Strategic Marketing Analyse for Dimes

University of Wales Institute Cardiff (UWIC)
London School of Commerce

MBA 2 - Strategic Management

MELIHA ATASEVEN
0718SBSB1009

SUBMITTED TO MERVYN SOOKUN

Table of Contents
Executive Summary…….….……….………………………………………………. 2 I. INTRODUCTION …….………………………………………………………….3
II. DIMES…………………………………………………………………………..…4 2.1 History of Dimes………………………………………………………….4 2.2 Vision and Mission of Dimes…………………………………………….6 2.2.1 Mission………………………………………………………….6 2.2.2 Vision……………………………………………………………6 2.2.3 Values…………………………………………………………...6 2.3 SWOT Analysis of Dimes………………………………………………..6 2.3.1 Strengths ……………………………………………………….7 2.3.2 Weakness ……………………………………………………….7 2.3.3 Opportunities …………………………………………………..7 2.3.4 Threats ………………………………………………………….8 2.4 Porter’s Five Forces Analysis for Dimes ……………………………….8 2.4.1 Threat of New Entrants………………………………………..8 2.4.2 Supplier Bargaining Power ………………….………………..8 2.4.3 Buyers Bargaining Power ……………………………………..9 2.4.4 Threat of Substitutes …………………………………………..9 2.4.5 Intensity of Rivalry ……………………………………………9 2.5 PEST Analysis of Dimes ………………………………………………...9 2.5.1 Political Factors………………………………………………..9 2.5.2 Economical Factors …………………………………………..10 2.5.3 Social Factors …………………………………………………10 2.5.4 Technology Factors …………………………………………..10 2.6 7S Model for Dimes……………………………………………………..11 2.6.1 Strategy ……………………………………………………….11 2.6.2 Structure ……………………………………………………...11 2.6.3 Systems ………………………………………………………..12 2.6.4 Shared Values ………………………………………………...12 2.6.5 Style …………………………………………………………...12 2.6.6 Staff …………………………………………..……………….12 2.6.7 Skills …………………………………………………………...12
III. RECOMMENDATION ………………………………………………………….13
IV. CONCLUSION …………………………………………………………………...14
V. REFERENCES …………………………………………………………………….15

Executive Summary Several description of the strategy can be defined, but very common and old definition of strategy is the firm’s route (direction) and capacity (scope) over the long-term which has to matches its resources to its changing environment, therefore; it has to meet with customer or market, and also shareholder expectations. In 1990’s strategic management appeared as a budgeting and control which was assuming that past conditions would affect the future. 1950’s instead of it long range planning which focused on the trend and 1960’s strategic planning just started to focused on business environment. And finally in 1970’s strategic management came up which has been dealing with business cycle, shareholder expectation, long term resources and change management, etc. Many of the strategic models can be examined. In this assignment Porter’s 5 Forces, McKinsey’s 7S Model, SWOT and PEST Analysis and how important of the Vision and Mission statement of a company which will be indicated case study of DIMES will be examined.

I. INTRODUCTION The world in the last twenty years, people have witnessed many important changes. The process started with the collapse of the Soviet Union, where the cold war rapprochement between the countries and left blocks. People followed the formation of a new unipolar level which was led by USA. During this period, the speed of China 's reform moves to win, therefore, the world 's most populous country has turned into one of the important actors in the global economy. At the past, common source of problem was Less Developed Countries, which are skipped a class, are now called developing countries have a greater say in economic and political platforms. People lived a period of economic liberalization which was being lead by USA and Europe. Technologies for communication has developed, while losing the meaning of borders between countries, "globalization" came into our lives. Consequently, the economic and financial integration that it has reached advanced stages, the EU countries started using the Euro for common currency. The world has been shrinking; concerns began to be common regional concern. Each event, although different in size has affected almost all countries. In the world, as geopolitical and economic shift from began to move west to east. Some Asian, Middle Eastern and South American countries ' growth rates, is expected to reach double digits. The, so, called BRIC countries of Brazil, Russia, India and China in the medium term future will be the world 's biggest economies. Go back and look at the 2008-2009 years, in the future people will remember as the year of changes in the global balance of power. Regarded as the leader of an era for the United States, Europe and Japan would lose much of its power can be seen today. Therefore, to have a voice in the market, in spite of all changes, the most important thing is deciding the next step, how the organization will behave or move.

