Natureview Farm A Case Study Analysis: Evaluating Strategic Options
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Table of Contents Organic Growth and Thoughts of Expansion .............................................................................2 Evaluating Opportunities and Potential Issues ...........................................................................2 One Choice, Three Possile Paths ................................................................................................3
Option #1: New Market Development with 8-ounce Cup Size...................................................3 Option #2: New Market Development with 32-ounce Cup Size.................................................4 Option #3: ro!uct Development with Chil!ren" Multipack .....................................................4 !ecision Criteria and "nal#sis .....................................................................................................5 $ecommendations% &ore Than One 'trateg#( ...........................................................................5 "ppendices ......................................................................................................................................6
Appendix A: lacement o$ Strate%ic Option.........................................................................6 Appendix B: Cot-&ene$it 'nal(i o$ Strate%ic Option.......................................................6 Appendix C: )inancial *alue '!!e! 'nal(i........................................................................7 Appendix D: ro )orma 'nal(i o$ Strate%ic Option.........................................................7 +ork Cite! ......................................................................................................................................8
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Organic Growth and Thoughts of Expansion People do not usually think of faily !e"ipes as soethin# that $ill ake the !i"h. %o$e&e! in the "ase of 'atu!e&ie$ (a! )n"o!po!ated* that is exa"tly $hat happened. +hen it $as founded in ,-8-* the o!#aniation #ene!ated !ou#hly /,00*000 in !e&enue. )n a atte! of ,0 yea!s* the 'atu!e&ie$ $at"hed thei! !e&enues #!o$ to app!oxiately /,3 illion and had de&eloped thei! 1! and into a popula! "hoi"e in the a!ket fo! o!#ani" and natu!al food options th!ou#h authenti"ity. hey $e!e a1le to a""oplish this $ith thei! diffe!entiated allnatu!al yo#u!t p!odu"t $hi"h is des"!i1ed as sooth and "!eay due to a spe"ial p!o"ess in p!odu"tion. Additionally* the o!#aniation expanded thei! p!odu"t offe!in# o&e! tie f!o t$o fla&o!s &anilla and plain and t$o sies 8 and 32 oun"es to f!uit on the 1otto offe!in#s in thei! 8 oun"e "up sie. ade f!o natu!al in#!edients and ilk f!o "o$s not aided 1y huan #!o$th ho!ones* thei! p!odu"t offe!in# #a&e the a "opetiti&e ad&anta#e $ith an extended shelf life. +hile ost yo#u!t last a1out 30 days on the shelf* thei!s typi"ally lasts 50 o! o!e days. 'atu!e&ie$ "apitalied on this "opetiti&e ad&anta#e and 1!and expansion in a nu1e! of $ays. )t allo$ed fo! the to ha&e flexi1ility in shippin# and plant pla"eent. +ith a lon#e! shelflife* it $as not a1solutely essential that thei! p!odu"ts 1e iediately shipped f!o p!odu"tion to the !etail lo"ation. %o$e&e!* thei! "opetition $as "onst!ained 1y thei! p!odu"t9s infe!io! shelf life $hi"h ultiately led to o!e plants 1ein# 1uilt "lose! to !etaile!s and need fo! faste! deli&e!y. )n addition to this "opetiti&e ad&anta#e* thei! p!esen"e in the natu!al foods "hannel allo$ed the to sell thei! p!odu"ts at hi#he! p!i"e points due to the #!o$in# deand fo! o!e $holesoe and healthy #!o"e!y options. Additionally* the st!on# !elationships they had de&eloped $ith those !etaile!s ade the p!o"ess of doin# 1usiness u"h easie!. 'o$ Ch!istine +alke!* the i"e P!esident of a!ketin# at the tie* had 1een tasked $ith #!o$in# !e&enue 1y o!e than 50; 1efo!e the end of 200,* f!o /,3 illion to /20 illion. %o$e&e!* one thin# she needed to keep in ind $as that the "opany had also st!u##led to aintain a "onsistent le&el of p!ofita1ility and findin# a $a y to "han#e that $ould 1e p!efe!a1le. Afte! a #ood aount of "olla1o!ation aon# depa!tents and top exe"uti&es* the st!ate#i" options 'atu!e&ie$ that $e!e 1ein# pu!sued had 1een na!!o$ed do$n to t$o o&e!a!"hin# di!e"tions to take the "opany. (i!st* they "ould ente! into the supe!a!ket "hannel 1y offe!in# eithe! 8oun"e "up sies on a la!#e s"ale o! 32oun"e "up sies on an inte!ediate s"ale. Althou#h the ne$ a!ket ent!y $as "onside!ed to ha&e its !isks* the !e&enue#ene!ation potential* if su""essful* $ould 1!in# a1out anothe! la!#e oppo!tunity fo! explosi&e #!o$th fo! 'atu!e&ie$. &e!all* the o!#aniation $ould ha&e to "hoose 1et$een one of t$o di!e"tions to take the "opany 1y "hoosin# one of the th!ee options.
