Olvea Groupe: 15 Grand Strategies Application
Olvea Groupe is a French company that deals with the manufacture of food grade vegetable oils from a variety of natural sources. For instance, the company manufactures Shea butter oils, neem oils as well as various fish oils used in the food industry. Presently, the company seeks to restructure its operations with the objectives of increasing the range of products offered as well as the quality of the products. It their overall strategic plan, the company is currently seeking to address quality issues that will culminate in the achievement of an ISO 9001 certification (olvea.com). To achieve its goals, Olvea Groupe can use a variety of strategies. The 15 grand strategy plans can be of great importance to the company at this time when growth is at the core of their plans. Not only can they pursue new products but can also transform their operation strategies in various other ways to boost their market shares relative to their competitors. The ensuing paper describes the 15 strategies and their applicability to Olvea Groupe. The key objective is to find an optimum point of application that will result in greater benefit for the company. The 15 strategies may not all be completely relevant to the current situation of Olvea Groupe, but the paper provides ways through which the company can take advantage of them in case the need to do so arises.
Concentrated growth is the process of directing organizational growth and resources towards a single product within a single market. In this regard, a company intending to use concentrated growth as a strategy to business expansion focuses on expanding its market shares with regards to a single product only (Edwards par. 5). In the case of Olvea, this strategy may be applicable in terms of product characteristics. The company produces vegetable oils of varying natures and also fish oils. While there are many other companies that may provide stringent competition in the manufacture and sale of vegetable oils, the competition in fish oils is limited. At the same time, the main product that gives the Olvea brand in the market is the vegetable oil range. As such, concentrated growth can only be applied in the company with regards to product choice. For instance, the company may decide to market a single product in each of the ranges. This will imply that Olvea Groupe markets a single type of fish oil product and a single type of vegetable oil product say Shea butter oil.
In this case, the company name would spread based on their key products. Alternatively, the company may decide to market only the vegetable oils, which are their major product while letting go of the fish oil products. In either case, the company will gain additional market shares due to the advanced reliability in terms customer awareness. This is due to the fact that customers are more likely to memorize products marketed individually than those marketed in a group regardless of the brand strength. Through concentrated growth, the company will be able to achieve greater brand identity relative to the present type of strategy that incorporates many products.
Concentrated growth can be achieved through strategies that aim at establishing greater product use by: attracting the competitors’ customers, increasing the rate of product use by present customers and attracting non users to use the product. By increasing promotional efforts and improving advertisement strategies, the company can be able to attract more customers. Olvea may also opt to enhance purchase experience through offering product incentives such as smaller oil packages for bigger ones, and cost reductions where necessary.
The concept of market development refers to product presentation through changed promotion strategies or changed advertisement. A company, intending to use market development as a form of business strategy may add distribution channels for its products (Edwards par. 4). This strategy can be used at Olvea through enhanced product availability, where the company places its products under distributorship. Presently, the Olvea brand is not a common name across many nations. This is because there are no specialized Olvea distributors in spite of being recognized as a leading manufacturer of fish and vegetable oils. If Olvea intends to develop its market, access to the company products has to be enhanced through improved availability. Various modes of product distribution can be used including: franchising, which is used by companies such as Starbucks and Burger King. Alternatively, the company may work closely with international transport and products companies to ensure that their products reach the unreached parts of the world. Many opportunities are available for organic vegetable and fish oils and the company can gain a lot of market shares by increasing accessibility to its products.
When companies use product development as a marketing strategy, they create new products or modify the already existing products into formats that are marketable within the same market segments that have already been reached by the previous products. Many options are available for product development: the first one is to adapt to new ideas and developments; modifying the product through change of color, form, odor and shape; magnifying the product; minifying the product; substitution; rearrangement; reversal and combining the product with others (Edwards par.5). Most of these strategies are applicable within the Olvea context. For instance, the company can adapt new products by diversifying the available product ranges to include essential oils derived from vegetable and fruit products. The color and form of products can be changed through addition of aromas, food dyes and other food grade additives. Similarly, the company could magnify the product packaging to reach those who desire to buy in bulk or minify to ensure that they reach even those of low purchasing power. Product combination may involve producing blended oils. For instance, coconut oil can be blended with corn oil or other natural organic oils such as tea tree oil or Indian hemp oil. However, this may result in a reversal of the product use. In any case, the company has to identify the key challenges in product marketing and the most applicable solutions thereof.
Companies that use innovation as a grand strategy intend to obtain greater market shares by taking advantage of the acceptance of new products into the market by customers (Fadun 58). Such companies not only use initial product release as strategy for pushing profitability but also use sustainable growth as a measure of performance. Innovation can be applied through the use of different approaches to the production of vegetable oils. At Olvea Groupe, the company is capable of making profits through such innovative measures. For instance, modification of products or widening the product range to include curative modified vegetable oils can help the company to access greater market shares than it is already doing. Through innovation, companies render existing products obsolete while also creating new product life cycles. Olvea can take advantage of this opportunity and obtain greater profitability and ease of marketing.
Under horizontal acquisition, a company may acquire other competing companies at the same level of the supply chain and effectively gain access to new markets through their acquisitions (Edwards par. 6). During the process, the acquiring company gains access to the business of the other, resulting in the expansion of the product range, increase in market shares and product differentiation. The process also eliminates the competitors hence expanding the –market with of the acquiring company. While horizontal acquisition can be a good strategy for international expansion, it may also result in losses for a company in cases where the acquired company is undergoing losses, underperforming or on the verge of being declared bankrupt. As such, horizontal expansion requires intensive analysis of the business environment as well as the business finances prior to decision making. At Olvea, there are no key competitors in France itself. However, the company can take this as a push towards international acquisition and subsequent international expansion.
