Ceres Gardening Company Case Study Essay

1. How has the confederation grown? What is its basic outline + how has it evolved? What have been the detect factors in the federations maturement?The growth of the company has been fueled by the grocery storeplace pack growth in innate products. cere change magnitude their r notwithstandingues by over 75% in just five years, plot of ground growing profits by over 25% (based on Exhibits 2, 3 & 4). wraps basic strategy started with its founder, Jonathan Wydown, to promote sustainable organic gardens and landscapes to environmentally conscious consumers. Mr. Wydown has been a prop onent of soil preservation, biodiversity, and natural fertilizers and infestation control. Mr. Wydown was confident that the same principles behind organic farming would in timetually declargon to kinsfolk gardens and lawns. Mr. Wydown s vision evolved into the creation and development of a commercialize niche of selected certified organic seeds and seedlings for vegetables, culinary herbs, a nd flowers bringing the farm to the home per se. This market niche and products became the companys differentiator and competitive edge. The key factors that drove the companys growth are* Market demand and segmentation wrap up developed a market niche for organic-conscious consumers who are concerned about the environment. Although products are priced at a higher premium, the apprise from the companys environmentally conscious go-to-market strategy and segmentation allowed wrap to develop a loyal consumer familiarity.* Product Offerings wrap expanded its products offerings to intromit open-pollinated, organically grown, and heirloom varieties of seeds and seedlings for vegetables, culinary herbs, and flowers. The company similarly added live envisionts, such as one-year-old trees.* Production Strategy wrap principal farm was located in centralCalifornia. As the demand for wrap products increased, Ceress product capability was challenged. To keep up with the increased demand, Ceres developed a network of small, independent organic farms, offering them a commitment to procure goods in exchange for an exclusive supplier relationship. These further strengthened Ceres production capability.* Distri neverthelession Channel In the early years, Ceres operated primarily as a mail- coif catalog company. This was their main scattering channel. The operation was ran soundly and valued for its quality, reliability, and hands-on node service. Moreover, Ceres provided a free periodical company newsletter, which included tillage tips, introduced new products, and created a sense of community among the expanding customer base. This alternative marketing expanded Ceres channel from one time purchase to future incremental (post-sale) revenues. Eventually, Ceres expanded its transmit to include retail channels, and direct sale through a sales strong point model.* GetCeres Program enabled the average nursery or garden concenter to stock a sufficient in ventory of Ceres products to meet the seasonal demands of the customer. If a retailer ran out of seasonal products, the customer would probably not return later, thus a potence loss of sale. Essentially the schedule meets the challenge of having the plenty of stock of the right product in the investment firm at the right time based on consumer attitudes, behaviors, and preferences. The program in any case provided incentives to retail storeowners by offering deep discounts to control inventory and encompassing payment plans.2. Questions3.1. How is Ceres monetary health? Which specific items in the subsidiary financial statements + which ratios might you calculate/research to encourage you assess its financial health?The financial health of Ceres is excellent and bears to show a positive trend from 2002 to 2006. (Please refer to Table 1)* Current proportionality shows Ceres ability to pay short-term obligations. The current ratio indicates that the company would be able to cover its liabilities in 2002 2 times over.* Quick Ratio measures Ceres ability to meet its short-term obligations with assets excluding inventory. The quick ratio indicates that Ceres would be able to cover liabilities 1.6 times over.* Debt Equity shows Ceres financial leverage and its aggressive posture in financing its growth with debt. The company could potentially generate more earnings than it would have without this outside financing. This indicates that even with Ceres expansion of distribution channels, extension of payment terms, and the creation of a direct sales force, Ceres was able to manage to stay down the stairs 1 with a mean average of .74.* Inventory Turnover shows an good turnover of inventory. Ceres does not hold inventory for long periods of time, which stool incur additional costs by having assets sit without revenue generation. It shows Ceres ability to manage inventory in a seasonal bicycle and further indicates their ability to forecast demands on pr oduct movement.* Accounts Receivable shows Ceres effectiveness in extending credit as well as compendium debts. The extended payment terms appear to be working. The prompt accumulation of debts enables Ceres to use the monies to reinvest into the business.3.2. What should Ceres strategic plan be, given the trends in the organic gardening market?A move forward strategy is a renewed focus on market penetration and diversification of product portfolio. As the CMO, Annette OConnell reported, Growth in organic gardening products is strong, and the trends should support long term growth.Market Penetration capitalize on the movement from wholesale organic farming to weekend home gardeners and nutrition service industries. While Ceres can retain to cement their market share in organic farming, the weekend gardener and food fabrication market are prime market niches. To reach these markets, Ceres has to shine its product portfolio.Product Portfolio Diversification Ceres has to consi der diversifying its product portfolio from materials (i.e. seeds, samplings, 1-year-old take trees, etc.) to services and solutions to help organic farmers, food service industries, and weekend gardeners on the how tos of organic gardening. You not only sell the seeds but also help the consumers manage the gardening process thus providing Ceres a market differentiator as a one-stop consumer experience.3. How would you evaluate Ceres marketing efforts? Should the Ceres program be expanded? Why or wherefore not?The GetCeres Program is a sound marketing plan but can be fraught with challenges if not managed effectively. The main purpose of the program is to address inventory and enable the average nursery or garden center to stock a sufficient inventory of Ceres organic products by having the right products in the stores at the right time. loafer line help Ceres increase sales by circumstances business partners manage their inventory. With that said, stores and business partners are not willing to carry inventories on their books if they are not able to churn it appropriately. To alleviate angst and potential cost exposure, Ceres extended their payment terms from 75 to 90 days to 120 days and a 15% discount the storeowner or business partner agrees to hold a minimum stock inventory. To help protect Ceres average gross margins, it successfully raised prices fairly on most of its products.4. Questions5.3. In your opinion, did Ceres learn the right CMO? What reference did that play in its financial situation?In our opinion, Ceres meshd the right CMO. Through the CMO leadership, distribution channels were expanded from mail order catalog to an expanded network of storeowners and retail merchants. The CMO further increased their market reach by developing a direct sales force and the appropriately compensation plan. Inventory was managed efficiently through the introduction of the GetCeres Program. Overall, the companys debt equity, inventory turnover, and accounts receivable ratios showed a positive trend and continue to forecast a better future.5.4. Why is it important to ensure that you hire someone who is the best fit for a position?It is important to hire someone who is a best fit because of the notion of a overlap vision and common values. A strategy remains to be a strategy without the proper tactical execution. Both Wydown and OConnell agreed,The best flair for Ceres to build its competitive position would be to push even more aggressively to increase profits and lower margins by expanding distribution channels and market footprint. OConnell had a background in retail and consumer packaged goods. This was the best fit for Ceress CEO, Jonathan Wydown whose strategy for growth was to move from a mail order catalog model to expression a retail presence. Wydown and OConnell believed that Ceres reputation for quality and customer service would give the company an advantage over the competition.5. If you were CEO Jonathan Wydown , what would you plan to say during your upcoming meeting with the posit regarding Ceres growth prospects + change flow projections for 2007 and the near future?During the upcoming meeting with the bank, the focus should be given on the debt equity, inventory turnover, and accounts receivable ratios and how well the company has managed its trading operations over a sustained period (i.e. 2002 to 2006). From the Balance Sheet provided, it is transparent that operational, financing, and investment cash flow is positive. The market-projected growth is 8% to 10% per year. Ceres has kept pace with the overall industry, but Ceres has to review its financing model to sustain their own growth in the market they chose to manage in order to continue having a competitive edge. As such, the bank discussion should center on the increase of revolving credit and capitalization of investments to continue to fund the retail distribution model.