Royal Greenland Analysis: Supply Chain Management Essay Example

to be on the top of the seafood market. Analysis of company’s internal factors One of the most used models in analysing company internally is model developed by M. Porter and is named value chain.

The main idea is that value chain creates value and by that brings profit to the company. The activities can be divided into two groups: primary and support ones. About all the activities I will talk more widely further on. Inbound logistics The main raw material for the company is seafood. Royal Greenland raw materials are supplied both by their fishing fleet in Greenland and sourced from the global seafood market. Raw material situation in Greenland is quite uncertain because of the increased competition in halibut and prawns as a result- increased price on some of the raw materials.

Operations

I will now describe the primary activities of operations (also mentioned as production) of Royal Greenland Company. It has great production facilities which include a number of trawlers and smaller fishing boats which supply seafood from the Arctic sea. Company has 7 factories and 9 processing facilities which are based in in Poland, Denmark, Germany, Canada and Greenland. Each production type is specialized in various tasks in order to add value at other locations. Outbound logistics As we are dealing with the frozen goods, it is very important to keep temperature at the constant plank when transporting or storing goods.

That’s why Royal Greenland has responsible approach to it. Company has its own Quality Control team which check all the way from production through storage to the customer. Marketing and sales As a part of marketing

promotion Royal Greenland has a policy of sponsoring activities. Most of them take place in Greenland but some sponsorship is given to activities outside Greenland. Usually sponsorships have a close relation to Greenland or seafood industry. A good way to promote the company for a low cost- to create a profile in the biggest social networks such as facebook. com, youtube. com, twitter. com etc.

Royal Greenland present in Facebook and YouTube as well. The numbers of followers are too small to take this kind of promotion seriously, but something is better than nothing.

Service

Royal Greenland is a big company but it still concerned about every single claim. Even though company has just ordinary customer service, they came up with a special procedure which called external reclamation. The claim is seriously validate and the action/solution is planned accordingly. Infrastructure Royal Greenland by 2010 year has 1934 employees, what makes it a middle size company. Company’s headquarter is based in Denmark, Nuuk.

Royal Greenland has developing new facilities in different countries which mean a merge of different cultures. Human Resources Royal Greenland always tries to make sure that their employees are motivated, qualified and that working conditions are safe and healthy which is really important it this kind of business. It is stated in the company’s web page, that they device a risk assessment report in order to reduce the risk of injury at the working place. It is also said that company’s HR focus on developing each individual manager with an intention to develop the individual employee.

Royal Greenland has a mechanistic organization because of the certain and stable

environment. Seafood producer comparing for example with designers doesn’t have to make quick decisions in order to succeed.

Technological Development

General processes take places in the main factories mentioned before. Skilled and experienced employees are playing important role in a product making and development. The facilities are equipped with cutting edge technologies and are based in the immediate vicinity of the fisheries and company’s key markets, what makes it more convenient to deliver goods.

Procurement

As Royal Greenland is in the food industry it demands paying more attention to raw materials. I will assume that company has time proved suppliers and the materials (seafood) are healthy and chemical free. After analysing all the activities I will sum up the information. Royal Greenland has great facilities for producing goods, which are located near potential markets. Company’s extensive distribution network, ensures that products are delivered on time in the perfect condition and in the right place. People, working at the company are high motivated and result-oriented.

They take responsibility of what they are doing and are concerned about the nature, which is extremely important nowadays. I consider that Royal Greenland has all the chances and opportunities to become a world-wide known brand in seafood industry. Analysis of demand In this section I am going to figure out in which market Royal Greenland products are placed in. The company serves hospitals, retailers, restaurants, canteens, hotels and institutions as well as food service and retail industry. That’s why I can say, that Royal Greenland is on the B2B market.

All these area belong to business sector. Moreover B2B market can be divided into

3 different markets: the industrial, the intermediate and market with public on non-profit organizations (B2G). I consider that Royal Greenland is more likely on the intermediate market. Here products are bought, but not processed, just resold. Retailers which Royal Greenland has distribute the goods to hospitals
etailerscanteens etc. (who are first tier customers) and further on their seafood will be consumed by the end customers or second tier customers.

Analysis of Competition

One of the most recognized and famous models dealing with competition is Michael Porter’s “5 forces”. This model helps us to clarify the level of the competition existing in the given sector. I am going to go through all the 5 steps in order to get a picture of rivalry.

Customers’ Bargaining Power

I consider that in case of Royal Greenland the number of customers for the industry is small (because company is on the B2B market) and every customer is responsible for a significant proportion of the turnover. That’s why customers’ bargaining power has a quite big influence on the company.

Suppliers’ Bargaining Power

It is goes the same way with the suppliers. Suppliers have different degrees of bargaining power depending on the business area and market. Royal Greenland is dealing with seafood and the nature of this recourse is easily replaceable that’s why it makes suppliers’ bargaining power low.

Potential Competitors (New Entrants)

I believe that the area Royal Greenland specializes in is not a specific one so there are a lot of competitors existing. The question is how hard it is for a new company to enter seafood market? The existing direct competition

company face from Kyokuyo Co. Peter Pan Seafoods and Pan Fish, which is quite a challenge.

