Group Assignment

Cargills Super Market

Group Members Name : K. K. R. A. Prematilake (09148205) : D. M. Warnasooriya (09148159) : P.M. Alagiyawadu (09152130)
: P. D. Priyadarshika (09148221)
: T.R. Thotamune (09148175)
: S.N. Fernando (09151168)
: H.L. Liyanage (09151150)
: S.K. Wirthamulla(09153551)
Subject Name : Business Policy
Batch Number : 13

BSc in M I S
Executive Summary

Cargills (Ceylon) PLC is one of the foremost and the largest retail chain in Sri Lanka with having over 150 outlets widen transversely the island covering 20 districts, counting Cargills Big City hypermarkets, Cargills Food City supermarkets and Cargills Express convenience stores. Today Cargills is the leader in the food and beverages sector and is ranked among the top 10 companies in Sri Lanka with over 4,600 employees.
Supermarket industry is one of the high competitive industries in Sri Lanka. Within this assignment we analyzed the internal and external factors that affected to Cargills and generate strategies which help to gain competitive advantage among competitors. In this Assignment we concern about SWOT analysis and TOWS matrix. According to those analyses we develop corporate, business and functional strategies to Cargills which help to achieve its vision

Contents Executive Summary 2 Our Business 4 Overview of the Industry 5 Organization Vision, Mission and Objectives 7 Vision 7 Mission 7 Objectives 7 SWOT Analysis 8 Strengths 8 Weaknesses 9 Opportunities 10 Threats 10 TOWS Matrix 11 SO Strategies- 11 ST Strategies- 11 WO Strategies- 11 WT Strategies - 11 Strategies 12 References 15

Our Business

Cargills (Ceylon) PLC is one of the foremost and the largest retail chain in Sri Lanka with having over 150 outlets widen transversely the island covering 20 districts, counting Cargills Big City hypermarkets, Cargills Food City supermarkets and Cargills Express convenience stores. Cargills Food City is rated as the fourth most precious brand in Sri Lanka. It is capable to provide uppermost probable price to their suppliers even though they selling nourishing superior foodstuffs to their customers at a lowest potential price, as they having their own out-grower network. Their leading mounting manufacturing brands are Cargills Supremo, Cargills Finest, Cargills Kist and Cargills Magic.
As stated in Cargills Ceylon (PLC), when regarding on Cargills history in concise, it was established in 1844 by William Miller and David Sime Cargill as a storehouse, import and wholesale trade, named as House of Cargills at Colombo Fort. In 1946 it has integrated as a Public Limited Liability Company. And in 1982 Mr. Albert A. Page was allotted as the chairman of Cargills and beneath the new supervision they evaluated on possibility of innovating on its trade bequest and consequently in 1983, it has begun the first super market chain in Sri Lanka by aperture of its’ first outlet in Staple Street. In 1993 they endeavor into the production of processed meats. Cargills has obtained the franchise license for KFC in 1996 and has begun to convey the products apt for local desire by producing lying on its secret formula. By 1999, when the store at Hanguranketha was positioned they have started supplying fruits and vegetables from farmers straightforwardly. Cargills Magic ice cream was the upshot of endow in a dairy dealing out plant and through that extended their dairy farmers association. And spreading the agri-processing with Cargills Kist, moreover they have enhanced the market opportunity for farmers. By the merge of marketing and distribution process, in 2008 they have gained Millers Limited.

Overview of the Industry

Now a day's the supermarket industry has become a well performing industry in Sri Lanka. The growth of the Super markets seems increasing time to time as people tend to buy goods from Super markets rather than going for normal shops. It's may be because as people are too busy, it is easy to go for a Super market and buy everything they want from one place other than going to many shops to collect goods they need. It saves your time, cost and even it makes people stress less as they can buy everything they need under one roof . Funded supermarkets usually firstly set up stores in major cities, and then progressively expand towards the second and third-tier cities, domestic supermarkets mostly root in a central region, and then spread out towards the margin areas.
The supermarket industry in Sri Lanka is set for explosive growth, given the western lifestyles of Sri Lankans, where convenience is a key benefit required.
Some of the supermarket chains in Sri Lanka that have expanded their operations are, * Cargills Food City * Kings Supercity * Sentra Super markets * Keells Super * EH Super Pola * Sathosa chain * Sunup * In addition there are other operators such as park n' Shop, Arpico Super Centres and Crystal.

