The Farm Winery Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

The Farm Winery Case Solution

“Question 3: Based on your analysis in Questions 1 & 2 to what extent will Madsen achieve the financial goals he has for The Farm Winery in 2014? (Goal = revenue of 200 000$).”

It could be analyzed from the projected income statement of 2014, the company had attained total sales of $225,000, which is more than its goal of revenue of $200,000. So based on that fact, it could be said that The Farm Winery has effectively achieved its goal for year 2014.

“Question 4: Based on your analysis thus far, determine whether the winery should pursue the $80,000 investment in an additional vineyard development. Explain why or why not?”

Based on the quantitative analysis; it could be said that the winery should not pursue the $80,000 investment because of two main reasons:

The company does not have positive cash balance at the yearend,so it would not be able to make such investment.
Secondly, it is mentioned in the case that this investment would have no impact on the company’s income for about a decade, which mean the investment would not provide sufficient returns to the company.

“Question 5: What business steps should The Farm Winery modify or pursue to strengthen its financial position? Should the winery adjust its annual production volume?”

Answer: In order to strengthen the financial position; the company is suggested to balance out the annual cash deficits and to go for debt financing so that its financial position would become stable.

Secondly, it is mentioned in the case that the company had scored 92 points in 2009 LPF,which is a very significant score to achieve.Despite this, the company’s average sell price is 75$ which is very low as compared to the companies with the same score, as there selling price are about 130$ even with low quality. So the company must revise its price and increase its rates according to its score, for say $100.By doing so, the company would be able to generate more revenue and would not even require debt financing to balance its cash equivalents.

The winery does not need to adjust its annual production volume because currently it is producing about 800 cases annually, which is a relief identified by the team. Increasing the company’s its annual production further would require the farm to compromise on its quality of product to some extent but it would not be an effective approach as according to their vision; the company must not boost its sales by hurting the brand (declined quality).

Note: Refer to all Exhibits attached for calculations.

Conclusion and Recommendations

Based on both qualitative and quantitative analysis of the company; it could be said that on a qualitative level that the company is doing great as it had managed to achieve the score 92 points in 2009 LPF, which was not an easy task for a small company like this, but it was able to do so because of its quality product. Based on qualitative analysis, the company is not doing much great as although it is able to achieve its financial goals but to make its cash equivalents positive; the company could effectively increase its selling price in accordance to its score..............................

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The Farm Winery Harvard Case Solution & Analysis