EVAN KRISTEN SPECIALTY FOODS (A) CASE ANALYSIS Case Solution
Problem Diagnosis
Chris Brody, who is the managing director for the banking group at E. M. Warburg, has to make a decision for one of the Warburg portfolio company, Evan Kristen Specialty Foods (EKSF). This small value added produce portfolio company has just completed four months market test in a number of the markets in the Wegmans supermarkets and the results of this market test have been astonishing. Based upon the results of this market test a four year profit and cash flow forecast has also been prepared by the management of EKSF.
Now Brody has to make a final decision and decide that should this company move ahead with the investment breakdown and implement full scale commercialization. A detailed analysis needs to be performed before a final recommendation can be made to EKSF management.
Analysis
Before analyzing the financial information presented in the case, some of the value capture model concepts used in game theory have been implemented to analyze and assess the potential position which EKSF would hold in the market and the overall industry among its competitors.
EKSF Value Delivery in Industry
The company would create value in the industry and this added value has been observed in the four months market test of the company. The management of EKSF would add value to the business through the following areas:
Distribution Convenience
The management of EKSF had made a convenient distribution system by having an engineer who designed the Cryopac refrigerator to maintain the temperature for the herb products. This enhances the delivery of the herb products from the warehouse of the company which is currently at Salinas, CA near Monetery Farms. The distribution system of FedEx used by the company makes use of the cryopac which keeps the herbs fresh.
Enhanced Impulse buying & product positioning
The unit designed by Rosemarie Kaplan had enhanced the impulse buying and the positioning of the herb products. This created value through in-store merchandising. This enables the product to be in easy reach and on front display for the customers which visited these stores. Moreover, the weekly visits of EKSF merchandisers also increased the care for the company’s products.
Association with Monetary Farms
The contract with Monterey Farms will allow the company to have a wide variety of high quality herbs year around in all seasons. This would meet the projected demands and give EKSF a competitive edge over its competitors. This is because currently no other competitors of the company have a contract with MF.
First Order Competitive Intensity
If we look at the first order competitive intensity for EKSF, then we can see that EKSF is guaranteed to capture a lot of value from its business model. The reason for this is that the competition in the market for EKSF is weak and the three important reasons for this are:
- Cost savings from the store management would not increase as Buyers WTP is lower
- The competition from national brands such as P&G is low and this market as a target market is not suitable for such large national brands.
- The next best alternative for EKSF is to earn $ 860.93 per store per year. This would enhance the value its products generate.............. This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.
