A Case Study: Creative Food Technologies Corporation

Executive Summary

Alex, a graduate of BS Food Technology with MBA degree who has substantial

experience working in the area of research and product development founded the

Creative Food Technologies Corporation (CFTC). CFTC’s products and services

composed of two main groups: the food group and the design and printing group. Under

the food group are candy line, beverage line and food and beverage consultancy service.

While the design and printing group composed of graphic design, offset printing and

equipment trading; these groups are connected with the operations under the food group.

Wake Up! Extreme candy, though being the first energy candy in the Philippines

was not patronized by consumers due to the lots of substitute in the market with same

price and lack of popularity. Also, PureDrops beverage line is facing a difficulty in staying

in the industry as there are a lot of competitors which they cannot compete with because

they do not know what business should be prioritized.

Being engaged on different business with a span of five years, Alex faced lots of

problems like non-remittance of revenues, non-payment of consigned goods, and

pilferage. Those problems are controllable since the cause of those problems came from

its workforce. While the major problem in the candy line business is about not having a

differentiation with other candies, in result, consumers already set price in mind about it

and it became a constraint on the margins of the product line.

I. Statement of the Problem

 As the CFTC engaged with different businesses, they faced difficulties on what

business line should be prioritized. Also, its current workforce caused a lot of problems

to the business like non-remittance of revenues, non-payment of consigned goods,

and pilferage. Lastly, high-perceived price of its products is considered as the major

problem for CFTC especially in its candy line.

II. Framework of Analysis

The group used the following tools in analyzing the problem:

SWOT Analysis – this tool is used to know what are the internal and external factors

that the business needs to consider or disregard.

Porter’s Five Forces Model – this framework seeks to explain the competitive

pressures within an industry

III. Situational Analysis

SWOT Analysis

Strengths

Having a well experienced in the area of research and product development, the

founder can contribute ideas that will help to maintain their business and having a

knowledge in monitoring the trends about food technology, he can formulate new snacks

and beverages that would be a key for their growth. Also, CFTC was involve in different

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product lines and services, and there had been a spin-off between these diversified

products and services to produce components of their products that led to cost reduction.

Weaknesses

CFTC candy product line, Wake Up! Extreme candy did not produce much sales

due to set prices of consumers on the product. Also, even if the candy constitute

differentiation with other candies, it did not capture the consumers to demand its products

since there were issues about prices and fatigue. The company also lacks in advertising

its products since its only way was by social media. Advertising in local television may

have a big impact to the popularity of its product. CFTC were also undetermined in its

mission and vision since it caters different type of business but there was no certain path

and goal. Also, they lack of internal control because their staffs do not conform to the core

values that cause a significant losses to the business.

Opportunities

Exportation of products can contribute a large impact to the demand and sales of

its products which can help to make them well-known in the market. Extending their

distribution channels to push their products into the market and to capture more

consumers.

Threats

The consumers could not differentiate Wake Up! Extreme candy from other

candies since they have set prices in minds, that is why they can easily switch to other

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brands making it hard for them to reach the target demand from the market and be able

to be well-known in the industry.

Porter’s Five Forces Model

Industry Rivalry – HIGH

The competition for the diverse products of CFTC was heavy especially in the

candy line, Wake Up! Extreme. This fierce competition was rapidly increasing due to the

importation of products by other major players. There were tons of candies manufactured,

more for imports and less for exports. However, these numbers did not represent a

downturn for the market growth.

Bargaining power of suppliers – LOW

Since the raw materials needed in making the energy candy is very common in the

market, CFTC does not have any problem regarding the supplies of its raw materials.

Bargaining power of buyer – LOW

Since CFTC have a high-perceived price point of its products, it does not cope up

with the setting of prices with the consumers. Even if the energy candy was different from

other candies in the market, the demand of the consumers was the thing that should be

first considered. CFTC have a unique product but it should conform to the preference of

the consumers.

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Threat of potential entrants – LOW

The barriers to entry into the candy industry for the potential entrants were low as

the need for machineries and equipment is a requirement to process the raw material into

candies and it requires huge amount of capital. Access to major distribution channels like

groceries and supermarkets and other distribution channels like sari-sari stores and food

stalls were a challenge for the new entrants since they have to capture these channels to

push their product into the market.

Threat of potential substitute – HIGH

Though Wake Up! Extreme candy is considered as different from other candies in

the market due to its caffeine content, potential substitute for the it is still high because its

price is the same with the majority of hard candies in the market. In result, consumers

can easily switch to other brands when prices are increased.

IV. Alternative Courses of Action

Seek Opportunities

Attending or speaking in a conference could be a great opportunity for them to be

recognized and also an opportunity for them to have an access with other distributors.

Penetration Strategy

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 By offering lower prices of candies, though it may tend to result into a loss from the

start, they will eventually benefit from it in the long run if they penetrate the market by

raising the prices.

V. Recommendation

Engage in Social Media

Since most of the consumers are active on social media, with this strategy they

could encourage them to buy their products with the use of social media for

advertisement. They could also have a partnership with social media influencers in order

to promote their products.

Cash-on-Delivery Policy

In order to avoid uncollectible accounts, they should continue their cash-on-

delivery policy.

Invest on the workforce

Since one of the problems of CFTC in within its workforce, they should invest on

training their employees or hiring best possible employees to avoid any losses to the

company.

Enhance the Mission and Vision

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 Mission and vision is very important to all business, it gives them direction and

motivation what the business should do in order to achieve its goals. CFTC should first

establish the best mission and vision for them to be in the right path in achieving its goals.

VI. External Sourcing

Business Policy and Strategy by A.B. Llano (2018)