Cutco Corporation Case Summary

Situation Analysis Industry: Cutlery/ Direct Selling Industry Sales force consists of 15 million direct sellers 2007 U.S. Industry sales were $30.8 billion; Global sales were $114 billion Average annual growth rate is 3.2% Company: 61st year in operation (2010) $200 million revenues Headquarters located in Olean, Pennsylvania Over 500 products, ranging in price from $27 to $945 (Increases 5% every other year) Numerous subsidiaries- Trends: Majority of sales force (90%) only employed for one selling season which results in the loss of customers Competition’s products are mostly sold in department stores as well as mass merchandisers at a reduced price Mergers and acquisitions Target college students as their
Alternative Evaluation 1. Acquiring a cutlery manufacturing company Cost = $10-15 million a. Advantage: Gain additional plant capacity required for growth expansion b. Disadvantage: The acquisition would divert attention away from the company’s primary activities. 2. Expansion of Internet recruiting and new Internet technologies Cost = $5-10 million c. Advantage: Improving recruiting procedures and gaining knowledge of new internet technologies d. Disadvantage: Cost of hiring and training additional sales force 3. Expanding brand recognition and preference through increasing through public relations exposure Cost = $1-2 million e. Advantage: f. Disadvantage: 4. Reenergizing major international marketing efforts Cost = $10-15 million g. Advantage: h. Disadvantage: Substantial financial and personnel resources