Strategic and Operational Performance Assessment at SC Dobrogea SA

The Academy of Economic Studies

Faculty of Business Administration-English Section

Strategic and Operational Performance Assessment at SC Dobrogea SA

Business Quality Management Project

SC.DOBROGEA SA

The gift of the earth this is the slogan that can be seen on every product made by SC Dobrogea SA, one of the most important producers in the Romanian milling and bakery industry and the company that we have chosen as the subject of our project. Located in Constanta but with distribution channels across the entire country, Dobrogea SA has over 45 years of activity full of successes and accomplishments that brought them a respected position on the Romanian market.

As a company which capitalizes tradition by permanent innovation and care for people, over years Dobrogea has launched new products, new activities, brands and concepts on the Romanian market, being constantly a pioneer in the field. Dobrogea has permanently adapted its supply and organization structures to the changeable markets as well as to the demanding European standards.

The internal market of milling and bakery rises to almost 2 billion Euro. The main competitors of Dobrogea are Boromir,Titan,Vel Pitar and Pambac and according to Rompan, Dobrogea Group has a share of 7% of the milling market and 8% of the bakery market.

History

In 1961 , Dobrogea Milling and Baking Enterprise is born as 2 wheat mills, one bread production facility and one biscuit factory are brought into operation . Between 1966 and 1989 new production facilities are build : 5 bread factories in Constanta , Eforie Nord , Navodari , Harsova , Medgidia , a manufacturing division for sugary products , a corn mill and a short and medium pastes factory . Soon, the name of the company changed to Dobrogea Milling, Baking and Pastes Enterprise, a firm with over 2200 employees.

In 1991 the company, organized as a shareholding firm is recorded at the Commerce Register.

Between 1994 and 2007, Dobrogea has constantly improved its production, technology and equipment and launched various products (other than those already existing on the market): frozen pastry products, breakfast cereals Matina, biscuits Digesta, Saltza, Regally and Petit Beurre. In 1995 the company started production of premixes for bakery-pastry-confectionary industries and its privatization lead to a status of 100% domestically held equity.

Our project represents an enquiry in the depths of a successful company. In the next pages, we will be emphasizing the accomplishments and activity of this company and, of course, of the people that conduct the firm. We will present different aspects about the management and processes of the company, the way the company assesses the strategic and operational levels and some thoughts about the future. We had the chance to interview the marketing manager of the company Mrs. Stanciu Otilia and that is why all the information that you will read come directly from the source.

Process management

Dobrogea makes up a dynamic, full-fledged company, which is run by a 5-member board of directors: president general manager and 4 vice-presidents who are in charge with different functional areas. The group holds over 50% of the capital in 5 subsidiaries, as follows: Dobrogea Biscuit production, Transserv Dobrogea transport, Dobrogea Onix local distribution, Prodglobal Galati regional distribution and Fresh Dobrogea retail chain. Currently, the company has 862 employees, 9 production units, 145 specialized means of transport, 23 retail stores, over 300 products in 5 fields and over 52 million investment in modernization and re-engineering during the last 10 years.

45 years of activity in the milling and bakery industry may not look as important at first sight, but for Dobrogea SA they hold special connotations. The Company has gone through lots of phases and has continuously developed as times have changed, becoming a serious, trustworthy partner both in the national and international markets. Mrs.Stanciu is one of the persons that contributed to this achievement because she believes that for her company innovation represents a frame of mind and a key success factor.

As it was said, Mrs. Stanciu has been managing the marketing department for 10 years and during this time she helped modernize the production base by coming up with new, demand-driven products. To briefly mention some of her ideas that had a tremendous success: in 1997 Dobrogea launched the frozen pastry products and the Fresh selling concept. This came as a result of Mrs. Stanciu and her staff form the marketing department research: they discovered that Constanta lacked of shops from which you could buy freshly baked products such as pretzels, mini pies, etc. So they invested in new performant equipment that they brought from Italy, and transformed 5 of their shops into Freshs where people could purchase, besides ordinary products you can find in any food store, fresh products to eat when you are in a hurry or want something tasty and light to eat. In 2002, they introduced a new range of pasta called Pasta Magica and breakfast cereals- Matina and in 2003 Dieta Total pasta obtained from total flour and Dieta Mix pasta with spinach add-ups.

A very important step ahead was the implementation of Total Quality Management in all their activities, providing technical assistance both in the start-up phase of production lines and during normal operations and introducing functional products containing pre- and pro- biotic ingredients.

