Sunnyvale Foods, Inc. Case
1 Present Situation Analysis
* Long history
It has history of more than 127 years. Its products are popular under the Sunnyvale Foods brand. * Enough facilities
Sunnyvale Foods is the one of the large US food processors operating more than 30 processing plants with total annual sale about $650 million. So Sunnyvale Foods is capable of economy of scale or scope, which can contribute to low cost or price. * Broad product line
Sunnyvale Foods has a product line of 65 items. If this is made use of appropriately, it can contribute to economy of scope.
* Sales orientation
The former president said, “as long as new products look like they will increase the company’s sales…show more content… This subjective decision will probably result in products consumers do not buy. And even though consumers really want this product, it is not enough to decide to produce this thing. Sunnyvale needs to estimate and weigh the benefit and cost to make sure this product will make profit. * Stuck in production era
According to Pierce Cassedy, the typical plants in the industry are not fully used, so the production department is always looking for new ways to make more effective use of facilities. It seems the production department thinks “if we can make it, it will sell”, which is the characteristic of the production era. The production does not have a correct direction. * Low profit rate
All the weakness above together with outside conditions, Sunnyvale Food sale has not increased much from the 1990 level and in 2010. Sunnyvale Foods faced severe profit decline, while operating costs have soared. Compared to competitors’ 5 to 9 percent average profit return of equity, Sunnyvale Foods’ 1.5 percent is very low.
* Less bargain power toward upstream suppliers
According to the vice president of sales, while Sunnyvale Foods is expanding horizontally, its main competitors expand vertically. So which main competitors could make raw materials by themselves and control the cost and quality of the supplies, Sunnyvale Foods has to buy these supplies from suppliers, and does not have control over supply price and