May Despi, AC Guanco, Jan Ilo, Hanzelle So Group Assi nment ! 3 1.

Situation Key Points for the Case

September21, 2013 "rinciples o# Mana ement $ Sat% &AM'12"M

As o# 1&&(, Selecta )as become t)e mar*et lea+er in Metro Manila a#ter it capture+ a substantial s)are ,(-./ #rom its competitor, Ma nolia, in less t)an #i0e years% Selecta nee+s to e0aluate its strate ies to sustain lea+ers)ip in Metro Manila, an+ also capture lea+ers)ip o# t)e mar*et on a national le0el ,currently 3&. mar*et s)are nation1i+e/% Selecta2s main competitor as a *ey player in t)e mar*et is Ma nolia% 3t)er local in+ustry players are4 "resto, Arce Dairy Ice Cream, an+ Coney Islan+% 5)ere are also #orei n competitors, namely4 6as*in 7obbin2s, Dreyer2s, an+ Haa en'Dazs% 5)e ice cream mar*et2s +istincti0e #eature is its 1ay o# +istributin its pro+ucts, as eac) ice cream bran+ carrie+ e8clusi0e outlets% 5)ey 1oul+ re9uire #reezers ,#ree o# c)ar e/ to +istribute ice cream% Its main competitor, Ma nolia':estle +istribution system is superior to Selecta% In 1&&0, 7;M Corp%, re'launc)e+ t)e Selecta bran+ to tar et A, 6, an+ upper C mar*ets% Selecta ice creams 1ere sol+ at par 1it) 1)at t)e main competitors o##ere+% In early 1&&<, Selecta recei0e+ a =oint 0enture o##er #rom >nile0er% >nile0er 1as intereste+ in )elpin Selecta since it 1ante+ to e8pan+ its ice cream mar*et in ?ast Asia%

Apply t)e ;i0e ;orces ;rame1or* #or Selecta an+ +iscuss t)e competiti0e strate y t)at Selecta s)oul+ a+opt base+ on t)e analysis

2. Diagnosis (Based on Porters Five Forces Framewor !

Force 5)e ?ntry o# ne1 competitor s $ 6arriers to ?ntry

Factors"Determinants Go0ernment "olicy $ re ulations, monopoly Capital 7e9uirements ?conomies o# Scale $ Minimum ?##icient Scale "roprietary @no1le+ e $

Diagnosis Go0ernment policies an+ re ulations can be consi+ere+ a bi #actor #or Selecta, as ;DA re ulations #or ne1 #oo+ pro+ucts are alrea+y set #or compliance% ;or a ne1 competitor, ainin

"atents Access to Distribution Asset Speci#icity

6ar ainin po1er o# customers

6uyer In#ormation a0ailability

6uyer Bolume

Substitutes A0ailable

6uyers2 Incenti0es 6uyer Concentration 0s% In+ustry

appro0al to enter a ne1 ice cream pro+uct ,or an alternati0e/ is relati0ely easy as lon as ;DA re ulations are met% "atent policies may pose a c)allen e to ne1comers% A)ile anybo+y can ma*e an ice cream pro+uct, t)ere may be a nee+ #or bi capital re9uirements to buy t)e necessary e9uipment 1)en +istributin ice cream in bul*% Capital re9uirements may be a small #actor #or t)e 1ell' establis)e+ Selecta% 5)is also #orces t)e ne1 entrants to setup lar e initially to catc) up 1it) Selecta% A)ile still possible, ne1 competitors 1oul+ )a0e a )ar+ time +istributin t)eir pro+ucts, especially in Metro Manila 1)ere Selecta an+ ot)er 1ell' establis)e+ competitors suc) as Ma nolia )a0e alrea+y settle+ )o1 t)eir pro+ucts can be +istribute+% Ma=or retail areas li*e roceries, malls, an+ ot)er public places alrea+y )a0e #reezers ?9uipment use+ in ma*in bul* ice cream is ma+e #or t)e speci#ic purpose o# ma*in ice cream% :e1comers may be +iscoura e+ in 0enturin to t)e ice cream business because o# t)is% 6uyer in#ormation is a0ailable #or consumers 1)et)er t)e pro+uct is 1ort) t)eir money, especially t)at t)e internet can be accesse+ almost on +eman+% 5)ese i0es more po1er to consumers an+ +ictate pricin stan+ar+s% 7estaurants, Hotels, an+ #ast #oo+ c)ains1 usually buy in bul* an+ o# t)e same bran+% 5)is a##ects Selecta in a bi 1ay% It 1as note+ in t)e case t)at t)eir competitor, Ma nolia, is t)e pre#erre+ bran+ o# t)ese establis)ments% Substitute bran+s or pro+ucts #or ice cream is ubi9uitous, especially no1 t)at alternati0es li*e yo urt are becomin more acceptable to t)e )ealt) conscious2 an+ a0ailable in

"ro+uct Di##erentiation

5)reat o# 6ac*1ar+ Inte ration

supermar*ets% C)eaper alternati0es suc) as t)e so#t ice cream bein sol+ at malls are also a bi #actor Customers )a0e a )i ) bar ainin po1er in t)e ice cream mar*et% 5)ere is al1ays t)e ris* o# customer #li )t as t)ey can easily s1itc) to a +i##erent bran+ or pro+uct substitute i# t)ey are not satis#ie+ 1it) t)e price, 9uality, or e0en =ust #or its a0ailability% Homema+e ice cream ma*ers are alrea+y a0ailable3 #or people to use in t)eir )omes% In a++ition, ice cream recipes are a0ailable in t)e internet%

