How did you select the metrics for the value curve

Value Curve Analysis

this assignment challenges you to examine entrepreneurial opportunities by creating a new value curve.

As discussed in this week's readings and lectures, a value curve plots multiple metrics that are important for your target customers (i.e. price, ease of use, speed, accuracy) with the low-high measures for competitors and yourself. By examining the existing and expected competitive offerings, you can analyze which metrics to modify in order to create a new value curve.

To develop your value curve for this assignment:

Select 4 to 8 key metrics that matter to your target customers in their buying decisions. Use your prior Market Analysis, Industry Analysis, and Competitive Analysis, plus new resources.
Identify 3 to 5 competitors (or categories of competitors) to analyze. Use your prior Market Analysis, Industry Analysis, and Competitive Analysis, plus new resources.
Plot these metrics and competitors on the value curve, to include your ratings of the metrics per competitor. Do not plot your new venture, yet. PowerPoint or Excel is fine for this graph.
Author 1 to 2 paragraphs describing your thoughts (with supporting data and research references) on:
the target market that you selected; and
why you selected the metrics for the value curve.
5. Author 1 to 2 paragraphs for each of these questions:

What existing factors can you eliminate?
Where can you reduce factors and not reduce value?
Which factors can you raise above competitors?
What new factors can you create?
6. Lastly, use your analysis from item 5 above to plot your new venture on the value curve diagram started in item 3 above.

Submit items 1-6 as a single document (Adobe pdf format or MS Word format with the graph inserted).

Running head: FOOD INDUSTRY ANALYSIS 1

Food Industry Analysis Tyran Hunt

University of Maryland October 11, 2020

FOOD INDUSTRY ANALYSIS 2

Food Industry Analysis It is indisputable that everyone worldwide has food as among the basic needs needed for human survival. The food industry has been instrumental in ensuring that the world does not run short of food leading to a more productive and healthier life. Food industries cover a series of industrial activities aiming to process, convert, prepare, preserve, and packaging food for the general population (Banaeian et al., 2018). My essential driver towards entering into the food industry is the unending demand for food. No one can ever forgo food for other products and commodities, but other products and commodities can be left for one to buy food. Therefore, to join the industry and start a company, an industry analysis must be done to determine how competitive the new business will be.

Industry under Analysis For this assignment, I will be analyzing the food industry to get insights into how the industry works and its competitiveness. The SIC code and title for my industry are 2090 and Miscellaneous Food Preparations & Kindred Products consecutively (U.S SECURITIES AND EXCHANGE COMMISSION, n.d.). Since when I was a child, my interest in starting a food company has been manifested because everyone deserves a chance to have equal access to affordable and safe food. Therefore, as I plan to venture into this food industry, mu essential goal is to make food accessible and affordable to the general population. There will be a production of different kinds of food that cannot be easily categorized under the company. Impact of Knowledge Conditions on the Industry It is important to note that the food industry is among the most competitive industries. As a result, a company in the same industry must have diverse strategies for engaging its customers by producing different products and commodities. Despite being competitive, the industry can welcome new firms, including mine. This is so because the production process for diverse kinds of foods is not too complex compared to other industries such as aerospace industries. Additionally, new knowledge creation is needed to keep the food industry running (Bacon, Williams & Davies, 2019). New knowledge needed helps the food industry develop products based on customer demands and needs. For example, some customers might demand new manufacturing methods to enhance the quality of the end products. Therefore, having a company in a fast-growing and ever dynamic industry, new knowledge of engaging the customers must be incorporated. Furthermore, another knowledge condition that affects the performance of the food industry is knowledge codification. Knowledge codification entails the writing down of knowledge on the development of different types of products. Notably, in some industries, knowledge on the development of a specific product is written in different documents, including but not limited to books, magazines, periodicals, and journals. The food industry is one that demands a lot of knowledge on the development of different types of products as well as services. For example, concerning the development of a food commodity such as bread, a company must have the formula that guides it to remain competitive in developing customer satisfying products. Codification of knowledge enhances new companies' performance as entrepreneurs can easily access the codified information (Bacon, Williams & Davies, 2019). Furthermore, the food industry is one that demands innovations to keep running. Therefore, the knowledge condition concerning innovation will significantly affect my new company's

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competitiveness. Thus, to make it highly competitive, I must adopt new knowledge concerning innovation.

