ICE FILI Harvard Case Solution & Analysis

Question 1

How has the attractiveness of the traditional Russian ice cream segment (in which Ice-Fili competes) changed in the period 1996-2001. Please make maximally use of (possibly imperfect) quantitative measures of changes in industry profitability between 1996 and 2001 to support your point. (max 1 page; 7 points)

The attractiveness of the traditional Russian ice cream market has changed significantly between 1996 and 2001. The market has been severely and negatively impacted by the instability of the financial and political climate of the country. The consumption ability of the Russian market has declined significantly after 1998 due to the ruble of the consumption within the Russian market. The growth in consumption per capital is shown in exhibit 1 in the appendices which depicts this picture.

The consumption per capital had declined in 2000 as seen by the negative growth rate. Secondly, the producers relied on the external suppliers for raw materials and the cost of making ice creams had increased significantly. This has also intensified the competition within the market as a result of the financial crisis due to which a number of wholesalers had entered the ice cream market. The decline in the production of the ice cream volume during this period could also be seen in exhibit 1 in the appendices.
ICE FILI Harvard Case Solution & Analysis

The consumption volume in total has also decline just like the consumption per capita. The consumption per capita has been highest for the Russian market as compared to the other countries like Canada, France and US. However, the price of the ice creams was lower in Russia. The producing capacity had exceeded the demand of the market in 2001 despite the decreasing population of the country. The declining population between 1996 and 2001 could be seen in exhibit 1 in the appendices and this has shrinked the ice cream market of Russia.

We have also computed specific quantitative measures for Ice Fili as shown in exhibit 1. We can see that production has been declining for companies like Ice Fili that are major players in the traditional Russian ice cream market. In the same way, the market share of the company has also been declining as shown in exhibit 1. These all factors suggest the low profitability and attractiveness of the Russian ice cream segment. However, the measures that we used might be imperfect proxies since, they directly not measure profitability or the price point changes with respect to the demand and supply of ice cream products in the market. Finally, these are few specific measures, however, more accurate analysis could be made by analyzing the trend of sales, market shares, costs of this segment in total......................

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