Ice Fili Case
Background (as of 2001)
Russian ice cream market has become increasingly challenging with relatively stagnant growth and aggravating competition. Due to these challenges, Ice Fili, the top ice cream producer in Russia, has experienced 40% decrease in the production volume and 50% decrease in its market share for past 5 years. However, Ice Fili has been capitalizing neither the market potentials nor its competencies. Russian ice cream market is highly profitable with over twice the profit margins than the comparable markets, such as confectionary. Over 20% growths in beer and soft drinks, which are substitutes of ice cream, indicate similar growth potentials for the ice cream industry. Despite the deterioration of some financial indicators, Ice Fili has successfully leveraged its assets to maintain its ROA around 15% and its top market share for the past five years. It is also positioned in the most lucrative value chain within the industry. Thus, the key question for Ice Fili is how to leverage its core competencies to achieve profitable growth within the ice cream industry despite the stagnant demand and growing competition.
Strategic Options
Ice Fili can think of its growth strategy in two dimensions: domestic expansion and global expansion. The ice cream consumption level in Russia is merely one seventh of those in the global markets. This may be an indicator of the high potential demands in the domestic market or an indicator of relative attractiveness of the global markets. In the domestic market, Ice Fili is challenged to increase the market demand while withstanding the competitors. In the global markets, Ice Fili may have some advantages, such as manufacturing competencies. However, it is challenged to develop new products suited to Western consumers and also to build its brand as well as distribution networks. Considering these opportunities and challenges, Ice Fili can deploy four distinct growth strategies;
Market Share Reclaim (Grow without
Russian ice cream market has become increasingly challenging with relatively stagnant growth and aggravating competition. Due to these challenges, Ice Fili, the top ice cream producer in Russia, has experienced 40% decrease in the production volume and 50% decrease in its market share for past 5 years. However, Ice Fili has been capitalizing neither the market potentials nor its competencies. Russian ice cream market is highly profitable with over twice the profit margins than the comparable markets, such as confectionary. Over 20% growths in beer and soft drinks, which are substitutes of ice cream, indicate similar growth potentials for the ice cream industry. Despite the deterioration of some financial indicators, Ice Fili has successfully leveraged its assets to maintain its ROA around 15% and its top market share for the past five years. It is also positioned in the most lucrative value chain within the industry. Thus, the key question for Ice Fili is how to leverage its core competencies to achieve profitable growth within the ice cream industry despite the stagnant demand and growing competition.
Strategic Options
Ice Fili can think of its growth strategy in two dimensions: domestic expansion and global expansion. The ice cream consumption level in Russia is merely one seventh of those in the global markets. This may be an indicator of the high potential demands in the domestic market or an indicator of relative attractiveness of the global markets. In the domestic market, Ice Fili is challenged to increase the market demand while withstanding the competitors. In the global markets, Ice Fili may have some advantages, such as manufacturing competencies. However, it is challenged to develop new products suited to Western consumers and also to build its brand as well as distribution networks. Considering these opportunities and challenges, Ice Fili can deploy four distinct growth strategies;
Market Share Reclaim (Grow without