Among all these super markets the Cargills Food City which has the largest outlet network is based for our assignment. Cargills Super marlkets advertises based on the theme "gedera yana gaman" and it was an attempt to be unique in advertising. But it is clear that Sri Lankan Super market industry is expanding day by day and Cargills has many competitors to compete with in order to become the leader in the Super market industry.

Organization Vision, Mission and Objectives

Vision
“To be a global role model in community-friendly private sector led national development.”
Mission
Serve the rural community, our customers and all other stakeholders through our core business- food with love – and other related businesses, based on the three main principles of;
- Enhancing youth skills
- Bridging regional disparity
- Reducing cost of living
- By enhancing local and global market
Objectives

* Delighting Customers with better products and Services. * Pursuing Innovation and Food Safety in its manufacturing brands. * Serve the rural Community by Reducing Cost of levels, enhancing youth skills and bringing regional disparities. * Carry out Eco-friendly practices in line with the business. * Serve the community by improving nutrition, health and education, and protecting natural resources.

SWOT Analysis

SWOT analysis is a strategic planning method which is used to evaluate Strengths, Weaknesses, Opportunities and Threats of a business environment. Strengths and Weaknesses relate with the internal business environment while Opportunities and Threats are related to external environment.
Cargills food city is also influenced by its own strengths and weaknesses and opportunities and threats of external environment.
Strengths
One of major strengths of Cargills is its reputation and the good mage. Cargills is a well established brand name in among Sri Lankan citizen since 1844. And it was rated the 4th Most Valuable Brand in Sri Lanka according to the survey initiated by Brand Finance in 2009. Because of that day by day they are increasing their customer base.
Cargills directly deals with the farmers. So farmers get standard price and a reliable market for their products .Today the company has thousands of farmers in their network. So the Cargills is fulfilling a social responsibility in protecting farmers.
Another major strength is maintaining good quality products. Every product that is manufactured or sold at Cargills food city must meet the benchmarks of quality standard set. The highest quality, safety and environmental and social standards of food which are purchase or manufactured by Cargills are ensured. Cargills Quality Dairies and Cargills Quality Foods are accredited with ISO 9001: 200, 14001: 2004 and 22000:2005.
Figure 1- sterile environment
Cargills always uses up to date technologies and well established IT infrastructure. Their food plants are the most technologically advanced plants in the region with well equipped anti-bacterial cold rooms, cold storage and manufacturing areas etc. They use Point of Sales systems (POS) in their retail outlets in order to increase the efficiency of the procedures. Today technology is one of the major factors that decide the competitiveness of an organization. Therefore affluence of newest technologies and IT infrastructure is strength of Cargills.
Another main strength is the availability. Cargills food city is opened all 365 days of year and 14 hours a day. So they are willing to offer best service to their customers every day. In addition to that Cargills food city is the fastest growing network in Sri Lanka. At present it has 150 branches in 20 districts including Cargills Big City hypermarkets, Cargills Food City supermarkets and Cargills Express convenience stores.
Green Business program is one of the ongoing projects of Cargills. Under Go Green concept they are trying to minimize its environmental impact throughout their entire supply chain, from the farm to the trolley. It will create a positive impact in the mind of customer. The introduction of Go Green bag is a preliminary step of that concept.

