Read carefully from image Answer the following questions 1. What are the alternative strategic scenarios, and what are the pros and cons of each scenario? 2. How does ACME's buyer power, as an individual company that has relationships with its suppliers, shift over time? 3.What best describes the social responsibility efforts of ACME, as explained in the case? Question 2 - Strategy and Strategic Factors at ACME Birdseed Company AngelaBaker, CEO of ACME Birdseed Company (ACME), sat at her desk and thought ofthe board meeting that was about to start. At the meeting, she would have tomake recommendations for what her company should do next. Despite a longrecord of success, the company faced numerous challenges, and shareholdersneeded confidence in its future. History Baker and her twin brother, Gregory,had founded ACME as a family business in Topeka, Kansas, in 1952. They hadboth been interested in birds as children. At the University of Kansas, Angelastudied biology and Gregory studied mathematics. They both took jobs inKansas City after graduation, but they hoped to return home eventually tofamily and friends. When they returned to Topeka, the twins opened a birdseedcompany. The Bakers were quickly successful. They found suppliers thatcollaborated with them so they could provide very high-quality birdseed toconsumers. They were able to gather feedback from their local customers, andwere gratified to hear that customers thought the quality of birdseed madeACME different and attracted many more birds than birdseed from competitors.Of course, ACME birdseed was more expensive than most competitorbirdseeds, but many customers thought the difference was worth it. ACMEbirdseed came in several varieties that included sunflower, safflower, corn,peanuts, millet, and other seeds and nuts. ACME packaged these ingredientsinto different recipes so that customers could, at least in theory, express apreference for which types of birds they wanted to see in their backyards bybuying one package of seed versus another. Suppliers were not abundant.ACME could choose from less than a handful of large, reliable, affordablesuppliers. These did offer very important volume discounts should ACMEpurchase enough seeds and nuts. All the suppliers were very pleased to workwith ACME, as the company was growing fast and buying the highest-quality,highest-margin ingredients. ACME represented good business for its suppliers.ACME began by selling the birdseed exclusively in pet stores, which retained40% of the sales price. After beginning in Kansas, ACME quickly expanded fromthe Midwest to the Northwest, and eventually to the Northeast and the rest ofthe United States. As pet stores learned of the quality of the product, it madesense for them to offer ACME birdseed to their customers. Sales grew rapidly asACME expanded geographically. In 1984, with annual sales exceeding $300million and annual profit of $12 million, ACME went public with an initial publicoffering (IPO) of stock. The issuance of stock was successful, and the companyraised millions of dollars with which to fuel further growth. Growth focused ontwo key areas. First, the company was able to sell birdseed in smaller suburbanand rural communities, expanding its reach to more of the population. Second,ACME began to sell birdseed to retailers beyond pet stores. Walmart, Target,and Costco all stocked ACME birdseed. By 2010, sales exceeded $1.5 billion.This represented approximately 22% of the total birdseed market, makingACME the dominant player in the industry. Since 2010 Birdseed consumerswere aware of environmental trends, including scientific researchdemonstrating that climate change threatened birds, and many people wereinterested in helping by providing food. Approximately three million peoplebought birdseed every year, and another two million participated in backyardbird watching. However, the Great Recession severely reduced sales ofbirdseed, as customers looked to save their incomes and spent discretionarymoney elsewhere. The industry had not yet recovered from this dip in sales.Regulatory changes that affected food consumed by people across the countryalso caused ripples in the birdseed industry. The 2015 Food Safety andModernization Act included foods for animals, and therefore birds. The primaryimpact was the addition of inspections to ensure the production of birdseedthat was safe and of consistent quality. These inspections added significant costto the production of the ingredients. The overall birdseed industry had grownslowly, even before the Great Recession. The dominant customer segmentconsisted of baby boomers (born 1944-64), and this had not changed over thepast decades. As these customers aged and retired with fixed incomes, theirdemand for birdseed remained steady or slowly declined. Furthermore, therewas less interest from subsequent generations. Along with the cost to inspectingredients, other critical costs, such as labor, shipping, and marketing, had allincreased substantially. Because of these trends, ACME shifted from thehighest-quality to average-quality ingredients, more in line with competitors. AsACME shifted toward average-level ingredients, suppliers realized lower andlower margins in selling to ACME. This caused suppliers to be less dedicated toACME and therefore to reduce ACME's volume discounts. ACME became justanother customer, albeit a large one, for the suppliers. ACME had becomedeeply engaged with philanthropic interests and efforts. Executives and manyassociates in the company were involved with environmental organizationssuch as the Audubon Society, Sierra Club Foundation, and American BirdConservancy. They gave financial contributions and participated in abundantvolunteer efforts to promote bird safety and longevity. Competitive SituationThere had always been competitors in the birdseed industry, including bothwell-established companies and several new companies. Most of the industrywas viewed as a commodity market where there was less opportunity todifferentiate based on the product itself. Some of the newer, smaller companiesmarketed unique and different products, while the larger companies sold avariety of products. A few of the largest competitors had begun to reducequality, while flirting with regulatory acceptability, to reduce costs. They werethus reducing prices to the consumer and acquiring more and more marketshare. Current State ACME was not showing strong results. Profits had beendropping for eight consecutive quarters, with a net loss of $14 million in the lastquarter. The board of directors was expecting Baker to present several strategicalternatives along with a recommendation for how ACME could restoreprofitability and increase its stock price over the long term. Baker and her teamhad been analyzing the industry, environment, and prospects for the company,and Baker was prepared to make her presentation.

