Victory supermarkets expansion strategy harvard business case analysis, strategic, financial, marketing

••••••••••••••••••••••••••••••••••Victory SupermarketExpansion Strategy

TEAM 33Aydan MasmalizadehAzad BagirovShahlar BayramovFarid Akberov

Overview

Market Environment

Marketing Strategy

Financial Analysis

Risk and Mitigation

Conclusion

1

2

3

4

5

6

OVERVIEW

Retail / Grocery

Competitive Market

Funding Requirement

Obj

ectiv

es

Focus on quality & service

Increase Market Share

Keep the Chain Viable

Overview Environment Marketing Financial Risk Conclusion

Kingston

Twin city

Marlborough

Lancaster St

The OlderConventionalMarket Squares

Expand Rapidly

Derry Hingham

Decision Tree

Expand Slowly

DECISSION MATRIX

 Key factors Expansion Rapidly New Market Square

Competition

Up-front cost

Differentiation

Size of market

Sustainability

Positioning

Total 1 7

DERRY VS HINGHAM

RECOMMENDATION

1998-1999 2000-2005 2006-2008

New geographies, developing profitability

Increase efficiency, develop performance

Grow faster, acquire business

Penetrate & Develop ExpandRestructure

COMPETITORS

0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.50

50

100

150

200

250

Size: 1991 Revenues in bill

# of

sto

res

Demand

Market Strategy

Funding

Distribution

Demand Market Strategy FundingDistribution

under 14 15-24 25-34 35-44 45-54 55-64 65+0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

Demand Market Strategy FundingDistribution

under 14 15-24 25-34 35-44 45-54 55-64 65+0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

Demand FundingDistributionMarket Strategy

3 WAVES

Strategy

• Specialize • Differentiate• Personalizes

Restructure

• Quality-driven• Go niche • Grow faster

Penetrate • Extend scope• Greenfield• Expand

synergies

Expand

1998

2001

2005

Demand Market Strategy FundingDistribution

Depend on Supervalu

• Flexible• Meet our

needs• Greater

efficiency

After 5 years

• Increase sales volume

• Expand markets

Integrated firm

• Own wholesalers & retail

• Decrease cost

Demand Market Strategy FundingDistribution

Wholesaler

Supplier

Supplier

Supplier Retail Store

Retail Store

Retail Store

Demand Market Strategy Distribution Funding

Capital MarketPartnership

$ 39 M

$ 100 M+

$ 139 M

Victory

Supervalu

28%

72%

Total

Vote authority

Fleet financing

5 Years

Bank Loan

FINANCIAL ANALYSIS

Derry Hingham Derry & Hingham$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,484,049

$49,484

$894,121

NPV

Derry Hingham Derry & Hingham0%

5%

10%

15%

20%

25% 21.00%

3.3%

14.00%

IRR

FINANCIAL ANALYSIS

Derry Hingham Derry & Hingham0

0.5

1

1.5

2

2.5

3

3.5

4

2.5

3.73.5

PPFINANCIAL ANALYSIS

SENSITIVITY ANALYSIS

SCENARIO ANALYSIS

optimistic base pessimistic

-5000000

-4000000

-3000000

-2000000

-1000000

0

1000000

2000000

3000000

by changing sales 10%

Choosing Derry, reject Hingham

Increase sales volume

Cost Control, Consumer Loyalty

RISK PYRAMID

Economic downturn

Short-term Financing

Competition

CONCLUSION

1998-1999

Set up just one store Derry

2000-2005

Increase market share

-variety of products and services-USP-POSITIONING

2006-2008

Continue to expand

What if expansion fails?

ALTERNATIVE PLAN

Continuous CustomersAlready Trained StaffLower Cost of Switching Higher

$117 <$177

$ 25 <

Feed family real foodFrom our family to Yours

Most Cleanest

Friendly Personalized Service

Socially Responsible

Exciting Shopping

Strategic Points of Difference

Thanks For Attention