Tootise Roll Case internal and external analysis distinct competencies
Business Strategy Tootsie Roll Case: Question 1: Internal and External Analysis: Internal Analysis: It seems that Tootsie Roll Industries has many strengths, which kept the company in a very favorable place in its original niche markets (50% of the taffy and lollipop market segment of the candy industry). However, the company has inherent weaknesses which were starting to appear when the case was written (in 1995). ... The Tootsie Roll name itself is widely recognized, and Tootsie Roll is a very strong brand in the USA. ... • Favorable access to distribution networks: the case points out that one of the company’s strengths is that despite its size, it managed to get good shelves spaces in most retail and discount stores. It was able to capitalize on that to get good shelve space for the other products it sells, using Tootsie Roll’s distribution network. ... It can even adapt pretty well to external forces as the company can change the formula of its candies according to fluctuations in commodity prices in order to keep costs as low as possible. ... Also, TRI is competing against industrial giants (Mars, Nestlé…) and even if this would count for an external threat, the threat comes from an internal weakness. ... As the case points out numerous times, Tootsie Roll is an old brand and newer generations might well start to see it that way. ... • Packaging: Tootsie Roll products can be tampered with and seasonal sales (Halloween) have dropped because of that. ... The internal analysis is rather positive and shows that TRI is a very efficient company. ... Its core competencies are keeping production costs low, keeping strong brand names, adapting to supplying changes … Tootsie Roll is such a strong brand that it can be a distinct competency. Another distinct competency could be manufacturing, because TRI is able to have extensively customized machinery built to increase production efficiency. ... External Analysis: _Porter’s fives forces: 1) Risk of Entry: the risk of entry is relatively low for TRI’s markets, not for the industry. ... Tootsie Roll is the Coca Cola of its niche market, and most stores would probably not consider not selling Tootsie Rolls. ... _Industry Life Cycle: the case points out that the market has not reached maturity yet, because the average growth for a decade was 6% per year and because of demographic trends (new baby boom). ... It seems that TRI is not really taking advantage of this growth (although its sales have grown constantly since the case was written) because it does not use enough advertising. ... Question 2: SWOT Analysis Strengths: Brand Names Financials Production Efficiency 50% market share Cost Advantage Autonomous production Good distribution networks Effective vertical integration Opportunities Growing International Markets US market still growing Weaknesses Small fish in a big sea Highly competitive market No real long term strategy Not enough advertising Who will replace the Gordons? ... Question 3: Distinct Competencies TRI has two distinct competencies: its brand names portfolio and very effective production capabilities.