Aloha Case Essay

1371 Words Sep 18th, 2012 6 Pages
National University of Singapore
ACC3602 Managerial Planning and Control Systems


1. What should be Aloha's competitive strategy?

Low cost?
It is difficult for Aloha to compete with the industry giants like Nestle, P&G and Phillips Morris on low cost. The reason is simple - volume. These industry giants have much higher volume than Aloha and enjoy a tremendous advantage in economies of scale. It is probably suicidal for Aloha to try to adopt a low cost strategy. It will probably be crushed like an ant, unless the giants play “oligopolists” and charge high prices to maximize profits.

Differentiation; i.e., selling gourmet coffee a la. Starbuck?
It is probably easier for Aloha to position itself as a gourmet coffee
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The gap between the latter and the former is likely to be high in a period if the department has exercised good judgement on how much to buy on the forwards market vs. the spot market and when to buy. The gap is likely to be low or even negative, if the department has exercised poor judgement.

If the purchasing department is evaluated this way, the department has nothing to gain by transferring high-priced beans to the roasting plants and keeping low-priced means to themselves, and therefore will cease to do so. But the purchasing department should not be given unlimited freedom to trade on the forwards market; they should not be like Nick Leeson and allowed to bring the whole company down by excessive

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