Business Strategy and Policy - Report on Associated Brands Industries Limited

OVERVIEW OF FIRM

Associated Brand Industries Limited (ABIL), established in 1974 is a leading manufacturer and distributor of snack foods, chocolate confectionery, biscuits and breakfast cereals in the Caribbean. Although we were not provided with the company's mission and vision statement, the aim of ABIL is to maximize profit while providing quality products to satisfy their markets. The Company is headed by Arthur Lok Jack, one of the foremost businessmen in Trinidad and Tobago and the Caribbean.

The Company's manufacturing facilities are all located in Trinidad with distribution outlets in Jamaica, Barbados and St. Lucia. In total, ABIL currently distributes its products to over 20 countries worldwide, reaching as far as Taiwan and Ireland. ABIL's operations are divided along four divisions, Charles Candy, Sunshine Snacks, Consolidated Biscuits and Universal Foods.

* CHOCOLATES - Charles Candy Division

The Charles Candy operation began in 1974 producing a wide range of chocolate products. Production then expanded to include plain as well as chocolate covered wafers.

* SNACKS - Sunshine Snacks Division

This division was formed in 1977 and quite like the chocolate division has expanded its product range over the years. Presently, Sunshine Snacks manufactures the widest range of products of any snack manufacturer in the region

* BISCUITS - Consolidated Biscuits Division

The Consolidated Biscuits Division was formed in 1987 as a joint venture between ABIL and United Biscuits of England, the largest biscuit manufacturer in Europe. In 1996, ABIL acquired the minority shareholding from United Biscuits, becoming the sole owner of the Division.

* CEREALS - Universal Foods Limited

Universal Foods Limited (UFL) began operations in August 1986 and is a subsidiary of the Associated Brands Investments Limited Group of companies. It is a world-class manufacturer of Ready To Eat (RTE) breakfast cereals and is the only RTE cereal manufacturer in the region.

STRATEGY

ABIL's products have become household names in the Caribbean. They have no specific target market as they cater to everyone, all age groups, with a variety of prices and product sizes.

ABIL focuses on being cost conscious and as a result their strategy is based on being the lowest cost producer in the region. This position helps them to maintain flexible pricing, which is a great advantage in terms of dealing with competitors from both regional and extra regional sources. Another aspect that ABIL is passionate about is Quality Control. ABIL has developed stringent quality control procedures, for raw materials, semi - processed goods and finished goods, which are adhered to by all divisions

Management believes that the ability of the company to produce high quality products which are cost effective, are two core competencies that allows them to gain a substantial competitive advantage over their competitors.

Another Strategy that helps ABIL to achieve a great competitive advantage is their investment in modern plant and equipment coupled with continuous investment in overseas technology training. Recently ABIL installed a new top loader robot system at their San Juan plant to package a wide range of products in several size formats. With this new system, ABIL was able to receive cost reductions, which contributes to their goal of being the lowest cost producer.

Additionally, ABIL's marketing strategy is aimed at achieving growth via market penetration, market expansion and product diversification. In order to grow its market and customer base even further, the Company is currently developing a number of new market initiatives aimed at further enhancing its position throughout the Latin American region. Over the years, the company has invested heavily in advertising as a way to solidify and increase consumer loyalty.

INDUSTRY TRENDS

The manufacturing (food) industry, like other industries has been affected by the worldwide recession. As a result of this firms have had to fight more aggressively to earn money that would in previous times come more easily from customers. This means that there would be an increasingly competitive nature in the industry. This also means that firms would have had to focus more on reducing costs in order to maximize profits. ABIL has always gone the route of being cost effective therefore they would not have been so hurt by this factor.

Another trend is the growing demand for safe, healthy and nutritious food. Consumers are generally better informed of different ingredients in foods as well as their short term and long term effects. This means that consumers are now 'pickier' as to what they buy and consume. As a result, producers have to pay careful attention to foods that they produce and try to sell.

Another trend is the intensification of legal and regulatory framework for firms. This is because a greater emphasis is being placed on Food Safety. There are standards and rules which address food safety such as the HACCP (EU) and Codex Alimentarius (FAO/WHO).

Another important trend is with respect to the technological advances that are being adopted in the Food and Beverage Industry, from production to inventory management. For example, the "TTI - I Toploader" which is an advanced packaging system.

PESTLE ANALYSIS

Like any other business in any industry, there are many factors in the macro environment that would affect the decisions made by managers. Having a clear idea increases the chance of creating and maintaining a successful business strategy. These macro environmental factors are categorized into a term called PESTLE which stands for; Political, Environmental, Social, Technological, Legal, Economical factors.

* POLITCAL

There were changes in to the political administration of Trinidad and Tobago on 24/06/2011. In terms of corporate taxes, businesses were not affected as corporate taxes still stand at a statutory rate of 25.0%. ABIL is assisted by the government with Research and development facilities as a means to stimulate and support investment in new and advanced technology and innovation. This allows ABIL to acquire specialized technology to increase quality production and improve profitability. Assistance also includes equipment and machinery lease financing. The cost of being a production oriented organization is very high. Government's intervention in these two areas aids ABIL in their strategy of competing as the lowest cost producer.