Red Hen Bakery Harvard Case Solution & Analysis

Introduction

Randy George, the manager of the Red Hen Baking company established the company in 1999 and is in the decision making process to move cramped and inefficient facility which is located in Duxbury to a few miles away. The new facility is expected to be more than twice as large  and will be designed specially for the bakery. The new facility would facilitate the expected growth. The old facility was only able to produce 2200 loaves of bread per day. Red Hen Bakery has been in business for eight years and is expected that turnover will exceed $1 million as sales on an annual basis is expected to grow by 30%. Red Hen Bakery is an unique bakery that specializes in the artisan bread making business with a mission to produce premium quality breads in the traditional method by carefully select the highest quality raw material and making the highest quality bread with least impact on the environment. Red Hen Baking achive its objective through the marketing of the premium quality products within 100 miles of the bakery and by delivering the products to sales points such as stores, bakery, hotels and restaurants.

Red Hen Bakery was of the belief that by using pure and uncomplicated healthy ingredients and by use of traditional skilled artisan, the company will be successful. Red Hen Bakery which was established in 1999, in the first eight years of operations it focused on the banking and delivering organic and fresh bread to area stores and restaurants. However, products were becoming famous and there was increased demand of its products and supportive environment Red Hen Bakery was seeking to expand itself  to pastry, soups and other business, This was only possible when Red Hen Bakery moved from the existing facility to new and more efficient facility where there is more space and efficient process allow more capacity. This is because it is expected that on an average there is 30% growth in the sales it was time to decide the action plan. 

What are Randy Georges' objectives? How would he view the success of Red Hen Baking Company in 2007? What would then move to Middlesex accomplish for the company and for its owners?

In early 2006, Red Hen Bakery was growing quickly. It is expected that the growth is so strong that it will quickly out pace the capacity of the Duxbury bakery which have the capacity to produce 2200 loaves of the bread. Randy George is considering setting up the new factory at ideal location, of ideal size and of ideal capacity which fulfill the demand of the bread production.

Red Hen Bakery Case Solution

Red Hen Bakery’s facility is currently located at a place which is not suitable given in current circumstances and not suited for bakery because of space which is limited. The design of the building is not structured for the bakery as initially it was rented because of low cost. The building has low ceilings and space is too small for the efficient production of the bread and due to the production facility, the quality is being impacted and also due to limited capacity there is loss of sales as well. Red Hen Bakery’s business is seasonal in nature and there is increased sales when there is holidays and on the weekends. Due to the increase demand of Red Hen Baking products, Randy George soon began to realize that for the first time in 2007, sales had crossed $1 million and expected to increase 30% per annum. The sales of the first half of 2007 were already 35% higher than the 2006and there are increases in the number of days when Red Hen Bakery cannot meet the demand of the customers. It is expected that the new facility can move in Middlesex as it will be able to produce upto 3300 loaves of bread on a daily basis an increase of 50% in the capacity of production. The new facility is expected to be a location which has high ceilings and will be twice the size of the old facility which is located at Duxbury. In the new location, more efficient ovens can be installed which will produce the premium quality of bread. It is expected that due to the rising cost of the production, which majorly consists of ingredients cost as Red Hen Bakery manufactures the organic product and cost of the organic material is expected to increase. Along with an increase in the cost of material, other operating cost will also increase such as there will be increases in rents and other moving and shifting expenses.............................

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