Demand Conditions in Food Industry The home demand market is of great importance to an industry's performance. Where an industry performs better at a local location, there are chances to expand its influence across other territories. Worth noting, food is demanded globally; therefore, any company that ventures and remains customer-responsive in the industry get a chance to command the local, regional, and global markets (Donthu & Gustafsson, 2020). Demand conditions refer to the nature and size of the local demand for a specific company's products. Demand forecast has always played a significant role in strengthening other business processes. Where an industry expects demand to shoot, it is forced to restructure most of its processes to develop an increased number of products to meet the demand. Therefore, the demand for a company's products is essential for further developing other products. Therefore, the demand conditions for my industry is high because of existing firms. However, to have a considerable share of the market, customer engagement seems to be inevitable. The current coronavirus pandemic came with both challenges and opportunities for different firms. Due to the current pandemic, most firms in the food industry have been forced to develop platforms where customers can order goods online without necessarily having to visit the stores (Donthu & Gustafsson, 2020). This is essential to curb the spread of the deadly virus as it spreads through human contact, particularly through droplets. This presents an opportunity for my company to reach most customers with the utmost ease. Having a close look at how the current companies operating in the industry have adopted online delivery, there is an exciting gap as most of them have not fully adopted the service. Therefore, to succeed in commanding the market, my company must adopt a competent online platform that allows customers to connect with the company.

Lifecycle Stage in the Food Industry Different industries go through different stages from start to collapse of different firms in it. Therefore, when starting a firm in a specific industry, one must consider assessing the lifecycle stage currently affecting the industry of choice. There are five lifecycle stages for different industries. For example, there is a startup stage, growth stage, stakeout stage, maturity stage, and decline. If a person wishes to start a company in a specific industry, he/she must find a purpose to check the lifecycle stage the industry has attained. Notably, some industries have long been developed; therefore, entry into such industries demands a lot of care as firms have devised diverse methods of remaining competitive from production methods, distribution of products, and services to methods of engaging customers to understand their needs. The food industry has been in existence for a long time, meaning the industry has realized many developments. Most companies in the food industry have reached the maturity stage. In the maturity stage, most companies in an industry have established themselves and have reached the saturation point (Bakarich, Hossain & Weintrop, 2019). Such companies, therefore, attempt to moderate the intensity of the competition both for self-preservation and maintenance of profitability. Such companies do this by adopting strategies and methods aiming at preventing new entries into the industry. In this case, they develop strategies to remain dominant and prevent rivalry in the

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industry. More importantly, such industries do so through the use of strategies concerned with brand identification. For example, some companies, such as Domino's Pizza, have managed to maintain their profits through brand identification in the food industries. The company can maintain most of its customers due to enhanced customer loyalty. Therefore, to enter such an industry, I must develop new products and communicate the product to the target customers. Food Industry Capital Intensity To venture and start a food industry company, one does not necessarily need to have a huge sum of finances. However, the company's type and size that one wishes to start and run demands the amount of capital needed to achieve similar purposes. Generally, the food industry is not capital intensive than other industries, such as automotive and oil manufacturing. However, having aimed at starting a big food company, one must consider investing heavily. As with any business, the amount of capital needed to start and run the business depends on the scale of operations (Lee & Shin, 2018). I will require a small amount of capital for my company as it will have a limited business scale. However, as the company realizes considerable growth, I will be forced to adopt an outward strategy that leads to the company's growth, which in turn gives me a better chance to command a wider market. Additionally, the production of diverse kinds of products significantly depends on the target market. For example, where the market demands foods such as pizza, I must invest heavily in developing such products. For that reason, I will be forced to adopt different machines used to manufacture such food products. Additionally, my essential focus will also be directed towards hiring staff competent in the processing of the product. Notably, the quality of products and services produced by a specific company determines whether it succeeds in commanding the market or not. Thus, as the industry is not capital intensive, I will direct my efforts to hire competent staff to help achieve the desired competitiveness. Additionally, much of the capital will be used to purchase all the necessary materials to manufacture its products. Food Industry Advertising Intensity Advertising and promotion are important for a company to command the market. Advertisement helps a company develop brand loyalty. In turn, brand loyalty helps a company achieve a competitive advantage because of repetitive purchases and the introduction of new customers by those existing (Foroudi et al., 2018). Advertisement is, therefore, of great importance to any company regardless of the industry under which it operates. Additionally, advertisements help a new firm sell its name to the existing customers. Without advertisement, customers will have no knowledge about the company's existence and the products it sells. It is important to note that the food industry is among the most competitive industries; therefore, new firms must advertise their arrivals and new offerings. Today, several food industry companies have directed much of their focus to advertise by using social media. Social medial allows the company to engage and communicate with different kinds of target customers. For example, Domino's Pizza, as a well- established company in the food industry, advertises its products through diverse social media platforms such as Facebook. Additionally, it allows customers to make their orders through such social media platforms. Therefore, my entry into the industry demands a lot of advertisements because of several reasons. The main reason for the advertisement is to advertise my entry into the industry. If a new industry does not attempt to advertise and make its customers aware of the entry, it becomes challenging to command the market. In addition to increasing customer awareness, advertising

