Example 2
Example 2
Example 2
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5.Annexures 26
5.1. Appendix 1 - Cargills SWOT Analysis 26-27
5.2. Appendix 2 - PESTEL Analysis for Cargills 28
5.3. Appendix 3 - Porter’s value chain model 29
5.4. Appendix 4 - Cargills retail operations 29
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1.Introduction to Cargill’s Food City Pvt Ltd
Cargills Food City is Sri Lanka’s largest modern retailer. Its pioneer
venture into modern trade in 1983 with the opening of its inaugural
store at Colombo’s staples street that is still considered as the chains
premier location. Today the Cargills is the largest country’s retail
super marketer and spread throughout the island as ‘Cargills Food
City’ supermarkets, ‘Cargills Food City Express’ minimarts, and
the 'Cargills Food Hall' gourmet store in three formats.Cargills Food City has 411 outlets covering
all districts of Sri Lanka as of 31 March 2020(Report, 2019-2020).The company has maintained
3725 new recruits and 10522 permanent employees as at March 2020.Currently consisting
approximately 600 employees with more than 15 years of service (Report,2019 - 2020).
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1.2. Size of Organisation
The retail sector of Cargills has contributed 94.66Mn which is 83% of total revenue of their group.
Loyal / Gourmet customers Looking for good quality goods, ready to pay a premium
gourmet price.Look for a particular brand name
Smart Shoppers Looking for the best value of the commodity offer.
Above the budget shoppers, successful in evaluating value.
Budget shopper Restricted to budget fixing, low price check and discount prices
Looking for primary shopping needs and expecting best value for
Basic Shoppers the pay.
Table 02: Cargills Key Customer Segment
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1.5. Competitor Analysis
At present in Sri Lankan context there is a strong presence of major competitors who play and
there is a high barrier to the survival in the market. According to above competitor break down
analysis,Cargills food city stated as number one player in the market whilst recognition vise Keells
as 2nd and Sathosa, Arpico, Laugfs,Glomark and Spars ect.
CARGILLS
Rivalry of the
Industry
HIGH
6
Forces Description
At present Cargills has more than 558 suppliers who supply more
than 20000 products. The strategy of Cargills is to acquire the most
significant business entities that have the negotiating power over
their company. Vegetables, fruits, spices, rice and lot of other items
directly harvested from rural famers with the idea of "Farm to shelf”.
Due to intermediaries and production cost. This is useful for both
Bargaining power of supplier customers and direct suppliers.
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Advantages Disadvantages
- Quick access to the stores when paying - Can misuse if the card gets stolen
for online orders
- Special loyalty card related offers and - Only limited customer base in Colombo city
discounts limits and suburb areas can be reached
- Easily can enhance consumers interest - Limited access to each part of the country’s
and loyalty since this makes their lives outlets(Rural areas would not be interest on
easy and convenient such advance payment methods)
Table 05: Advantages & Disadvantages of Digital Loyalty card payment method
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Advantages Disadvantages
Best value addition to the shopping Quality and tasty always considered as
customer number one factor
Gives enjoyable, stress free shopping Space issues arise when customer request
experience (All in one store) dine -in facility
10
Idea - 2 - Hygiene factors always matters
11
3. Business proposal Implementation plan for the Digital Loyalty card payment
system
Change management is the discipline that guides how we prepare, equip and support individuals
to successfully adopt change in order to drive organizational success and outcomes. It involves
creating a customized plan for ensuring impacted employees receive the awareness, leadership,
coaching, and while taking new business idea as an innovation process of enhancing loyalty card
system on digital platform as a one-time payment method which could change the system of
Cargills. At initial stage it could be uneasy and challenging. Cargills is now at the forefront of
expansion and popularizing the concept of modern retail, spelling out opportunity to shop in
comfortable and clean surrounding with friendly service. The supermarket industry is projected to
expand at the pace of 25% and plan to attract and serve more and more customers through an
expansion programme (Today, 2018).
Driving successful individual transitions should be the central focus of the activities in
organizational change management (Prosci, n.d).
"Change is the only constant."- Heraclitus, Greek philosopher (tools, n.d)
Through this systematic approach Cargills expect to enhance their quality of service towards
strengthen customers’ loyalty. To be execute effective change management process company need
to consider adjustments will impact to its current processes. Therefore, Cargills mainly focusing
on developing user friendly convenient, secure, cost effective and eco-friendly digital loyalty
system to retain and attract its loyalty customers.Change management also encourages future
company growth by allowing it to remain dynamic in the marketplace (Rouse, 2019).
12
3.1.1 The Business Model Canvas: Cargills Digital Loyalty Card
Value Propositions
Key Partner Key Activities
Mass Market
-In person at point of sale
-Sub urban
-Direct phone call assistance
-Rural
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Key Resources Channels
Revenue Streams
Cost Structure
-Loyalty card Fee - Revenue from issuing
-Cost of card printing loyalty card (E.g: Rs.350/- per card)
-Electricity
14
3.2 Business Development Plan
With present situation of COVID -19 pandemic, Cargills stepping up to create strategies to sustain
entire business with new levels of growth and profitability. Business development plan is a process
that is used to identify, nature and new business opportunities to drive growth and profitability
(FREDERIKSEN, 2020).
