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A Guide to Buying, Cooking, and Eating Italian Food, Case Study Example

Pages: 6

Words: 1546

Case Study

A macro environmental analysis reveals the relationship between the external business environment and Eataly as well as the food industry.

Political: The country is currently under the leadership of the center-right coalition that seeks to improve trade and business within the country by concentrating on building the capacity of local businesses, and potentially seek external markets for their goods (Jobber & Fahy, 2015). However, the country experiences political instability due to an inefficient government and poor management strategies.

Economic: Despite the fact that Italy is the fifth largest economy within the European Union (EU), there is considerable hampered economic growth as a result of a number of factors. The country has experienced stunted growth in the country’s gross domestic product (GDP). Labor market conditions have also hampered considerable growth and development as a result of poor economic and labor market performance by the southern part of Italy (Hill & Jones, 2013). This is associated with considerably high levels of unemployment. Most nationals experience low levels of economic freedom. The country also faces considerable public debt relative to GDP (Grewal & Roggeveen, 2014).

Social: There is increasing migration into Italy as a result of the ageing population. Migration has been enhanced to fill in the positions that cannot be undertaken by the ageing population. Most of the people in Italy have a preference for eating out, appreciating cuisines from establishments.

Technological: Communication faces considerable hindrances resulting from the landscape of the country. The considerably high number of hills and mountains causes communication problems and failures at times.

Environmental: The Mediterranean Sea and the Alps provide Italy with ample climate for agricultural and leisure activities throughout the year. The country’s Mediterranean temperate climate is particularly suitable for tourism and greatly benefits the tourism industry (Harland, et al., 2013).

Legal: The regulations of the food industry within the country make it possible for individuals to engage in business within the industry.

These macro factors have negative and positive effects on the food industry. The political and social instability as a result of poor economic policy and food insecurity drives away tourists and potential local clients (Nykiel, 2011). The environmental aspects enhance the appeal of the industry on the global market.

Industry Analysis

Bargaining Power of the supplier: One of the main missions of Eataly is to reduce the length of its supply chain. This mainly entails sourcing for food stuff straight from farmers as opposed to using middlemen (Slow Food Editore for Eataly, 2011). The company maintains a cordial relationship with its suppliers, ensuring it obtains the best prices for the best quality of foods. Eataly’s suppliers have limited bargaining power.

Bargaining Power of the Customer: the customer has little bargaining power as the company already offers high quality products at considerably competitive prices.

Threat from New Entrants: The food industry initially constantly faces new entrants as a result of the size and profitability of the industry within the economy. There are numerous players found within the industry (Shepard, 2011). However, entry into this industry is dependent on the enterprises ability

Threat from New Substitutes: there are a number of companies adopting the Eataly business format, offering healthy foods. However, substitutes pose a moderate threat to the Eataly’s products.

Rivalry among Competitors: there is considerable rivalry from competitors as they seek to enter Eatlay’s market niche. Rival companies look to develop the same economies of scale and supply chain similar to Eataly’s (Pride & Ferrel, 2015).

The industry is considerably profitable. However, the high level of competition makes it difficult to make profit using traditional business management techniques. Eataly has successfully managed to navigate this aspect of the industry by reducing its supply chain costs.

Opportunities and Threats

Opportunities

There are a number of underlying opportunities for Eataly in the form of the company’s online retail store. While the company currently employs its presence on the web to make sales, there is considerable potential in developing social media profiles as well as software applications tailored for clients as well as suppliers (Danford, 2014).

Social Media introduced a new platform through which individuals could communicate instantly regardless of the distance between them. These networks have since evolved into determining element of what is trendy and what is not. Individuals using these social media networks tend to pass on messages, quotes, videos and comments on a given topic, creating a trend within the social network. What is trendy is determined by the number of individuals conversing about it (Al-Deen & Hendricks, 2013). This has created a channel through which businesses can market their products by creating a following and having as many individuals talking about their product.

Threats

The country currently faces potential insecurity as a result of Europe’s conflict with the Islamic State (IS). Between 13th and 14th November 2015, France experienced a myriad of attacks, marking one of the worst days for security forces in Italy in recent years. These series of terrorist attacks since 2013 continually pose a threat to the tourism and hospitality industry in Europe. Italy has since become a target for ISIS, potentially threatening tourism in the country owing to fear of attacks. Since most of the November 2015 attacks in France were carried out in bars and restaurants, the industry has experienced reduced income and revenue as a result of declining sales (Jobber & Fahy, 2015).