Evaluating Opportunities and Potential Issues he ain p!o1le $ith pu!suin# any of the th!ee options $as the issues that $ould a!ise !elated to "hannel ana#eent and "onfli"t 1et$een the inte!ests of the &a!ious stakeholde!s of the o!#aniation. ?nte!in# into the supe!a!ket "hannel $ould "ause f!i"tion $ith thei! existin# natu!al food "hannel !elationships. )f they $e!e offe!in# the sae p!odu"ts at supe!a!kets at a si#nifi"antly lo$e! p!i"e than $hat the natu!al food !etaile!s $e!e "ha!#in#* this $ould hu !t sales and hu!t the !elationship 'atu!e&ie$ $ould ha&e $ith the. Additionally* if the o!#aniation de"ided not to expand into the supe!a!ket "hannel* the &a!ious exe"uti&es $ould 1e upset and feel like 'atu!e&ie$ $as not se!ious a1out "apitaliin# on the &a!ious #!o$th oppo!tunities that
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$e!e a&aila1le to the. )n #ene!al* +alke! had a &e!y tou#h task ahead of he!. %o$ $as she #oin# to 1alan"e all stakeholde! inte!ests $hile also ensu!in# finan"ial &ia1ility o&in# fo!$a!d@ Befo!e the o!#aniation de"ided on $hi"h path to "hoose* they needed to ensu!e the!e $as a syste in pla"e to e&aluate the st!ate#i" ad&anta#es and !isks of ea"h option. Additionally* they needed to fi#u!e out ho$ to deal $ith any "onfli"t of &a!ious stakeholde! inte!ests and ensu!e thei! "hannel ana#eent st!ate#y "ould !e"on"ile any issues that ay a!ise. 'o$* an ent!an"e into the supe!a!ket "hannel in a noti"ea1le and $idesp!ead fashion $ould "ause f!i"tion $ith thei! natu!al food "hannel. +as the!e a $ay fo! 'atu!e&ie$ to a""oplish an ent!an"e into the supe!a!ket "hannel $ithout ao!ly dis!uptin# the sales in thei! natu!al foods "hann el@ Additionally* if they "hose to the ne$ p!odu"t offe!in# in the existin# natu!al foods "hannel* $ould the!e still 1e a $ay fo! the to de&elop a possi1le ent!y st!ate#y into the supe!a!ket "hannel that $ould allo$ fo! in"!eental adoption as opposed to an allaton"e entality@ hese a!e the =uestions that needed to 1e ans$e! and the issues that needed to 1e !esol&ed 1efo!e 'atu!e&ie$ "ould na!!o$ thei! th!ee "hoi"es do$n to one final !e"oendation. +ith that in ind* the finan"ial and st!ate#i" 1enefits and !isks of ea"h option $ill no$ 1e e&aluated.
