Cpa Exam Case 2012

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Exam cases:
 Patties Foods Ltd (PFL)  The death of the iPod  Australian Beverages Ltd

Pre-seen exam information Semester 1 2012

Global Strategy and Leadership
© CPA Australia Ltd 2012

Case Scenario 1
Patties Foods Ltd (PFL)
Patties Foods Ltd (PFL) is a leading manufacturer in Australia’s branded frozen food industry. The company can trace its origins back 50 years to a small cake shop in the Victorian country town of Lakes Entrance. This cake shop was purchased in 1966 by the Rijs family who soon extended into pies and bread rolls. The business continued to grow through acquisition and product development and subsequently refocused its business around frozen savoury, dessert and fruit products. The company listed on the Australian Stock Exchange in 2006. Two members of the Rijs family remain involved in the company as board members. Today PFL is a major supplier and marketer of frozen savoury, dessert and fruit products. It has some iconic Australia brands in each of these product categories. PFL’s frozen savoury products include meat pies, sausage rolls, cheese and spinach rolls, pasties and quiches. Its well-known frozen savoury brands are Herbert Adams, Four’N Twenty, Snowy River and Wedgewood. PFL’s dessert products include fruit pies, waffles, crumbles and crepes. It also has fruit products that include frozen whole fruits (e.g. cherries, strawberries, cranberries and raspberries) and processed fruit products (e.g. fruit smoothies that are cubes of frozen concentrated fruit which can be added to milk by the consumer to create a drink). PFL has some well-known dessert and fruit product brands including Creative Gourmet, Nanna’s and Chef’s Pride. PFL does not sell directly to consumers. Rather it sells to retailers (e.g. supermarkets) and foodservice outlets (e.g. sporting venues or cafes). PFL distinguishes its two main distribution channels as In-Home [retailers where products are bought for home consumption] and Out-of-Home [foodservice outlets where products are bought ready for consumption]. PFL has less than 1 per cent of sales coming from exports, despite moves to enter the US market with its Four’N Twenty products. It has also developed halal products in its Four’N Twenty range with the intention of growing sales in Asia. Its headquarters and production facilities are in Bairnsdale, Victoria. Following are extracts from three corporate publications of PFL. Extract A provides an overview of PFL’s current strategic framework. Extract B is the 2010 Managing Director’s report by Greg Bourke. Extract C provides three items of news about some recent developments at PFL.

Global Strategy and Leadership—Pre-seen exam information

Page 2 of 22

A Phases

PFL’s strategic framework Build the base     Low costs High customer service levels Defend the core Category leadership Develop and grow     New products Extra ranging Extra distribution More customers Expand and extend     New channels New regions New categories New sub-business

Outcomes

Source: Adapted from Patties Food Ltd (2011), Full Year Results 2011: Market Briefing (accessed February 2012).

B

Managing Director’s Report (2010)

This year’s improved trading is the result of a focused effort of the executive leadership team on the ‘Build the Base’ phase of our strategic plan with a relentless drive to build revenue and reduce factory conversion costs. During the year we rebuilt market share in our important In-Home savoury category with revenue increasing well over the category growth. Our strong relationships with the major supermarkets have enabled Patties’ brands to strengthen as market leaders. The Out-of-Home revenue increased to another record level, in line with the strategic intent of increasing our mix of revenue towards foodservice and other non-grocery channels [products sold through the Out-of-Home market]. The sales management was restructured with a new Head of Sales (Tim Peters ex Fonterra) joining...
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