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Components of Grandma’s Best Strategy Case Study

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Updated: Jan 30th, 2022

Components of Grandma’s Best Strategy

Grandma’s Best has several strategy components (Shankar 415). In terms of arena, the company’s head office is located in Spokane, Washington. The arena of Grandma’s Best includes three major areas. The areas include the candy area, chocolate area and cookies. The company belongs to the chocolate, candy, and cookies industry. The chocolate bars include mint, almond, and other flavors. The chocolates are sold in boxes. The chocolates are marketed as premium chocolate items. The company’s vehicle strategy is to sell the products globally. The company sells the products in grocery stores throughout the United States. Likewise, the products are exported to other countries.

In terms of differentiation, the company sells chocolates and candies (Shankar 415). Its products have unique flavors. The products are sold at discounts. The company advertises the benefits of eating the company’s chocolate and candy products. The products are sold as Easter egg decorations and valentine heart items. Advertising increases the demand for the company’s products. In terms of economic logic, the company sells products to fill the public’s demand (Cassidy 4). The demand includes a desire to eat chocolates, candies, and cookies. The company sells its products to fill the chocolate and candy cravings of current and future customers. The chocolate stores collect a commission of 5 percent from the company.

In terms of staging, Grandma’s Best is on Stage two (Gupta 71). On this stage, there is a strong demand for the company’s products. Currently, the company is expanding its marketing activities. The company is exporting the products outside the United States. Evidently, Grandma’s Best is on the best economic stage. All the components firmly fit together. The fitting contributes to the increasing demand for the company’s products. This is what is called profitable strategic coherence. All the components create synergy, increasing the popularity of the Grandma’s Best products.

Financial Statement Analysis Return on Assets (ROA)

The ratio, part of the financial statement analysis study ( Fridson 47), is used to determine how much profit was generated by the use of the company’s assets, Table 1.

  • Table 1 ratio presents an unfavorable picture of Grandma’s best. Grandma’s Best generated a favorable but low 2 percent Return on Assets ratio.
  • On the other hand, the chocolate, candy, and cookies industry’s average return on assets ratio is 47 percent.
  • The variance is 45 percent. Grandma’s Best must strive to increase its ratio nearer the industry level.

Return on investment (ROI)

The formula is used to determine how much money was made from the use of the investment, Table 2.

  • Table 2 ratio indicates that Grandma’s Best generated a favorable return on investment ratio. Grandma’s Best generated a 2030 percent ratio.
  • On the other hand, the industry generated an average 2,075 percent return on investment ratio.
  • The variance between Grandma’s Best and the industry is 45 percent.

Return on Equity (ROE)

The ratio is used to determine how much profit was generated by total stockholders’ equity, Table 3.

  • Table 3 shows Grandma’s Best generated a favorable 2 percent return on equity ratio.
  • On the other hand, the industry generated a 94 percent return on equity ratio.
  • The variance between the two ratios is 92 percent.

Current ratio

The ratio determines the company’s capacity to use its current assets to pay its current obligations,Table4.

  • Table 4 ratio indicates Grandma’s Best generated a favorable 146 percent current ratio.
  • The industry generated an average 636 percent current ratio.
  • The variance between Grandma’s Best ratio and the Industry ratio is 490 percent.

Quick Ratio

The ratio determines how fast the company can use its liquid assets to pay its current obligations, Table 5.

  • Compared to the current liabilities, table 5 indicates Grandma’s Best has favorable 62 percent more quick assets,
  • Table 5 shows the industry generated a 350 percent quick ratio.
  • The variance between the company’s ratio and the industry ratio is 288 percent.

Debt ratio

The ratio shows the relationship between the company’s total debts and the stockholders’ equity, table 6.

Table 6 indicates Grandma’s Best generated an unfavorably high 223 percent debt ratio. The industry ratio is 1039 percent. The table shows the variance between the two related ratios is 816 percent.

Market share

  • Table 7 indicates the revenues of four of the top players in the cookies, chocolates, and candies industry during 2012.
  • Grandma’s Best generated $16,487,000 revenue during 2012.
  • M & M Chocolate produced $30,000,000,000 revenue.
  • Hershey chocolates generated $ 6,644,252,000 revenue.
  • Mondelez Confectionery produced $ 9,176,000 revenue. Grandma’s Best has 0.04 percent of the total industry pie.

Comparison with Industry Players

  • Compared to the other players in the industry, Grandma’s Best is one of the least performing companies.
  • The company failed to increase its revenues. Consequently, the company must sell more chocolates.
  • With more sales, the company will get a bigger piece of the industry revenue pie. The company must resolve three issues. First, the company must produce more products. Second, the company must export more products. Third, the company must create new products.

Organizational Health

Overall organizational health of Grandma’s Best: Okay

Appendix

Table 1.

Description Return on Assets (ROA) Ratio
Grandma’s Best 2 percent
Industry 47 Percent
Variance 45 Percent (unfavorable picture of Grandma’s)

Table 2.

Description Return on Investment (ROI) Ratio
Grandma’s Best 2030 percent
Industry 2075 percent
Variance 45 percent

Table 3.

Description Return on Equity (ROE) Ratio
Grandma’s Best 2 percent
Industry 94 percent
Variance 92 percent

Table 4.

Description Current Ratio
Grandma’s Best 146 percent
Industry 636 percent
Variance 490 percent

Table 5.

Description Quick Ratio
Grandma’s Best 62 percent
Industry 350 percent
Variance 288 percent

Table 6.

Description Debt Ratio
Grandma’s Best 223 percent
Industry 1039 percent
Variance 816 percent

Table 7.

Company Revenues ( In Thousands) Percentage
Grandma’s Best 16,487 0. 04 Percent
M & M 30,000,000 65 percent
Hershey 6,644,252 14.4 percent
Mondelez 9,176,000 20 percent
Total 45,836739 100 percent
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