Spreading Happiness: Warm Fuzz Cards Harvard Case Solution & Analysis

Q 1: Should Mills pursue slower or faster growth? Why?

Erica Mills should pursue the strategy of a faster growth, although growing slowly has been profitable for her, but there are some arguments about making decision to grow faster like:

  • Erica Mills has an ability to develop business faster and this is very good omen for the business. She has the support of her husband to grow her business faster.
  • The business has a very little or no threat from the substitutes as the e-cards, a substitute, are supplementing the growth of the paper based card business. This opens the opportunity to grow faster.
  • Although in the beginning she was a novice in managing such kind of a business, she has learned a lot of the required skills to do business efficiently and effectively which makes her business suitable to grow in the $0.75 billion market of Canadian greeting cards.
  • If Mills decided to grow faster her business, then her business volume will be increased and ultimately, her business cost per unit will decrease. The increasing volume of the business will ultimately leads to increase the inventory cost, so Mills will have to invest in marketing and sales to offset the increase in inventory costs. She will also have to bear the additional labor cost as she herself cannot manage the sales, marketing and designing with the plans of starting motherhood. Growing faster will grow the business and this in turn bodes well to offset the increase in costs. This will increase the business’s profits.
  • Mills quality of work, recent designs, paper quality, printing quality and add-ons set her business apart from what the market offers. So, the high quality in all aspects of business opens the door of opportunities for the business to grow faster.
  • She will be able to off-load the inventory she has accumulated since the start of the business, if the business grows faster, returning the investment hold in the inventory.

Q 2: What are the implications of her choice?

If she decided to grow faster, then there is not enough internal cash generated, so she has to go for financing out the business. It needs to be decided what type of the financing will be needed in the business,either with the help of an investor in the business or through taking loans. The investment can be in inventory or any other aspect of the business. For growing faster, she will need more time for the business and in return, there can be implications on her planned motherhood. So, in order to save time, she should adopt either one or all of these strategies:

  • Hire a financial expert who can deal with the financial matters of the business.
  • Hire a self-employed designer who can design the cards as carefully as she used to do, according to the increasing requirements of the business.
  • Hire a sales person or a sales broker to increase the sales and find new or niche markets.
  • Hire a marketer who can do the marketing of the business effectively.

Choosing any one or all the options will increase the cost of doing business in terms of overheads manifold, so the business should grow at a faster pace in order to offset the increase in costs. This will help to achieve the goal of increased profitability which is also coming with slower growth but at a small scale.

Lastly, by growing faster, there will be implications in terms of increase in business, achieved through using the family contact, which can provide business of 10,200 cards for bigger stores of that national chain of stores and 9,600 cards for smaller outlets of that business. This will be a good boost to the business of Mills as she will be reducing her cost of production per unit through economies of scale. The faster growth will provide her with the chances to expand a business that can be lost with the slower growth approach......................

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