The high cost of doing business within Italy as a result of the high levels of taxes and labor costs pose a major threat to the profitability of Eataly and other businesses within the food sector. The high cost of operations minimizes the profit margins realized by Eataly as well as the food industry.

Identification of the resources and competencies

Eataly has a number of resources and competencies that set the company apart from its competition. The company has a number of resources that it employs to execute business activities. Some of the tangible assets include retail locations and quality products. Some of the intangible assets include a slim supply chain, goodwill and a unique brand name (Giménez & Minguet, 2011). The company also has highly trained staff as a resources.

The company has a number of competencies including quality customer service, outsourcing for quality raw materials.

Distinction between threshold and distinctive resources and competencies

Threshold Competencies

  • Customer service
  • Food services
  • Raw material supply chain(Danford, 2014)

Distinctive Competencies

  • High quality and sustained customer service
  • High quality food services
  • Reduced supply chain cost
  • Slim supply chain
  • Preparing healthy foods

Threshold Resources

  • Retail location
  • Retail shop equipment

Distinctive Resources

  • High quality business locations
  • Multiple business locations
  • Website that offers free shipping(Danford, 2014)

Appraisal of the Resources and Competencies

  Valuable Rare Difficult to Imitate Exploitable by the organization Competitive Implications
Brand Equity Yes Yes No Yes Unexploited Competitive Advantage
Customer Service Yes No No Yes Competitive Parity
Effective Distribution Network Yes No No Yes Competitive Parity
Product Quality Yes No Yes Yes Unexploited Competitive Advantage
Leadership and Innovative Ability Yes No No Yes Competitive Parity
Marketing Yes No No Yes Competitive Parity
Facilities and Plant Yes No No Yes Competitive Parity

Strengths and Weaknesses

Strengths

Eataly has a considerable advantage within the market by selling artisanal products reducing the length of its supply chain, thus reducing the costs of originating from the supply chain. This allows the company increased cash flows. Furthermore, the reduced costs increases profit margins significantly, allowing the company to offer higher quality products at considerably favorable and competitive prices (Massa & Testa, 2012). Selling seasonal products also enhances the company’s flexibility and ability to adequately adjust with market variations.

Eataly has a considerable presence throughout the country in major cities like Turin and Rome and Milan, which guarantees the company’s status and market share. This also enhances the company’s ability to cater to different markets simultaneously. The company’s national presence is also enhanced by a strong brand name and a dedicated vision towards maintaining and improving the brand’s quality and standards (Dev, 2012).

Weaknesses

The company has considerably little influence on it external environment, which makes it difficult to overcome the security challenges currently facing Italy.

References

Danford, N., 2014. How to Eataly : a guide to buying, cooking, and eating Italian food. New York: Rizzoli.

Dev, C. S., 2012. Hospitality branding. Ithaca: Cornell University Press.

Giménez, M. & Minguet, J. M., 2011. Hotel Brand Identity. Barcelona: Monsa.

Grewal, D. & Roggeveen, A. L., 2014. Review of marketing research. Volume 11. Bingley: Emerald Publishing.

Harland, C., Nassimbeni, G. & Schneller, E. S., 2013. The SAGE handbook of strategic supply management. London: SAGE.

Hayes, D. K., Ninemeier, J. D. & Miller, A., 2012. Foundations of lodging management. Boston: Prentice Hall.

Hill, C. W. & Jones, G. R., 2013. Strategic management : an integrated approach. Mason: Cengage Learning.

Jobber, D. & Fahy, J., 2015. Foundations of marketing. 5th ed. Maidenhead: McGraw-Hill.

Massa, S. & Testa, S., 2012. The role of ideology in brand strategy: the case of a food retail company in Italy. International Journal of Retail & Distribution Management, 40(2), pp. 109-127.

Nykiel, R. A., 2011. Marketing in the hospitality industry. East Lansing: American Hotel & Lodging; Educational Institute.

Pride, W. M. & Ferrel, O. C., 2015. Foundations of marketing. Stamford: Cengage Learning.

Smith, C. N. & Murphy, P. E., 2012. Marketing ethics. Los Angeles: SAGE.

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