Harvard Case - The Aristizabal Family: Growth of a Family Firm?
"The Aristizabal Family: Growth of a Family Firm?" Harvard business case study is written by Luz Elena Orozco Collazos, Luis Diaz, Maria Alejandra Serna. It deals with the challenges in the field of Strategy. The case study is 15 page(s) long and it was first published on : Nov 21, 2020
At Fern Fort University, we recommend that the Aristizabal family adopt a strategic growth plan focused on business model innovation, international expansion, and digital transformation. This strategy will leverage their existing core competencies in manufacturing and distribution, while expanding into new markets and leveraging emerging technologies to achieve sustainable competitive advantage. This plan will involve a combination of organic growth, strategic alliances, and selective acquisitions, all guided by a robust corporate governance framework.
2. Background
The Aristizabal family has built a successful business, 'El Rinconcito,' specializing in the production and distribution of high-quality, traditional Colombian food products. The company's success is rooted in its strong family values, commitment to quality, and understanding of the Colombian market. However, the family faces challenges in achieving sustained growth amidst increasing competition and evolving consumer preferences.
The main protagonists of the case study are the four Aristizabal siblings:
- Carlos: The eldest brother, responsible for operations and production.
- Maria: The family's marketing and sales expert.
- Alberto: The finance and administration specialist.
- Sofia: The youngest sibling, with a passion for technology and a vision for the future of the business.
3. Analysis of the Case Study
SWOT Analysis:
- Strengths: Strong brand reputation, established distribution network, loyal customer base, experienced management team, commitment to quality, strong family values.
- Weaknesses: Limited financial resources, lack of formal strategic planning, reliance on traditional marketing methods, limited technological expertise, potential for family conflicts.
- Opportunities: Growing demand for authentic Colombian food globally, increasing popularity of online food delivery, potential for product diversification, emerging markets in Latin America and beyond.
- Threats: Increasing competition from large food companies, changing consumer preferences, economic instability, potential for supply chain disruptions, technological disruption.
Porter's Five Forces:
- Threat of New Entrants: Moderate, as entry barriers are relatively low, but brand recognition and distribution networks provide some protection.
- Bargaining Power of Buyers: Moderate, as consumers have a variety of options, but 'El Rinconcito' offers unique products and a strong brand.
- Bargaining Power of Suppliers: Low, as the company has established relationships with reliable suppliers.
- Threat of Substitutes: Moderate, as consumers may choose other ethnic cuisines or home-cooked meals.
- Competitive Rivalry: High, as the market is fragmented and includes both local and international players.
Value Chain Analysis:
The company's value chain includes:
- Inbound Logistics: Sourcing raw materials and packaging.
- Operations: Production and quality control.
- Outbound Logistics: Distribution to retail outlets and restaurants.
- Marketing and Sales: Building brand awareness and generating demand.
- Customer Service: Providing support and resolving customer issues.
Business Model Innovation:
The Aristizabal family can explore new business models to cater to evolving consumer preferences and market trends:
- Direct-to-Consumer Model: Utilizing online platforms and delivery services to reach a wider customer base.
- Subscription Model: Offering regular deliveries of curated food boxes or meal kits.
- Partnerships with Restaurants: Expanding distribution through partnerships with restaurants and food service providers.
- Product Diversification: Introducing new product lines, such as ready-to-eat meals, snacks, or specialty ingredients.
4. Recommendations
1. Strategic Planning and Corporate Governance:
- Implement a formal strategic planning process to define long-term goals, identify growth opportunities, and allocate resources effectively.
- Establish a corporate governance framework to ensure transparency, accountability, and family harmony in decision-making.
- Develop a balanced scorecard to track progress against key performance indicators (KPIs) across financial, customer, internal processes, and learning and growth perspectives.
2. International Expansion:
- Begin with market segmentation to identify promising markets in Latin America and beyond based on cultural affinity, demand for Colombian food, and competitive landscape.
- Develop a globalization strategy that considers cultural nuances, regulatory environments, and logistics challenges.
- Explore strategic alliances with local distributors, importers, or retailers to leverage existing networks and reduce entry barriers.
- Consider mergers and acquisitions as a means of expanding into new markets or acquiring complementary businesses.