Keeping track in a competitive market like the one Dobrogea activates in, can be very demanding and that is why they rely a lot on the very good communication between all the departments in the company. Also, the strategic plan set years ahead, is thoroughly followed. Like any other company, Dobrogea faces many difficulties and threats but the competitive advantages and resources that they have help them remain a leader. Dobrogea has indeed been a state company until the 90 but it is after this moment that the firm really started growing. The milling and bakery company, one of the main players in this field from Romania, has registered, in the first 9 months of the year, a turnover of 47 million Euros, increasing with 23% .In the same period of the last year, the company has a turnover of 38 million Euros. This increase is mostly due to the launching of new brands and the expansion on new markets. The company intends to take over the Merlin brand of biscuits produced nowadays for Elite Romania Company and they intend to re-launch the production.

Strategic Level Assessment

The wish of every entrepreneur is to make its business grow. They all have a vision about growth in their mind, but few are those that actually formulate it in a strategic plan. In an ever-changing economic environment, a strategic plan is essential not only to assure a continuous growth of the company but also to survive in times of crisis, like the one we are facing nowadays. The strategic objectives are related to the business position of the company.

Dobrogea sets its strategic objectives on their processes and a very important method that they use to sustain the implementation of the strategy is BPR Business product redesign. By using this method they can clearly establish what are the critical processes that bring value to the client, what are the risks, the success factors and key performance indicators related to the processes. Also, in establishing a strategy by using BPR they take into account the analysis of the internal and external environment and the mission of the organization which is:

      To provide their consumers with healthy food by top quality and nutritionally balanced branded products.

      To innovate and invest permanently in order to bring added value in their consumers' lives and to keep the leading position in the Romanian milling and bakery industry.

The analysis of the environment includes, as we said, an internal analysis of the company, of the industry in which they activate and of the macroeconomic environment. Dobrogea, like all the other companies uses the PEST analysis analysis of the macroeconomic environment concerning the political, economic, social and technological aspects. The internal analysis provides information about strengths and weaknesses whereas the external part gives information about opportunities and threats.

So, we come to the SWOT analysis that can give them a clear picture about the status and position of the company. The SWOT analysis of Dobroges group can be seen below.

STENGHTS

      the experience of the company in the production and distribution of its products;

      the existence of an efficient marketing department;

      the advanced technology used in the company;

      the brands notoriety;

      the leadership position on the target market;

      high coverage level of the target market;

      the fast rhythm of renewal and diversification of the range of products offered.

WEAKNESSES

      financial difficulties of the company ;

      the unfavorable image of the products on the market;

      unsatisfying price/quality report;

      the lack of a clear and efficient marketing policy;

      the big number of managerial levels in the company;

      high costs of production;

      employees fluctuations;

      the lack of a selling force.

OPPORTUNITIES

      the absence of a direct competitor in case of launching of an innovative product on the market;

      rapid rhythm of development of the market;

      the governmental policy that favor investments in certain sectors of activity;

      large potential of the market or of the target segment;

      the existence of an unfavorable potential on certain external markets.

THREATS

      the low purchase power of potential buyers;

      the decline faze of the life cycle of products on the target market;

      the adoption of some legislative provisions that limit or forbid the promotion of some sensitive products such as baby products, alcohol, drugs;

      the economic and politic instability;

      the market penetration of some powerful competitors;

      the inflationary process in the economy;

      the rise of the market share of some direct competitors.

The selected strategy is implemented by a set of programs, budgets and procedures and the actual implementation implies the organization of the resources and the motivation of the employees to reach those objectives. From this point of view, the management team of this society is to be admired because they believe in reward motivation and not punishment motivation and this makes work in this company very enjoyable. All the employees know what are the objectives and strategies of the company and they act likewise in order to fulfill them. Also, the management team uses performance targets to motivate the employees and achieve the preset goals.

Besides all the above mentioned indicators, Dobrogea Group also uses BSC balanced scorecard which is a management instrument for the implementation of the strategy. BSC examines the company from 4 different perspectives: financial, clients, knowledge and growth and internal processes. In this way, the company can analyze its financial performance for the last period (Dobrogea increased its sales and turnover with 23% in the last 9 months), their customer satisfaction (the company is customer orientated that is why they develop new products every 3 months), employees knowledge base and the internal environment.

All these methods used by the Group help them assess themselves at a strategic level, learn from past issues and develop new ways to improve quality, performance and customer satisfaction. By doing that, they raise awareness and this leads to an increase in sales and profit.

