Executive Summary
Charlene’s Nutrition Centre organizational structure consists of two levels of management namely, the executive board of directors and line managers. The executive board consists of the Chief Executive Officer (CEO), the Vice President, the Chief Operating Officer (COO), the Director of Quality Improvement and Compliance, and the Chief Financial Officer (CFO).
The executive board is highly involved in the implementation of the organization’s strategic goals. Concisely, they are responsible for setting the goals and identifying future activities in order to achieve them. They are also responsible for the provision of resources for the implementation strategic goals. Implementing the goals is essentially a change process that requires effective leadership. Consequently, the organization uses Kotter’s 8-step change model to pursue its strategic goals.
This model involves implementing change in eight steps, which include creating agency for change, forming a powerful change coalition, developing a vision for change, communicating the vision to members of the organization, eliminating obstacles, creating short-term wins, building on the change, and incorporating the change in the organizational culture.
Introduction
Charlene Anderson started the company in 1998. The Nutrition Centre deals in various products of nutritional nature. Charlene’s Nutrition Centre strives to be the largest producer of nutritional products in Canada and the Breton island. The global per capita nutritional products consumption is on the rise. The leading nutritional products consuming countries such as Norway, Finland and United States of America continue to register higher per capita averages each year.
At the same time, consumers of nutritional products prefer nutritional products shops rather than consuming the nutritional products at their homes. These shops pride themselves as having nutritional products shops at every corner and street in the countries they operate. However, most of them specialize in offering nutritional products only, with just little snacks. CNC, on the other hand, is the world’s leading food outlet.
Although not substantiated, it is highly likely that the customers of nutritional products shops may have a bearing on the customer numbers at CNC. The problem is that they do not have the option of taking nutritional products at the outlets. There is also the belief that cold drinks sell more than hot drinks. Statistically, this is not true as hot drinks enjoy a similar sales margin as cold ones.
Profitability Objective
CNC has two major unsystematic risk factors in its financial statements. This paper focuses on two major risks: liquidity and leverage. Liquidity gives an indication of a company’s ability to meet all its obligations in a timely manner as they arise. In order to measure CNC’s liquidity, three ratios are computed in the table below. The combination of these ratios gives an indication of the company’s liquidity position.
The current and quick ratios indicate CNC’s ability to meet its current liabilities out of its current assets. Unfortunately, it seems CNC operates on a lot of short-term credit. The payables constitute a large amount in the current liabilities. The current ratio has been worsening since 2011. It has decreased from 0.85, to 0.76 and finally 0.69. This trend is alarming. It raises the question of whether CNC is overtrading.
The Quick ratio removes the distortion effect of inventory on the current ratio. CNC posted an even poorer trend in the quick ratio than the current ratio, which is another cause for alarm. Finally, the inventory turnover period indicates how long items stay in inventory before the company manages to sell them. Companies consider shorter inventory turnover days better than longer turnover days.
In this case, CNC Inventory days increased to an all-time high of 5.1 days in 2013. This could indicate difficulty in moving inventory. Investors should however not put too much emphasis on the inventory ratio since CNC is not primarily a trading company. Most clients rent the pallets and containers instead of buying those.
Leverage indicates the financial risk a company is exposing itself to by using debt financing.
All the computed leverage ratios indicate that CNC is a highly geared company. It depends on debt to finance most of its operations. The company decreased its leverage in 2012, probably by paying off a long-term loan, which is evident in the Debt-Equity ratio. The ratio decreased from 257% to 201%. However, leverage by all the measures increased slightly in 2011. An investor who is averse to financial risk should not invest in CNC.
Marketing Growth Strategies
Market Development
The target market for the health food and supplement products at CNC is males and females between the ages of 25 and 55 who lead an active and healthy lifestyle. With the products in the store being geared towards health, the target market would have to lead healthy lifestyles in order to want the product. With an increasing interest in leading healthy lifestyles, the number of people included in this target market would be on the rise.
For their spice products, the target market would be different. This would be people who cook from the international population as well as people in the general population who enjoy cooking ethnic foods that require different, hard to find spices.