Question

Read carefully from image Answer the following questions 1. What are the alternative strategic scenarios, and what are the pros and cons of each scenario? 2. How does ACME's buyer power, as an individual company that has relationships with its suppliers, shift over time? 3.What best describes the social responsibility efforts of ACME, as explained in the case? Question 2 - Strategy and Strategic Factors at ACME Birdseed Company AngelaBaker, CEO of ACME Birdseed Company (ACME), sat at her desk and thought ofthe board meeting that was about to start. At the meeting, she would have tomake recommendations for what her company should do next. Despite a longrecord of success, the company faced numerous challenges, and shareholdersneeded confidence in its future. History Baker and her twin brother, Gregory,had founded ACME as a family business in Topeka, Kansas, in 1952. They hadboth been interested in birds as children. At the University of Kansas, Angelastudied biology and Gregory studied mathematics. They both took jobs inKansas City after graduation, but they hoped to return home eventually tofamily and friends. When they returned to Topeka, the twins opened a birdseedcompany. The Bakers were quickly successful. They found suppliers thatcollaborated with them so they could provide very high-quality birdseed toconsumers. They were able to gather feedback from their local customers, andwere gratified to hear that customers thought the quality of birdseed madeACME different and attracted many more birds than birdseed from competitors.Of course, ACME birdseed was more expensive than most competitorbirdseeds, but many customers thought the difference was worth it. ACMEbirdseed came in several varieties that included sunflower, safflower, corn,peanuts, millet, and other seeds and nuts. ACME packaged these ingredientsinto different recipes so that customers could, at least in theory, express apreference for which types of birds they wanted to see in their backyards bybuying one package of seed versus another. Suppliers were not abundant.ACME could choose from less than a handful of large, reliable, affordablesuppliers. These did offer very important volume discounts should ACMEpurchase enough seeds and nuts. All the suppliers were very pleased to workwith ACME, as the company was growing fast and buying the highest-quality,highest-margin ingredients. ACME represented good business for its suppliers.ACME began by selling the birdseed exclusively in pet stores, which retained40% of the sales price. After beginning in Kansas, ACME quickly expanded fromthe Midwest to the Northwest, and eventually to the Northeast and the rest ofthe United States. As pet stores learned of the quality of the product, it madesense for them to offer ACME birdseed to their customers. Sales grew rapidly asACME expanded geographically. In 1984, with annual sales exceeding $300million and annual profit of $12 million, ACME went public with an initial publicoffering (IPO) of stock. The issuance of stock was successful, and the companyraised millions of dollars with which to fuel further growth. Growth focused ontwo key areas. First, the company was able to sell birdseed in smaller suburbanand rural communities, expanding its reach to more of the population. Second,ACME began to sell birdseed to retailers beyond pet stores. Walmart, Target,and Costco all stocked ACME birdseed. By 2010, sales exceeded $1.5 billion.This represented approximately 22% of the total birdseed market, makingACME the dominant player in the industry. Since 2010 Birdseed consumerswere aware of environmental trends, including scientific researchdemonstrating that climate change threatened birds, and many people wereinterested in helping by providing food. Approximately three million peoplebought birdseed every year, and another two million participated in backyardbird watching. However, the Great Recession severely reduced sales ofbirdseed, as customers looked to save their incomes and spent discretionarymoney elsewhere. The industry had not yet recovered from this dip in sales.Regulatory changes that affected food consumed by people across the countryalso caused ripples in the birdseed industry. The 2015 Food Safety andModernization Act included foods for animals, and therefore birds. The primaryimpact was the addition of inspections to ensure the production of birdseedthat was safe and of consistent quality. These inspections added significant costto the production of the ingredients. The overall birdseed industry had grownslowly, even before the Great Recession. The dominant customer segmentconsisted of baby boomers (born 1944-64), and this had not changed over thepast decades. As these customers aged and retired with fixed incomes, theirdemand for birdseed remained steady or slowly declined. Furthermore, therewas less interest from subsequent generations. Along with the cost to inspectingredients, other critical costs, such as labor, shipping, and marketing, had allincreased substantially. Because of these trends, ACME shifted from thehighest-quality to average-quality ingredients, more in line with competitors. AsACME shifted toward average-level ingredients, suppliers realized lower andlower margins in selling to ACME. This caused suppliers to be less dedicated toACME and therefore to reduce ACME's volume discounts. ACME became justanother customer, albeit a large one, for the suppliers. ACME had becomedeeply engaged with philanthropic interests and efforts. Executives and manyassociates in the company were involved with environmental organizationssuch as the Audubon Society, Sierra Club Foundation, and American BirdConservancy. They gave financial contributions and participated in abundantvolunteer efforts to promote bird safety and longevity. Competitive SituationThere had always been competitors in the birdseed industry, including bothwell-established companies and several new companies. Most of the industrywas viewed as a commodity market where there was less opportunity todifferentiate based on the product itself. Some of the newer, smaller companiesmarketed unique and different products, while the larger companies sold avariety of products. A few of the largest competitors had begun to reducequality, while flirting with regulatory acceptability, to reduce costs. They werethus reducing prices to the consumer and acquiring more and more marketshare. Current State ACME was not showing strong results. Profits had beendropping for eight consecutive quarters, with a net loss of $14 million in the lastquarter. The board of directors was expecting Baker to present several strategicalternatives along with a recommendation for how ACME could restoreprofitability and increase its stock price over the long term. Baker and her teamhad been analyzing the industry, environment, and prospects for the company,and Baker was prepared to make her presentation.

Accepted Answer

1
Alternative stages of the scenarios
 
Pros
Cut down on the costs like the redundant costs or the…