Cutco Case Analysis

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Situation Analysis
Cutlery/ Direct Selling Industry
Sales force consists of 15 million direct sellers
2007 U.S. Industry sales were $30.8 billion; Global sales were $114 billion
Average annual growth rate is 3.2%

61st year in operation (2010)
$200 million revenues
Headquarters located in Olean, Pennsylvania
Over 500 products, ranging in price from $27 to $945 (Increases 5% every other year)
Numerous subsidiaries-

Majority of sales force (90%) only employed for one selling season which results in the loss of customers
Competition’s products are mostly sold in department stores as well as mass merchandisers at a reduced price
Mergers and acquisitions
Target college students as their primary sales force
New and existing customers desire to make Web-based purchases

Problem Statement
In order to achieve revenues in excess of $500 million per year in the next five years and ultimately achieve revenues of $1 billion annually, CUTCO Corporation must implement a long-range growth strategy by selecting and focusing on a growth driver as well as a strategic marketing channel for the next ten years.

Alternative Evaluation
1. Acquiring a cutlery manufacturing company
Cost = $10-15 million
a. Advantage: Gain additional plant capacity required for growth expansion b. Disadvantage: The acquisition would divert attention away from the company’s primary activities. 2. Expansion of Internet recruiting and new Internet technologies

Cost = $5-10 million
c. Advantage: Improving recruiting procedures and gaining knowledge of new internet technologies d. Disadvantage: Cost of hiring and training additional sales force 3. Expanding brand recognition and preference through increasing through public relations exposure

Cost = $1-2 million
e. Advantage:
f. Disadvantage:
4. Reenergizing major international marketing efforts
Cost = $10-15...
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