Substitute Products

Potential competitors are not just companies producing the same product but substitute products are also a threat to the industry and its companies. As a substitution of Royal Greenland seafood products I can mention direct ones which are poultry and red meat. These kinds of products can easily substitute one another because these products appeal to the same needs and sometimes concerned identical by the customers. Rivalry in the Industry The industry Royal Greenland in is a competitive one.

There are a lot of companies who provide customers with seafood therefore rivalry in this area can be considered as high. Talking about type of competition I figured out that in seafood industry there is perfect competition. Perfect competition describes markets, where no players are large enough to have the market power and to set the price.

Taking Royal Greenland Company

I can say that there is no potential direct competitors because it provides customers with high quality products and it is a well-known brand. After going through all the 5 steps I can sum up all the information.

Royal Greenland is a company with a strong brand and quality products which gives them an opportunity to be better in customers’ eyes. The rivalry in this area is middle. The thing company should be aware of is a substitution power which could be a problem in the future. Analysis of distribution In the analysis of distribution I am going to use supply chain. Supply chain is a system of organizations, people, technology,

activities, information and resources involved in moving a product or service from supplier to customer. Regarding the supply chain management at Royal Greenland I will go through 4 steps listed below: 2nd tier supplier:

There is no accurate information about 2nd tier supplier, it is only mentioned that raw materials are supplied both by their fishing fleet in Greenland and sourced from the global seafood market. I can only assume that raw materials are from the seafood markets which have low-cost products. 1st tier supplier: Regarding the information given on the web page, the 1st tier supplier for Royal Greenland is factories based in 5 countries and their production types are specialized in various tasks: producing, processing, packaging and so on. After the manufacturing process the production is delivered to the desired market.

Focal Company

The focal company is Royal Greenland Company itself with CEO-Mikael Thinghuus and 1933 employees. 1st tier customer: As there is no precise information about 1st tier customer I can broadly say that Royal Greenland serves hospitals, retailers, restaurants, canteens, hotels and institutions as well as food service and retail industry. 2nd tier customer: The end customer for Royal Greenland Company will be people who are reachable from the 1st tier customer such as hotel visitors, hospital patients, restaurant clients and ordinary customers making purchases at the supermarkets.

Royal Greenland orders products based on the end customer demand (this is information flow). Later on orders are sent to the producer (1st tier supplier) and onwards he orders raw materials from 2nd tier supplier. When the goods are ready they are delivered to Royal Greenland who distribute them

to 1st tier customer, who again sell them to the 2nd tier customer (this is flow of materials). It is extremely important to have a good collaboration between channels to have a good and working supply chain. If the coordination does not work than Royal Greenland may have delivery problems, lack of products or other problems.

That’s why supply chain management is very important part of running a business. Analysis of environmental factors In order to get an overview of the country (in our case Russia) I will use one of the common models used to analyse the macro environment- PEST model. Model focuses on four elements: Political, Economic, Socio-demographical and Technological factors. To penetrate new market needed knowledge about understanding culture, rules, regulations etc. about the country the company is going for.

Political

According to the Constitution of Russia the country is a federation and semi-presidential republic, where the President is the head of state and the Prime Minister is the head of government. Russia plays significant role in maintaining international peace and security. For example, the county participates in the Quartet on the Middle East (foursome of nations involved in mediating the peace process in the Israeli-Palestinian conflict) and also Russia is a member of the G8 industrialized nations. Also, county maintains strong and positive relations with other BRIC countries (Brazil, Russia, India and China).

These countries are all deemed to be at the similar stage of a new advanced economic development. This could be a great opportunity for Royal Greenland to go for Russian market as it is experiencing a new stage of development. Talking about legislative power

I would like to mention that in our case I assume Royal Greenland already has an agreement. I made this assumption because of the fact, that Royal Greenland has constructed a prawn packing plant in Moscow, what means that company is pretty much aware about rules and regulations.

I consider that the thing that Royal Greenland should log into is CISG which stands for convention of international sales of goods act. The main idea is “the adoption of uniform rules which govern contracts for the international sale of goods and take into account the different social, economic and legal systems would contribute to the removal of legal barriers in international trade and promote the development of international trade”. CISG is crucial when it goes to international sales, that’s why Royal Greenland should be aware of it.

Economy

Russia has undergone significant changes since the Soviet Union collapsed, moving from globally-isolated economy to a more market based and globally-integrated economy. Russia has a market economy with enormous natural resources, particularly oil, gas and wood. Nowadays, Russia is the world leading producers of oil; the second-largest producer of natural gas, Russia holds the words largest natural gas reserves. And also Russia is the third- largest exporter of both steel and primary aluminium. Oil, natural gas, metals, and timber account for more than 80% of Russian exports abroad.

In year 2008, when the economic crisis started to grow, Russia has not been as seriously affected by the global financial crisis compared to Europe, largely because of the integration of short-term macroeconomics policies that helped the economy survive. In 2011 Russia’s gross domestic product grew

by 4. 2 per cent. The forecast for GDP to grow is 3. 7 per cent in 2012. Russia is considered as emerging market and that’s why I consider that Royal Greenland should be there on time in order to get their piece of cake.

