Mgmt 612 - Prince Edward Island Preserve Co

Case Study #1

Prince Edward Island Preserve Co.

MGMT 612 – Global Strategic Management 612-2540

Dr. Karl Alorbi

February 18, 2016

Executive Summary

Prince Edward Island Preserve Co. is the manufacturing and the retail company primarily situated in New Glasgow, Prince Edward Island, Canada.  Prince Edward Island Preserve Co. is in the gift, gourmet and especially foods market. The company makes and markets specialty food products like jam preserves, honeys, teas and coffees.  In the first few years of its existence, founder Bruce MacNaughton expanded his company from one manufacturing and retail outlet in 1989, following a second retail outlet in 1991. The company also diversified and opened two restaurants in 1989 and 1990 respectively. After success of the company, Bruce contemplated on future expansion in August 1991 in two cities; Toronto and Tokyo. Options under consideration include adding retail outlets in the two selected regions. Bruce also considered increasing wholesaling, through the use of distributors such as hotel and airlines and the mail order business. Although Bruce has weighed some or all options to diversify PEIPC’s operations, it is unequivocally clear the company lacks clear vision, strategy goal and objective. MacNaughton’s business had been built on gut and emotion rather than analysis.  However, this approach may prove to be insufficient for the future.  It is difficult to execute a strategy if goals are not specific, can’t be described or understood.  However, guided by the proper analysis of the external environment (SWOT), together with the firm-level analysis (VRINE Model), Bruce can improve PEIPC’s long term competitive business position.
Case Problem

Given the resources available, the company’s financial position and competitive environment, what might be done to improve current organizational efficiency and effectiveness, and what growth opportunities are available to Prince Edward Island Preserve Co.

Case analysis

Prince Edward Island Preserve Co. is in the gift and specialization food industry which is a market with various firms, and few of which are large players. This industry has led to firms competing in the quality, taste and plan in order to attract consumers, since the goods in this industry are luxury goods they are income-sensitive as well. Another factor that has considerably influenced this industry is globalization, because you now have both local and international payers competing in the marketplace. Globalization has also led to a rise of ‘middlemen’ as if importers and wholesalers, which has led to the double marginalization, and has thus significantly, raised the retail prices of the product.  With the strategy to expand into two different regions it should also be taken into consideration that consumer preferences change from country to country and hence, it is vital to have the clear understanding of every geographical market that the firm in the industry plans to enter and play in.

Personal contact and mail order catalog analysis

The company has been utilizing two areas to promote the company. PEIPC has been relying on the personal contact with its customers and consumer catalog. The Personal contact had been effective in the Restaurant operations because visitors are able to learn firsthand about the history from the founder, according to the report it shows visitors were enthusiastic upon meeting Bruce in his family kilt and reciting history and providing entertainment to everyone. The company has also implemented a cooperative coupon scheme in which it partners with other specialty retailers whereby the retailers provide coupon for a cup of coffee or tea at PEIPC. On the other hand the mail order catalog helped the manufacturing and retail division of the company because it helped the order rate to increase to 7.5 percent from previous years.  

SWOT analysis

Strategy planning for PEIPC must include a SWOT analysis in order to identify its internal and external factors that are favorable and/or unfavorable in achieving its objective. SWOT Analysis of Prince Edward Island Preserve Co.

Strengths                                

• Brand Loyalty is a very important strength for this company because they have a product that consumers will buy regardless of the competition.
• Product Differentiation – PEIPC product is different from its competitors because of the unique and specialized product from what is in the market. Currently the company has a much higher fruit content with champagne or whisky with is not currently in the market.
•  Broad Product Mix – The Company has a very broad product mix which includes a wide range of specialized product.                 
• Local Reputation – Since Prince Edwards Island is small the company was able to build a very respectable reputation which helps when visitors come during the summer months.  

Weakness

• Seasonal Business Structure – Since Prince Edwards Island is a mostly summer vacation getaway most of the income are generated during this time period only.
• Limited Advertisement – PEIPC is only limiting itself to personal contact and customer mail order, they need to expand the advertising in order to reach more customers.
• Cash flow shortage – Due to the nature of the business the company has had periods of cash shortages since majority of the income is generated in the summer when visitors are at the island.

Opportunities

• Expansion in Japan and Toronto – The Company has a huge chance to expand the band to two different regions which might help the company with the cash shortage.  
• Extensive distribution channels – By expanding the distribution channels such as wholesale and through hotels it will also help the company expand its brand.

Threats

• Variety of possible substitutes – PEIPC knows that it will have many competitors trying to duplicate its product because of the success that they are having, but by staying ahead of the competition they hope to avoid this pitfall.
• Product Limitations – Since the company has a restaurant they might want to think about adding more products to their line so as to diversify whereby it might help with the shortage of cash experienced.
• Ability to meet competitive pricing – Since the item is priced high many competitors might try to lower their price in order to attract PEIPC’s customers.

VRINE Model and test

In the gifts and specialty foods industry, PEIPC has the single position due to their location and their capability to source only the greatest quality of fruits and other raw materials.  It also has the major emphasis on the brand quality and product design.  From the VRINE model analysis, it is clear that even though PEIPC does have some range, resources and abilities that are VRINE-certified, they are very softly certified and therefore the firm does not achieve any sustainable competitive benefit in the industry. This is the concern for the company and their future business model.