There would be no real age or gender specification for this target market; they would just have to have a disposable income large enough to support the purchase. With a greater number of international students coming to Cape Breton University each year, the number of people in this target market would be on the increase (Charlene’s Nutrition Centre 2014).
Product Development
In this section, product development is analyzed from the perspective of the Porters Fives Forces analysis.
Threat of New Entrants
The economies of scale current players are experiencing, the level of product differentiation, and the capital required to begin operations in the industry determine this force. The Canadian nutritional industry has comparatively moderate obstacles when it comes to entry into the market. Large nutritional centers already experience huge economies of scale because of widespread operations and have the advantage of experience.
Supplier Power
The bargaining power of suppliers is high if there are few suppliers and many buyers and if the product supplied is critical to the buyer’s business. Hence, the bargaining power of a nutritional center as conceived in this paper is relatively low. The suppliers for the equipment are international corporations as there are no available suppliers within the country.
Buyer Power
The power of buyers is high. The economy in Cape Breton Regional Municipality in general, is not in the best shape. According to CBC, the unemployment rate in Cape Breton in March 2013 was 18.6%. This is a staggering number. Due to this, there many families in the area would be struggling with their finances. While CNC offers reasonable and comparable pricing for the products they sell, many families are not able to afford the higher prices of healthy foods.
This could definitely have a negative impact on sales at CNC. Many people would view what they sell as a luxury as opposed to a necessity, and some people would just not be able to afford that luxury. Additionally, there would be a certain segment of the population devoted to getting or staying healthy. Hence, to this group products at CNC would probably be a necessity. Therefore, they would shop there no matter what the cost.
Threat of Substitutes
Alternate products serve almost a similar function as the product that a business produces. For the type of business, CNC has a lot more social implications behind it than at first glance. There are two ways to look at the societal properties for this. This can be looked at in two spectrums positive and negative.
This phenomenon for ‘healthy’ foods has come from the recent societies need to look good and feel good. In addition, one of the greatest factors is the media. The media telling us what ‘beautiful people’ should look like, which not only affects adults like I, but it also affects how our youth look at themselves
Competitive Rivalry
With the recent developments in today’s technologies we have been able to create ‘health foods’ and even to learn about certain foods being healthier for us than we thought. For example we have always known blueberries were good for us because they were a fruit, but only more recently did they discover that the amounts of antioxidants that blueberries possess and their benefits. This will always be happening, people learning and studying new medicines and different health properties as the never-ending evolution of technology.
Market Penetration
Older people are the most consumers for this center also; fitness people got attracted to CNC center. Good quality and fair value are benefits for customers. Also good nutrition is essential for the body and all its systems to function optimally for a lifetime. We think that customers have met all their needs in the CNC center. The customer motivations are clear. Everyone use nutrition and health products to keep their body in a good shape and their health away from any disease (Charlene’s Nutrition Centre 2014).
Beginning with the political environment, the country’s political environment is very stable and does not pose any threat to the firm, but provides it with an opportunity to perform its duties. Economically, the country is recovering from the effects of the global financial crisis and it is yet to grow exponentially. However, the economic recovery offers the firm with increased activity with many patients visiting the hospital for various ailments.
The consumer and social environment is very accommodating since the firm is familiar with the peoples’ culture. Technologically, there are new equipments manufactured with the latest technology that are able to perform various hospital activities effectively. However, the poor financial performance of the corporation hinders the firm from purchasing such equipments, as they are costly.
As the firm operates, it has to adhere to all health regulations in all the regions and states it operates especially new regulations on Medicare. When the firm expands, it also has to abide by regulations in the countries of operation (Charlene’s Nutrition Centre 2014).
Economically, the country is recovering from the effects of the global financial crisis and it is yet to grow exponentially. However, the economic recovery offers the company with potential increased activity with many children visiting the center for health purposes. The country also rakes in high oil business providing the perfect place to do business. The following is the summary of economic performances in Canada.
GDP $906.8 billion
GDP growth: 6.8%
GDP per capita: $24,500
By sector:
Agriculture 6.7%
Industry: 21.4%
Services: 71.9%.
The services sector as indicated above is quite robust. Canadians have huge disposable incomes. Hence, they would not find it hard to pay for the company’s services and products.