One Choice, Three Possible Paths As seen in "ppendix "* the &a!ious options take distin"t pla"es on the Ansoff at!ix in te!s of a!ket and p!odu"t pla"eent. +hile options , and 2 a!e a!ket de&elopent st!ate#ies* option 3 is a p!odu"t de&elopent app!oa"h. +hile a a!ket de&elopent st!ate#y typi"ally "osts o!e upf!ont* thei! upside !e&enue potential is &e!y lu"!ati&e. >n the othe! hand* $hile a p!odu"t de&elopent st!ate#y ay not the sae le&el of !e&enue potential* it does ha&e si#nifi"antly lo$e! additional "osts to ipleent. +ith that 1!ief o&e!&ie$* $e "an no$ e&aluate the st!ate#i" options in o!e detail also see "ppendix ) fo! a less "u1e!soe !ep!esentation of the analysis. Additionally* "ppendices C * ! p!o&ide the full analysis of the finan"ial insi#hts outlined 1elo$.
Option #1: New Market Development with 8-ounce Cup Size As entioned 1efo!e* this option poses a th!eat to the "u!!ent !elationship 1et$een the natu!al food "hannel !etaile!s and 'atu!e&ie$. )t likely poses the #!eate! th!eat 1e"ause the 8oun"e "up sie option $ould int!odu"e the la!#est &olue of p!odu"t to a ne$ a!ket and $ould pose a di!e"t th!eat to the sales at natu!al foods !etaile!s. %o$e&e!* fo! 'atu!e&ie$* this option !ep!esented the #!eatest !e&enue potential ea!ne! and p!o&ided a $ay fo! the to stay ahead of thei! "opetition. hey $ould ha&e a si#nifi"ant fi!sto&e! ad&anta#e if they $e!e the fi!st in thei! "ate#o!y to int!odu"e a p!odu"t in the supe!a!ket "hannel. astly* the o!#aniation pointed out the in"!edi1le su""ess of t$o othe! natu!al food 1!ands that had a"hie&ed in"!eased !e&enues of o!e than 200; in ust t$o yea!s follo$in# a supe!a!ket ent!y. he finan"ial analysis* ho$e&e!* #ene!ated a #!eat deal of "on"e!n in te!s of $hat 'atu!e&ie$ "ould expe"t in te!s of p!ofita1ility f!o a $idesp!ead ne$ a!ket ent!y. Althou#h the ain #oal of 'atu!e&ie$ is to #!o$ !e&enues to /20 illion 1y 200,* this option $ould do that at the expense of #ene!atin# net losses of ust o&e! /, illion fo! 2000 and 200,. +hile !e&enues $ould !ise to a1out /40 illion pe! yea!* the "opany $ould "ontinue in the ha1it of ope!atin# unde! an in"onsistent le&el of p!ofita1ility. his is likely due to the la!#es"ale natu!e of this ne$ a!ket ent!y. hus* the !e&enue potential is hi#h 1ut the initial "osts upf!ont and o&in# fo!$a!d yield the !esults $e see. 'o$* if the o!#aniation sa$ o!e than 2; #!o$th f!o 2000 to 200,* then thei! net in"oe $ould likely tu!n positi&e* espe"ially if the #!o$th $as a nythin# a1o&e 5;. hen* o&in# fo!$a!d* it $ould likely see positi&e net in"oe f!o yea! to yea! afte! the supe!a!ket adoption !ea"hed a hi#he! le&el. %o$e&e!* the!e is a si#nifi"ant "han"e that this
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option $ould #!eatly hu!t the !elationships and !e&enues #ene!ated f!o the hi#h p!i"epoint natu!al foods "hannel.