Figure 2-Go green bags
Cargills is able to win hearts of the community by doing some charity works under the theme of One Trust. It was started by helping the children survived form Tsunami disaster and rebuilding the schools which was affected by the disaster. Today the concept is expanded to help the children affected by war.
Weaknesses
The supermarket industry is gradually moving to on-line marketing. Cargills main competitors are experiencing on-line marketing. But still Cargills does not have such on-line ordering or delivering system. Today many people have busy schedules. They hardly find time to shopping. Since Cargills does not have any on-line ordering or delivering system, they are tend to move to the competitor’s of Cargills who are having on-line systems. That is the main weakness of Cargills.
Opportunities
Now government has launched various agricultural programs to develop agricultural sector like “Api wawamu Rata Nagamu”. So that farmers can grow more under government support and can supply quality products to market. So Cargills can join with them and can expand their supply chain.
With the end of 30 years war, the Cargills now has a great opportunity to increase their customer base by installing new outlets in northern and eastern provinces.
Threats
Cargills main competitors are now able to provide online shopping experience to their customers. But still Cargills does not provide such facility to customers. At the moment On-line niche market is being captured by Cargills competitors. So Cargills is facing a threat of losing their customers.
Due to the social gap between rural and urban people in Sri Lanka, most of the people in rural areas have an idea that super markets are for high class people and very expensive luxurious goods which are not feasible for them are sold.
Due to government rules and regulations like, taxes cost of the goods are rising day by day. Because of that Cargills is unable to provide premium low price which can resulting higher sales than present.

TOWS Matrix

TOWS matrix is used to match the Strengths, Weaknesses, Opportunities, and Threats against each other to find suitable strategies
SO Strategies-
Cargills can use their strength to take the advantages of the opportunities. According to the current situation of Sri Lanka Cargills can increase their customer base by installing new outlets in northern and eastern provinces. They have powerful brand name and good image among the consumers. So they can easily increase their customer base. In addition they have good opportunity to introduce online shopping concept because they have good financial status to introduce new technology such as online shopping, online payment, online ordering etc.
ST Strategies-
Cargills can use their strength to avoid the potential threats. Cargills have good image among consumers that they provide quality products to consumers. Therefore they can go for online solution which was not currently available. Currently their major competitor Keells provide online shopping experience to consumers. Cargills can avoid this threat by introducing online solution. They can use their good image to popular this new concept to consumers.
WO Strategies-
In this situation we identify the opportunities to overcome the weaknesses. When concern about weaknesses of Cargills they do not have any on-line ordering or delivering system. Therefore some consumers moves to Cargills competitors who are having on-line ordering. But Cargills have great opportunity to increase their customer base by installing new outlets in northern and eastern provinces. Therefore they can use this opportunity to overcome their weaknesses.
WT Strategies -
In WT strategies we concern about how Cargills can minimize its weaknesses and avoid threat. So their main weakness is they do not have online ordering system. But their competitors are now able to provide online shopping experience to their customers. So it is threat for Cargills. In addition to that government rules and regulations also act as thereat for Cargills.
Strategies