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helps a company engage with its customers making them make choices concerning the types of products they need to purchase (Venkatesan, 2017). Therefore, it is clear that to start any company in any industry, advertisement plays a critical role in determining its success. For this reason, to increase customer awareness in the most cost-effective way, I will employ the use of diverse strategies in the advertisement. For example, I will use social media platforms such as Facebook, Twitter, and Instagram, among many others.

Food Industry Concentration The food industry is among the most concentrated industries. Therefore, companies venturing into the food industry must develop diverse methods of commanding the market. In a highly concentrated industry, new entries face many challenges because existing firms use strategies that keep them away to reduce competition. Due to high food industry concentration, top-level organizations have adopted abusive power to maintain their competitiveness (Cusumano, Gawer & Yoffie, 2019). Therefore, it has allowed top organizations to reap a lot of profits assisted by paying lower prices to farmers and workers who produce the food produced. Additionally, such firms have directed much of their profit, gaining strategies to hurting customers through the employment of exorbitant prices. As a result, to join such industries, new firms must devise strategies to achieve competitiveness. Notably, if such strategies are not developed, entry into the industry becomes challenging as well established firms seek to remain commanding the market. More importantly, some strategies could be used to gain competitiveness in the food industry. These are cost leadership, differentiation, and focus. Concerning cost leadership, a firm gains a competitive advantage by lowering the cost of producing a specific commodity (Institute for Manufacturing [IFM], n.d.). The low cost of commodity production significantly affects the product's market price, which gives a company a competitive advantage. One method to ensure cost leadership is by ensuring that there is adequate access to cost-effective raw materials. Furthermore, in differentiation, a firm gains a competitive advantage by creating unique products that attract more customers. Therefore, for my industry to achieve competitiveness in a highly concentrated market, there must be the employment of innovative individuals. As another important strategy, focus gives a company a competitive advantage by narrowing competitive scope within an industry. Focus as a strategy has two segments, which are cost focus and differentiation focus.

Average Size of Companies in the Food Industry Different companies, big, medium, and small, operating in the highly competitive food industry. There are diverse strategies used to determine the size of different forms, which helps determine the average size of firms operating in the food industry. Therefore, it is worth understanding these determinants as they help in decision making concerning entry into the industry. Capital invested by the owner determines the size of a company. If a company has limited capital invested, it will have no big chance of hiring many employees, producing the desired output, and employing desired technology ("Factors that determine the size of a business," 2015). Therefore, capital investment is one of the most important determinants of a company's success. For one to start an average food company in the U.S., the person needs to have about $275,000. However, if the building and premises cost are included, the cost can shift to about $425,000. Additionally, the number of employees employed by a given firm determines the size of the same company. In small organizations, the owners hire few employees because of the limited number of tasks needed to be done ("Factors that determine the size of a business," 2015).

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However, in large organizations, many employees are employed to assist in managing different business processes. For example, a large production company will need engineers, human resource managers, information technology experts, and relations officers, among many others. Therefore, the average company in the food industry has about business 15 employees with different tasks. Additionally, the level of technology used within an organization helps in determining its size. For example, an organization that employs standard technology means that its business processes are not too complex. However, an organization that utilizes sophisticated technologies depicts that its business processes are of great complexity. Venturing into the food industry presents one with diverse opportunities and challenges. However, the challenges must not prevent one from meeting the opportunities presented. For example, the food industry is a very competitive one. For this reason, new firms seeking to venture into the industry must devise methods of combatting strategies developed by existing companies aiming at preventing new entries. For instance, new firms must remain innovative in developing new products that, in the end, attract new customers. Additionally, it must keep the cost of production low to reduce the prices of end products leading to the attraction of new customers besides maintaining existing customers.

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Banaeian, N., Mobli, H., Fahimnia, B., Nielsen, I. E., & Omid, M. (2018). Green supplier selection using fuzzy group decision making methods: A case study from the agri-food industry. Computers & Operations Research, 89, 337-347.

Cusumano, M. A., Gawer, A., & Yoffie, D. B. (2019). The business of platforms: Strategy in the age of digital competition, innovation, and power. New York: Harper Business.

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