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1-1. Dippin’ Dots Ice Cream Brian R. Callahan Alan B. Eisner McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc.

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Presentation on theme: "1-1. Dippin’ Dots Ice Cream Brian R. Callahan Alan B. Eisner McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc."— Presentation transcript:

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2 Dippin’ Dots Ice Cream Brian R. Callahan Alan B. Eisner McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

3 Dippin’ Dots Ice Cream Icebreaker Question  How many of you have tried a specialty ice cream?  How many of you have heard of “Dippin’ Dots?” McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

4 Dippin’ Dots Ice Cream 1.Analyze Dippin’ Dots external environment. What are the general environmental factors that have impact on the industry? McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

5 Dippin’ Dots Ice Cream 2.What are the external forces of competition affecting the frozen dairy industry? McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

6 Dippin’ Dots Ice Cream 3.Analyze Dippin’ Dots’ internal environment.  What does Dippin’ Dots’ value chain look like?  What about its resources?  How would you evaluate its performance? McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

7 Dippin’ Dots Ice Cream 4.What business level strategy does Dippin’ Dots appear to pursue?  What niche (cost, differentiation, focus) can Dippin’ Dots fill in the highly competitive ice cream industry? Is it sustainable and does the industry have room for such an enterprise? McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

8 Dippin’ Dots Ice Cream 5.What opportunities for growth should Dippin’ Dots pursue?  What should Jones do to manage and encourage this entrepreneurial activity? McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

9 Q1. General Environment  Demographic: Rising levels of affluence – more discretionary dollars; shift in geographic population to South and West – hotter weather, more appeal to frozen products  Sociocultural: Greater concern for healthy diets/fitness – single serving concept has appeal; possible MTV/sports celebrity endorsements attracts growing teenage market  Technological: manufacturing/distribution opportunities  Economic/Global: Access to capital; China as a market; consolidation in food/beverage industry; sector competitive and profitable McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

10 Q1. Industry Environment McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved. SUPPLIERSBUYERS SUBSTITUTES POTENTIAL ENTRANTS INDUSTRY COMPETITORS Limited number and variety of available distribution channels available to newcomers, particularly in large grocery store chains Low – commodities such as milk, sugar, etc. Buyers are franchisees and the general public, 90% of whom consume ice cream and frozen desserts. Expansion to grocery chains – buyers? Competitive forces? High – many alternatives for desserts/snacks (cake, pie, fruit, candy) Reason for competition is the market’s potential. Some ice cream categories show opportunity for innovation especially in the novelty area

11 Q3: Dippin’ Dots’ Value Chain McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Value Chain Activity How does Dippin’ Dots create value for the customer? Primary: Inbound logistics Acquisition/licensing of new manufacturing facilities in central U.S. and Korea – easier distribution OperationsSuper-cold freezing locks in flavor/ freshness; unique form factor and state of art product line Outbound logistics Logistics problems; vending machines, scoop shops Marketing and sales Needs to be consumed at or near retail location; innovative promotion – MTV, sports celebrity ServiceOpportunity for instant feedback; less control because of franchising

12 Q3: Dippin’ Dots’ Value Chain (cont.) McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved. Value Chain Activity How does Dippin’ Dots create value for the customer? Secondary: ProcurementHigh ingredient costs affect pricing/ margins Technology development Curt Jones’ ability to innovate in lab; new product creation Human resource management Initially Jones’ friends; franchising allows for growth without overhead costs General administration Jones is an entrepreneur – priority is growth, may be a problem. Can Jones hire the right people?

13 Q3. Dippin’ Dots’ Resources McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.  Tangible: Financial – franchise cash flow options; Physical – new production/distribution facilities in Kentucky and South Korea; Technological – innovative product, production/distribution designed specifically for product; Organizational – no obvious value-creating org. resources  Intangible: Human – franchisees can add value or damage reputation; Innovation and Creativity – Curt Jones’ scientific background and innovative ability; Reputation – current relationship with McDonald’s, MTV and sports celebrities endorsement  Capabilities: Entrepreneurial mindset, technological capability; innovative product plus energy and marketing to gain celebrity sponsorship could really add value

14 Q4. Business Level Strategy McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.  Cost Leadership – perhaps not a good strategy at this point; not enough experience yet to be able to learn what costs can be lowered without sacrificing quality  Differentiation – Dippin’ Dots must work to link its value chain processes to make sure the product retains its unique qualities. Main challenge is that product can be imitated.  Focus – Current focus is on the out-of-home market, Nestle and Unilever also doing it; if Dippin’ Dots goes to grocery stores – more competition from other brands

15 Q5. Growth Opportunities McGraw-Hill/Irwin Strategic Management, 3/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.  New product (that will withstand conventional freezers while preserving super frozen dots in the ice cream) – enter take-home market  Maintain/expand current market base through more support for franchising or push into grocery store business  Successfully manage the innovation process  Jones needs to know when new product is worth pursuing  Need operational skills  Consider implications for marketing and distribution  Need to monitor feedback from customers


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