Contrary to horizontal acquisition, vertical acquisition entails acquiring firms that are above or below the acquiring company in the supply chain (Edwards par. 6). This could be the suppliers or the distributors. Most companies however, plan on acquiring the suppliers. The main objective of doing this is to enhance the credibility of raw material sources as well as to enhance dependability of the process. Olvea prides itself in an enhanced traceability system, where the company clearly identifies the sources of its raw materials and can trace back to them in case of any problems. Moreover, the company also makes efforts towards the production of purely organic and safe products for their markets. To enhance productivity through vertical acquisition, the company can acquire some of its suppliers, such as the coconut oil suppliers. The choice of suppliers to acquire could depend on factors such as difficulties that have been experienced in the past while dealing with specific suppliers, challenges of marketing and poor supplier volumes. Through vertical acquisition, the company can ensure that the products manufactured not only meet the market conditions but also fulfill the available product demands.
In the use of concentric diversification, companies acquire firms that are similar to them in terms of markets, technologies or products (Fadun 58). The acquired businesses have to be compatible with the already ongoing business since the main objective is to increase strengths while minimizing weaknesses. The process of concentric diversification itself involves analysis of potential business targets, their value in the market and their possibility of expanding the target market characteristics. The acquiring organization makes efforts to understand the businesses of the acquired companies. In this way, they are better capable of running the businesses once they are in control. The choice of company to acquire has to operate within the line of business of the acquiring companies. At Olvea, concentric diversification can be challenging to hack due to the nature of the company products. With limited numbers of competitors, concentric diversification may result in little or no financial benefits for the organization. However, should the company desire to pursue greater growth, it should settle for a firm that provides them with an opportunity for organizational risk reduction.
As opposed to concentric diversification, the conglomerate diversification approach aims at acquiring any companies that promise financial profitability (Fadun 58). In this case, an organization does not confirm the availability of relationships in terms of markets, products or technologies. On the other hand, the acquiring company randomly chooses the company that it perceives to be most likely profitable to its business. While addressing this as a grand strategy for growth, it is difficult to advice Olvea to take on a particular company. However, the company has to make decisions based on in-depth financial and operational analyses. Olvea has to follow up on recent stock market activities associated with the company they intend to acquire and to determine any negative implications of their activities. Companies marred by scandals and those associated with financial failures should not be targeted for conglomerate diversification. As conglomerate diversification pays little attention to market synergies, it is relatively easy to make investment mistakes in the choice of companies to acquire. It is therefore recommended that the profit patterns of targeted organizations be evaluated thoroughly before implementation of the decisions made.
Turnaround is most applicable when a company is itself making losses due to a variety of reasons. Some of the reasons may include production inefficiencies, product breakthroughs among the competitors and financial recessions among others (Schoenberg and Others 244). A company can implement a turnaround strategy through putting in places measures such as asset reduction or cost reduction, besides retrenchment. The main objective of such measures would be to reduce the expenditures of the organization during the off peak seasons and subsequently manage the available funds efficiently. While Olvea’s operations are positive financially at present, having a well laid down turnaround strategy can be an important source of comfort for when the need to apply the strategy arises. Such strategies need to be well planned since their failure can be the cause of more stringent measures.
In case a turnaround fails to prevent the downturn in a company, measures have to be undertaken for a divestiture to be conducted (Brauer and Schimmer 84- 86). This involves the sale of the entire company or a major part thereof. In such as case, the organization depends on the most highly valued asset in a non-integrated company. For Olvea, this would be the processing plant. Although this is not the intention of any business, planning for any eventualities is a mandatory activity.
Liquidation is undertaken when it is the only viable option available. This can be through sale of parts of the assets or at times the entire holding (Fadun 59). In such a case, Olvea would sell in bits, paying off the creditors. The company must however be evaluated for the tangible value of assets prior to sale.
In liquidation bankruptcy, all the assets of the failing organization are sold and the creditors paid off from the proceeds (Currie and Burgers 1). In this case, the business has to be completely unable to cater for its operational needs and the needs of its creditors. Olvea must have in place a legal framework for initiating and implementing bankruptcy liquidation where the need arises.
When companies are unable to attain profitability independently, joint ventures entail two companies coming together to operate a common business in order to expand their market power (Edwards par. 7). In order to determine the most suitable partner, Olvea will have to examine the viable options and to decide on the most potentially profitable joint venture prior to implementing the decision.
In strategic alliances, the partners do not hold equity agreements with each other. On the contrary, they act like licensing agreements (Fadun 59). However, their main objective is to boost profitability through partnerships. In this regard, Olvea, just like in forming a joint venture, should pursue only organizations that promise operational effectiveness and profitability.
Consortia, Keiretsus and Chaebols
When businesses form large interlocking relationships, they are referred to as consortia (Fadun 59). All these are formed just like in joint ventures to enhance profitability of otherwise failing companies. Olvea may not need these presently, but has to weigh the available options when the right time comes.
Olvea Groupe is a French company that deals in the manufacture and sale of various vegetable oils and fish oils. The company has strong operational points and is highly profitable. Even then, there are several grand strategies that the company can use to advance its profitability while also maintaining its position as a market leader. Practices such as product and market development, concentrated growth, horizontal and vertical acquisition and innovation, can be used to enhance the organizational growth of the company. Other strategies such as divestitures, liquidation, bankruptcy, joint ventures and strategic alliances may not be applicable to the company at present but can find use in future. This is however on condition that the company seems to fail and has to be rejuvenated through optional strategies.
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