Operational Level Assessment

Between the proper measuring of performance and a far more dynamic process of establishing performance levels for several areas of the business is only one step. This implies the setting of some performance targets in key- value producing areas of the business. The objectives can be defined for different periods of time: annual ,quarterly, monthly , even daily, function of the operational level they apply to.

Operational targets refer to the degree of customer satisfaction , internal processes and the innovation and improvement activities that the company conducts . Operational indicators are the engine of future financial performances. These non-financial indicators have a strategic character which expresses the long-term development vision. It is crucial to adapt the indicators to the actual situation and specific objectives of the business. For example, a producer that sells a large quantity of low-cost goods can focus on the speed of the production line , while a producer that sells a relatively modest amount of high-cost goods should focus on the reduction of errors of the production line, which could generate losses.

The implementation of the indicators must be monitored and adjusted when necessary. In their evaluation is it recommended to go through the following stages : define the parameters that must be measured , define standard values for those parameters, measure the parameters, compare the results with the predefined values, analyze the causes that led to deviations, do the necessary adjustments . The periodic evaluation is imposed so that the level of the indicators should be within a certain deviation interval, that is manageable to the company. By the term acceptable deviation we understand the potential plus/minus of a percentage of deviation from the standard value which does not substantially affect the reaching of the target.

The causes and implicitly, the modalities of target adjustments can be various : for instance, if it observed that the allocated resources are incorrectly dimensioned , the resources will be reallocated as they should ; if the level of the target is inadequately set , the level is going to be modified so that it could be easily reached ; if the key-performance indicators have been improperly set, a reevaluation of their importance is going to be conducted and those that are considered either not to provide value or that are very difficult to calculate are abandoned.

It is important to establish a monitoring cycle for it can increase a companys ability to effect changes in the business and to readjust its objectives when the conditions in the internal and external environment impose it. Also, a good planning can help the top management to anticipate potential problems and to adapt much faster to the necessary changes.

As far as Dobrogea Group is concerned , since they sell panification products they are mostly concerned with increasing the speed of the production line . In this situation, constant technological innovation has always played a major role. At Dobrogea innovation is a state of mind and an important success factor. Over years Dobrogea has launched new products, brands, concepts and new activities, being constantly an innovator and a pioneer in its field.

Also, the turnover represents a operational indicator for them , for each of their subsidiaries and for the entire organization as a whole (it exceeds 60 million euros annually). With a total of 9 production units and 862 employees Dobrogea has over 23 retails stores and 145 specialized means of transportation. It produces a range of over 300 products of 5 fields : milling, bakery, frozen products, breakfast cereals and biscuits. Over the last 10 years , the company has invested over 52 million euros in equipment modernization and re-engineering . Research paper works were developed together with foreign and local universities and institution with the purpose of obtaining nutritionally balanced healthy products and of introducing new technologies. Important brands and patents portfolio for brands have been launched and promoted on the Romanian market: wheat flour- Dobrogea, biscuits- Eugenia, Digesta, bread- Neptun, Bonpana, Bongrana, cereals- Matina, Captain Crantz.

 

Market Shares (on a national level)

Market shares (on a local level)

Quality Management System Certificates

- ISO 9001 certificate awarded in 2000 by the prestigious Germanisher Lloyd Certification Company for the quality management system. Recertification in 2003 and 2006 in accordance with the new ISO 9000/2000; 

- RENAR accreditation proceeding with ISO 45001 in 2000 for its own laboratories of physics and chemical analyses and re-accreditation in 2003 according to ISO 17025/2000;

- Implementation of HACCP standards of food safety in all the sectors;

- ISO 9001/2000 certification of all the subsidiaries in 2004;

- ISO 14000 certificate in 2005 for the environment management at the level of the whole Dobrogea Group.

Awards

- Excellency Diplomas and Trophies awarded by the Chamber of Commerce, Industry and Navigation of Constanta for the first rank in the County Company Top and by the Chamber of Commerce of Romania for the first ranks in the National Company Top;

- Excellency diplomas and gold and silver medals obtained at the annual Indagra International Exhibition of equipments and products in the field of agriculture and food industry held in Bucharest;

- The Creativity Trophies for the activity of industrial property awarded by OSIM Bucharest, 2003, 2004, 2005, 2006;

-The first rank at the national level of the Bakers Cup organized by Rompan and other international participation in the World Bakers Cup in Hungary (1998), Czech Republic (2001), France Paris (2002), Russia St Petersburg (2004)

- The Quality Trophy, Paris, 1997.

