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American Chamber of Commerce MBA Case Competition 2001

American Chamber of Commerce MBA Case Competition 2001. Team Members: Anastasia Shorokhova, Anna Chistik, Michael Korotkih, Andrey Saksin, Ekaterina Kolesnikova. Current Situation. Sales are falling. 132. Sales Mln.$. 105,9. Black PR. 95,5. 84. 1996. 1997. Boiled Sausages. Hot Dogs.

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American Chamber of Commerce MBA Case Competition 2001

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  1. American Chamber of Commerce MBA Case Competition 2001 Team Members: Anastasia Shorokhova, Anna Chistik,Michael Korotkih, Andrey Saksin,Ekaterina Kolesnikova

  2. Current Situation Sales are falling 132 Sales Mln.$ 105,9 Black PR 95,5 84 1996 1997 Boiled Sausages Hot Dogs

  3. Problem Definition HOW WILL WE CREATE THE COMPANY THAT CHEAP HOT DOGS NEVER KILL?

  4. Recommended Course of Actions • Short Term Actions • Let the government be aware of fraudulent customs schemes • Put more emphasis on high and medium-end products • Public Relations campaign • Long Term Actions • Build strong and recognizable brand • Develop core competences: marketing, finance, leadership • Attract foreign investment

  5. MOST Analysis

  6. External environment analysis PEST (1) Unfavorable Taxation Tough Competition Poor Financial System Unclear Game Rules High Interest Rate Economic factors Political legal Cherkizovsky Group Corruption Lack of foreign investors Absence of Government Investment in Agriculture Black players Crime

  7. External environment analysis PEST (2) Industry-wide Outdated Equipment Crazy for Quality Discrepancy between Production & Distribution The Cherkizovsky Group Disposable Income Increase Social – buyers side Technology Underdeveloped Organization of Production Process PRSensitivity

  8. Symbols Openness to new ideas Curiosity Organization Functional structure Insufficient communication Paradigm Legal & Transparent Business Product Quality Best production technology Stories Good salary level Employee benefit package Power Based on: Babaev domination Western expertise Controls No financial control Absence of performance measurement systems Rituals & Routines Bureaucracy No clear visionof the future Cultural Web As Is

  9. Respond to changing environment Mission & Vision Communication Building Leadership & Management Expertise Internal External Tight up Financial Control Delegation of Authority & Responsibility (New Structure)

  10. Market Segmentation Analysis High-end Smoked Sausages ($7,8 per 1 kg) Deli Meats ($5,8) Low and Middle-End segments suffer most from cheap imports 132 Middle-end Summer Sausages ($4,04) Boiled Sausages ($2,95) Hot Dogs ($2,42) Sales Mln.$ 105,9 95,5 84 Low-end Boiled Sausages, Hot Dogs Pelmeni ($1,6) Raw Meats ($1,1) 1996 1997

  11. Cherkizovsky Strategy Clock High Differentiation 4 Focused differentiation Hybrid 5 3 PERCEIVED ADDED VALUE Low Price 2 6 7 1 ‘No frills’ 8 Low Low High PRICE

  12. MOST Analysis

  13. Hot Dogs Economics

  14. Do you think that hot dogs are not very serious things?

  15. Increase in imports for 0210 & 0206 codes, kg 486,200,000 Taxes at 15% rate and $0.43 declared price $ 75,000,000 Taxes at 20% rate and $1.15 declared price $ 246,000,000 LOSSES IN TAXES FOR GOVERNMENT $ 171,000,000 Savings on taxes and meat per kg $ 1.16 Production of hot dogs and sausages, kg 67,000,000 SAVINGS ON TAXES AND MEAT FOR CHERKIZOVSKY $77,720,000 Hot dogs ARE serious things!

  16. Price We Pay Values Legal & Transparent Business Product Quality $ 77 000 000

  17. Exploring Alternatives Savings $23M on taxes What should we import? Quality meat Savings $77M on taxes and meat Kill the Brand Inferior meat Yes Use black imports? Kill the company No Nothing What to do? No Take huge personal risks Actively fight Let government be aware Let government be aware Regain market share Regain market share

  18. WE WILL CREATE THE COMPANY THAT CHEAP HOT DOGS NEVER KILL !!!

  19. Recommended Course of Actions • Short Term Actions • Let the government be aware of fraudulent customs schemes • Put more emphasis on high and medium-end products • Public Relations campaign • Long Term Actions • Build strong and recognizable brand • Develop core competences: marketing, finance, leadership • Attract foreign investment

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