategic planning process is a key factor to successful implementation and continued expansion of Kudler Fine Foods. Strategic Decision-Making Over the past several years Kathy Kudler has successfully grown Kudler Fine Foods from a single store into a multi-store organization with three locations in the San Diego area. The organization wishes to accelerate their rate of growth and secure their foothold in the market space. Failure to identify and select strategic plan options would not only limit the organization’s influence and profitability, but allow competitors to develop in competition free market spaces, eventually threatening Kudler’s established locations. Strategic Plan Alternatives Although success in business is not always guaranteed, it is important to develop and implement a strategic plan to guide the decisions and actions of the organization. Even more importantly, there should be several strategic plan alternatives to select from to determine which option will best meet the goals specified by the company. The following options were put forth for review and selection: {draw:frame} Ultimately the goal for Kudler is to increase the long-term growth of the organization. Plan B – Focusing on the Del Mar location, would help the company determine why that location is not meeting current needs, goals, and objectives. Through researching consumer needs and buying habits in that particular area would allow the company to make the needed changes to make the store profitable. The weakness in this strategy is in spending money that may not prove to provide return on the investment at the cost of other opportunities lost. Strategic Plan Selection Process Improving the sales forecast (30% weight value); Meeting customer needs (20% weight value); Cost of implementing the proposed strategy (20% weight value); and Capitalizing on strengths, improving weaknesses, implementing opportunities, and eliminating threats (30%). Each of the four proposed alternatives was rated by members of the strategic team to make the best choice for the company, keeping the process as objective as possible to result in the best strategic plan for the company. {draw:frame} Recommendation Implementation Plan Once a strategic plan has been selected for implementation the work really begins. In order to properly manage a project through all phases of implementation it is critical to create and follow a work breakdown structure (WBS) and Gantt chart, as well as clearly defining objectives, action items, milestones, resource allocation, and deadlines for the plan. Other items to consider in a strategic plan implementation include key factors for success; the cash budget and forecasted financials; and development of risk management and contingency plans {text:bookmark} {text:toc-mark-start} Work Breakdown Structure {text:toc-mark-end} {draw:frame} In addition to the WBS it is helpful to create a Gantt chart to ensure the timeline for each phase of implementation is well defined and known by all project stakeholders. Using the information from the WBS the Gantt chart, project timelines and deadlines, and action items for this project are as follows: {draw:frame} {draw:frame} {draw:frame} In order to keep implementation of the plan progressing forward it is important to maintain contact daily with key team members, hold weekly project review meetings for status updates on all aspects of the project, and to audit the project monthly to assess budget and timeline issues. {text:bookmark} {text:toc-mark-start} Key Success Factors {text:toc-mark-end} Implementing a strategic plan will only be as successful as those behind it. It is important for Kathy to put a capable team in charge of this project and trust them to do what they are hired to do. This does not mean that Kathy should not be involved at all, but rather to manage the implementation of this plan in a hierarchical manner. Keys to success in this project include: Empower managers to make everyday decisions; Ensure accurate information, strong direction, and team commitment is provided from the outset; Develop the project team with representation from all aspects of the company whose skills and experience not only provide the most knowledge for success, but who will also advocate success with other stakeholders; Get input and advice from suppliers in addition to internal sources; Motivate employees by explaining how important their roles will be to ensure the plan is a success; Organize management reports to signal shortfalls or implementation delivery failures; and Closely monitor the project to review progress, capitalize on opportunities, and immediately resolve problems issues to sustain momentum (Shetcliffe, 2007). Cash Budget- Internet Sales site for Kudler Fine Foods (See Appendix A for software purchase details): {draw:frame} {text:bookmark} {text:toc-mark-start} Forecasted Financials {text:toc-mark-end} As of right now there is little competition in internet sales of fresh produce and high-end gourmet cooking items. However, based on the figures of Diamond Organics, KFF should be able to claim a good portion of the market and operate profitably: Diamond Organics grew by 12 percent in 2006, reporting sales increasing from $3.7 million in 2005 to $4.2 million in 2006 (Anonymous, 2007). It is important for KFF to advertise in several venues, including hard-print cooking magazines, gourmet