Integrative case: Daregal

Extract

[...] On the financial level: they need to have a better financial management: indeed, their financial situation is not good now (they have a lot of debts). Being vertically integrated allows Daregal to have full control of their products quality. However, the herbs cultivation represents high costs for the company so they should outsource this activity: it is going to allow them to lower their prices, by procuring themselves on the fresh products [...]

[...] the sector of the kitchen equipments is growing: more and more households tend to be equipped with kitchen devices, for instance: widespread use of fridges and freezers ; decrease of the purchasing power, increase of the price of raw materials Socio-cultural environment: Social: the jobs in production fields are seasonal, and in 2006, Daregal Equatorial stopped its production in order to focus on the US market, thus closing the plant in ToSo and firing its employees in Togo which has a bad effect on the employment the staff is continuously trained to incorporate the use of new technologies and new hygiene standards; Cultural: lifestyles change: more and more people are concerned with what they eat: they want to eat healthy quality food with a lot of flavors (in contrary to the GMO); there is a lot of culinary diversity, people spend less and less time to shop for aliments so they expect flavored and easy to prepare food Technological environment: there are patents for dehydration and deep- freezing processes, those processes constantly evolve Environmental environment: the packages need to be environment-friendly in order to meet the commitments towards sustainable development; there is also the problem of the pesticides used to treat the plants and the pollution that they create Legal environment: governments have strict standards concerning the product safety, quality and hygiene (ISO standards) Porter's 5 forces The intensity of the competition can be measured through 5 forces and we can evaluate those forces by grading them on a scale from 0 to 5 being the most intense): The competitors: there are not many competitors: Daregal used to have two competitors (Gyma and Unifrost-Dujardin) but since Daregal acquired the deep-freezing activity from Gyma, Unifrost is the only real competitor. [...]

[...] Their relationships with their clients combined with a strong notoriety and brand image will allow Daregal to lower the threat of dereferencing from the supermarkets shelves. Their brand image has gotten stronger since they acquired Gyma, a subsidiary from Ducros, which is a well-know brand by the general public. Conclusion: Opportunities / threats Opportunities Threats The demand on this market is The market tend to enter into its growing maturity phase so the competition Entry barriers (ISO standards) tends to be tougher Development of kitchen devices The hygiene standards are more and Nutrition lifestyles have changed: more constraining, heavy people are more and more concerned Daregal is very dependant towards with what they eat (high demand for the large scale retailers, which biological, natural and healthy have high bargaining power: they food ) can lower the prices , remove the Opportunities towards the food products from the shelves, create industry: especially towards their own aromatic herbs that they companies who produce ready-made should sell for a lower price meals Huge industrial and marketing investments are needed Seasonality The sector offers good perspectives but the real threat is the large scale retailers. [...]

[...] To avoid this danger, Daregal needs to focus on keeping their products referenced at the large scale retailers: for example, by developing long-term partnerships with them which is also going to widen their distribution networks. On the international and domestic level: since the market of aromatic herbs seems to have reached maturity in France and that some international markets are growing, Daregal needs to increase its sales abroad. However, since the main production sites are located in France and that the costs of exports are high they shouldn't neglect the French market (they need to keep investing in R&D and keep innovating) and they should also consider having fields and production sites on growing market ( like in the USA). [...]

[...] The quality offered: Daregal made the strategic choice to offer its customers a high quality instead of having a low quality with a lower price. Such a quality can be offered through the use of new technologies and processes; they have a good control of their production and their costs. What's more, they succeeded in overcoming the problem of seasonality that occurs with fresh products: indeed, their products are available all year long thanks to the internalization of their production (the stocks costs are lowered). [...]