By-the-Sea Biscuit Company: A Decision in New Venture Analysis Harvard Case Solution & Analysis

By-the-Sea Biscuit Company: A Decision in New Venture Analysis Case Solution

Because of the great manufacturing capacity, the business was able to manufacture approximately 15,050 cases/month, working about five days/week. The mentioned fact depict fifty to sixty percent of the manufacturing capacity. Despite this, the firm can incline its manufacturing quantity by up to 120,400 cases/month with effective and efficient marketing operations. The company’s annual income could go up by using the approach of Healthy Omega 3.

From the 1st to the 4th month, the venture would not be able to manufacture but from the 5th month; it would be manufacturing 100% conventional biscuits, and after its seventh, to the twelfth month, it would be manufacturing 75% and 25% of conventional and healthy products, respectively.

From Appendix 5, it could be seen that the manufacturing would be starting from the fifth month and it would be covering around 10% market share of the frozen product’s market. During the initial months of operations; the venture would be manufacturing more than its supply because the products could be stored and preserved for a long life so it would be stored by the company to fulfil various demands of its customers in future.

It is analyzed that the price rate for the conventional biscuit at wholesale is about \$ 13.5 /case, however its consumption rate is \$ 2.99/ dozen. While for the Healthy Omega 3;the wholesale rate would be \$ 20.25/ case and its consumption rate would be \$ 4.49/dozen, as shown in Appendix 7.

From Appendix 8, the manufacturing cost and its breakeven could be analyzed. Based on the assumption; it could be said that the price for the Healthy Omega 3 would increase by 20% comparative to the price of conventional biscuits, depicting the price to be \$ 9.34/case.

The advantage of this alternative is that it would provide cheap delivery rates for the company, allowing it to havethe least competitive market with almost zero competition, an increase in cost and the demand of the biscuits and less differentiation pressure on the firm.

Besides these advantages, the company must consider the potential disadvantages of this alternative in its analysis, which include the loss related to the opportunity cost by deciding to enter the conventional market of the U.S. with no previous calculations and analysis about the supply and demand of the frozen biscuit market.

Solution of Alternate 2

• The prices of the sea frozen biscuit of the company are very low and inexpensive than other biscuit companies.
• The local stores of New York and England help in decreasing the cost of exportation, enabling the company to have potential growth.
• Canadian dollar is very high as compared to the United States dollar, so all the company’s expenditures will be inexpensive.
• If the company disregards your shipping or exportation cost; the refrigerated export containers of the company affects the alternate, which helps in changing or transforming your services and specific product as compared to the competitors’ products, and this strategy also helps in enhancing your goodwill and competitive advantages in comparison to the competitors.

• Competition with the United States’ market competitors can increase your problems and difficulties of the company and due to these circumstances the company will back out from the market of the US and present competitors are shutting down of your company’s entire operational activities.
• The Fluctuation of exchange rates between two countries, Canadian dollar and United States’ dollar in forthcoming years. This uncertain situation is heavily affected by decreasing and increasing the company’s cash flow.

Recommendations& Conclusion

After carrying out a detailed analysis, it has been concluded that the company should select alternate 2 as provides higher revenues and profits as compared to alternate 1. The revenue from alternate 1 is 1,822,130 dollars and profit is 628,963 while the revenue from alternate 2 is 1,864,838 dollars with the profit of 661,827 which is higher than alternate 1.

Because of the highly comparative market; the sea biscuit company will have to create some uniqueness in its product from competitors otherwise there would be higher chances for the company to face difficulties in the market. The positioning strategy by the sea biscuit will be the best quality with lower price products in the form of traditional biscuits and Healthy Omega 3.

As in Canada there is low competition, the company will be not as worried, leading it towards offering a wider range new products. The offering of new products seems to be good as it will createa big brand image in customers’minds, which will result in more power or monopoly in the frozen biscuit market.In the first year of operation, the company must be in contact with customers and suppliers in order to maintain a good relationship, which will be helpful for Sea Biscuit Company for different purposes in future............................

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