I am only needing certain parts completed for this team case analysis- needed as a shell as well. needed by Thursday 10 pm CST(US).
Please see attachments for reference there is an outline of the team case analysis (the outline is how we are completing the assignment), the sample case analysis (same write up as a reference) and also the honeysuckle document – the honeysuckle is the actual case analysis we have to focus on – the team case analysis,
I am needing the Introduction, Part 1- Major problems/issues, and the conclusion (those parts only)
1
Running head: GEAUXSICLES CASE ANALYSIS
2
GEAUXSICLES CASE ANALYSIS
Geauxsicles Case Analysis
Austin Murray
Southeastern Oklahoma State University
Geauxsicles Case Analysis
Introduction and Major Issues
After brainstorming with her mother and sister in their family kitchen, Erin Johnson started a popsicle business with funding provided by her father. Despite a lack of business experience and knowhow, Erin was able to utilize her interior design experience, combined with her brother’s graphic design abilities, to create a strong brand image to market her family’s popsicle recipes. Specifically, paying tribute to the French influences of the firm’s location, Louisiana, Erin named the popsicles, “Geauxsicles,” and they are made in the shape of the fleur-de-lis. Geauxsicles are also differentiated by their handmade production process and premium ingredients.
As Erin began the pursuit of her new venture, her lack of business experience began to surface through inadequate research methods. Erin observed considerable setbacks as she acquired a building in an ideal location, but it needed to be rezoned to meet her venture’s needs. Fortunately, her father is a lawyer and he was able to help her with the appeal. Later, Erin stumbled upon selling Geauxsicles at festivals, which now contribute to 50% of all her sales.
Now, after two years of business, Geauxsicles has reached a point of expansion, but Erin is at a crossroads with what to do. This problem is partially attributed to her lack of experience in evaluating expansion opportunities using accounting principles. However, the major issue is the fact that Erin is facing major threats to expansion due to high costs, exacerbated by the fact that the slow, handmade process of producing Geauxsicles is limiting her ability to generate the revenue necessary to pursue opportunities.
Analysis
Analysis for single line of business organizations
Organizational vision/mission, objectives, current strategy. As previously mentioned, Erin’s lack of business experience has affected her ability to effectively plan for her new venture. Although the organizational mission and vision statements clarify a company’s purpose, products, differentiation, and future aspirations, the owner of Geauxsicles does not appear to have created either at this time (Pearce & Robinson, 2013).
On the other hand, while primarily unintentional, the owner of Geauxsicles has employed a differentiation strategy predominantly focusing on the brands’ image. This derives from her strength in design and it is represented in the brand’s Louisiana inspired name, product shape, and truck and storefront decorations. Furthermore, Erin differentiates her products by incorporating unique flavors and premium ingredients.
SWOT analysis. SWOT analysis of Geauxsicles reveals the following findings:
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Strengths |
Weaknesses |
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· Use of premium ingredients · Interior design background · Family resources—Father is a lawyer & brother is a graphic designer · Ability to develop strong brand image · Unique recipes and flavors · Positive customer reception · Shop/factory located in a high traffic area · Event sales · Freezer truck |
· Lack of business experience · Insufficient business research/plans · Limited production capabilities resulting from labor-intensive/hand-made process · Limited financial resources · High-volume product · Owner is spread thin |
|
Opportunities |
Threats |
|
· Rising demand in sugar-free market · Multiple areas for potential growth (LSU Stadium, local restaurants & businesses, mom & pop shops, retail stores, festivals, and franchising) · Louisiana’s sub-tropical climate |
· Zoning laws · High expansion costs · Inconsistent reliability of small firms · High festival costs · High number of large, established competitors · High number of substitutes |
Additionally, SWOT analysis provides that Geauxsicles currently operates in cell 2. As such, the company possesses many internal strengths, but faces a number of environmental threats. This suggests Geauxsicles should pursue a diversification strategy or potentially redistribute its resources in pursuit of more favorable circumstances (Pearce & Robinson, 2013).
Competitive Analysis. Geauxsicles faces a high level of competitors and substitutes. An overview of them is below:
· Major ice cream and popsicle manufacturers: Popsicle, Blue Bell Creameries, Ben & Jerry’s, Breyers, and Nestle.
· Advantages—Dominate market share, brand recognition & reputation, readily accessible through a variety of channels, high production levels, increased purchasing power, and vast resources
· Ice cream retail locations: Marble Slab, Baskin Robbins, Cold Stone Creamery, other local locations.
