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Zorbas Bakeries Ltd

During the year 2000, Company’s Management team was trying to create the future strategy plan of the Company. The International Food Engineering Consultants of Denmark, (a well established Consulting Group), was asked to give their thoughts and opinions about this. Their proposal, (later had been adopted by the Company) was rising that the maximum efforts of the Company have to be concentrated at the Retail Shop Industry because of many reasons. The major one was that the competition at that market was strong but very easy to be hammered!

The customers were thirsty of quality! The market futures were huge and the benefits for the Company were going to be great because of the high cash incomes that a movement like that will bring. In four (4) years, 24 new shops opened all over Cyprus. Customer’s personal satisfaction was achieved by offering the highest possible product quality all over the day, all over the year. The Company’s turn over for the year of 2003 was raised up to 19,921,000 Cypriot Pounds and for the year of 2004, a 35%-40% increase of it is objected!!

The Company is producing more than 180 different products at its premises which are satisfying the needs of

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all the members of a family all over the day. These products are mainly baking and confectionery ones. At each shop, the customer can find all the basic items in order to cover his food needs, from fresh milk to fresh cakes, from fresh bread to freshly roasted peanuts, and from fresh orange juice (squeezed in front of you) to cold beverages etc.

The increase of the variety of the available products and their continuous quality improvement are the main opportunities that the management team is called to cover. A well organized Research and Development department is responsible to develop new products as also new production techniques for increasing the offered product quality and for reducing the production cost. The implementations of the “frozen product” production technique for example, reduce the production cost to less than a 30% of the original; increase the customers’ satisfaction twice (because the products are offered to them freshly baked – Just in Time Production process) and enable the Company to open more stores because of the centralization of the production and because of the higher production capacity.

The European Union Legislation that the Government of Cyprus is forced to follow after the 1st of May, 2004 and the “supermarkets cartel” are the main threads that the Company has to face. The owners of the supermarket force the various members of the Parliament and the Ministry of Trade, to change the current legislation which covers the operation of the Retail Bakery Shops. With that, the purchasing power of each shop will be dropped dramatically because the Company will have to reduce the available stocks and the available variety of products. Pressure is also acted for the reduction of the opening hours of these kinds of shops.

Under these circumstances and after a market research, the managing team decides to change the whole concept of each shop. The shops are going to change from “Retail Bakery Stores” that are now, to “Retail Convenience Stores”. Under this, the main objective of each store will be the offering of product availability at the best possible quality all over the day, all over the year. A “pilot shop” is already running under this concept at Platy area of Nicosia. At this shop, a bookstore, a kiosk and a mini market department are also present.

Regarding the baking competitors no real thread is present. All of them realize the superiority of Zorbas Bakeries because of the big production capacities and the low production cost. Both of them are achieved because of the implementation of the latest available technology and correct production planning. With the financial strength that the huge cash flow incomes give, the Company is able to make future investments without facing any financing problems. The main competitor realizes the financial weakness that has, compared to the Zorbas bakeries and for the last year is looking for a “strategic partner”.

Target Market and Channel Relationships: As Mr. Michalis Kkanios, sales development manager [1] mentions, “all the members of each family are considered as customers. All the needs and requirements of all the members of a family have to be satisfied by the best possible way. At each shop, the personnel are responsible to identify and to satisfy the needs of all the customers that are entering the shop. They have to “guide” them correctly regarding the selection of the products. The right behavior and response will make the customers to realize that the main objective of the personnel is to not to sell, but to satisfy their needs and requirements. That’s how the big sales are achieved!”

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