Shorefast Case Study B March 2013

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Table of Contents

Introduction…………………………………………………………..1 Financial Analysis…………………………….…..………………….1 Strategy Diamond Model……………………………………………7 Internal Analysis…………………………….……………………….8 Value Chain Analysis…………………………………………….……..8 VRINE Analysis…………………………………………….…………12 External Analysis……………………………………………………13 Porter’s five forces………………………………………………………13 PESTEL……………………………………………………………..…..14 Alternative Evaluations………………………………………….…15 Fit analysis…………………………………………………….…….18 Conclusion………………………………………………..………….19 Recommendations……………………………………...……………19

Introduction
Plant Nutrients Inc. (PNI) is an international company that supplied fertilizer ingredients used by its subsidiaries in 6 geographic area which are Northeastern United States, Eastern Canada, Europe, Australia, New Zealand, and South America. The general manager of PNI is Brian Dunwoodie and the marketing manager is Dave Claussen. Mr. Dunwoodie and Mr. Claussen are the main decision makers within the organization. They were meeting with each other to determine the main issues of the company, which how to improve company’s performance next year (1999). They came up with three potential alternatives, which are strengthening the existing business, adding a seed business and adding precision agricultural services to better PNI’s performance next year. For choosing the best alternatives, this paper will use different frameworks and models to analyze each alternative, for example financial analysis, strategy diamond model, internal analysis (Value Chain and VRINE), external analysis (Porter’s 5 forces and PESTEL). After analyzing all these parts, the fit between internal and external environment will be analyzed as well.

Financial Analysis 1. Operating income statement (Exhibit 1)
As Exihit 1 in the case shows that the main product PNI had sold was Fertilizer, the total sales of PNI in 1998 is $4,621,097, which consist of the sales of Fertilizer( $3,339,097), the sales of pesticides ($1,058,000) and the sale of services ($224,000).

The sales of fertilizer accounted for 72.3% ($3,339,097/ $4,621,097) of total sales, the sales of pesticides accounted 22.9% in the total sales, and the service only accounted for 4.8% in the total sales, so fertilizer product generate more sales than pesticides and services and this also means the sales of pesticide and services may have huge growth potential in the future. Hence, PNI should focus more on the sales of pesticide and service in the future.

In addition, the gross margin of fertilizer was 20.07%, and the gross margin of pesticides was 18%. Among these products, fertilizer was the major contributor of PNI’s profit. In terms of the sales of each product, the analyst will use the following tables to identify what the major markets and customers of these products. 2. Fertilizer sales

No.1 The percentage of PNI’s customers accounted in the Fertilizer Market. (Formula: Number of Customers in PNI / Number of Customers in the whole market)

Market AreaPNI
Farm SizeSalesCustomersSalesCustomersMarket Share
Small$1,128,000527$986,00040476.7%
Medium$10,635,0001578$1,259,00017110.8%
Large$3,631,00095$319,00099.5%
Total$15,394,0002200$2,564,00058426.5%

No.2 The percentage of the fertilizer sales for the market and for PNI over the total sales by customer segment, 1998
Market AreaPNI
Farm sizeSalesSales
Small7.33%38.5%
Medium69.1%49.1%
Large23.6%12.44%
Total100%100%
Market AreaPNI
Farm sizeSalesSales
Small100%87.41%
Medium100%11.84%
Large100%8.79%
Total100%16.7%

No.3 The percentage of PNI’s fertilizer sales contribute to the market sales by customer segment, 1998 3. Pesticide Sales

No.4 The percentage of PNI’s customers accounted in the Market.

Market AreaPNI
Farm SizeSalesCustomersSalesCustomersMarket Share
Small$797000527$356000209...
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