Essay on Ceres Gardening

1447 Words Nov 24th, 2009 6 Pages
CERES GARDENING COMPANY CASE STUDY/G5P/B200

Executive Summary Ceres Company, backed by its innovative GetCeres program, has been capitalizing on a previously untouched segment of the organics market. In capturing a key demographic of consumers, those causal gardeners who demand instant gratification, rather than the extended gardening period, Ceres is eager to expand quickly to capitalize on this opportunity before its competitors. This strategy is putting extensive strain on the company’s resources and its relationship with suppliers. The exciting growth in sales have eclipsed the company’s sustainable growth rate and Ceres is hampered by cash deficits. Our team has identified three options for Ceres as it looks to
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3. Contextual Environment: The nature of the business is quite an innovative concept of social responsibility as the company is aiming to do well, while doing good. The industry is shaped by trends in organic awareness and it must focus its marketing efforts not only on its products but also on educating customers on going organic.
II. PRAXIS - Alternative Policy Options
A. Ceres will switch to a more conservative, slow growth and marketing approach in response to increasing debt and decreasing cash flows. Our ratio analysis (Exhibit 2) has identified that the company is growing too fast and is putting considerable strains on its resources, raising the possibility of bankruptcy in the near future. The 2006 pro-forma statement calculates a 98-day payable period, with suppliers already angry at the 90-day period. Profit margins are decreasing and the plummet in NOCF is worrying (Exhibit 1). The company is not generating enough business from operating activities and is debt financing. As a result of GetCeres, AGE, Inventory and AP have increased significantly more than sales, resulting in a lack of cash. All leverage and liquidity ratios (Exhibit 2) confirm that. Our first policy is to slow down growth to the sustainable growth rate, calculated at 12%

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