Investments

Dobrogea has invested over 52 million euros in the last 10 years in order to:

- Introduce new technologies in milling, bakery, frozen products and biscuit manufacture;

- Develop the integrated information system;

- Develop its own retail chain;

- Update the specialized car fleet and logistic equipments;

- Improve the competence level of its employees in order to meet the European food safety and quality standards.

The future

As regard to the future, Dobrogea has several values that it has sustained and constantly applied in order to continuously grow and develop; these values are:

- Leadership active presence on the local and national market of milling and bakery products;

- Innovation, the state-of-the-art technologies and strategies adapted to the market evolution;

- Responsibility for our consumers' health, given by nutritionally balanced, high quality products,all obtained in food safety conditions according to the European regulations;

- Respect for people, communities and environment;

- Long lasting partnerships based on trust, professionalism and quality;

- Preserving the Romanian tradition and at the same time the regional characteristics, Dobrogea being a multicultural island, all in the context of globalization and European integration;

-  Team spirit and pride of belonging to the Dobrogea family.

As a stated mission, Dobrogea has the objective of providing their customers with healthy food by top quality and nutritionally balanced branded products. This means constantly innovating and investing in order to bring added value to the customers lives and to keep their leading position in the Romanian milling and bakery industry. They intend to keep their customers trust in Dobrogeas products through quality, innovation and professionalism and hope to become one of the most important milling and bakery producers in the Eastern Europe.

Also the managements theories and principles have changed in the past years. Creative and innovative ideas coming from anyone of the staff are encouraged, and they are appreciated whether or not they are later considered bad ideas or which cannot be applied.

The company intends to take over the Merlin brand of biscuits produced nowadays for Elite Romania Company and they intend to re-launch the production. Several months ago the shareholders of the group decided the constitution of a new industrial platform and the relocation of the bread factory in Mangalia, because of the purchase of some land in the industrial zone of Constanta. According to the representatives of the company, the relocation of the factory is part of the investment program for 2007-2008.This investment could raise up to 25 million Euros for every factory.

The internal market of milling and bakery rises to almost 2 billion Euro. The main competitors of Dobrogea are Boromir,Titan, Vel Pitar and Pambac and according to Rompan, Dobrogea Grup has a share of 7% of the milling market and 8% of the bakery market. These companies are serious competitors of Dobrogea and the organization must find out ways to keep if front of them by producing quality products that customers will prefer to those of the competitors. In order to maintain the solid position on the market Dobrogea must continue to invest great amounts of money and energy in innovation, especially the technologically speaking but not only. For instance, they must always do market research so that they can always predict the changes and adapt to them as quickly as possible.

Analysis and conclusions

In our opinion, the milling and bakery market is quite a competitive one especially because of the low-purchase power of the buyer. You must constantly improve your technology and anticipate any changes in the industry before they occur , and since were are talking of a very volatile market, this is no easy task. However, Dobrogea has entered the market 45 years ago, when the competition was not so problematic and Doborgea has always set its objective tosatisfy its customers by providing the best quality in their products Such a strategy has paid off, since it has a leading position on the Romanian milling market .In time, the company managed to earn a name and a solid image among the large product. Dobrogea has become a brand and it suggests to the consumer healthy and qualitative. This was actually the company logo, this was the precise image they wanted to link themselves and their products with.

Also, taking into account their vision , the measures through which they wish to get there and the operating indicators as well (annual turnover , periodic analysis of the production process , market research , volume of sold products ) they are most certainly capable of meeting their long-term objectives . They are doing an excellent job, especially because of the policy of the top management regarding the staff (the encouragement that everybody should state their ideas, whether or not they prove themselves to be useful or not) . This is an open-minded approach and I think it has proved its efficiency. You never know from where a good idea can come up, thus, you mustnt ignore any favorable circumstance in this sense.

If I were to talk about lessons learned from analyzing Doborgeas performances, both on a strategic and on an operational level, I would have to say, first of all, the power to make no compromise when it comes to your mission in business. You set a goal and you tend to reach it, without changing your principles or compromising your products quality or availability on the market. This would only lead to losing your customers and your position on the market. Another thing is patience, you cannot get to the top in 2-3 years, it all takes time and perseverance, for everybody to get familiarized with you and what you sell and, with the years, to gain confidence that will assure their loyalty .

Bibliography

www.dobrogeagrup.ro

www.wikipedia.ro

https://www.bizcity.ro/afacerea-ta/opinii/planul-strategic-esential-pentru-dezvoltarea-unei-companii-43738.html