· Advantages—brand recognition, reputation and customizability of products
· Snow Cone Stands
· Advantages—inexpensive, wide range of flavors
· Ice Cream Trucks
· Advantages—accessibility
As previously identified, due to their unique design, Geauxsicles require a slow, hand-made process. To demonstrate the competitive advantage of the major manufacturers over the start-up. Consider the fact that Geauxsicles can produce 27,000 popsicles in the average 30-day month without holidays. If the company is operating 7 days a week and 12 hours a day, this means the company is producing 900 popsicles a day, or 75 popsicles an hour. Comparatively, the typical popsicle machine generates 4,320 units per hour, which translates to 51,840 popsicles a day per machine (a major manufacturer will be operating more than one machine) (Advameg, 2019).
Financial analysis. Considering Geauxsicles’ current production levels, Erin stated the company can make up to 27,000 popsicles in a 30-day month without holidays. Geauxsicles sell for $3.00 a piece with an average cost of goods sold at $1.00 per popsicle. Furthermore, Geauxsicles’ monthly fixed expenses include a payroll expense of $5,290 and rent of $1,650. Conservatively adding another $1,500 of fixed expenses for insurance, utilities, and other payments would bring expenses to $8,440 a month. With $2.00 of contribution margin per Geauxsicle, this means Erin will need to sell 4,220 units a month to break even.
Additionally, based on the previous monthly break-even analysis, estimated production levels, assuming all units produced are sold, and assuming Erin’s father is not charging her interest for financing her projects, the following financial information can be deduced:
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Geauxsicles |
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Budgeted Income Statement |
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For the Year Ended December 31, 2019 |
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Sales |
$972,000 |
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Cost of Goods Sold |
324,000 |
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Gross Margin |
648,000 |
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Selling and administrative expenses |
101,280 |
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Net operating income |
546,720 |
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Interest expense |
0 |
(Father provided funding) |
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Pre-tax Income |
546,720 |
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Taxes (est. @30%) |
164,016 |
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Net income |
$ 382,704 |
Implementation Issues/Problems. Geauxsicles faces several issues concerning implementation. Highlighted in previous sections, due to the owner’s lack of business experience and knowledge, she has not conducted any kind of analysis, market research, or planning for her business activities. In fact, the successes the firm has experienced, like sales from festivals, could be attributed to chance. This also contributes to the owner’s inability to evaluate investments opportunities for the firm’s survival. Furthermore, the
Evaluation/Control Procedures. At the moment, Geauxsicles implements almost no evaluation or control procedures. It is part of the reason Geauxsicles has reached an impasse in the decision-making process regarding the direction of the company.
Analysis for multi-line of business organizations.
Portfolio analysis. Not applicable for Geauxsicles.
Resource allocation/restructuring needs. Not applicable for Geauxsicles.
Alternative Solutions to Problems/Issues
Continue Current Operations While Addressing Weaknesses
The company appears to be in a financially strong position. Even if Geauxsicles only sells 75% of its annual production, the company would yield a net income of $268,800 (excluding Erin’s salary). As such, Erin could continue current operations and save the money to overcome barriers to entering new markets (e.g., fees, equipment, etc.). Better yet, Erin could reinvest the money in the business, and herself, by taking some business courses online, or at a local university.
Pros. Continue to build upon established brand recognition, increase understanding of business processes to enhance business processes, ability to evaluate opportunities more effectively in the future.
Cons. Must continue to sell high volumes of Geauxsicles, slower pace.
Develop/Implement a Diversification Strategy
As previously identified, Geauxsicles’ current production rates are a weakness greatly compounding the company’s threats to entering new markets. For this reason, Erin could evaluate and redistribute her current assets to generate favorable circumstances and potentially generate higher profits. Specifically, Geauxsicles could utilize its freezer truck as an additional point of sales locally when it is not at festivals. The company could develop and introduce an additional product line (e.g., shakes or smoothies) that incorporates the same ingredients as Geauxsicles, but has a faster production rate or higher profit margin. Both options utilize the company’s current resources; therefore, they generate limited additional costs. Geauxsicles could implement one or both approaches.
Pros. Low costs, potentially increases revenues, production, offers variety.
Cons. Increased variable costs, change management.
Expand the business
Considering the several expansion opportunities presented to Geauxsicles, the owner could evaluate the firm’s current assets and seek business counseling about which opportunity is in the company’s best interest (e.g., retail opportunities, local restaurants, LSU stadium, franchising, etc.). In light of the high costs associated with many of these options, Geauxsicles may need to borrow money.
Pros. High costs, consulting fees, licensing agreements and documents, potentially incurring debt.
Cons. High risk accompanied with potentially great consequences.
Recommended Course of Action & Justification
Reviewing the options and problems facing the firm, it is recommended that Erin pursues developing and implementing a diversification strategy. As of right now, the issues Geauxsicles faces are largely attributed to the firm’s dependence on a single product line that requires high volume sales, but is produced at a slow rate. Despite observing many potential opportunities, this scenario inhibits the owners desire to enter different markets since there are major environmental threats. Pursuing a diversification strategy aligns with the SWOT analysis of firms position in cell 2 (Pearce & Robinson, 2013). Furthermore, optimizing the utilization of resources, such as creating another product line using the same ingredients as Geauxsicles and using the freezer truck as an additional point of sales locally, generates additional revenue streams while incurring minimal additional costs. Thus, the firm will be able to observe increased profits, which can assist with the expedited achievement of expansion goals and Erin’s necessary investment in business courses. In other words, the diversification strategy offers the highest reward to risk ratio out of the options.
