Case Analysis #2: Case 7 - FreshDirect: How Fresh Is It?

Instructions: Complete this case analysis after reading the case study for this week -- Case 7: FreshDirect: Is It Fresh? located in our textbook. Please notify the instructor if any of your team members did not contribute to this assignment.

Textbook: Dess, G., McNamara, G., Eisner, A., & Lee, S. (2021). Strategic Management: Text and Cases. 10^th edition. New York, NY: McGraw Hill.

Assignment goal: In lecture, we have now discussed the external and internal environment. This assignment is intended for you to apply the internal analyses, and to reflect on both the external and internal environments. Our goal is to answer: What internal factors might affect FreshDirects strategy? To answer this question, you will need to conduct an in-depth internal analysis!

1. How is FreshDirect doing business? Briefly describe the company (it might help to reflect on the business model) and identify the industry this company competes in. In your answer, please touch on production/distribution, delivery protocols, and any major policies that help someone unfamiliar with this company understand the basic premise of how this company operates. (Keep your answer to 1-2 paragraphs). (5 points)

1. Sometimes it can be difficult to partial out the difference between a vision and mission. In general, what is the organizational goal for their business? What promise do they offer to their customers? (4 points)

1. Is FreshDirect fulfilling their promise to their customers? Identify and describe three major issues the company is contending with (there are more than three!). (6 points)

1. Who is the ideal FreshDirect customer? (3 points)

1. How does FreshDirect plan to compete in a growingly competitive market? In your teams opinion, will FreshDirect be able to continue and compete in this market? (3 points)

6.) Analyze the Value Chain along the following dimensions (write ~2 sentences per factor). When you discuss each activity, it is your responsibility to try and identify how FreshDirect creates value for each activity. (14 points).

Primary Activities

Here is an example: Inbound logistics (distribution facilities, material control systems, warehouse layouts) Answer: FreshDirect buys directly from growers and producers, they do not use intermediaries. This decision reduces costs for FreshDirect (eliminating the middle-man), while ensuring they offer a high-quality product. Operations (efficient workflow design, quality control systems) Answer: Outbound logistics (consolidation of goods, efficient scheduling, finished goods processing) Answer: Marketing and Sales (motivated salespeople, innovative advertising and promotion, effective pricing, proper ID of customer segments and distribution channels) Answer: Service (ability to solicit customer feedback and respond) Answer:

Secondary Activities

Procurement (win-win relationships with suppliers, reduced dependence on single supplier) Answer: This is one is complicated, so I will answer it. Regardless of food category, there is industry-wide high product costs, which will clearly impact profitability and product pricing. FreshDirect is not able to capture much value through procurement. Technology development (state of the art hardware and software, innovative culture and qualified personnel) Answer: Human resource management (effective recruitment, incentive and retention mechanisms) Answer: General Administration (effective planning systems to establish goals and strategies, access to capital, effective top management communication, relationships with diverse stakeholders) Answer : (hint: the case discusses leadership decisions)

7.) Reflecting on your Value Chain analysis, do you have any recommendations for FreshDirect to become more efficient, effective, or to otherwise enhance their overall value proposition? (5 points) 8.) Applying the resource-based view of the firm, Barney developed the VRIO analysis. To conduct this analysis, you should first identify key tangible and intangible assets. I imagine this is a bit abstract until you see an example. For this case, I will do it for you. (10 points) Tangible Resources:

Financial: Private investors and a training grant from the State of New York

Physical: Up-to-date production and distribution facilities

Technological: Production and distribution facilities designed specifically for the product to maintain product safety and freshness

Organizational: Other than the initial energy and drive required to start and grow the company to this level, there were no obvious value-creating organization resources

Intangible Resources:

Human: Expert staffing in production areas, company drivers allowed control of distribution

Innovation and creativity: The founders background and innovative ability

Reputation: Online hard to tell, but founder Joe Fedeles success with the brick-and-mortar Fairway Uptown supermarket in Harlem had to have some carrying power

*Reflect on the concepts of value, rareness, inimitability/non-substitutability, and how well resources are organized among the core competencies listed above. Take the VRIO analytical framework to defend whether you believe FreshDirect achieves a competitive disadvantage, competitive parity, temporary competitive advantage, unused competitive advantage, or a sustained competitive advantage.