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Tavazo Case Solution & Answer

Tavazo Case Solution

  Introduction

The Tavazo Company is a family operated business in the food industry. It started an entrepreneurial initiative in Iran in 1930, its business developed as Tavazo from retailing to the growing of commercialized products, such as: nuts and dried fruits. The two main products of the company are nuts and dried fruits. The main focus the company is on retailing, and there is a great brand recognition in Iran due to its quality products and retailers.Due the loyal customers and the high quality of the company; Tavazo brother entered into new markets while targeting the Iranian community. They developed geographically when they entered Canada in 2010.

The Company’s Situation

Nuts and dried fruits are considered as commodity products historically in Iran.The Tavazo brothers through differentiation strategy, tried to provide dried products as branded products. The company has loyal customers due to the high quality of its products. It has a steady demand throughout the year, but in March, during the occasion of Nowruz; the demand for dry fruits and nuts increases to a larger extent.

In 2010, the company expanded its business to Canada, where 80% of the customers are from Iran and 30% from other communities. Now, the company is considering recommendations for further business expansion.(Eghbali-Zarch, 2010)

Important Facts Surrounding the Case

This case is related to the international trade and strategic management of a family business, which discusses the key issues being faced by a small-scale business when it enters a new market. As the Tavazo brothers are using differentiation strategy to get competitive advantage,they have vast knowledge regarding manufacturing and the company is focused on retailing and has remained customer oriented through the much-appreciated quality of its products. Tavazo’s business is bound primarily to Iranian culture that has huge demand from Iranians from local and foreign markets. Tavazo tried to penetrate into foreign market in 2010, when it started its business in Canada, but had little knowledge on how to penetrate into international markets around the world. The company has stable financial statements but its profit ratio is 5-7%, which seems that it will not help the company in further investment. The company’s objective is to gain market shares in Canada and Iran, and further expand into new markets, while increasing its sales and profits by expanding its operations.

Problems/Issues That Need To Be Addressed

Tavazo is a family based business that is operated by family members who were trained in a traditional business environment, which is why they faced brand management issues Many imitators popup their products with the brand name of Tavazo, which has badly impacted the business and the family has taken the imitators to court. Due to Iran’s volatile economy and business environment; the exchange rate has affected imports.When the company penetrated international markets in 2010;it had limited expertise in management but now the company is  considering to have an expansion into other foreign markets, but it haslimited resources and knowledge to compete in the international markets.

Internal Analysis / SWOT Analysis 

 Strengths

It has good brand recognition in Iranian and Canadian markets.

The financial statement is stable, which can help the company to move forward.

High quality products act as the company’s strength.

Shell life of nuts is more than 2 years

A strong network of suppliers gives Tavazo a competitive advantage in the market.

The company has a strong knowledge of growing and preserving process of nuts and dried fruits.

Weaknesses

The company lacks expertise and experience in international business management, which is a weakness for the company, restricting it from expanding its business in the foreign markets.

The company has less brand management expertise, which can lead towards failure.

It has less developed market except Iran, with few retailer outlets in Canada.

Tavazo lacks expertise in wholesale to groceries.

A profitability ratio of 5-% can lead the company towards a shortage of funds, restraining it from investing in new projects

 External Factors

Opportunities

An increase in the disposal income of the brand’s consumers an opportunity for the company to expand its business further to attract more customers.

The diverse demographic of Canada is an opportunity to get more diversified customer base.

Rapidly increasing demand of health trends and nutrition, which is surrounding nuts, is an opportunity for the brand to increase its customer base in future.

In Canada, the company doesnot have a significant competitor, which serves as an opportunity to get more customers

The company has loyal customers around the world; enabling it to get customers easily in foreign markets, helping it in its business expansion……………………

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