Cargills (Ceylon)PLC is well equipped with all corporate, business and functional level strategies. So it was a blessing for them to come up with good results at the end. Mainly they are following the strategy of sustainability. Also according to our SWOT analysis we hope to suggest some of the new strategies and also how to improve the current strategies based on the environmental scanning.
In order to this they collaborate with customers to create better products and services, streamline supply chains, save energy, reduce costs and move goods to every corner of Sri Lanka. Also they help farmers get higher yields from fewer acres, and store crops so they have greater flexibility in marketing their harvest. They give back to the communities where they do business through continuous efforts to improve nutrition, health and education, and protect natural resources. Every day, Cargills nourishes people and ideas-in both expected and unexpected ways.
Their sustainability strategy is used as a corporate strategy. Mainly they are associating with three commitments * Reducing the Cost of Living * Enhancing youth skills * Bridging regional disparity.
Their environmental sustainability strategy can be used to commence social responsibilities as well. Because they have enough economical strength they produced shopping bags which are not affected badly to the environment and also they can improve the ways of releasing garbage outside associating re-productivity concepts which is more useful for the food industry.. Through the "Green Business" program, Cargills is committed to minimize its environmental impacts throughout their entire supply chain, from the farm to the trolley. They have instilled environmental responsibility as a corporate value. Not only in their premises they are encouraging all partners to follow their mission as well.
Again Cargills develop their branch network according to the globalization concepts. They have opened the latest branch in Jaffna peninsula and hope to open another two more in the same location. In this way they have successfully reached to a branch network of 150 in 2011.
As another corporate strategy Cargills hold many training programs in different sections to educate employees. These methods can be used to upgrade communication skills, marketing and finance. This will reduce the weaknesses of customer handling and disappointments and then the staff will be able to provide a good service on behalf of the company. So with a well trained staff it is easy for them to achieve business goals and to keep up to the mission of the organization.
As business strategies they have so many strategic business units such as KFC, Cargills Express and Cargills book-city, in these points they maintains strategies limiting only to their business process. To enhance the look of the business premises they follow through a uniform for all the employees and nice arrangements of food items. They have separate sections in their food city and express stores for vegetables, fruits, medicine, Milk powder, biscuits, chocolates, perfumes, cosmetics, stationery, cleaning products and Ice cream products. So it is very convenient for customers to choose their needs without any delay or confusion. So from these arrangements Cargills creates the idea of quick service in customers' minds and get the opportunity of serving better than retail shops.
In KFC restaurants they come up with innovative food items daily. They have special promotional schemes and seasonal offerings annually. As an example they have, buy 2 and get one free promotional schemes. Their packing systems also breathe taking and suits to high class people so that customers with good taste and high class choices stream there. That gives them the opportunity to access high class level.
Cargills also holds the distinction of being one of the few global franchisees who supports local farming and livestock industries, by sourcing local produce for their products, while maintaining KFC's strict international standards. That's what makes its food truly finger licking good!

As functional strategies mainly they use a concept called “Agri Business” linking farmers to markets.For this they can use the strong work force and the well trained skills of them to attract farmers and also with this Cargills get the opportunity of attracting farmers easily to their business. This is mainly based on the production. Cargills purchases a wide variety of farm produce directly from small land holders. By eliminating middle men, Cargills is able to minimize transaction costs. Resultant savings are passed on to farmers on the one end and consumers on the other. Its business model guarantees a minimum price that is at least 20% above the estimated production costs. Agribusiness includes farming, seed supply, agrichemicals, farm machinery, wholesaling and distribution, processing, storing, marketing, trade and retailing. Currently, Cargills Agri-business focuses on direct produce purchase from the farmers, processing and retailing. Its future plans on agri-business will follow an end-to-end approach.
Also when it comes to quality assurance, each product that is manufactured or sold at Cargills must meet the benchmark of quality standards set by the company over a century of trading and operations. Cargills Quality Dairies and Cargills Quality Foods are accredited with all three ISO Certifications ISO 9001: 2000 for Quality Management, ISO 14001: 2004 for Environment Management and ISO 22000:2005 for Food Safety Quality Management. The Cargills Kist quality assurance process is a stringent one that kicks starts from the farm. Fruits are purchased during the season and processed in the UHT plant minus the use of any preservatives, aseptically packed and stored for use all year around.
So in this way the secret for the success of Cargills (Ceylon) PLC is to maintain good strategies though-out the year. Also they can improve the strategies based on the SWOT analysis as revealed above. So this will lead them to good results and to become the top in the food industry.

References

Cargills Ceylon (PLC), http://www.cargillsceylon.com/AboutUs/OurHistory.aspx [26 Feb. 2011]

Using the TOWS Matrix Developing strategic options from an external-internal analysis, MindTools, http://www.mindtools.com/pages/article/newSTR_89.htm [28 Feb 2011]