Driving Strategy and Performance

Driving Strategy and Performance
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Driving Strategy and Performance
Executive Summary
The report conducted an assessment of Kiwi Kitchens’ (a pet nutrition company) driving strategy and performance. It started by analyzing the critical market and industry trends that influence its strategy. The study determined a global demand for natural, premium, and sustainable pet foods, while the internal analysis revealed significant resources and capabilities to meet the same. However, the company has a limited international presence, and given its management deficiencies, the report recommended e-commerce as the primary marketing strategy to establish an international scope. Pet food e-commerce sales are expected to grow and become the main sales channel in place of traditional brick-and-mortar stores. Other strategic options included bringing in a proven senior management team to steer global expansion and devising a comprehensive and cohesive marketing strategy to facilitate global market acceptance. The strategy map revealed significant interrelations between the balanced scorecard’s financial, customer, internal, and learning & growth strategies.
Introduction
Kiwi Kitchens is a New Zealand pet nutrition company that specializes in the manufacture and distribution of dog and cat food. The company is categorized under the Pet Food Industry, which refers to companies involved in producing or marketing animal feed intended for particular pets’ consumption. Pet food manufacturers produce complete and balanced feeds based on nutrition that cater to the needs of the pets as well as the concerns of their owners. The pet food industry started in the early 1940s but mostly manufactured feeds for livestock. However, the close link between pets and their owners over the decades resulted in the development of specific sensory requirements that appealed to both parties.
At the core, manufacturers continued to ensure that pet food is nutritionally well balanced to guarantee a wholesome diet for the animal. However, they also started producing these feeds in more eye-catching shapes and packaging as well as new flavorings to satisfy the owners. Kiwi Kitchens is one of the growing numbers of pet food companies that embody the nutritional philosophy of providing pets with the ideal macronutrient ratio using pure, natural, and simple ingredients, over and above, using colorful marketing in order to appeal to both pets and “pet parents,” who are especially concerned about the health of their pets. The purpose of this report is to conduct a formative assessment of the driving strategy and performance of Kiwi Kitchens as a pet nutrition company.
Analysis
The global pet food market is classified according to animal type (dogs, cats, and other animal types), product type (wet pet food, dry pet food, treats and snacks, veterinary diets, and other products), ingredient type (plant-derived, animal-derived, cereals and cereal derivatives, and other ingredient types), distribution channel (supermarkets/hypermarkets, specialized pet shop, e-commerce, and other channels), and geography (Europe, North America, South America, Middle East, Asia-Pacific, and Africa). The world’s largest pet food markets are mostly situated in North America and Europe, although certain geographical regions also lead in pet food consumption (particularly the United States, France, the United Kingdom, Brazil, Germany, Russia, Brazil, and Japan) (Fortune Business Insights, 2021a). However, the fastest rising markets are situated in the Asia-Pacific region, although the recent Covid-19 pandemic saw an increase in pet ownership in nearly all geographic domains (particularly developing nations) as people sought companionship in pets during the lockdowns.
(Goel, 2021)
The size of the pet food industry stood at $90.13 billion in 2019 and is set to reach $127.21 billion by 2027, thereby demonstrating a compound annual growth rate of 4.60% between 2020 and 2027 (Mordor Intelligence, 2021). Various market analysts predict that the biggest impetus in the pet food industry will result from the growing demand for natural and premium products. Even as various governments in developed countries continue to stress that pet food manufacturers use natural, healthy, and safe ingredients in their products, the bigger reason for the shift towards natural and premium products stems from the growing consciousness among pet owners of the food they are feeding their pets. The rising pet adoption and increasing empathy (humanization) toward the pets have brought about the concept of personalized food products: pet owners have expanded their wellness mindset to their pets, especially in regards to the food they are feeding them. Pet owners are increasingly choosing natural and premium products over generic feeds, thereby offering a huge growth opportunity for those brands that use natural, healthy, and safe in their products.
(Imarc.group, 2022)
Coupled with this insistence on nutritious and quality pet food is that of customizing food products to address particular pet conditions such as ailments, dry skin, obesity, and others. The pet humanization trend is tied to the global rise in per capita income and has led to many pet owners identifying themselves as “pet parents.” Consumers are not only motivated to give their pets the best food available but are also capable of spending on premium, healthy, and organic food products to ensure their wellness. Another trend in the pet food industry is the increasing innovation among manufacturers to address the needs of different pet types of different age groups in a sustainable manner. Some of the industry’s biggest companies, including Nestle, Mars Inc., and J.M. Smucker, have started launching premium food products that not only address growing pets’ needs but also involve sustainable production (Fortune Business Insights, 2021b). For instance, Nestle Purina introduced pet animal food last year that sustainably uses alternative proteins. The company’s animal feeds include plant protein from millet and fava beans as well as insects.
