Green Mountain Coffee Roasters Harvard Case Solution & Analysis

BACKGROUND OF THE COMPANY

Green Mountain Coffee Roasters is located in Vermont, United States of America. The company is well renowned for its leading specialty coffee as well as its exceptional customer care services. The company has expanded its business through its subsidiaries all over the country in order to grab a huge market share as well as in order to increase the size of their customer base.

The company is engaged in selling Keurig Single Cup Brewers and high quality roasted Arabica bean coffees. These coffees also include single-origin, Fair Trade, certified organic, flavored, limited edition and exclusive blends.

The company is also engaged in selling customary whole bean and coffee in attractive packaging in order to attract customers towards the brand. The attractive packaging of whole bean and ground coffee includes bags, miniscule packages, and disposable cans. Moreover, the company is also engaged in production and selling of local domain beverages apart from its main business of or core operation of selling customary coffee in single-serve packs.

The company sells a huge variety of beverages in order to attract its customers and grasp a huge market share in the industry products include hot apple cider, hot and iced teas, iced coffees, iced fruit brews, hot cocoa and other dairy-based beverages. These products are highly admired by the customers as well as it has increased the customer loyalty towards the brand.

The company has acquired a huge brand name of Keurig. This has increased the overall reputation of the company. The company offers a huge variety of exceptional and highly admired beverages for commercial use as well as for home use. The company provides brewers for commercial use in the Away From Home (AFH) channel as well as it uses At Home channel to provide brewers for home use.

ANALYSIS OF MAIN ISSUE

The company was facing an issue of accounting irregularities. The company has not made its accounts in accordance to US GAAP. This inconsistency is not only in the current year, but also the company has been making its financial records inconsistent with US GAAP for past 3 years. The main problem of the company was the income recognition procedure which is highly inconsistent with the global practices. The company’s problem came to public after the SEC inquiry. The company inquired that there are five areas where the company is lacking in following US GAAP.

The highlighted five areas include the overstatement of inventory by 7.6 million dollars across the span of time. The company has overstated its inventory by choosing an inappropriate costing methodology (Dulong 2010). The company would not have this issue if it had adopted an appropriate costing policy.

The next problem which the company is facing is that the company overstated its income by 1.4 million dollars. The company has done this by posting an incorrect amount of incentive programs expense. The amount of incentive program expense is also an accrued amount. The next issue that is faced by the company is that it has also overstated its income by 1 million dollars as the company had made this blunder while accounting for the revenue and royalties from third party vendors. The company has wrongly classified this amount due to timing difference of revenues and royalties from third parties.

The fourth issue that the company has used inappropriate standards for inter company inventory costs, which have adversely affected to the profitability of the company. This has caused a decline in the income of the company by approximately 800,000 dollars. The last problem is that the company had to reverse the accrual made for the customer incentive program. However, the company failed to reverse the accrued amount of customer incentive program which has further understated income of the company by 700,000 dollars.

Another challenge that the company is facing is to determine that whether the brand loyalty of the customers towards the company will remain same in the future or the company will require some innovation to strengthen this prospect. The company has enjoyed intensive brand loyalty from its customers so far up till now.

Green Mountain Coffee Roasters Case Solution

The management of the company seems questionable that whether this brand loyalty is enough to allow the company to penetrate into other markets successfully as well as they are also concerned related to the growth of the company that whether they require any major change in their operations or existing strategies to enable a vast future growth in the future...............

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