Option #2: New Market Development with 32-ounce Cup Size ike the fi!st option* the ne$ a!ket ent!y poses a potential th!eat to the !elationship 'atu!e&ie$ has $ith thei! natu!al food !etaile!s. %o$e&e!* it does not see that this option $ould "!eate as u"h f!i"tion fo! the !elationship. At a si#nifi"antly lo$e! nu1e! of units and la!#e! "up sie 32oun"e 1ein# int!odu"ed into the ne$ a!ket* 'atu!e&ie$ $ould "ause less of a !ipple in the sales of thei! natu!al food "hannel9s !etail sto!es. he ain ad&anta#e of this option is the hi#he! #!oss a!#in it p!o&ides "opa!ed to the 8oun"e "up sie option. Additionally* the!e $as less "opetition in this "up sie and thei! shelflife "opetiti&e ad&anta#e 1!ou#ht a1out a si#nifi"ant ease of ent!y. his "up sie had also a"hie&ed a 45; a!ket sha!e fo! the sie se#ent $ithin the natu!al foods "hannel. )f this a!ket sha!e $as a"hie&ed in the supe!a!ket "hannel* it $ould de&elop a &ia1le lon#te! finan"ial 1enefit to the topline. astly* slottin# fees $ould 1e ,0; of the "ost that $ould 1e in"u!!ed $ith the fi!st option /4.8 illion "opa!ed to /480*0 00. he diffe!en"e in "ost 1et$een the fi!st and se"ond options is $hat allo$s the se"ond option to 1e p!ofita1le. Additionally* althou#h it does not #ene!ate as u"h !e&enue* the!e is si#nifi"antly less !isk in te!s of pay1a"k pe!iod and initial in&estent. >ption , #oes fo! the hoe!un in te!s of !e&enue at the expense of ope!atin# unde! a net loss option 2 plays it safe 1y ensu!in# p!ofita1ility e&en thou#h !e&enue sie and #!o$th a!e not as su1stantial. >&e!all* this se"ond option p!ootes a #!eate! de&otion to a la!#e! nu1e! of stakeholde! inte!ests the fi!st option $ould appea! to daa#e !elationships to a #!eate! de#!ee if ipleented and satisfy fe$e! stakeholde! inte!ests "olle"ti&ely.
Option #3: ro!uct Development with Chil!ren" Multipack his option is on the othe! end of the spe"t!u f!o the fi!st and se"ond options. his st!ate#y $ould !esult in the o!#aniation holdin# off on ente!in# a ne$ a!ket. )nstead* it $ould de&elop a ne$ p!odu"t in o!de! to 1ette! tailo! to the needs of thei! existin# a!ket* the natu!al foods "hannel. his option $ould also 1!in# a1out diffe!ent and uni=ue st!ate#i" 1enefits "opa!ed to the othe! t$o options. (i!st* the ne$ p!odu"t $ould help fu!the! 1uild the al!eady solid !elationships 'atu!e&ie$ has $ith the natu!al foods "hannel. Eo#u!t "ontinues to 1e a &e!y ipo!tant p!odu"t fo! the natu!al foods !etaile!s and that !elationship should 1e aintained.
Decision Criteria and Analsis 'o$ $hat should 'atu!e&ie$ use as a "!ite!ia fo! de"idin# $ith option to ultiately pu!sue@ he!e a!e a nu1e! of stakeholde! inte!ests and inte!nal di!e"tions that need to 1e ali#ned in o!de! fo! the #!o$th st!ate#y "hosen to 1e a""epted and e1!a"ed 1oth inte!nally and exte!nally. (i!st* the !esult of all final de"ision on $hat to do should eet the !e&enue #oal of /20 illion 1y 200,. %o$e&e!* this #oal does not need to 1e #!ossly o&e!a"hie&ed. )t $ould 1e 1ette! to #!o$ steadily than to #!o$ explosi&ely and then "!ash. &e!all* the o!#aniation9s "ustoe!s and $holesale 1uye!s ust 1e kept happy in o!de! to ensu!e the topline expe!ien"es does not expe!ien"e any undue st!ess o! de"line. +ith that* a final e&aluation of the st!ate#i" options ust 1e "ondu"tion and a final !e"oendation ust 1e ade.
