The Ice Cream Analysis Dippin Dots

The Ice Cream Analysis Dippin Dots Despite having operation in the global market, the company was not much affected politically. There exists federal regulations on the frozen desserts, which include a minimum of 10% of butterfat, and the ice cream must weigh a minimum of 4.5 pounds to the gallon. This is to ensure manufacturers do not produce sub standard qualities of ice cream ECONOMIC FACTORS Their core U.S.A market is a strong economy with a very high GDP, which has not been, affected much over the years of varying economic conditions. The growth of the Asian market in terms of wealth is also a factor, which may have led to growth in demand. SOCIOCULTURAL FACTORS The most important element is the demography of the market for ice cream. The ice cream was initially targeting the kids and teenagers (aged 8-18 years) even though the company foresees a growing demand in future from older people. The trend to consume more healthy treats made firms develop ice cream with less fat but similar taste and texture. TECHNOLOGICAL FACTORS The company has its foundation from the technology of micro encapsulation. Flash freezing the ice cream using liquid nitrogen at -325 degrees and collecting the bead/dot to produce a special flavour, texture and shape was a remarkable idea by the microbiologist. This idea was to avoid crystals of air and ice in the dessert. It was named theicecream of the future due to its uniqueness whose formula was continuously perfected by Jones. Over time technology also led to the development of various ways of making different types of frozen desserts like Novelties, Frozen custard, Sherbets, Frozen yoghurt and others. LEGAL FACTORS Patenting the idea of flash freezing was a factor that made the company keep away strong competition through copying. Franchising and making contracts was also necessary as it maintained a legal relationship of distribution and royalty payment. 2) PORTERS FIVE FORCES MODEL POTENTIAL ENTRANTS The Ice cream market had been segmented and dominated by 2 major companies Nestle and Unilever. This was a challenge to keep away the Giants from eating into the flash frozen ice cream segment. Some of the competitors with similar business were Breyers, Dreyers/ Edy Grand, Blue bell and others. Dippins with its experience and knowledge kept away the competitors through differentiating their ice cream and creating a vast network of distribution through franchising. SUBSTITUTES Other types of frozen foods like the novelties and the ice cream/sherbet brands are a substitute for the flash frozen ice cream due to the similar satisfaction they give to the customer. Because of the segmented market, the product could be differentiated which led to the survival and growth of dippins. BUYERS The buyer power of this industry is high due to the large number of ice cream producers and varieties. There are many substitutes for this product as mentioned hence the customer is likely to move if not satisfied with quality and taste. SUPPLIERS The power of suppliers is high since most have quality products with loyal customers and new entrants pose a threat due to the way they copy the idea. Many new producers were former employees or franchise distributors of dippins who knew the strategy of operations. COMPETITIVE RIVALY Due to globalisation, dippins face stiff competition from U.S companies like Breyers and other European companies. This makes it necessary to differentiate the product since other companies can copy the ideas. The cost of operation also plays a role since it requires huge capital investments in technology. ANALYSIS OF INTERNAL ENVIRONMENT VALUE CHAIN The firms operations are global and hence its primary factors affecting the internal environment are operations management, logistics, sales and marketing. The firm operates from U.S.A with over 448 franchises in 2006. These franchises distribute the product while paying royalties and some fees to dippins. The firm experiences logistical problems since transporting the product at sub zero temperatures require special equipment, containers and freezers. Mc Donalds rolled out a marketing campaign with dippins in 2002 spending $1.2 million in San Francisco to boost sales of both companies. The firm got recognition and value by appearing on top ranks in magazines like Entrepreneur. This also gave them a chance to be present in celebrity shows. The secondary factors, which affected the internal environment, include the procurement policies, technology and infrastructure. Jones initially hired his friends to manage the company with family members and later got professional staff. They faced a huge problem of financing and getting a suitable location making them move to locations. The technology they were using was being copied by rivals hence Jones continuously refined and perfected it. The firm later had a good infrastructure with sitting capacity and transport network was well developed. Value system of Dippins was efficient enough to reach the market and retail outlets but lacked the ability to enable the ice cream reach homes. They later introduced brands which could be consumed at home. VRIO ANALYISIS. The firms products have had a loyal customer base for a long time due to the quality. The value is due to the quality and the taste the frozen ice cream gives to its customers. The distribution also has had an impact in the value of firm since having a higher number of franchises gives them a greater market share. Despite having a high relative price they have had increased sales over the years. Celebrity appeal has also increased their value. The idea in a whole of having ice cream without crystals of air and ice is the biggest asset of the firm. The Dippin dots ice cream is a rare product to find because of the originality and the quality it gives. There are firms who produce similar products but cannot match the quality of dippins due to the unique technology they use. The firm has a many franchises (448) which gives them a competitive advantage. The rarity is due to the experience and knowledge they have. The firms operations and the product strategy are imitable in a way since the operations are global but the quality cannot be matched to that of dippins. Some former franchisers came up with similar products as dippin The organisation has adequate capacity and resources which can allow the firm to achieve more competitive advantage and get the most benefits through product diversification, increasing franchises, increasing the support to retail outlets. BALANCED SCORECARD. The strategies the company used to achieve the goals have been wise as their growth was rapid enabling them to scoop many awards and get highlighted in magazines for their good performance. The strategies they used were customer satisfaction in terms of quality and taste. Continuous improvement in the operations of making the ice cream. Their financial objectives can be getting the highest return on capital and maximum profits. They provided value for the price customer paid for the ice cream. Their price was high but relatively competitive. Their customers were differentiated in terms of the physical nature of the ice cream. Their internal objectives were quality of service and maintaining the quality during distribution and effective management of logistics. Their growth was substantial in terms of sales and number of franchises. They were given recognition through getting awards because of the fast growth and quality standards of ice cream and packaging by the international dairy association. They are innovative since they have launched a product, which can be now consumed at home.