FIN 6446 Competitive Strategy Professor Manuel Lasaga
Guidelines for Group Case Memorandum Harmon Foods, Inc. Analysis of Case: HBS Case 5 – 176 – 152 Harmon Foods, Inc.
Each group is to prepare a one and a half page memorandum to clearly and concisely discuss the questions posed below. The text should be single-spaced. Additional tables and exhibits can be included as annexes. Based on the information provided in the case, prepare an analysis of the forecasting issues faced by management.The analysis should address the following questions: 1. What factor factorss do you think think affect affect the the demand demand / shipments shipments of of Treat? Treat? Why? Why? a. Price Price of Treat Treat (mov (moveme ement nt in in demand demand curv curve) e) b. Seasonality (higher demand in Spring and beginning of Summer) – changed in taste (distributors want lower inventory levels at the end of the year – or convenience to buy cereal during school year) affect seasonality. c. Taste - Buyer’s Buyer’s basic basic attitude attitude towards towards a good good is based based on their their taste taste and and preference. d. Promotions Promotions (discounts (discounts,, allowa allowances, nces, rebates, rebates, etc) e. Income (changes (changes in in income income of potentia potentiall customers customers of Treat) Treat) (shif (shiftt in demand demand curve) f. Pop Popul ulat atio ion n (shif (shiftt in dema demand nd curv curve) e) g. Expect Expectations ations (prices (prices potentia potentiall customers customers expect to pay for for cereal) cereal) (shift (shift in demand curve) h. Price of related goods (substitutes) (substitutes could be oatmeal and yogurt; changes in prices of those substitutes might affect the demand of Treat)(shift in demand curve) also Complement such as milk cause a shift in the demand curve, if the price of milk increases, since both b oth goods are used in combination, co mbination, consumers will switch to other breakfast choices and the demand for the cereal will decrease. i. Avail Availabili ability(Sup ty(Supply) ply) of Treat (chang (changes es in quanti quantity ty supplie supplied) d) 2. Based on the the informati information on / data provided provided did managem management ent identify identify the key factor factors? s? a. No. They missed missed items items in red. (Chapter (Chapter 3 – factors factors affecti affecting ng demand). demand). They need to increase the advertising in the months were the sales decreases. 3. Is it possible possible to to quantify quantify all the the demand factors factors so so they can be used used in construct constructing ing a forecast model?
a. Yes, it is possible to quantify all the demand factors. We can use the following formula, making some assumptions: b. QXD = F ( PX (-) ? Income(+/-), PY (+), PZ (-), Population(+), Promotions(+), Expectations(?) , Tastes (convenience) (?) c. QXD = F ( PX (-) ?GDP(+), PMILK (+), PYOGURT (-), Population growth (+), Promotions/Allowances(+), Expectations(?) , Tastes (convenience)(?), i. Weights 1. Price = 50% 2. Income (changed in GDP) = 5% 3. Population Growth = 5% 4. Promotions/Allowances = (15%) 5. Substitutes = (10%) 6. Complements (5%) 7. Taste (convenience – need to lower inventory levels) (15%) 4. Can you provide any recommendations for improving the company’s forecasting process in order to enhance profitability? a. See formula above. They can take historical quantities demanded and adjust it by changed in market forces like the ones mentioned above (changes in GDP, changes in population growth, changes in demand of substitutes and complements, changes in expectations, changes in promotions, and changes in taste of customers depending on the time of the year (such as lowering inventory levels at the end of the year). Each group can determine the format of the memo, as long as it addresses the above questions clearly and concisely. Focus on relevant issues. Avoid descriptive text that repeats what is described in the case. Concentrate on key insights backed-up by cogent analysis. The deadline for the Group Case Memorandum is Monday of Week 4 in the assignment drop box. Your responses will be discussed during the in-class session.