3. Digital Transformation:
- Invest in information systems and technology and analytics to streamline operations, improve efficiency, and gain insights into customer behavior.
- Develop an e-commerce platform for online ordering and delivery.
- Utilize social media for marketing, customer engagement, and brand building.
- Implement digital marketing strategies to reach a wider audience and target specific demographics.
4. Product Development and Innovation:
- Conduct market research to identify consumer preferences and trends in the food industry.
- Develop new product lines that cater to diverse dietary needs, such as gluten-free, vegan, or organic options.
- Explore disruptive innovation by introducing novel products or services that redefine the market.
5. Organizational Culture and Leadership Development:
- Foster a culture of innovation and entrepreneurship to encourage creativity and risk-taking.
- Implement leadership development programs to equip the next generation of family members with the skills and knowledge to lead the company.
- Encourage collaboration and communication across departments to foster a sense of shared purpose and ownership.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Consistency with Mission: The recommendations leverage the company's existing strengths in manufacturing, distribution, and brand reputation while aligning with the family's commitment to quality and authenticity.
- External Customers and Internal Clients: The recommendations address the needs of both existing and potential customers by expanding product offerings, improving accessibility, and leveraging digital channels.
- Competitors: The recommendations aim to differentiate 'El Rinconcito' from competitors by focusing on innovation, international expansion, and building a strong online presence.
- Attractiveness - Quantitative Measures: The recommendations are expected to generate positive returns on investment through increased sales, market share, and brand value.
6. Conclusion
By embracing a strategic growth plan focused on business model innovation, international expansion, and digital transformation, the Aristizabal family can position 'El Rinconcito' for sustained success in a dynamic and competitive market. This approach will require a commitment to collaboration, communication, and continuous improvement, while ensuring that the family's core values remain at the heart of the business.
7. Discussion
Alternative Options:
- Staying focused on the domestic market: This option would limit growth potential and expose the company to increased competition.
- Focusing solely on organic growth: This option would be slower and less impactful than a combination of organic and inorganic growth strategies.
- Acquiring a large food company: This option would require significant financial resources and may not be feasible given the family's current financial position.
Risks and Key Assumptions:
- Economic instability: The global economy could impact consumer spending and demand for premium food products.
- Competition: Existing and new competitors could erode market share and profitability.
- Technological disruption: Rapid advancements in technology could render current business models obsolete.
- Family dynamics: Family conflicts could hinder decision-making and implementation.
8. Next Steps
- Develop a detailed strategic plan: Define specific goals, timelines, and resource allocation for each recommendation.
- Conduct market research: Identify target markets, assess competitive landscape, and gather insights into consumer preferences.
- Develop a financial model: Project revenue, expenses, and profitability for each growth initiative.
- Secure funding: Explore financing options to support international expansion and digital transformation.
- Implement a change management program: Prepare employees for the changes ahead and ensure smooth transition.
By taking these steps, the Aristizabal family can embark on a journey of sustainable growth and ensure the long-term success of 'El Rinconcito' as a family business.
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Case Description
Mr. Manuel Aristizábal was the founder of San Basilio, a restaurant that began operations in 2001. Angelina, Manuel's wife, started to work at the family firm on trial. Very soon, however, her organisational and managerial capacities meant that she became completely involved in the business. The business' growth was very conservative when Manuel and his wife were in charge. When Martín (their son) returned from studying abroad, he proposed new challenges for the family firm. Martín set up a catering service for San Basilio, led the opening of an additional branch, and began a successful ice cream business. The first two opportunities were leveraged in San Basilio, his parents' business; the new branch and the earnings from the catering service were important economic benefits just for him. Martín is the sole owner of the ice cream business. However, San Basilio's growth started to exceed its operational capacity, and, according to Angelina and Anette (their daughter), its financial performance was at risk. Angelina and Anette were interested in slow growth for the business and in maintaining the family ties, which had weakened due to the Martín's entrepreneurial activities. Martín's proposal to pass the catering service to San Basilio was the straw that broke the camel's back. He had been running it on his own and now wanted his parents to assume control of the whole operation and to give him a commission for the business whose original idea and current performance were the result of Martin's management.
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