Case Instructions – Evergreen Natural Markets

Posted: October 24th, 2013

SWOT Analysis- Evergreen Natural Markets

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SWOT Analysis- Evergreen Natural Markets

Strengths

1. Evergreen Natural Markets is a large company which enjoys certain privileges such as economies of scale and recurrent profits from other subsidiary sources such as royalties and contracts with third-party businesses.
2. It has been in operation since 1966, and this gives it an edge over the other companies as it has established a reputation as a reliable and affordable company.
3. The company is sufficiently financially stable and is therefore able to support a subsidiary in Nevada.
4. Years of experience enable it to be a strong player in the food industry as a producer and as a distributor both locally and internationally.
5. The company has the managerial and administration capability to open and manage a successful grocery store in Nevada.
6. The company has the character of retaining past supervision in new businesses this will retain customer loyalty once they open up a new store.
7. The prices in Evergreen Natural Markets are much friendlier than those in similar sized stores, hence attracting customers and quickening its financial stability in new markets.
8. The company ensures variety in its products making it a one-stop shop for all shopping that is concerned with natural food.

Weaknesses

1. Evergreen Natural Markets depends almost entirely on foreign countries since this is where the company is mostly invested.
2. The financial future of the company may be at risk since it mostly depends on its rich clientele as the main consumer base (Yaremchuk, 2010).
3. The company has a high operational cost as a prudent means of revenue retention and might not work since regular expenses in Nevada are higher.
4. The venture in Nevada might not work since majority of the revenue is directed to infrastructure and the money spent on advertising will not have adequate returns.
5. The Nevada market scene is highly competitive and grocery stores and supermarkets might have a hard time finding a niche that has not covered Evergreen.
6. Most customers of the middle and lower classes are reluctant to buy the organic foods and because they make up the larger market in Nevada, Evergreen might be disadvantaged.

Opportunities

1. Nevada has contributed greatly to the government and since there are many investors there, this bilateral relationship might benefit Evergreen.
2. Evergreen’s trade in organic food provides a solution to the great Nevada community that is conscious about healthy dieting.
3. Evergreen presence in the market will provide healthy competition in the market and reduce the monopoly-like grasp that the fast foods industry has.
4. With a wide base of clients, it will attract foreign investors into Nevada and encourage new investors into the economy.
5. The state has invested significantly in food related technological advances. Evergreen will therefore benefit since it only deals in foods.
6. Mobile-based advertisement has recently been introduced in Nevada. Evergreen’s venturing into the market provides an opportunity for cheaper advertisements that will reach a broader audience.

Threats

1.  A large consumer base is still very dependent on fast foods.

2.  It will be difficult to advertise in a market like Nevada where people are ignorant about health issues.

3.  The economic downturn would still make for an uncertain venture in a new market.

4.  Nevada authorities put pressure on foreign investors and for new businesses. This may seem         unfriendly and discourage further investments.

5.  It might prove difficult for a conservative company like Evergreen to make a good business environment in a state like Nevada that has fraudulent bureaucracies.

Marketing Efforts

A short period was provided  for deliberations and scrutiny of the information collected n Nevada’s economic status before the last conclusion concerning the choice to either invest in the grocery supermarket venture in Nevada or abandon the opening altogether. The choice to go either way depended mainly on the financial forecast and examination carried out by the study team. Within Las Vegas, Nevada registered the least number of people who consumed healthy, organic food alternatives when compared to other states. This showed a chance for Evergreen to put in their money with optimal financial outcomes. A large part of the market segment showed potential to advance in size and economically and this population would act as the main customers for evergreen for several years to come.

Evergreen’s Success

Several factors contribute towards the constant success of Evergreen Natural Markets. The company’s approach towards growth and expansion is one of the main factors. While most companies seek to grow by re-investing their profits back into their businesses (ploughing back), Evergreen adopted a more effective approach by acquiring other competing companies or companies that show potential of growing rapidly. Evergreen designed a strategy that was twofold in nature. By bringing in rival companies under the Evergreen umbrella, the approach simply eliminated any competition, increased the resources and financial base and made it easier for Evergreen to have a wider scope and reach. Granted, acquisitions have issues with integration of management and operations. However, this approach has been steadily used by Evergreen, and this has resulted in its prosperity as an organic food distributor. As the latest addition to the Evergreen umbrella, Aragula Grocers serve to make the effect of the mother company increasingly widespread. The recent acquisition can allow the company to lower its prices and engage in aggressive marketing that will make Evergreen more successful.

Improved Performance

The main reason for the increased performance after joining the Evergreen umbrella lies in the approach adopted by Evergreen. On the surface, they may seem like clear acquisitions. However, when Evergreen completes an acquisition, the acquired stores are allowed to maintain their functional systems and procedures. In this way, Evergreen owns the stores but allows them to continue operating in the same way. The slight modifications that might be made on the administration and management may include branding, change in sales approach, and other minor issues. Using the operational systems of the different stores, Evergreen can tap into their combined efforts and realize massive profits. Conversely, the smaller stores also get to prosper under the Evergreen because of two main factors. One is the injected capital and administrative support provided by Evergreen. Evergreen offers increased investment opportunities by providing the capital, human resources, and other assistance. The second factor is an advantage of working under a larger company that allows one to work without much competition from the outside.

Arugula Acquisition and Modifications

The acquisition of Aragula Grocers is an advantageous addition to the Evergreen group as it offers new opportunities in Nevada, Las Vegas. However, several modifications would serve to improve the situation in their relations. Firstly, Mrs. Norton should introduce more effective communication measures that will ensure that the link between Evergreen and Aragula Grocers is not severed. It was discovered that the link between these two parties was weak, and this will lead to confusion and dilution of the vision of the mother company. Secondly, Norton also needed to rectify the financial status of the store before investing in it seriously.

Aragula Grocers was acquired amid a series of financial issues and complications that showed signs of mismanagement. Adopting these problems will lead to failure of the store and eventually, losses for Evergreen. Mrs. Norton should also consider making modifications to the management style in Aragula Grocers. The changes should reflect the three proposals that she made concerning all acquisitions under Evergreen. These changes involved investing in improving human resources, maintaining the local setting, and caring about the welfare of the employees and customers. These three proposals would serve to change the atmosphere and approach taken by the Aragula management as they start operations under Evergreen.

Financial Statements

References

Buss, D. (2010). Anatomy of an Acquisition: Why bigger companies are targeting smaller company acquisitions. Chief Executive, 249, 50-55.

Cheeseman, H. R. (2010). Business law: Legal environment, online commerce, business ethics, and international issues. Upper Saddle River, N.J: Pearson Prentice Hall.

Yaremchuk, J. (2010). The constant evolution of business sources: Entrepreneurial spirit in the midst of consolidation. Business Information Review, 27, 3, 190-192.