Strategic management opportunities at Sumol & Compal

Sumol & Compal

A Detailed Analysis of Strategic Management Opportunities

Company Overview

Value Creation Model

Research and Development

Production

Marketing and Sales

Service

Resource-Based View of the Firm

Firm Specific Advantage

Company Overview

The begginnings of the Grupo Sumol date back to 1945 when the company was founded to produce soft drinks (sumol + compal, N.d.). The sumol + compal company later merged and have crafted a unique niche geographically as well as with their product mix. The company owns many domestic brands of soft drinks, fruit and vegetable juices, and alcoholic beverages as well as act as a distributor for strategic partnerships in the Portuguese market. The company is managed by an experienced management team that has expanded customer loyalty in the domestic market (sumol + compal, N.d.). Despite having an innovative product mix, the industry is competitive and there can be many distribution challenges. Furthermore, the target market is limited to the European domestic market as well as the African market.

From a strategic management perspective, the company faces many challenges from different risks that could manifest in the short-term. For example, the Portuguese economic environment has been turbulent at best and the economic conditions required a EURO bailout that introduced many austerity measures (Bugge & Goncalves, 2015). Because of the economic conditions in Europe, Sumol + Compal could see new regulatory requirements and increases in their tax liabilities relative. Therefore, it is necessary for the organization to continually look at both internal and external factors when trying to maintain their strategic objectives. This analysis will use three different strategic management models to attempt to identify opportunities for future growth.

Value Creation Model

The four primary activities for value creation are research and development (R&D), production, marketing and sales, and service.

Production

There are also production opportunities that would allow Sumol + Compal to create value. The organization could look to form more strategic partnerships for distribution with foreign brands. This would allow Sumol + Compal to leverage their existing infrastructure to bring beverages that have consumer demand in the markets they operate without having to invest heavily in research and development.

Marketing and Sales

Marketing and sales can nearly always serve as a source of value creation. One example could be with marketing products like NATUREXT. The company could build consumer value by educating the consumer about the health consequences that are related to the beverages they choose and their lifestyle in general.

Service

There are limited opportunities to services the products that Sumol + Compal produces because they are disposable goods. Therefore, this is not an ideal source of value creation for the consumer or the organization in this instance.

Resource-Based View of the Firm

The resource-based view of the firm can be applied to this organization in their European market and African market independently. The European market is comparatively developed and the opportunities that lie here are smaller than what can be found in Africa. As Africa's economy continues to develop there will be more of the population with levels of disposable income that are necessary to be a consumer of Sumol + Compal's products. While the European market is mature and offers little in the way of potential increases in market size, the African market can be expected to steadily increase its consumer base. Thus, Sumol + Compal should look to Africa for future growth opportunities.

Firm Specific Advantage

The company has developed many brands that they could seek to leverage in new markets to create a firm specific advantage. Just as Sumol + Compal have developed strategic partnerships for distribution in the European market, the organization could look to form strategic partnerships in new markets all over the globe. For example, "Um Bongo" is a product that Sumol + Compal have developed that is targeted at kids and their parents. The product consists of fruit juice that can be considered healthy. The company could use their firm specific advantages that they have created in developing the brand to explore opportunities to find new markets and new niches in which to introduce this brand through a strategic distribution partnership.

Sumol + Compal also have a firm specific advantage in Africa as they have already developed two factories and could continue to expand their infrastructure in this market. The beverage market in South Africa has been described as:

"Soft drinks are neither a necessity nor a luxury product. Its price is generally sufficiently cheap so that it can be bought by even the lowest income earners… quality of tap water in Africa is generally so bad that people will opt to buy soft drinks, including bottled water, where they can afford to do so. As a result, the non-alcoholic beverages industry in Africa has access to a potentially massive market. As incomes increase and consumers get increasingly health conscious, the demand for carbonates is likely to fall, while that of juices and bottled water will tend to rise (KPMG, N.d.)."

Thus, Africa represents one of the strongest markets in the world relative to its growth potential for the beverage industry. Sumol + Compal could make the best uses of its resources by building its infrastructure and growing its market share in this geographic region.