Royal Greenland is already having some connection in seafood area so it is worth focusing on it more deeply to get a better profit.

Social

The crucial part for Royal Greenland Company can be differences between the cultures. Later on I am going to apply Geert Hofstede cultural dimension theory in order to get a better understanding of Russian culture. First of all let’s have a look on power distance rate. Russia, scoring 93, is among the 10% of the most power distant societies in the world.

This is underlined by the fact that the largest country in the world is extremely centralized; just imagine that 80% of all financial potential is concentrates in Moscow. Now we are moving to Individualism. With score of 39 points Russia can be considered as collectivist society. If Russians plan to go somewhere out with their friends the will say “We with friends” instead of “I and my friends”. I will continue with masculinity. At a score of 36 Russia is non-masculinity country. A low score means that the dominant values in Russia are caring of others and quality of life.

The last point will be uncertainty avoidance, which is high. Scoring 95 Russians feel very much threatened by ambiguous situations, as well as they have established one of the most complex bureaucracies in the world. Also the thing

Royal Greenland should take into consideration is the fact that Russia is Multi-active culture. It means that Russian will not be interested in schedules, will always mix his/her personal life with business. These people are unpredictable and you never know what to expect from them, extrimely talkative, imatient and want to do things their own way.

Also Russia is a corrupted country and lots of deals are made with some extra cash in order to make the thing work. All the facts listed above are extremely imotraint in doing business and Royal Greenland should be aware of them.

Technology

If we talk about Russia, you will never say that it is a high-teck counrty. Why is that? My assomption will be that Russians are more focused on other areas of development. In the 19th and 20th cenruty the country produced a large number of brillian scientists, making imortant contributins into such areas as mathematics, computing, chemistry, pysics and so on.

The thing is, that Russa has pure minds who are one of the best in areas such as electrical engineering, shipbuilding, weapony, nuclear technology and space technology. For Royal Geenland olny one thing might be interesting- shipment. As I mentioned before russians are good at shipbuilding what gives an guarantee that the goods will be delivered in a perfect condition and there is no dubt that ship will not sink somewhere on the half way.

SWOT

After all the external and internal analysis done I will summarise the data using SWOT model.

Strengths

• Company culture - As it is mentioned on Royal Greenland web site, they
  

take care about every single employee. They are motivated and work-oriented people who are proud of what they are doing. At Royal Greenland they have efficient stategy of SCR: they have created new working places for greenlandic people, are concerned about climate change and so fourth.

Weakness

• Presence - The company is global, but it has presence only in Europe, Noth America, Scandinavian countries, China and Indonesia.
• Promotion - Due to the lack of actionsin the promoting area through the Internet and it’s other social networks, Royal Greenland is not well- known among upper-middle customers. For a brand, it is always important to be known widely.

Opportunity

• Health and wellness trend - Nowadays people all around the world are more and more interested in healthy lifestyle. By healthy lifestyles is meant not just doing sports but also to consume the right food. Russia is not an exception. Health and wellness trend continues to grow in popularity in Russia. Royal Greenland products, which are seafood, could be concerned as healthy because fish contains a lot of vitamins and nutrients.
• High economic growth - The county Royal Greenland want to focus on is Russia. Russia is considered as emerging market with a huge potential. Last few years the GDP has significantly
  

grown up, what gives opportunity for Royal Greenland to launch a bigger production in order to get a profit.

Threats

• To grow in frozen processed food - The possibility of economic downturn in the Eurozone, which threatens the Russian economy as the EU is the Russia’s largest trading partner
• Pollution and global warming - Our society becoming more and more concerned about environment. This point can be crucial for Royal Greenland in long-term orientation.
• Cheaper products - The products of Royal Greenland have are for middle customers. By that I meant that it is not a budget option. Taking into consideration fact, that Russia in an emerging market which usually demands cheaper products than Royal Greenland have today.

Conclusions

After all the analyses the problem area that was given can be answered. The problem area was: “To evaluate the attractiveness of the market and make suggestions for a growth strategy for Royal Greenland on the Russian market. ” Russian market has a huge potential as it is an emerging one. The economic indicators have a good forecast for future. There are possibilities to manufacture goods. Entry barriers are not high, which is a plus. The forecasts for frozen products are positive.

Russian market is not a new one for Royal Greenland so it is worth considering expanding at this potential market. The supply

chain of the company might have some changes. Russia is a country with facilities for fishing. I can assume that it will be way cheaper to find a supplier in the Russia than to bring materials from Greenland or Europe. Moreover it would be a great investment to build more plants in the area of big towns in order to ease the production and to reduce the logistic costs. The annual reports show us that Royal Greenland has enough resources to do that.

The biggest problem Royal Greenland may face is corruption. In Russia you need to put some extra money in pockets just to make things work. Company should be aware of this fact and try to follow the legislation. So the conclusion to my problem area is that the Russian market is attractive and promising to Royal Greenland. The grow strategy Naleraq 2013 is already have met objectives and continue positive development. Also, entering Russian market Royal Greenland should keep in mind cultural differences and find a good and reasonable solution how to pass the corruption.