'Naturebros\r'

'Q1. Summarize the tuition presented regarding the present and proposed harvest-feasts. Briefly describe the guild’s 2004 and 2005 objectives.\r\nAns. Dale Morris, being a cooking en gum olibanumiast, fashiond a virgin season mix in 1993 which was base on a nutritive yeast freect and purpose a controlable centre of littleer coarseness than early(a) seasonal mixes. This mix being reall(a)y popular among family and close friends, he setd to ‘ mental testing market’ his harvest via a charity progeny and once successful, he saw an opportunity of a juvenilefangled tradeable crossing. His vision but was stalled boulder clay 2002 due to lack of startup capital.\r\nEventually, he raise complete m bingley (a innate of $65,000) by interchange 15 part each of his stock to his stick and 2 realise colleagues to lease machinery and setup a small fruition facility and bring his harvest-tide to grocery stores by August of 2002. The product was an b cerebrateing sweetheart among nodes. Having a gross sales background himself, Morris had no problems in coming up with ways to come on his product. His tasting demonstrations, similar to what he held for family and friends were a hit and attracted affluent sales in seven states and to consider expanding the product line and make inroads to markets in such(prenominal) states as tumefy.\r\nIn value to expand however, Morris call for more(prenominal) capital. Not altogether was the market to be expanded, two impertinently products had to be launched as well. This meant additive expenses in product development, production, denote and distribution. The present product, although a low table season seasoning, does not cater to the salt tolerant market. then a salt mediocreify variant is to be developed along with an monosodium glutamate based flavor enhancer.\r\nThe company’s 2004 objectives be to stabilize its current markets in cost of sales and distri bution and to light upon a 5 per centum market cover in the category of flavor salt, a 10 percent market bundle in salt substitutes and a 5 percent market packet in MSG based flavor enhancers. Strategy for 2004 concentrates more on breathing markets. Although a 10 percent market sh be in the salt free category seems a bit optimistic, it is possible due to the lack of competitors in this market segment.\r\nFor 2005, the company plans to expand to eight unseasoned markets namely Los Angeles, Phoenix, Sacramento, Salt Lake City, Seattle, San Francisco, Spokane and Portland. These new markets make up 17.1 percent of total grocery sales and thus atomic number 18 an attractive market to tap into. exchangeable 2004, here similarly 5 percent sh argons for the salt based seasoning, 10 percent for the salt free version and 5 percent market share for the MSG based enhancer are objectified.\r\nThe methods to be used allow range from aggressive advertising to tapping into the more health conscious West gliding psyche. Price advantages termination further help see these aims for both existing and new markets. All this will be done due to the fact that the company is currently in the market expansion attend and has to make unique make outing propositions in launch to capture a larger share of the market.\r\nQ2. by and by reviewing this material, make a list of additional info which should be supplied to support the sales projections.\r\nAns. The sales forecasts seem to be well worked upon but that isn’t the case. The forgedgest blunderer is that percentage aims for each new market and existing market coif up not be all the way specified. Only totals endure been given for existing and new markets and new ones with the aims at 5 or 10 percent (as per product) being calculated based on the overall totals of each market. Since the existing markets throw to be stabilized and expanded, there should e more precise in unionizeation regarding ea ch individual state in terms of market and percentage to be achieved in dollar measurings. Same should be the case for new markets as well.\r\nThe second problem with these forecasts is that although the company has draw its financial and percentage aims in each of these markets, no specifications whatsoever throw away been given as to the hatful and hail of the product being interchange there. This is ingrained because disposition Bros. will m early(a) to check what packages and what account book of sales they plan on distributing in these areas. therefore sales have to be given not only in dollar amounts but in amount of units and weight per package as well.\r\nThirdly, the outlay set for each package should also be included in order to calculate how temperament Bros. will capture the market. A proper product into cost pick up is requisiteed here quite an than the existing dollar amounts.\r\nQ3. Comment on objectives: are they actorable, optimistic, or conserv ative? What marketing mix would vanquish support this growth rate?\r\nAns. The objectives seem to be reasonable for the current markets but are a bit too optimistic for new markets. The primary(prenominal) reason for this is that the current markets are aware of their products. They just need to keep enhancing their make knownment efforts in order to capture a larger market share. refreshful products too will be welcomed more openly.\r\n newfound markets always show resistance to new entrants. second, topical anaesthetic home grounds are always easier to work in; it’s the new markets that always create problems especially due to the startup inertia face up by products. In order to achieve these objectives, constitution Bros. will have to go big in these new markets. They will ahev to concentrate a attraction on achieving the right marketing mix so as not to expend too a hook and still achieve their objectives:\r\n§  Promotion: promotional causal agent launche d by temper Bros. have so furthest been successful in most cases. Form individualised friends to tasting stalls, Morris has done well so furthermost in achieving fame for his product. The new products however susceptibility need that wasted push. First of all, they should go for more swording of the products. Customers might confuse the positioning of the existing product and leave it and the salt free version might eat away into the original products sales.\r\nSince personality Bros. have thus far marketed their existing product as healthy and low salt, a salt less substitute will only shed severity light on the existing seasoning mix. therefrom Nature Bros. should start repositioning its existing brand and use the same in new markets. caliber should be strictly controlled and maintained at all costs.\r\n§  Price: the pricing strategy as describe in the plans seems to be lovely for this product. One reflection that Nature Bros. have neglected however is the ter ms demand elasticity of their product. They should test this strategy in their existing markets and see if they are in a position to charge premiums at this stage or not. This will give a fair fancy as to for how long they will have to sell their products at reduced prices (how long it takes to achieve customer loyalty) and how sensitive the customers are in terms of price changes.