Smart Mart Simulation
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Set out your overall strategy for SmartMart, explaining why you elected to follow this strategy, and how each decision you made contributed to this strategy.
The strategy that I chose to address the above mentioned concerns is majorly supported by the companys missions and values. SmartMart has always delivered high Use value to its customers through its premium organic products, which constituted the major proportion of their SKUs and through its highly appreciated customer services. It is their core missions and values that differentiated them from their rivals and attracted many customers and it is rational to stick to those values and core differentiator as it has gained appreciation.
I also believe in Michael Jensens theory of value maximization and that the “The real issue is what decisions will result in least social waste and not whether one stakeholder is or should be more privileged than the other”. My strategies are not biased towards any stakeholder and focus more on profit maximization and ethical and greener ways of doing business and thereby also sticking to companys missions.
My strategies also focus on low risk initiatives as I feel that taking a big risk by investing huge amounts could literally wash the company out of the market. Hence my strategies also highlight most feasible 15% solutions that would start yielding immediate results.
For arriving at the decisions, I have used the Porters famous Five Forces analysis. Please refer to the (Appendix B) for the detailed analysis.
Scenario 1:
From the analysis, I feel that it is logical implication for SmartMart to become a Niche player and bank on the current competitive advantage that it has in the market. This also supports my strategy as there is no huge investment required and the risk of failure is too low and is a feasible 15% solution to the problem at hand. This decision is also not biased towards any stakeholder and focuses only on higher Value Creation through increased range of products and premium quality. This decision also sticks to the strategy of maintaining the current competitive edge and sustaining the core missions of the company.
Scenario 2:
It is clearly evident from the case that the Bio-Fuel market is in its very early stages and there is a huge scope for growth. Bio-Fuel is also once such product, the CEO of SmartMart is interested in due to its Value Add to the community and environment as a whole. This is one area where SmartMart could take another competitive edge over its competitors. But the supply of Bio-Fuel is the big question. According to my strategy, I decided that SmartMart should create an alliance with the leading producers of Bio-Fuels as this is a niche market and this option is the least risky and fastest way to enter the market. In case of failure, this option provides the easiest exit criteria. Though this option has some vulnerability due to lack of control, it could be managed because the suppliers would be highly willing to accept to the terms due to lack of market. This is also prone to Value Slippage as rivals might catch up with the business and it can be prevented by getting the copyrights for the product that they have developed. This option also creates Shared value among the companies while simultaneously advancing the economic and social conditions in the community.
Scenario 3:
Though my initial strategy focuses on environment and ethics, I decided not to go with Organics 2.0 concept at this stage. I feel that this would not have a great impact because customers are not very knowledgeable about the science behind organic foods and hence including labels would just increase the costs and have no effect on the buyers.
Scenario 4:
There were three options to deal with the Organics 2.0 issue.
Work with supply chains to raise the standards for forming practices to launch organics 2.0
Distribute next generation high yield, high nutrition to farmers.
Work with FDA and govt. agencies to secure label for organics 2.0
I feel the second option from the above choices best satisfies the economic and social motives of the company. It is also a feasible solution that can be implemented immediately and also creates shared value between CSA, the company and the community as whole. SmartMart also has to make sure that the growers sell to us what we require and the rest can be sold to anyone they wish. Other stores would be interested in buying the organic products and decrease the green washing and hence contribute to the society.
How did you take into account the needs and interests of shareholders and the other stakeholders of SmartMart?
According to my initial strategy, I have not showed any bias towards any stakeholder and needs of every stakeholder were considered while arriving at a decision.
Stakeholder
How value is Created?
Shareholder
Scenario 1: Low risk, feasible solution that contributes to Revenue
Scenario 2: Expanding into Niche market for Bio-Fuel to maximize profits while improving companys competitive edge. Forming an alliance was low free, low investment option
Scenario 3: Distributing seed to farmers/growers creates shared value and thus improves the value chain with the farmers / suppliers
Customers
Scenario 1: Increasing the range of Organic products and customization of stores to meet local needs while sticking to companys missions
Scenario 2: Making the Bio-Fuel immediately available to consumers, which is cheaper and better alternate to gasoline. Dealing with alliance companies to produce the Bio-Fuel invented by SmartMart to meet the trust of the consumers
Scenario 3: Increased availability of Organic 2.0 by sharing it with farmers/growers
Suppliers
Scenario 1: Concentrating on local suppliers and increased product range would in turn increase the suppliers revenue
Scenario 2: Consumers have lot of trust in SmartMart products. Their alliance with the Bio-Fuel companies would enhance their market value as well
Scenario 3: Improving the value chain with farmers/suppliers by providing them with next generation seeds to improve their businesses. (Shared Value Maximization)
Community
Ensuring