Euro Foods Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Euro Foods Case Solution

Introduction

This case sheds light on Euro Foods, a company engaged in the business of selling and distribution of food products, which originated from Europe and was established in 1973. The company is owned by Mr. Vigneau who is considering selling his company and moving back to France to pursue his passions. However,Olivier Company is considering acquiring Euro Foods in order to expand its network in its highly diverse and competitive market for the ethnic food distribution industry while also increasing its product portfolio to appeal to the customers with different ethnic backgrounds to gain potential customers while retaining its current customers, so that the company could gain competitive advantage as well as increase its sales revenues to better equip itself to fend off any future attacks or price war that might cause harm to the company in the future. Similarly, the company is faced with a tough decision and it had based its decision on two key components to assess and evaluate its commercial and financial performance by conducting an audit of its financial as well as commercial data collected through samples and surveys respectively.

Problem statement

The main issue of the case is that whether Olivier company should acquire Euro foods or not. In an attempt to provide economic benefit to the company, it can similarly increase its economies of scale. Furthermore, Euro Foodis facing significant problem regarding its high level of inventory, which has resulted in an excess holding cost that was barred by the company leading towardsa decrease in its profitability while increasing its expenses.

Strategy

The strategies implement by Euro Foodsare that the firm attains its inventory from Europe in two ways either by airplane or ship. The inventory arriving by air is perishable, and no inventory in stock is kept by the company whereas, the products arrived by boats were distinguished into two types whereas the first type of product comes from complete containers where the product inside are from same suppliers, and secondly the consolidated containers are where the products from different suppliers are present. Inventories acquired from both consolidated and complete containers are stocked by the company so that it could fulfill its customers’ requirement and orders to increase its sales revenues and profit margins. The company strives to keep its customers satisfied and tries improve its reputation in the market by providing the necessary products that its customers need and desire. To improve its brand image and brand recognition in the market, the company also maintains a slow moving item, which is the financial problem creator but it is commercially favored by the customers.

The company, because of this reason, has reached a point where it is barring significant holding cost for the excess inventories held. Due to the ineffective communication with its suppliers, the company has been able to increase its provision for safety inventory levels kept, which has resulted in the increased lead-times leading towards customer dissatisfaction and potentially leading to its clients to select its competitors for their purchases, as a result, reducing the company's reputation in the market and ultimately, harming its brand image.(Kairu)

Competition in the market

As the ethnic food distribution industry is highly diverse and competitive, the company faces stiff competition from its competitor. It is considering the acquisition of Euro Foods to gain a competitive advantage by adding the value of the company and its strong customer base to increase the economies of scale of Olivier's, so that the company could fend off any adverse event for price wars in the future that might negatively affect the company in the future. Furthermore, it aims to increase its ability to achieve higher profitability and sales margins.(Czepiel)........................

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