Cutco Corporation Case Study Essay
Strategic Marketing Problems
CUTCO Corporation
1. Situation Analysis
I.Industry
In 2007 the direct selling industry had approximately $30.8 billion in sales.
Direct sellers are almost entirely independent contractors.
Virtually any product can be sold via direct selling.
Internet Sales accounted for 11.4% of direct selling dollars in 2007, however most direct selling websites focus on company information and distributor contact information.
II.Company
CUTCO Corporation is a private company that is a parent holding company for: CUTCO Cutlery Corporation, KA-BAR Knives, CUTCO International, Vector Marketing Corporation and Shilling Forge.
Employs over 800 people at headquarters in Olean, New York and revenues are over $200 million. …show more content…
International expansion has been considered successful in Canada and Korea and unsuccessful in the UK, Germany, Costa Rica and Australia.
Operating Margins for the various segments of the company are available in Table 1 of the Appendix.
Revenues for the various segments of the company are available as a percent of total revenues in Table 2 of the Appendix.
III.Trends
Over the past decade: the direct selling industry has an annual growth rate of approximately 3.2%. the number of direct sellers has increased approximately 57% from 8.5 million (1996) to 15 million (2007).
CUTCO has double the number of SKU’s to over 500.
2. Problem Statement CUTCO Corporation must identify a major growth driver that they wish to focus on. Once this driver has been selected, CUTCO Corporation must begin planning on how to best implement it.
3. Alternative Evaluation
I.Acquisitions
a.Advantages
Increase cutlery manufacturing capacity.
Would fulfill additional capacity needed for projected growth.
Poor economy allows for a good deal on an acquisition.
b.Disadvantages
Cost of $10-$15 million would deplete cash deserves by 50-75%.
Dilute the company’s …show more content…
This is a desirable strategy due to the low cost involved with starting a retail store ($100,000). Although the Operating Margin is less than Catalog Sales, Internet Activities and Direct Selling it is still strong at 6%. Most important, the test store in Pennsylvania has shown that this channel is likely to have a neutral or minimal effect on the core of CUTCO Corporation, its direct sellers. Due to the radically different skill set that is required, CUTCO should investigate hiring experienced retail managers as opposed to trying to train their
CUTCO Corporation
1. Situation Analysis
I.Industry
In 2007 the direct selling industry had approximately $30.8 billion in sales.
Direct sellers are almost entirely independent contractors.
Virtually any product can be sold via direct selling.
Internet Sales accounted for 11.4% of direct selling dollars in 2007, however most direct selling websites focus on company information and distributor contact information.
II.Company
CUTCO Corporation is a private company that is a parent holding company for: CUTCO Cutlery Corporation, KA-BAR Knives, CUTCO International, Vector Marketing Corporation and Shilling Forge.
Employs over 800 people at headquarters in Olean, New York and revenues are over $200 million. …show more content…
International expansion has been considered successful in Canada and Korea and unsuccessful in the UK, Germany, Costa Rica and Australia.
Operating Margins for the various segments of the company are available in Table 1 of the Appendix.
Revenues for the various segments of the company are available as a percent of total revenues in Table 2 of the Appendix.
III.Trends
Over the past decade: the direct selling industry has an annual growth rate of approximately 3.2%. the number of direct sellers has increased approximately 57% from 8.5 million (1996) to 15 million (2007).
CUTCO has double the number of SKU’s to over 500.
2. Problem Statement CUTCO Corporation must identify a major growth driver that they wish to focus on. Once this driver has been selected, CUTCO Corporation must begin planning on how to best implement it.
3. Alternative Evaluation
I.Acquisitions
a.Advantages
Increase cutlery manufacturing capacity.
Would fulfill additional capacity needed for projected growth.
Poor economy allows for a good deal on an acquisition.
b.Disadvantages
Cost of $10-$15 million would deplete cash deserves by 50-75%.
Dilute the company’s …show more content…
This is a desirable strategy due to the low cost involved with starting a retail store ($100,000). Although the Operating Margin is less than Catalog Sales, Internet Activities and Direct Selling it is still strong at 6%. Most important, the test store in Pennsylvania has shown that this channel is likely to have a neutral or minimal effect on the core of CUTCO Corporation, its direct sellers. Due to the radically different skill set that is required, CUTCO should investigate hiring experienced retail managers as opposed to trying to train their