recipe websites and in Kudler’s existing ground stores. The Cash Flow Pro Forma statements for 2004 and 2010 are shown, reflecting anticipated growth for KFF: {draw:frame} {text:bookmark} {text:toc-mark-start} Risk Management and Contingency Plan {text:toc-mark-end} Risk management is a forward-looking process to addresses issues that could jeopardize achievement of crucial project objectives. The risk management approach includes early risk identification as a means to anticipate and mitigate risks, taking into account internal and external factors, and is comprised of four phases: identification, assessment, monitoring and handling (Risk Management Plan, 2005). Contingency planning is a means to address problems if they arise by defining a backup plan and immediate action to take to reduce the negative effect of setbacks. For the implementation of an internet sales site at Kudler Fine Foods the following risks and contingencies have been identified: Risk: The Del Mar facility will not prove to be an appropriate site for the distribution function of internet sales. Contingency: Time has been budgeted to thoroughly review city codes and the use of the Del Mar building as a distribution site. The current budget will cover the cost of leasing an alternative site if necessary, and $10,000 in additional funds has been allocated for moving equipment and other expenses if Del Mar cannot be used. Risk: Purchase of an existing software package is not feasible for this application. Contingency: The hardware budget has been padded to allow hiring an external company to get KFF’s website up and running in the event it is necessary. KFF’s IT team will handle maintenance after the initial program is written. Risk: Not enough time has been allocated for successful implementation. Contingency: Purchasing an existing software program and use of the Del Mar facility significantly reduces the amount of time necessary for a project of this scope. The initial timeline to determine these factors is critical to adhere to: if the project is going to be delayed for any reason this timeline can be adjusted, and extending the project for an additional eight weeks is assumed. Risk: The idea of a new branch of KFF is not well accepted by the staff, whose morale drops and discouragement leads to slower, sloppier project progression. Contingency: A short-term project manager will be hired to oversee implementation, keep the plan on track, and provide continual updates to keep the momentum up. This risks involved in this particular project are very minimal, and taking a proactive approach (by hiring a project manager) will significantly reduce any issue that has the potential to impede implementation. Conclusion Updating Kudler Fine Foods’ strategic plan was necessary to refocus Kathy and the organization on moving forward, continuing to compete profitably in the market, and to find ways to add products and services to ensure continued growth and success within the industry. Adding an internet sales site will allow KFF to reach customers outside of the San Diego area without the cost of additional buildings, a more limited workforce, and entire untapped customer base. Thorough planning, participation of all employees within the organization, and constant communication between all stakeholders as the project progresses will make the implementation of an online store successful for Kudler Fine Foods. It is critical for Kathy to have the best team possible in place in order to make the implementation of this strategy a success. The plan works on paper but must be followed closely instead of hoping for the best and letting the project become a long, drawn-out process - as was stated by McCumber (2009), “…hope is not a strategy” (p. 7). {text:bookmark} {text:toc-mark-start} Appendix A {text:toc-mark-end} {draw:frame} {draw:frame} {text:bookmark} {text:toc-mark-start} References {text:toc-mark-end} Ahoy, C. (2009). Facilities planning & management. Facilities News. Retrieved Nov. 22, 2009 from www.fpm.iastate.edu/worldclass/strategic_planning.asp Anonymous (Jan. 2007). Organic. Register-Pajaroian. Retrieved Nov. 29, 2009 from http://www.diamondorganics.com/inthenews. Anonymous (Nov. 2009) What is a decision matrix' (Nov. 2009). RFP Evaluation Centers. Retrieved Nov. 26, 2009 from http://rfptemplates.technologyevaluation.com/What-is-a-Decision-Matrix.html Cash Budget (n/d). NetTom_: The Malawi College of Accounting_. Retrieved Dec. 3, 2009 from http://cbdd.wsu.edu/kewlcontent/cdoutput/TOM505/page22.htm. Kerin, R.A., Hartley, S.W., Berkowitz, E.N., & Rudelius, W. (2006). Marketing (8th ed.) New York: The McGraw-Hill Companies. McNamara (2008). Basics of Developing Mission, Vision and Values Statements. Field Guide to Nonprofit Strategic Planning and Facilitation. Retrieved Nov. 17, 2009 from http://managementhelp.org/plan_dec/str_plan/stmnts.htm. Morrison, J.L. (1994). From strategic planning to strategic thinking. On the Horizon, 2(3), 3-4. Retrieved Nov. 23 2009 from http://horizon.unc.edu/projects/OTH/2-3.html. Pearce, J.A. and Robinson, R.B. (2007). Strategic Management: Formulation, implementation and control, 10th ed. Company Mission. McGraw-Hill/Irwin. Risk Management Plan (March, 2005). Florida’s Statewide Systems Engineering Management Plan. Retrieved Dec. 5, 2009 from http://www.floridaits.com/SEMP/Files/PDF_Report/050315_D1-10_V2.pdf