Good night, everyone. This is presented by Michelle Tsai, from the fin dept. The info I’ll give you tonight will help you win out as a CEO making a critical decision. In my presentation today I’m going to show you the panoroma of through analysis that brings the concepts into effects.
Let’s have an overview of my presentation. The most important part of all is by far the difficulty Natureview faces and the solution toward it. As a result, several analysis are included to support the final decision.
OK, now I’d like to move on to the background. Natureview is an organic yogurt producer, also a leading national brand in natural foods channel. Due to the cash out of venture capital that primarily supports the operation of Natureview, Natureview has to come up with a solution to sustain the operation, without VC’s help.
As you can see from the numbers, the executive wants the total revenue to grow from 13M to 20M.(abt 54% growth rate)
The first analysis-I want you to have a look at the 2 different channels that are proposed in the options. As you can see from this chart, Dannon and Yoplait are the two leading brands already existed in the supermarket channel. Comprises abt 54% of the market share. Therefore, if Natureview were to release on supermarkets, it has to battle face to face with the two name brands. It seems that supermarket is more technological driven; thus, the exp spent may be higher. In this page what I want to put emphasis on is the re-entry fee- the repeated slotting fee may be disastrous to the company. It then goes through 4 steps from the supplier to demanders. Though it has high potential to strike it rich, the underlying high risk can’t be underestimated.
The other channel is the original one where Natureview was in. It possesses 24% of market share in advance, which is a big leading brand in natural foods channel. However Brown Cow & Horizon are two big competitors of Natureview, who seek out to take the champion of market share. As a result, I think that Natureview should choose to take measures to sustain its superiority instead of plunging into a high risk position. Natureview can save an amount of money through natural foods channel, though it has to go through 5 steps compared to 4 steps in supermarket channel.
Let’s jump to the comparisons of customers. Mostly, people who buy in supermarkets are more price sensitive as a result of the social status they are in , usually middle or lower class. So in this chart shows gap between the cost and price it sold. Apparently, natural foods channel wins out due to the bigger gap which means the bigger profit it earns.
Look at the I/S in 1999, I set revenue as benchmark, after the calculation, net income just accounts for 2% of the revenue! How pity!! There are two simple yet practical solutions to the issue. To reduce expense or to gain revenue.
Here comes the most important part of the analysis. The 3 options. As you can observe from this data, the unit sales of option 1 outwins the other two. But can we look at the sky through the tube? No ,it’s possible that we omit sth important.
So let’s have a quick look at opt.1- 8 oz is the most popular size and it’s aimed at the target group, especially women. It itself can generate 25.9M alone, which exceeds the originally set goal of total revenue of 20M.
The advantage may be high potential for increased rev, the estimated total rev in 1st yr is 35M; however it is confronted with direct competition with the pre-exsisting name brands and bears high risk.
We can see from this chart that NI comprises 17.67% of total rev.
When it comes to opt2, the option alone makes the profit of 14M, total revenue earned exceeds 20M which is abt 27.85M.
As we look at the pros and cons, it has higher profit margin than the 1st opt. In contrast, it has much higher risk. Normal customers may not use to buy the family size, so it’s rather risky to enter supermarket through this option. To sell nationalwide, one has to do the marketing and advertising, which is expensive and hard to be as prevalent as big names can be. As a result, net income only comprises a very little rate of total revenue, 8%.
The final option has a high potential for growth: 12.5% AGR. Let’s have a look at the pros and cons. It has developed long-term relationship with natural foods channel and customers, so it’s low risk and low cost. Modern people nowadys care more about their health, in pursuit of a healthy diet, they seek for natural foods channel, which is a fast-growing trend all over the US. Despite of the fact that the disadvantage may be lower revenue and more R&D to develop new products.
Last but not least, the best option is Option 3!! This is the fragment I cut it from the Final I/S with each opt. Opt 3 has the highest return. & you may wonder further why option 3 provides us with the best condition? First, from the aspect of risk mgt, there is fewer risks and many known variables. Growing natural foods channel, and no opportunity cost for time and money for new marketing strategies,etc. total rev is 1M short of the expected one. But if you can have a thorough look at the I/S of Natureview, you can find out that with more efforts on promotion, more profit will be generated.
Thank you for your listening!
Filed Under : 
Mar.17,2012
)/ Good JOB, definitely dying for it. 