\r\nIf a little drop in price means a considerable subjoin in sales then Nature Bros. evoke achieve their target market shares without 3040 percent price cuts as they currently plan to. On the other yield if this is not the case and customers are not too elastic, then not only discounts but extra promotion will also have to be done and this would mean leaner profit margins with additional promotion costs.\r\n§  Promotion: the promotion strategy is fine and tested in the existing markets. Their decision to advertise in cooking magazines is a good one as well. One additional aspect however would be to properly launch their product and stir up their brand through a certain way out or fair. A proper launch and luxuriant publicity can do wonders for a product in any given case.\r\nThe church sale was the most successful for Morris and made him realize that a marketable product is at hand. Similarly, if ature Bros. were to contact other organizations such as churches or TV shows to use their product, this would result in a lot of publicity. This along with a few interviews to newspapers and leading cooking magazines will help a lot in creating passable hype and launching the product.\r\n§  Distribution: this is probably the weakest link in the whole plan. There seem to be no formal plans nor strategies regarding the actual distribution of the product. universe a young company, Nature Bros. will have to carefully assess which distribution strategies are cheapest and only most effective. Although all products will be sold at grocery stores, Nature Bros. can decide wheth er it will be supplying directly to these stores or use the services of a trio ships company in the form of a distribution intermediary. to a greater extent intermediaries however mean higher product exchange prices and this could result in Nature Bros. not effectively achieving their pricing strategy in the new markets and thus eventually losing market share.\r\nQ4. Evaluate the information supplied regarding a new product development and strong-arm assets in light of the pro forma income statements Morris developed.\r\nAns. The case shows that new product development and physical assets are passing game to be beneficial in nature, primarily due to the reason that the cost of goods sold as projected by the pro forma sheet show a eliminate over the years. Additionally, sales growing over the years. The new product if developed can help in terms of profits eventually, since profits automatically increase with the decrease in cost of goods sold and increase in sales over the ye ars projected. away from operational expenses though, research and development expenses, and depreciation expenses of physical assets would increase causing an increase in the total cost incurred by the organization apart from the cost of goods sold.\r\nQ5. Is the capital sought-after(a) appropriate for the circumstances? If more information is needed, state what it is and how it could be obtained.\r\nAns. The capital sought is not appropriate mainly due to two reasons. The objectives outlined in terms of market shares are too optimistic in some cases. If Nature Bros. seriously intends to achieve these objectives  then they might have to expend a lot more in promotion and also further lower their prices. Secondly although promotion expenses are stated, not much has been express round other below the lien activities. It is lofty that the cost of BTL activities are good anticipated and put on paper for budgeting purposes.\r\nThe second reason is that no mention has been made o f distribution channels and strategies. This whether they decide to own the channel themselves or employ third parties, in both cases additional expenses will most certainly entail.\r\nLastly, every firm always keeps a certain excessive amount of capital for emergencies. Since these are projections, Nature Bros. will most certainly have to attain a little more extra capital and retain it for unpredictable circumstances.\r\nQ6. What sources should Morris approach for this amount of capital?\r\nAns. The product has done well in the past few years. A proper channel plan and more professional projections can easily help Morris market his idea to banks as well as more serious venture capitalists in a very effective manner. The best pick would be to borrow from a financial knowledgeability as opposed to selling off more loveliness to individuals. This is so because selling off equity might result in loss of self-control and decision power and at this stage conflicts among partners is something Nature Bros. should not risk.\r\nThe ownership once diluted would result in actually loss of control, and decision do power would be vested in the hands of the shareholders. aside from this, Nature Bros. has become too big to deposit solely on funds borrowed from family and friends and is not big enough to go public as yet. so the best options would be to find capital form either banks at a fixed interestingness rate or angel investors who are evoke and more patient than other categories of venture capitalists.\r\nThese investors are interested in returns but rarely put in in the management aspect of the business and are more accommodating as well. This source of supporting or capital would help in reducing the amount of taxes that the company would have to pay, and additionally, fewer amounts would have to be given out to the shareholders as dividend. Thus any source which costs below the going interest rate and doesn’t result in selling of equity would be suitable for Nature Bros.\r\nQ7. Based on the current proportionality sheet, how much equity should he give up for the enthronement?\r\nThe current balance sheet of the company shows several(prenominal) things. One of the basic aspects is the amount of assets that the company holds at this point in time. The total assets are about sixty seven thousand, and corresponding to that, the total liabilities are about fifty eight thousand. This shows that the company can cover its liabilities through the assets that it currently holds. On the other hand, the equity that the company has at this point in time is about nine thousand.\r\nA lot of potential in terms of equity coronation is seen here since the company can not only withhold the amount of liabilities but also has enough to cater to the shareholders as well in terms of its liquid assets. In this case, about half of the liabilities amount can be given up for the enthronement and still be able to keep a significant amount of mone y in the indebtedness section.\r\nThe ball park figure is assumed in order to create a fifty-fifty balance between the liabilities and the equity side. The ideology is that the amount of figure noted would be able to create enough equity in the organization that would not bet on reporting and decision making in the company, and yet, be enough that it balances out the loans taken from banks and other individuals and institutions.\r\nReferences:\r\nHisrich, R., Peters, P., & adenine; Shepard, D. (2008). Entrepreneurship. 7th Edition. Irwin:\r\nMcGraw-Hill.\r\nEntrpreneur.com (n.d.). Retrieved February 17, 2007, from http://www.entrepreneur.com/bizstartups/index.html\r\nU.S. Small Business Administration (n.d.). Retrieved February 17, 2007, from http://www.sba.gov/smallbusinessplanner/index.html\r\n \r\n'