Pet owners are calling for more transparency in food product ingredients and how they are sourced. It is not enough for pet food manufacturers to produce natural, wholesome foods. They must also sustainably source their ingredients. The growing regulation of pet food markets is tied to this development, particularly in developed markets where food products are evaluated stringently at every production stage, from sourcing ingredients to food preparation to sales to marketing. Strict commercialization regulations can be a major barrier to the industry’s growth. However, the exotic pet snacks and treats segments are expected to continue growing even as calls for more regulation of the pet food industry continue (MarketsandMarkets, 2022). The active participation of “pet parents” will drive demand for healthy snack and treat options for dogs and cats, especially the dry form food option, which offers a longer shelf-life and is more economical and convenient compared to wet food. Another development in the pet food industry is the rising use of online channels for distribution. Millennials and Generation Z continue to dominate the pet ownership demographic and deviate from supermarkets/hypermarkets to online purchasing, so the pet food market is set to go online.
(MarketsandMarkets, 2022)
Industry giants like Amazon have noticed the growing number of pet owners using the internet to search for and order pet food at the convenience of their homes and sought to fill the role. More “pet parents” are choosing to buy pet food using retail e-commerce platforms with doorstep delivery options. The growing collaboration between pet food manufacturers and retail e-commerce players is projected to expand the industry further.
An internal analysis of Kiwi Kitchens’ resources and capabilities to take advantage of the underlined industry trends reveals several sustainable competitive advantages. The VRIO strategic tool is useful in determining the value of a company’s tangible and intangible resources in terms of competitive parity. The first acronym stands for value and refers to those resources that add value to customers, over and above, the company’s ability to exploit business opportunities with the internal capability. Kiwi Kitchens is located in New Zealand, one of the most resource-rich countries for pet food companies. The country has an abundance of grass-fed red meats, superpower foods, as well as sustainable fisheries. Therefore, Kiwi Kitchens can incorporate premium, natural pet food ingredients to achieve the ideal macronutrient ratio of high protein and fat content with minimal production costs (Kiwi Kitchens, 2022a). New Zealand’s clean and pure environment provides a unique opportunity for Kiwi Kitchens to produce the world’s best pet food while growing its position among brands that are popular for using natural, healthy, and safe ingredients in their products. The company can also exploit the abundance of meat, fish, and produce from New Zealand in a manner that most competitors located in resource-constrained countries cannot. Its setting provides a competitive advantage in terms of ease of sourcing for premium ingredients in a financial, social, and environmentally friendly manner.
(Kiwi Kitchens, 2018)
The second acronym stands for rarity and refers to the scarcity of said resources or capabilities. Kiwi Kitchens enjoys a relatively hard-to-find resource since most of its competitors have to contend with rising prices of raw ingredients and the problem of sourcing for meats and fish in a sustainable manner. The pet food industry is a high-meat-based sector. One of the biggest challenges for most pet food companies is creating wholesome and balanced pet food using natural ingredients sourced in an economical and environmentally friendly manner. Recent calls for sustainability by consumers speak to a rare opportunity for Kiwi Kitchens to capitalize on New Zealand’s abundance of grass-fed red meats and large sustainable fisheries (Kiwi Kitchens, 2022). The third acronym refers to the inimitability of an organization’s resources or capability. Kiwi Kitchen prides itself in producing premium dog feed with high protein and fat content because of the abundance of unique natural resources. It is difficult for other food companies to find other natural alternatives, besides red meats and fish, which can replicate Kiwi Kitchen’s ideal macronutrient ratio (45% protein, 45% fat, 3% carbohydrate, and 7% fiber and ash) and still classify as premium pet food (Kiwi Kitchens, 2022c).
(Kiwi Kitchens, 2022b)
The abundance of livestock, as well as green lipped mussel and other fish species (Ling and Hoki) that are fished sustainably in the cool deep waters of the country, are difficult to replicate, especially for companies keen on capturing the growing natural and premium pet food segment. Lastly, the last acronym stands for organization and refers to the company’s organized management system, structures, culture, and processes to capitalize on resources and capabilities. While Kiwi Kitchens has sufficient resources to capitalize on recent industry trends, the company is relative...