Kudler Fine Foods Business Proposal

Kudler Fine Foods: Business Proposal
Robert Dobbs
ECO 561
07/11/2011
Paul Updike

Kudler Fine Foods This business proposal is created to provide recommendations to Kudler Fine Foods in an effort to increase revenue and the associated ideal production levels for the operation. Included will be associated recommendations to assist Kudler Fine Foods in adjusting fixed and variable costs to maximize profit while identifying methods to reduce costs. This proposal will include the processes used in creating the recommendations and some economic concepts relative to the recommendations. Assumptions made about FGI and its values as a foundation for the recommendations will also be included. What are some of the issues at Kudler Fine Foods? 1. Del Mar Store is having some difficulties. 2. Kathy not able to interact with customers. 3. Perishable goods that have to be rotated out every 2 to 3 days. 4. Small management team. 5. Economy. The Del Mar store having difficulties being successful. Kathy has decided to not renew the leases for this location and when her other location in Carlsbad opens up; she will close the Del Mar location. These issues Kathy is currently dealing with but does she necessarily have to close this location and will the location at Carlsbad be as successful as she thinks? Maybe she should determine what specifically can be done to improve the location because she is contemplating a possible statewide campaign to open more stores and she will have to deal with locations that need more than just moving the location to make them successful. The second issue is Kathy not being able to interact with the customers and this issue goes beyond that and into a greater issue of time management for Kathy. Kathy is obviously taking on much more than she should and she needs to delegate down through a management chain of command the day-to-day duties that would lighten her work load. It is already obvious with the statement that if she is sick or on vacation, the ordering and finances cannot be completed because she has no one else to do these. These functions need to be divided up between other people and this would create more time for Kathy to interact with customers and her employees. What she needs to become is the chief executive and delegate authority down through her chain of command. The next issue involves Kathy not using preservatives and the bakery stock having to rotate out to either the garbage or homeless shelters. While donating the food is a measure of good gesture, it makes no sense economically. What Kathy should do as most bakeries do is sell “day old” or two day old” bakery at a discount and at least recoup some income from those sales. After that she could donate or throw out whatever stock is necessary. I understand her wanting to maintain quality but if the product still has a shelf life it makes no financial sense to throw it out. The next issue involves the size of the management team. Kathy has become an autocrat and micromanager which made her really not have a management team. Kathy needs to realize the importance of being the chief executive and creating other management positions to assist her with the operation of the business. This is why she has no time and the business suffers whenever she is sick or on vacation. Kathy needs to have someone who regularly handles the order, she needs to have someone that either does or assists with the finances, and she needs to allow her store managers to operate the locations for her. Kathy can still visit locations and interact with the customers but more as the chief executive making important face to face interactions with the customer base and by handling complaints. Finally, we look at the economy. Kathy may want to slowing build her stores throughout the state slowly, ensuring each location will be successful before doing a blowout expansion of her business. The other way to look at this as well is to investigate selling the business to a larger conglomerate and make her money off of the sale. This could provide for her more economically than being involved in an expansion that could possibly fail and cost her considerable amounts of money.
Issues
These are some of the main issues I see that can affect her future success. While she has many opportunities, unless she begins to shed some of the workload off her she will end up having serious health problems that will directly affect the operation of the business. The Del Mar location is performing just above breakeven and Kathy wants to close down the location. However, the Del Mar location has not received the proper evaluation as to what could be done currently to see if any other solutions would make the store have a greater level of profitability. Considering the expansion plans of Kathy to take her operation statewide, the Del Mar location has to be reviewed more closely. Kathy is working seven days a week and during this period of work she normally visits and works at most locations daily in order to interact with her customers, which creates the problem of time management with other duties of ordering and finances. Kathy already has store managers, assistant store managers, cashiers, and part time help in each of the locations but when Kathy is not available, due to either illness or personal leave, the ordering and finances are not completed. Twelve percent of perishable goods are rotated out of stock every two to three days due to the lack of use of preservatives. The perishable goods are either thrown out or donated to local food shelters but these goods are still in good condition for sale as “day old” or “surplus”. The management team of Kudler Fine Foods consists only of a store manager for each store location and an assistant store manager for each store location. Kathy is not able to maintain the ordering for the store locations or to complete the financial inputs due to her unavailability. Economic conditions are not being assessed by Kathy nor is there any input in the Kudler Fine Foods Strategic Plan. The financial statements do not have any future projections nor do the locations have a breakdown of financial performance. End Vision The end vision of Kudler Fine Foods can be dramatically different if Kathy took some of the areas in which I have identified opportunities. Kathy wants to have a state-wide expansion of her business, yet one of her businesses is profitable but not profitable enough for her. This is something that will occur and is part of being a multiple location business. What she has not done is to identify why the location isn’t performing as well nor has she identified what could be done differently to make the location more profitable. The next issue of Kathy feeling she must be able to interact with the customers at all of the current locations. Well how is she going to visit with all of the customers at all of the locations statewide if she completes her expansion plans; this is not likely. If she wants to be able to interact with her customers then Kathy must delegate her other duties, ordering and financials, to another person. This also takes care of another issue of not having a good amount of the work delegated out appropriately to her next level store managers and assistant managers. If she would not engage in autocracy and delegate out duties, she would have more time to interact with customers. Next the perishable goods being either thrown away or given away. This makes no sense whatsoever that she does not attempt to sell the products as “day old” or “surplus” and at least get some income from these items. After that she could consider donating or throwing out the perishable goods. Another option is to use some sort of organic preservative to make the shelf life of these products longer. Finally Kathy lacks the consideration for economic slumps or economic forecasts in her strategic plan. Kathy should have forecasts for future financials in her plan and the financials need to be broke down by location. She has not broken these financials by location. In doing this, she would have a better grasp for future economic events and how they could affect her business. Also if she has these as well, she could see how an expansion could be or not be possible. This identifies some of the problem areas that could and should be addressed before Kathy even considers a state-wide expansion.

References

McConnell, C. R., Brue, S.L., & Flynn, S.M. (2009). Economics: Principles, problems, and policies (18th ed.). New York: McGraw Hill/Irwin.

University of Phoenix. (July 7, 2011). Kudler Fine Foods scenario. Retrieved from University of Phoenix, ECO561 website.

References: McConnell, C. R., Brue, S.L., & Flynn, S.M. (2009). Economics: Principles, problems, and policies (18th ed.). New York: McGraw Hill/Irwin. University of Phoenix. (July 7, 2011). Kudler Fine Foods scenario. Retrieved from University of Phoenix, ECO561 website.