II. DIMES 2.1. History of DIMES The company was established in 1958 in Turkey as a fruit juice factory by Mustafa Vasfi Diren who was also agricultural technician. Mustafa Vasfi Diren has been believed of the economic improvement depends on agriculture through this believe he stepped up into the business environment. “By generating increased value from Turkey’s existing agricultural resources and for the purpose of distinguishing this value to the Turkish economy, he founded Dimes” www.dimes.com.tr In 1964 Dimes has become the “first fruit juice producer in Turkey”. In 1975 Tokat fruit processing and filling unit was opened. Soon after Kemalpasa in Izmir the land purchased and enabled Dimes to open up to the world. In 1985 “Dimes renewed its production plants and a modern production plant established on 33,500 m² of land, functioning in a 16,000 m² outdoor area and a cool storage unit with a 3,000 ton storage capacity entered into service.” www.dimes.co.tr In 1990’s the use of cardboard packaging for fruit juices started. In 1994, TSE (Turkish Quality Institute) certificate was given to Dimes for all its products, which means that the authorities were ensured that Dimes’ products has been meeting the Turkey’s official quality standards. Never making any sacrifice in the quality of its products brought ISO 9002 Quality Assurance System Certificate in 1999. “Dimes has always set its goals for the progress of regional production and the progress of the Turkish economy.” www.dimes.com.tr In 1995, while the Middle Black Sea Region was struggling about milk production and industry Dimes within its investment schedules and also with the aim of preventing migration away from the area company started to produce milk (dairy products) and opened filling units at the same year. Managing the sales and marketing process more actively Dimes established the Nobel Marketing Limited Company in 1997. In 2000 Dimes built a new factory in a very short time in Kemalpasa Izmir and this brought an achievement of being in terms of factory’s technical facilities the top ten fruit juice producing plant in the world. In 2004 “the company launched the first screw-capped cardboard packaging and produced the first “Citric acid-free (E330)” fruit juice. The firm became the leader of the fruit juice and nectar market in Turkey and was awarded the ISO 14001 Environmental management and HACCP certificates and therefore proved once more that we produce according to global standards.” www.dimes.com.tr Soon after when the issue is fruit juices within a short time with its brand communication projects the company became first brand. In the same year Turkey’s first functional fruit juice and the first light juice have been produced by Dimes and soon after the company has started to export its products to 53 countries in the world. After integrating Tasliciftlik in Tokat plant into their system, they started processing fruit in that plant in 2006. “Dimes realized Turkey’s first production of pure pomegranate juice and grape juice in cardboard packaging. According to statistics announced by the Istanbul Chamber of Commerce (ISO) in August, Dimes reached 190th place in the list of 500 industrial giants, up 98 places from its position 7 years previously.” www.dimes.co.tr “According to research published in the May 2007 edition of the Capital Magazine by the Brand Finance & Brand, the Dimes brand was the most valuable brand in the soft beverages category.” www.dimes.com.tr In 2007 the range of its products increased 23 from 15 in 2006. One of the new products was quince nectar which was also unique for the country. In addition to this same drink was put under the category of functional drinks. Hence, this product was the first fruit juice which is suitable for diabetics in Turkey. In 2008 Dimes Azerbaijan Factory was built which is first foreign facility investment. “According to the Istanbul Chamber of Industry (İSO) data announced in July of 2008, Dimes rose to the 238th position in the 500 Industry Giants in Turkey listing.” www.dimes.co.tr In 2009 the company took its place the 38th position from the 80th position in Capital Magazine 's “Turkey’s Most Valuable Brands” survey. Therefore firm became the most valuable brand in Non-alcoholic Beverages Category. In 2010 new product and renewed packages of “Dimes Ciftlik Yolu” launched. Additionally, Dimes Life Peach- red Carrots Nectar which is the first fruit juice helping decreasing the cholesterol level for human being in Turkey and Europe, under the functional products group launched. In the same year Lemonade (Limonata) and Ice Tea (Buzlu Cay) under the brand name of Dimes Buzz introduced and with these products Dimes increased the number of countries which the company has been exporting 73 from 53.

2.2 Vision and Mission of Dimes 2.2.1 Mission: Dimes’ mission is “providing society with the healthiest products of the highest quality in the most efficient manner, with the principle of respecting nature and humanity, always aiming to be the leader in the agriculture and livestock-based food and service sector.” www.dimes.com.tr According to their mission statement Dimes has never met any inquiries or scandal, unlikely has been reliable, fair trade company. Therefore most of the farmers have been trying to work with Dimes Group. 2.2.2 Vision: “Becoming an international company by 2011” is the vision of the company. Also firm has pointed the way to achieve this statement; • Exporting more than 50% of the production, therefore expanding the range of countries that the firm work • Increasing firm’s market share by maintaining leaderships in domestic and the overseas markets • Encouraging consumer the drink its product, so making initially bigger market and increasing consumption per person • Meeting with customer satisfaction and be the first choice for the fruit juice • The last and the most importantly empowering its employees to carry out its vision. 2.2.3 Values: Being an honest, reliable and the successful team is the first point of the Dimes’ values. Without making any sacrifice and making highest quality of the product, being environmentally and socially conscious, sharing knowledge and experience in all step of the operation are the total values of the Dimes Group.