!eco""endations# $ore Than One %trateg& he th!ee options ea"h p!o&ide thei! o$n st!ate#i" 1enefits and pose thei! o$n uni=ue !isks to 'atu!e&ie$9s 1usiness odel. )n !e"oendin# $hat should 1e done to Ch!istine +alke!* the follo$in# !e"oendations and a"tion plan $ould yield the 1est !esult fo! the o!#aniation 1ased on the analysis found in this !epo!t and in the appendi"es. (o! "e!tain* the thi!d st!ate#i" option ust 1e pu!sued. )t offe!s the least aount of do$nside !isk $hile offe!in# a desi!a1le le&el upside in te!s of p!ofita1ility and !e&enue. Additionally* the !elationships $ith the existin# natu!al foods "hannel $ill 1e aintained and st!en#thened. he !apid #!o$th that the "hannel is still expe!ien"in# !elati&e to supe!a!kets is &alue that 'atu!e&ie$ ust "aptu!e. astly* this option p!o&ides the 1est sou!"e of "onsistent p!ofita1ility and 1!in#s the o!#aniational to /,- illion in !e&enue in 2000. he p!oe"tions in "ppendix ! a!e "onse!&ati&e and do not sho$ 'atu!e&ie$ !ea"hin# /20 illion in !e&enue $ith this option all of the p!oe"tions a!e "onse!&ati&e to "on&ey unifo!ity in analysis of the options. %o$e&e!* takin# into a""ount the expe"ted #!o$th of the natu!al foods "hannel and the $ant and need fo! a "hild!en9s option* it is o!e likely than not that the /20 illion !e&enue #oal $ould 1e !ea"hed. 'o$* the =uestion !eains* if 'atu!e&ie$ pu!sues the thi!d option* $hat happens to the othe! t$o@ hese t$o options should 1y no eans 1e th!o$n out fo! #ood. he only !eason these options should not 1e pu!sued no$ is 1e"ause they need eithe! 1e fu!the! de&eloped o! ipleented on a salle! s"ale. he !e"oended a"tion plan $ould 1e to int!odu"e the 32oun"e "up sie option into the supe!a!ket fi!st to test the effe"t it $ould ha&e on the natu!al food "hannel. )f it has little effe"t* then "onside! addin# the 8oun"e option into the ix on an in"!eental 1asis as the 1!and #ains !e"o#nition in the "hannel. >n"e the 1!and has esta1lished itself* then a o!e "op!ehensi&e a!ket de&elopent st!ate#y "an 1e ipleented. %o$e&e!* the !elationship $ith the natu!al food "hannel ust 1e aintained. )n sho!t* the thi!d option ust 1e ipleented to satisfy and ali#n the #!eatest nu1e! of stakeholde! inte!ests. he othe! options should only 1e pu!sued in"!eentally and only to the point at $hi"h they do not ha! the natu!al foods "hannel !elationship. )f Ch!istine +alke! p!oposes this lon#e!te! st!ate#y* it is u"h o!e likely that all stakeholde! inte!est $ill 1e satisfied e&entually than soe not 1ein# add!essed at all.
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Appendices Appendix A: lacement o$ Strate%ic Option 1
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Option +% Market Development 8oun"e "up six
Appendix B: Cot-&ene't (nal)i o$ Strate%ic Option
&ene$it
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•
Cot
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•
,tilitaria n ulin% .1-1/0
Option #1 e!y hi#h !e&enue potential H!eate! s"ale a"hie&a1le
'atu!al food "hannel !elationship daa#e >pe!atin# unde! a net loss o!e ha! than 1enefit $ith la!#es"ale a!ket ent!y 4
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•
•
Option #2 )nte!ediate !e&enue potential Positi&e net in"oe &entu!e
Gnkno$n effe"t on natu!al foods "hannel !elationship
o!e 1enefit than ha! $ith a edius"ale a!ket ent!y 7
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ostly 1enefits $ith little ha! potential due to finan"ial pe!fo!an"e p!oe"ted -
, IAnsoff at!ix eplate and P!ofessional at!ix
Option #3 %i#hest p!ofita1ility aintain natu!al food "hannel !elationship o$est initial in&estent o$e! !e&enue addition
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Appendix C: *inancial +alue (!!e! (nal)i
J )or lottin% epene: ,0, !etaile!s /,0*000 fee pe! ption ,: 6 ption 2: 4
Appendix D: ro *orma (nal)i o$ Strate%ic Option
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,ork Cite! IAnsoff at!ix eplate and P!ofessional at!ix
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