The demographic nature of Canada is such that the country has a population of close to 100 million. Close to 30% of the population fall within the criteria, the company is interested in. The following is the Canadian age structure:
Age structure
- 0-14 years: 28.8%
- 15-24 years: 19.8%
- 25-54 years: 44.2%
- 55-64 years: 4.1%
- 65 years and over: 3%
The Technological environment in Canada is still at a very young. Most of the technology is being imported from Europe, East Asia, and America. Hence, there is a huge gap for introduction of technological advances in almost all sectors of the economy. A diverse product line is a large contributor to the success of CNC. In order to stand out and sustain consistent revenue, there has to be a reason customers continue to shop at any small business.
Whether it be exceptional service offered by the employees, or products that can only otherwise be purchased online, a small business needs something to distinguish itself in order to thrive. CNC offers an array of products that are virtually non-existent for purchase anywhere else on Cape Breton Island, giving them a unique edge (Charlene’s Nutrition Centre 2014).
Diversification
The business cycle has informed diversification strategy at CNC over the years. Business cycle is the periodic up and down fluctuations in economic activity measured by changes in real GDP plus other numerous macroeconomic variables. Currently, the economy is at prosperity in the wake of a recession.
The last signs of a recession were in 2009. The economy has been prospering for the last 7 quarters. Before the recession that rocked the country in 2008, the economy was growing steadily since 2000. This was occasioned largely by growth in the tech world and the recession came because of a banking and property trade crisis. During periods of recession, the company slows down while it expands in expansion periods.
The business environment is a very volatile environment especially in the 21st century. This is mainly because of stiff competition between players in the various industries and the carrying out of business on the internet. Therefore, there is a need for regulation to create sanity in the business field.
The government must also protect the rights of the consumers. It does this through enacting laws that constrain business from unduly exploiting the consumers. In addition, the government must also protect the environment. It does this by enacting waste management laws and ensuring that businesses follow those laws.
Vertical Integration
To encourage growth at CNC, top leadership encourages inculcation of leadership principles across the board. Leaders should identify potential; coach the person with it to make him sufficiently productive for a given cause. Recruiting is encouraged. A proactive approach to handle people towards success and to show interest is paramount.
Secondly, a leader should have ability to drive performance. This is in line with competition and the need to maintain market relevance. While hiring, this should be considered well. Thirdly, loyalty from the leader is paramount. It inspires the same and more form employees or followers and automatically performance increases. This requires a leader to inspire others, talk about retaining a loyal employee, change for a good reason, and engage in clean business.
The fourth aspect is the need for a manager to manage work effectively. It is important because technologies have made every aspect of life easy. A good leader takes risks and does not avoid progressive delegation. The fifth quality is related to teams. A leader should collaborate well within a team and between teams.
Most work is accomplished well when done in groups because humans are social beings. A leader should take the lead to build consensus according to author. The last aspect talks of influence through personal power. This entails using strong traits a person possesses and encouraging the same to followers. This may be working late, cleanliness among others.
Location
The business is located in the following location:
Charlene’s Nutrition Centre & Health Food Ltd
254 Kings Road
Sydney, NS
B1S 1A6
Physical distribution
CNC possesses unique distribution channels because of the nature of the business, as well as their location. In a business where the products delivered must be scrutinized and tested for quality and safety, CNC would certainly have to have an established relationship with its suppliers. While the owner of the business frequents trade shows and other such events to pick up products, when it comes time for direct supply an exclusive distribution has certainly been established. This exclusive distribution is acquired through both the reputation and experience of the owner, as well as the specialization of the products themselves. A majority of these products cannot be purchased in Cape Breton, making it all the more important for a client relationship to be established between buyer and supplier.
Consolidation Strategies
Pruning
The company fosters a culture of togetherness of employees. However, in the process, employees that do not perform will immediately face reprimand and possible elimination to protect the integrity of the organization.
Retrenchment
The current unemployment rate in the Canada is 8.3%. This is an improvement from last year and the last quarter. The economy is set to continue generating jobs in the next few months further reducing the unemployment rate to 7.8% according the bureau of labor statistics’ prediction. This is the best growth in economy since 1995 and it is set to continue at a steady but moderate rate of 3% as the country heads to 2013.