2.3 SWOT Analysis of Dimes In 2001 Dimes reorganized its export department and separated its export zones to eight regions: European region, The America region, The Africa region (North, West and East Africa), the Gulf and Middle East region, The Near East region, the Far east and Overseas region, The Russia-Caucasus-Central Asia region and Free Zones. 60% of fruit juice industry in Turkey has been producing by Dimes, and in eight years company increased its exportation capacity 20% and productivity 400% which is met at sales volume of 170.500 tons per year and exporting 50% of its total production aiming have a balance of domestic and foreign market and becoming a worldwide recognized international brand. 2.3.1 Strengths: The Company has been manufacturing operation in many countries such as Europe, USA. It is also largest fruit juice company in Turkey, therefore factory plant sizes are vast around the country. Working with farmers not paying additional cost or material for raw material for the fruit juice industry the firm is the cost leader in Turkey (very high Cost-Efficiency procedures). Same as the founder company’s workers are highly skilled, experienced and specialized. Comparing with the other Turkish companies Dimes has the strongest distribution channels and re-tailors. According to its monthly magazine between 2008 and 2010 products of the Dimes has been selling in the big retails such as Somerfiled, Costcutter and Sainsburry’s. 2.3.2 Weaknesses: Sales of the company depends on Turkish market. Therefore the political and economical situations effect on the company’s sales easily. Even though, the company has big influence (has big market share) in the Turkish market, Dimes does not have any influence (less market share) on other markets such as Europe, Asian and African markets. The company has potential risk of heavy investment in foreign plant. Total revenues easily effects on the foreign exchange rates. Long term investment and return from the capital takes long time and introducing (launching) new product cost big money. In foreign countries the company has been facing very big competition and still referring as an ethnic company (which is made for Turkish community who lives in the foreign countries). 2.3.3 Opportunities: Working with big retail companies bringing strong distribution channels and bigger market share in those countries (especially in Europe; such as in United Kingdom Somerfield, Sainsburry’s). Rather than manufacturing (producing) in foreign country the firm has made an agreement with local farmers and getting the cheapest raw material on time and distributing the final product over the world has been making the company cost leader. Making some promotions for school and introducing same functional products such as Dimes Life peach-red carrot for decreasing of cholesterol level company became more popular than Nestle in Turkey. Having hygiene and safety awards and certificate; company has been demonstrating that it is reliable company. The ranges of the products have been increasing significantly every year and so on.