15
At a point of marketing funnel shows how customers make their buying decision and how company
force their target market through strategies towards closing the sale
In order to create about digital loyalty card payment method Cargills has to create “Awareness”
within existing loyalty card members, then “Leads” generate using social media, flyers, point of
sale displays and awareness programmes. Prospects level, follow up with SMS alerts, emails etc.
Finally, successful subscription with new Digital Loyalty card at last level of the funnel and close
the sale.
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3.3 Change Management
3.3.1. Kotter’s Eight Step Model
John Kotter’s 8 step change model is a popular framework for change, and is used across many
industries. It was introduced “Leading Change” which was based on years of research (Athuraliya,
n.d).A change in the process of Cargills loyalty card in digital payment platform considerably
making an effect to an organisation.Therefore using Kotter’s eight step model assists to understand
the correct path of process that should follow to introduce this new business concept.
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Steps Description
18
In order to enjoy the victory early in the process, within a short
frame like 3 months,6 months & one-year company has to have
quick wins. Keeping targets for short term supports to evaluate
the sales success, number of cards been promoted, impact to the
revenue ect.Also small targets is achivable,with little room for
Step 6 : Generate short term wins failure.
Table 08:
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3.4. Financial Plan
A financial plan is essentially an overview of ongoing business financials and projections for
growth estimates. This plan shows present monetary condition as a snapshot of the health of the
business and the prediction of protection plans. It informs short and long-term financial goals and
gives a starting point for developing a strategy (Betenson, n.d).Following table will briefly explain
the financial plan for next three years for Digital Loyal Card implementation.
Gross Profit
186,897,324 333,199,679 416,929,542
Table 09:
At present Cargills has 1,177,081 number of Loyalty card customers in the system, therefore
considering current loyalty customer base, 1st year target customer based will be 800,000 from
existing loyalty members. Hence revenue generates as 1st year 800,000,2nd year 400,000,3rd year
200,000 cards and membership fee is Rs350 per year. While enhancing Digital card loyalty
members’ loyalty card renewal fee also adding to year 2 & 3 as additional income. Based on that
revenue been calculated accordingly. Cost of sales consist with cost of cards sold, sales force cost
and card distribution cost.
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Assuming administration expenses will be increased gradually by 2.5% in 2nd year and 3rd year
by 4%. Year 01 marketing expenses will be stated as Rs. 52,489,780, but after acquiring
considerable market share in 1st year, it will have reduced by 1% in 2nd year and again increase
by 6.5% in 3rd year in order to maintain market share and awareness. Operational expenses are
gradually increased by 3% year on year(YOY)with the advancement of the processes.
21
Primary Activities Value Chain
Inbound Logistics
- IT system support company, hosting company,
card printing, swipe machine and maintenance
system
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3.6. Conclusion
This case study report has critically evaluated the two business ideas. After analyzing the factors,
the selected business idea considered as an important and useful during the current COVID-19
pandemic situation. Introducing “Digital Loyalty Card” payment method become more interest
towards ecommerce based sales platform feature, as many retailers and customers’ awareness
towards cashless, essay payment process when shopping. Therefore, this new business idea
concept enables to enhance Cargills brand loyalty as well as market share together. Further many
people willing to enjoy hassle free shopping experience since everything become digital and
adhering to the new normal in payments in digital. It is an interesting time for the cards industry
and for issuers there is a similar narrative to that of legacy banks and digital transformation. There
have been several triggers of innovation in recent years, very much accelerated by the current
pandemic and the different demands and transitions that have been introduced to the retail industry
in various ways, as well as to the consumer base (Finextra, 2020).
As this payment card is a user friendly payment method along with the features for quick access
for online orders and especially better solution to maintain social distance when there will be any
pandemic situation. Convenience and less time consuming enables to attract awareness more.
Therefore, digital loyalty card would significantly be an opportunity to ensure that innovation
within Cargills group.
23
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Advantage. Retrieved from Business to you: https://www.business-to-you.com/value-
chain/
Athuraliya, A. (n.d). What is Kotter’s 8 Step Change Model . Retrieved from Creately:
https://creately.com/blog/diagrams/kotters-8-step-change-model/
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https://articles.bplans.com/the-key-elements-of-the-financial-plan/
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in-card-and-digital-payments
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Approach. Retrieved from Hinge: https://hingemarketing.com/blog/story/business-
development-strategy-a-high-growth-approach
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Technological-Era-Retail-Industry-Goes-Contactless-in-COVID-Times
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(Ceylon) PLC .
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Strengths Weaknesses
- Organized and clear directions by - Poor leadership at outlets and operation levels
Senior management
- Strong logistics facilities - Cargills has - Lack of emphasis on other retail formats (Big
one of the country’s largest city, Express, Book city)
warehouses.
- More than 5000 brands of items - Drop in level and quality of service standards
(Housekeeping, speed, accuracy, courtesy)
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Opportunities Threats
- Growing with modern trade through - Global economic downturn due to COVID-19
Urbanization and Modernization pandemic and high inflation rate inside the
country.
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Political - Fluctuating VAT
- Government controls on goods transportation
(Eg: -High transportation cost to deliver vegetables from central
province)
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: Porter's Value Chain Model
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