Business Structure
Managing Growth Simulation The purpose of this paper is to study Sunflower Nutraceuticals (SNC) and how the decision the company makes can help their working capital and increase growth. The paper will also take a look at each phase from SNC’s simulation and how it affects their working capital.
Background
Sunflower Nutraceuticals (SNC) “started as an internet-based, direct-to-consumer distributor and retailer of dietary supplements, including vitamins, minerals, and herbs for women, with product offerings for all age groups”. (Harvard Business School Publishing, 2012). The company was founded in 2006, and SNC has expanded their operation into several new retail outlets. They found success when they introduced their own brand of sports drinks, metabolism-booster posers and vitamins for teenage girls. SNC has great potential to grow but they are struggling to break even and one time had to exceed the company’s credit line to finance their operational needs. As a result, SNC is only able to use 12% to evaluate and invest in business opportunities. .
Phase 1 (Years 2013-2015) During phase one SNC was given four opportunities that could help the firm maximize their growth opportunities.
1. Acquiring a New Client – SNC acquired a new client Atlantic Wellness to their nutraceutical products line. This decision increased SNC’s EBIT by 256,000. Even though EBIT increase their working capital and profit margins stayed the same.
2. Drop poor selling product- SNC has several SKU’s products on hand, and some of these products can be dropped due to low demand or the products are not as popular. By dropping or discounting these items, this will allow SNC to reduce days sales of inventory by 90 days. This would create more space for products that are more popular or on demand.
3. Leveraging supplier discount – SNC is considering Atlantic Wellness offer to add them as their mutraceutical product line. By accepting Atlantic Wellness offer, this
Background
Sunflower Nutraceuticals (SNC) “started as an internet-based, direct-to-consumer distributor and retailer of dietary supplements, including vitamins, minerals, and herbs for women, with product offerings for all age groups”. (Harvard Business School Publishing, 2012). The company was founded in 2006, and SNC has expanded their operation into several new retail outlets. They found success when they introduced their own brand of sports drinks, metabolism-booster posers and vitamins for teenage girls. SNC has great potential to grow but they are struggling to break even and one time had to exceed the company’s credit line to finance their operational needs. As a result, SNC is only able to use 12% to evaluate and invest in business opportunities. .
Phase 1 (Years 2013-2015) During phase one SNC was given four opportunities that could help the firm maximize their growth opportunities.
1. Acquiring a New Client – SNC acquired a new client Atlantic Wellness to their nutraceutical products line. This decision increased SNC’s EBIT by 256,000. Even though EBIT increase their working capital and profit margins stayed the same.
2. Drop poor selling product- SNC has several SKU’s products on hand, and some of these products can be dropped due to low demand or the products are not as popular. By dropping or discounting these items, this will allow SNC to reduce days sales of inventory by 90 days. This would create more space for products that are more popular or on demand.
3. Leveraging supplier discount – SNC is considering Atlantic Wellness offer to add them as their mutraceutical product line. By accepting Atlantic Wellness offer, this