2.3.4 Threats: Competitors of the company has been trying to increase their market share by introducing new product new technology; such as Nestle’s healthy nutrition products with renewed packages and labels, also their market share is the biggest obstacle for he company. Even though the company is the cost leader in Turkey in the foreign market the price of products is not cheap but reasonable. Having a difficulty of negotiation for the distribution channels, because of working with Turkish transport companies other foreign transport firms are having inhibition for working with Dimes. Despite of having several of certificate and awards; lots of the factories of the company are more than 30 years old, mainly old fashion technology. Therefore productivity level is low and can not be increased easily, because it is required huge money for investment. Limited production because of working with local farmers; the strategy of the company does not allow to bring in other raw material from different countries; hence this is also so difficult to control and risky for the company. 2.4 Porter’s Five Forces Analysis for Dimes American Michael Porter’s Five Forces of Competitive Position model provides a perspective of an organization about its strengths and weaknesses. It could be used alongside SWOT and PEST analysis. Porter 's Five Forces model can help an idea about the firm’s competitive position and can be used during creating strategy, plans or making investment decisions. 2.4.1 Threat of New Entrants: Dimes requires massive amount of capital because of huge plant of factory and machinery and highly skilled workers. Lack of experiences for new entrants is making entering into market difficult. Dimes fruit juice market is also highly competitive therefore it has been facing strong competitions such as Nestle, Cappysun, etc. Dimes has also high switching cost. Dimes have been facing difficulties about government’s policy, environment and safety regulation because of strict rules in most of the countries. Struggling with the off-season fruits, also; during this period facing with high cost. In foreign countries company is struggling to enter into distribution channels. New regulation of hygiene and safety rules and latest technology are making big barrier to entry. To sum up threat of new entrants is weak for Dimes Company. 2.4.2 Supplier Bargaining Power: Same as automobile market (manufacturers’ supplier) in fruit industry suppliers usually have one major contract for the long term plan (at least five or ten years). There are huge numbers of farmers and huge size of plant the production requires and other small-medium size of companies who supply other materials are often can not be able dominate negotiations. Switching any of the suppliers (by meant farmers) would highly cost to the company. The company prevent this by making major contract. Therefore supplier bargaining power for Dimes Company is weak. 2.4.3 Buyers Bargaining Power: Concentration of buyers based on World wide is in Turkey and in Turkey buyers are widely dispersed. Shear volume of customer (by meant one individual customer) has absolutely no power. Buyers demand is changed between ages. While the company has seen higher demand age “between 7 and 18”, very low demand age between 18 and over. This because of over 18 years customers are allowed to drink alcohol (beer, wine, etc). To sum up buyers bargaining power for Dimes is strong. 2.4.4 Threat of Substitutes: There are many substitutes against the Dimes fruit juice which is meant in above paragraph. For example; many of the alcoholic drinks such as beer, wine, sprits, etc. Also many of the other soft drinks such as cola are substitutes of fruit juice. While the threat of alcoholic drinks is not very high in the Muslim countries; especially American and European countries, Dimes has been struggling with its substitutes. On the other hand in Muslim countries consumption of cola (by meant fizzy drinks) is very high; in addition in those countries Dimes company- being as a Muslim Company- is one step forward from its competitors. While the company can encourage its customer with promotions and advertisements in Muslim countries, for the other countries company does not have any power on the customer behaviour. Therefore threat of substitutes for Dimes is Strong. 2.4.5 Intensity of Rivalry: In every country that the company has been operating the competition is very strong. There are many company has been producing under the category of beverage. 2.5 PEST Analysis for Dimes 2.5.1 Political Factors: Especially different tax regulation by different governments is preventing growth in particular country. While the developed countries ask higher tax, developing countries encouraging companies to work with them. Some of the governments (especially developed countries) are strict about hygiene and safety regulations. While many of rules are global, some governments could ask extra precaution. In particular; it is easy to be in the market of Arabic Countries (because the company is Muslim also) for example; American market and European market entry and trying to become a brand name are difficult. In addition to this, while developed countries likely to have political stability, undeveloped and developing countries do not have political stability. 2.5.2 Economical Factors: Dimes has been working and trying to expand especially in undeveloped and developing countries. The reasons for this are; • Competition is not very high • Lover tax requirement • Cheap labour • Cheap raw material • Better respect to the company • It is for every age • Making promotions and advertisements easily therefore encouraging people to buy its products. In comparison, while the sales volume is same in the developed and developing country the total revenue is the half for the developing country. Therefore, selling in the developed country is more profitable. On the other hand paying tax, interest, other regulation and expensive labour, material are making it difficult to sale in those countries. 2.5.3 Social Factors: In every country drink behaviour is shown differentiation. American and European Societies where the people have higher income the consumption of soft drink in particularly fruit juice is very low. Besides; consumption of alcoholic drink is too high because of the culture and religion. On the other hand customer behaviour in Arabic and Muslim countries is opposite. The age of the customer is the major effect on the consumption. Therefore, in developing countries population is too high and people, age 10-25 are more than half of the population. In comparison with developed countries randomly population is half of the developing countries and people, age 35-60 are more than half of the population. Furthermore, in developing countries average family has at least three kids –this number is only one or two for developed countries- and the government encouraging people to give fruit juice to their kids. 2.5.4 Technology Factors: The importance of new technology for fruit juice industry can not be comparable with automobile and computing industry; nevertheless the process of machinery always requires new technology. In the same plant if the company has old fashion machinery the production capacity will be lower level. For Dimes in 2004 in the same plant with old machinery company can only produce 100,000 ton, in 2009 with the new technology machinery the capacity increased 75% by 175,000 ton a year. With the new process, the quality of raw material is easy to be controlled, more hygienic final product (never touched by hand), less human capital requirement (cost saving), step in the situation on time, making adapting new technology process for new government, hygiene regulation easy for the company, etc. Latest technology also helps the control of the transport system of the distribution channels. Making stock control easy, also giving an idea about which product/products sales more (effective productivity). The image of the company will be more reliable for the developed countries. Hence, the latest technology will help R&D department works more effective, developing new products and processes will be easy. 2.6 7S Model for Dimes McKinsey’s 7S Model has seven different factors which are come up a conclusion of either “soft” or “hard”. By meant “hard” management can define and identify these elements easily and influence on them, and “soft” elements, such as cultural factors on the customer behaviour, is more difficult to describe and as important as “hard” elements. 2.6.1 Strategy: Dimes’s strategy is the building competitive advantage over the competition. Being an old company and highly experienced workers of agriculture is the strategic weapon of the company. The company is convicted as a brand name in Turkey and this will happen in world wide. 2.6.2 Structure: The organization structure in Dimes is complicated and simple. Farmers are belong to the Kazova Factory unit and DMS factory unit, in the middle of the diagram Dimes working with Nobel Marketing unit which is also connected with Cihan Logistic and dealers ( overseas and domestic). Being in the middle of the structure is making control easy for the firm. 2.6.3 Systems: In the Dimes group companies each of the firm has to be contacted to each other. As a whole process any problem in any step (firm) will effect whole organization. Monthly meeting with the group leaders and daily meeting in each firm make the process easily manageable. In each group have operation managers and supervisors, on top of it senior managers. The leaders of the each group take reports and have to meet at least a month with top management. 2.6.4 Shared Values: The Dimes group has been working with the same suppliers, distribution channels and workers. This is why shared values are important for the company. “Respecting people and sharing your knowledge will bring the achievement.” is the motto of the group. 2.6.5 Style: Main material of the production is depends on the farmers’ knowledge. The agriculture knowledge is obtained by year and year. To help those formers firm has to develop new seeds, pest control, giving training and meet with expectation of the farmers. Agriculture technicians are the most important people in the organization to get raw material with best quality and on time. In the production process the technicians of the machinery have the key role. Keeping same quality, hygienic and on time production (high productivity level) bring the achievement. Distribution channels -particularly overseas dealers- are the other key factor of the operation. Daily conversations and monthly meetings help clarifying and defining common goals, identifying and integrating team members’ roles and duties, corresponding training requirements, supplying timely information and resolving issues on time. 2.6.6 Staff: HR management in Dimes group is very important. In particular working with farmers is the key HR issue. Also Dimes’ employees are selected for lifetime which is meant before. Every steps of the organization are required skilled workers therefore selecting employees is very important. 2.6.7 Skills: Capacity of the workers and their skills effect the productivity level of the firm. On the job development, personal development, training sections, giving more information about agriculture help those who work with Dimes group.