6ar ainin po1er o# suppliers

5)reat o# substitute pro+ucts

Supplier Concentration Substitute Inputs Bolume Si ni#icance to Supplier 5)reat o# ;or1ar+ inte ration Cost o# Inputs S1itc)in Costs 6uyer propensity to substitute

S1itc)in costs may be consi+ere+ a small #actor as prices o# ice cream #rom eac) competitor )a0e little +i##erence% Consumers 1)o are loo*in #or a col+ snac* )a0e a ten+ency to loo* #or alternati0es 1)en ice cream is not aroun+, especially in t)e ")ilippines 1)ere t)ere is an abun+ance o# con0enience stores t)at o##er a 0ariety o# #oo+ pro+ucts% ?8it barriers remains )i ) as in0estment to t)is particular type o# in+ustry can be costly Hi ) #i8e+ cost associate+ 1it) in0estment in mac)ineries an+ plants t)at are use+ #or manu#acturin an+ pro+uction% 5)reat o# competitors to o##er pro+ucts t)at are similar in t)e eyes o# customers 1)ere t)e competitor can ain a+0anta e ,pricin , taste, a0ailability, e8posure, etc%/ can be )i )%

7i0alry Amon Competitor s

In+ustry Concentration ?8it 6arriers Hi ) ;i8e+ Costs

"ro+uct Di##erences

In+ustry Gro1t) S1itc)in Costs

Corporate Sta*es Ce0el o# A+0ertisin Hi ) le0el o# a+0ertisin cost in mar*etin its pro+ucts 1)ereby, t)e company create a+0ertisements #or its +i0erse pro+uct o##erin % ?ac) a+0ertisement caters to a speci#ic pro+uct%

#. $%ternatives and &'tions

Strategy Di##erentiation

Descri'tion 1% Mar*et pro+ucts t)at )a0e arnere+ +istinction suc) as DC)ocollectionE, DClassic CollectionE, an+ DS1irls an+ 51irlsE, base+ #rom a1ar+s t)at it )as recei0e+ 2% Create an alternati0e #or )ealt)ier non'+airy options suc) as coconut mil*(, to manu#acture ice cream% 1% ,;rom case/Sell more Selecta "ro+ucts $5)is strate y see*s to increase sales #rom current Selecta "ro+ucts in current mar*ets% 2% ,;rom case/De0elop more Selecta "ro+ucts $ 5)is strate y 1ill increase sales by +e0elopin ne1 or impro0e+ pro+ucts #or its current mar*ets% 3% ,;rom case/?nter ne1 Mar*ets (% ,;rom case/?nter ne1 business le0era in t)e current re#ri eration #acilities

Cost Cea+ers)ip ;ocus

3% Chosen $%ternative

5)e strate ies t)at 1ill be c)osen are base+ on t)e e##ect o# t)e #actors o# eac) #orce t)at a##ect t)e ice cream in+ustry as )i )li )te+ in t)e +ia nosis%

(% (ecommendation Selecta2s strate ic tar et is to utilize a mi8e+ strate y in its operation, 1)erein t)e company o##ers a +i##erentiate+ pro+uct to o##er uni9ue pro+ucts to t)e entire mar*etF a cost lea+ers)ip strate y o##er t)e lo1est cost pro+uct in t)e mar*etF an+ a #ocus strate y 1)ere it caters to a speci#ic nic)e in t)e mar*et% Ait) t)e company2s +i0erse pro+uct line it can easily en a e in t)ese strate ies to )elp reac) an+ establis) a lar e customer base% 5)rou ) in0estment in t)e company2s mar*etin an+ 7GD to +e0elop e8citin an+

uni9ue #la0ours t)at 1ill tic*le anyone2s taste bu+s% Inno0ate to +i0ersi#y pro+uct o##erin s 1)ile ta*in care o# pro+ucts t)at )a0e become staple bran+ #or loyal customers% H% Sources

1% ")ilStar ' Summer is more #un in t)e ")ilippines 1it) C)o1*in Halo'Halo )ttp4II111%p)ilstar%comIsun+ay'li#eI<J32H<Isummer'more'#un'p)ilippines'c)o1*in ' )alo')alo 2% ;I5DAK ' 7easons to C)oose ;rozen Ko urt o0er Ice Cream ' )ttp4II111%#it+ay%comI#itness'articlesInutritionI)ealt)y'eatin Ireasons'to'c)oose' #rozen'yo urt'o0er'ice'cream%)tml 3% Kummy $ Ice Cream Ma*er $ ?laine "% Cim )ttp4II111%yummy%p)I#eaturesI#in+sI+etailsIice'cream'ma*er (% SHA"? $ Can Ice Cream 6e Healt)yL ' D3:254 ;or et About :on'Dairy 3ptions ' )ttp4II111%s)ape%comIblo sI1ei )t'loss'coac)Ican'ice'cream'be')ealt)y'H'+os'+on .?2.J0.&&ts H%