Implementation Plan
Who will do what?
The owner, Erin, will begin brainstorming ideas for potential new product lines incorporating current Geauxsicles’ ingredients. It is recommended that, during this time, she proactively seeks outside input from her customers about their preferences, considers gaps in her region, and incorporates these components into her concept. Once an idea is decided upon, Erin will begin researching and experimenting with recipes.
When
With Geauxsicles’ current operating levels, and due to the nature of utilizing preexisting assets, Erin can start on brainstorming and research right away. The target goal is to have a new product ready for testing in 3 months and introduced into the market in 6 months.
With what resources?
Since Erin is diversifying and, therefore, reallocating current resources. Erin will utilize the ingredients she already incorporates into Geauxsicles. Additionally, to be more strategic with her approach, once Erin is close to developing a new good, she will provide small samples to family, friends, and eventually customers. The biggest expense in this process will be Erin’s personal time. Consequently, Erin will hold off on utilizing the freezer truck to establish another local point of sale until she has implemented the new product. This way, she will not be overwhelmed and spread between multiple projects at the same time.
References
Advameg, Inc. (2019). How products are made: Popsicles. Retrieved from http://www.madehow.com/Volume-6/Popsicle.html
Pearce, J, & Robinson, R. (2013). Strategic management: Planning for domestic & global competition. New York, NY: McGraw-Hill.
,
Honeysuckle Acres Bed & Breakfast:
Multi-Channel Distribution
Strategy for Success
Honeysuckle Acres is a farm retreat bed and breakfast owned and operated by Alexa Jones. Honeysuckle Acres was booked at 80% occupancy for the months of June and July and Alexa was feeling great about the decision to open the Bed & Breakfast last year. However, her investors are somewhat concerned about the months in the fall and winter and are encouraging her to find alternative sources of revenue for the off-season.
Honeysuckle Acres sits on the banks of a beautiful river in the southwest part of the country known for swimming, fishing and canoeing. While there is no direct access to the river from the property, just a short walking down the river trail is access and there are several access points for swimming and canoeing within driving distance. They boast of quiet, country living surrounded by farm animals, beautiful scenery and attractions within 10 miles of the property.
Currently, there are ten cabins available for rent on the property as well as a large building for meals or events and a small chapel. The event building has a full kitchen and seating for around 50 guests. The chapel seats 48 people comfortably. On average, the B&B operates at 80% occupancy in June and July; 40% in August and 20% for the other months for the Thursday-Sunday stay. Information on the nightly rates for the cabins can be found in table 1. Last year she only had one group request the use of the event center for a catered lunch and one other group use the chapel for a family meeting. Alexa included these in their stay since they booked the entire farm.
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Cabin |
Sleeps |
Rate |
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Main home |
12 |
$550 for the entire house |
|
Main home |
2 |
$125 per bedroom |
|
Farmhouse |
7 |
$325 for entire house |
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Farmhouse |
3 |
$175 per bedroom |
|
Honeysuckle Cabin |
8 |
$175 |
|
Buffalo Cabin |
4 |
$175 |
|
Painted Cow Cabin |
4 |
$175 |
|
Rusty Nail Cabin |
4 |
$225 |
|
Under the Pines Cabin |
2 |
$250 |
|
The Hidden Haven Cabin |
4 |
$150 |
|
Sunset View Cabin |
2 |
$150 |
|
Starlight Sanctuary Cabin |
4 |
$150 |
|
Event Center |
50 |
$200 per day |
|
Chapel |
48 |
$200 per day |
Alexa runs specials on her website, but only about 5% of her guests are aware of the specials and take advantage of the birthday, anniversary, family reunions and church retreat specials she runs throughout the year. She advertises on her Facebook page and is listed on several hotel websites such as Booking.com and Trivago.com. Her Trip Advisor ratings also have a direct link to her website. Alexa has considered HomeAway and AirBNB but is unsure if the fees involved are worth the effort. In addition, with the third party providers, the guests will be charged service fees. She has done some research and found information for comparison for the most popular third party sites (see table 2).
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Guest Fees |
Host Fees |
Listing Fees |
|
|
Homeaway/VRBO |
6-12% |
7-11% – or – |
Annual $499 |
|
AirBNB |
0-20% |
3-5% |
Free to list |
|
Trip Advisor |
8-16% |
3% |
Free to list |
|
Booking.com |
None |
10-25% |
Free to list |
|
Expedia |
None |
15-20% |
Free to list |
|
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