III. RECOMMENDATION In order to achieve Dimes’ vision statement and being well known international company (having a brand name) company has to work more effectively. While the company caught up an achievement in Turkey and Muslim countries the same portfolio can not be the subject in the American and European markets. Having a big opportunity of influence on the Muslim culture has advantages; such as sales volume on these country more than doubled because of the social, religion issues and so many protests on the Coca Cola soft drink, and disadvantages; such being or selling just for ethnic groups in overseas countries, in particular United Kingdom, Dimes seems to sale only for Turkish community. To be overcome with this situation company has to focus on American and European markets even the competition and regulations are more difficult.

IV. CONCLUSION

To sum up Dimes has been manufacturing more than 52 years. In those years company has been expanding (growing) step by step. This growth has not been satisfied its owners and customers yet. Therefore depends on the strategic analysis, which have done above, company has to take an action on expanding (exporting and manufacturing) on overseas countries.

V. REFERENCES http://alfrancobakerhughes.wordpress.com/2010/02/03/porter%E2%80%99s-five-forces-%E2%80%93-successful-marketing-strategy-2/ http://marketingteacher.com/lesson-store/lesson-pest.html http://www.businessballs.com/portersfiveforcesofcompetition.htm http://www.quickmba.com/strategy/swot/ http://www.themanager.org/models/7S%20Model.htm http://www.valuebasedmanagement.net/methods_7S.html
Grant,R.M.,& Neupert,K.E.(2003). Cases in Comtemporary Strategy 6-Analysis (3rd ed.),Blackwell Publishing,Oxford
Thompson, A. A. & Strickland, A. J. (1995). Strategic Management: Concept and Cases,(8th ed.), Richard B Irwin, USA www.dimes.com.tr Formun Altı

References: http://alfrancobakerhughes.wordpress.com/2010/02/03/porter%E2%80%99s-five-forces-%E2%80%93-successful-marketing-strategy-2/ http://marketingteacher.com/lesson-store/lesson-pest.html http://www.businessballs.com/portersfiveforcesofcompetition.htm http://www.quickmba.com/strategy/swot/ http://www.themanager.org/models/7S%20Model.htm http://www.valuebasedmanagement.net/methods_7S.html Grant,R.M.,& Neupert,K.E.(2003). Cases in Comtemporary Strategy 6-Analysis (3rd ed.),Blackwell Publishing,Oxford Thompson, A. A. & Strickland, A. J. (1995). Strategic Management: Concept and Cases,(8th ed.), Richard B Irwin, USA www.dimes.com.tr Formun Altı