Aloha Product
Aloha Products Inc.
Introduction
The purpose of our report is to provide our analysis, assessment, and recommendations related to Aloha Products (AP) and the current control systems for the manufacturing, marketing, and purchasing departments. Based on the case information, we believe the current implementation of measurements and controls do not best serve the current business strategy of AP. As a result, we have included recommended changes for the three departments that best align with AP’s business model and will create a more thorough and effective measurement for performance for each department and the firm as a whole.
The following subsections of this memo will consider the current situation, the evaluation of current controls and the performance measurements in place, and then provide our alternatives that we believe are more aligned with the organization.
Current Situation
The coffee industry has proven to be volatile and prone to a variety of price drivers and threats. While green coffee is produced year round at least somewhere in the world, harvests are constantly at risk. Weather and insects are constant pests to crops and impact growers all over the world. Inventories have also been negatively affected in the past due to dock strikes restricting the flow of goods from ports. While gourmet and specialty coffees have sold well over the last 30 years, the general liquid consumption trend has shifted away from coffee. This might be attributed to the growing health concerns at the consumer level and the trend to move towards liquids that may better reflect a healthy lifestyle. Given all this downward pressure on the marketplace, it is increasingly difficult for smaller processing companies to compete. This becomes even more difficult when we consider the pricing of inputs and the complex futures market where green coffee is traded. For larger corporations (Maxwell House brand, Philip Morris, P&G) their large capital stake and stability allows them to
Introduction
The purpose of our report is to provide our analysis, assessment, and recommendations related to Aloha Products (AP) and the current control systems for the manufacturing, marketing, and purchasing departments. Based on the case information, we believe the current implementation of measurements and controls do not best serve the current business strategy of AP. As a result, we have included recommended changes for the three departments that best align with AP’s business model and will create a more thorough and effective measurement for performance for each department and the firm as a whole.
The following subsections of this memo will consider the current situation, the evaluation of current controls and the performance measurements in place, and then provide our alternatives that we believe are more aligned with the organization.
Current Situation
The coffee industry has proven to be volatile and prone to a variety of price drivers and threats. While green coffee is produced year round at least somewhere in the world, harvests are constantly at risk. Weather and insects are constant pests to crops and impact growers all over the world. Inventories have also been negatively affected in the past due to dock strikes restricting the flow of goods from ports. While gourmet and specialty coffees have sold well over the last 30 years, the general liquid consumption trend has shifted away from coffee. This might be attributed to the growing health concerns at the consumer level and the trend to move towards liquids that may better reflect a healthy lifestyle. Given all this downward pressure on the marketplace, it is increasingly difficult for smaller processing companies to compete. This becomes even more difficult when we consider the pricing of inputs and the complex futures market where green coffee is traded. For larger corporations (Maxwell House brand, Philip Morris, P&G) their large capital stake and stability allows them to