The inflation rate was at around 7%. The rate is not conclusive but hovers around that figure. This is because different indices measure rates of inflation. This includes Consumer Price Index, Producer price indices, Import and Export Prices, unemployment trends among others. Notably, improved unemployment rate leads to lower inflation levels.
The lowest rates of unemployment were recorded in 2010. This was at the height of the recession that continues to grapple the country with major negative implications in the economy. The highest rates of unemployment the economy recorded were in 2007. Economists attribute this sudden discovery and subsequent embrace of the internet in various institutions following its discovery in the previous years. This resulted to notable growth in the economic activity. CNC has not retrenched before and is unlikely to retrench people in future.
Divestment
CNC plans to continue in its current line of products without divestment. The products are doing well and the board is making plans for further investment across Canada.
Product Strategy
CNC has always taken pride in providing customers with the best selection, service and quality they have got too many nutrition and health products all under the Health First brand such as, Cold-Defense, Cayenne, Liver oil, Vitamin E, and Vitamin D. CNC has an array of products to offer, all being within the realm of health. They do not necessarily specialize in one product offering, but rather they offer a large selection of supplements, teas, and spices among other things that customers visiting the business would have an idea. Even the most health-conscious person would be seeing many products for the first time (Charlene’s Nutrition Centre 2014).
Promotion Strategy
They use TV, radio, and newspaper to promote their products, which is good but not enough because there are others things they can use to promote their products for example online marketing and events.
CNC believes that online marketing attracts certain ages 18-35. The opportunities of CNC exist in the external environment and it is important that the firm becomes the first to spot the opportunities, be unique, and take action. Some of the existing opportunities include increasing healthcare spending and the ability of the firm to grow and expand.
The increased availability of healthcare implies that the organization can rely on the funds to meet the patient’s bills, which in turn could increase the level of cash flows. The firm is now able to undertake some medical activities for its patients that were very costly that the patients could not afford. Concerning growth, the healthcare organization is in a strong position to grow and expand out of its current saturated markets.
CNC could take advantage of a number of opportunities in the external environment. First, society is definitely moving towards being more health conscious. This is increasing the demand for health food and supplements. This could therefore broaden the market for CNC and help to increase sales and profits. They could also broaden their product offerings to meet the needs of this market (Charlene’s Nutrition Centre 2014).
Pricing Strategy
Although the differentiated products are very important to the business, the pricing strategy in which CNC employs is also very significant to its success. Products can range from $3.95 for a package of miracle noodles. The more exotic items cost $50 or more. Since there is such an array of products, they must be priced intelligently and effectively. A focus on demographics, particularly on the location of the potential buyers, and on the economic strength on the potential buyers, is important for CNC (Charlene’s Nutrition Centre 2014).
Market Plan Implementation and Control
With CNC selling food products, they would have certain laws they would have to follow. One of these is the proper handling of food. Some of their products appear to be things that they buy in bulk and then package in smaller quantities themselves. They have to ensure they are doing this in a sanitary and safe manner.
Another would be an environmental factor. With society moving more towards environmentally friendly products, CNC should consider purchasing products that have little packaging or environmentally friendly packaging. They should also choose their supplies carefully.
They would want to make sure that their suppliers have good reputations and have not had product recalls or problems with the quality of their products. When dealing with food products, this is of utmost importance so that their customers are not consuming products that are not safe for them (Charlene’s Nutrition Centre 2014).
The weaknesses of the health corporation emerge from its internal environment just like the company’s strengths. To begin with, the company is operating in an industry that is saturated domestically and the firm needs to establish other markets other than its current markets.
However, there are insufficient funds that can enable the firm meet this objective. The inadequacy of the funds could be partly attributed to the low level of net cash flows. The level of cash flows has reduced due to many factors such as increased competition. In addition to the low cash flows, the health organization is experiencing increasing costs of operation that arises from the products it uses and the high employee salaries.
Reference
Charlene’s Nutrition Centre (2014). Charlene’s Nutrition and Health Centre. Web.