Burt's Bees Case Analysis

Only available on StudyMode
  • Download(s) : 495
  • Published : November 12, 2012
Open Document
Text Preview
Introduction
Burt’s Bees case is a follow up for the case about Roxanne Quimby, an entrepreneur who started Burt’s Bees together with Burt Shavitz and managed to create a considerably big company almost from nothing. The objective of the first case was to make a suggestion whether the company should relocate its production from Maine to North Carolina and use its full potential, or stay in Maine and operate with limited growth potential. As the second case indicates, it is obvious that Quimby decided to expand company’s operations by moving to North Carolina while the company’s revenues were projected to be between $6 million and $8 million. Quimby’s current intentions are to expand its operations to a level that is going to allow Burt’s Bees to have more than $25 million in sales which Quimby thinks is sufficient to sell the company to a bigger market participant. The dilemma that Quimby currently faces is how to expand company’s operations in order to make Burt’s Bees attractive for a potential buyer. This is why the objective of this case is to make a decision whether retail would be the best route to $25 million sales and to suggest how Burt’s Bees would enter the market that is already crowded. Moreover, the case asks to provide an alternative to retail if retail is proven not to be the best strategy available to Burt’s Bees.

Analysis
Burt’s Bees’ early success, while the company was still located in Guilford, Maine, was attributed to Roxanne Quimby’s entrepreneurial skills and her desire to capitalize on the opportunity that she saw in the market. However, by 1994 she noticed that the future potential of her company would be limited if she decided to stay in Maine because of high transportation costs and the lack of associates that had enough relevant experience in the industry. Quimby’s decision to move the company to North Carolina overcame the obstacles that prevented Burt’s Bees from making more money while the company was forced to substantially change the way its products are produced and even completely eliminate a majority of its products. After moving its production to North Carolina, the company had a better access to its most important markets and was able to cut its transportation costs significantly and therefore increase its profit margins. By 1997 Burt’s Bees distributed its products to stores in every state while they were also present in European and Japanese market. However, even though company was able to produce its products at a very low cost in its highly automated manufacturing plant, the fact that it was not selling its products directly to customers was a factor that was limiting company’s profits. The dilemma that Quimby faced after moving to North Carolina was whether Burt’s Bees should keep selling its products through others or establish its own retail store in which their products will be sold exclusively. The company therefore has the option to enter into a retail market which is a decision that has both advantages and disadvantages.

Retail Market
Burt’s Bees need to increase its revenues and therefore become attractive to potential buyers may force the company to start selling its products in its own stores and not through other retailers. An obvious advantage of selling through its own stores is the fact that the only intermediary between the company and the end users is eliminated. This simply means that, through retail, Burt’s Bees would be able to substantially increase its profits as the profits earned by retailers would now belong to the company. Another apparent advantage of this approach is that the company would be able to directly observe its customers. Quimby indicated that it is absolutely crucial for her to observe how customers make their decisions to buy and how they react to the product. By selling directly to its customers, the company would be able to provide the end users with a superior customer service and respond to every individual question they might...
tracking img