Fudge Cottage Case Study

Essay by MellifluyA+, April 2004

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Performance Summary

Fudge Cottage is a relatively poor performer. Sales have flatlined at around $200,000 in recent years and show no signs of improving. The main problems for The Fudge Cottage are low net income and sales. While profits are declining, expenses are skyrocketing. Christine North, the owner, has had no formal education in management. The only things she knows about store management, she has learned from her parents. In addition, North has no clear objectives for the business. The Overhiser's have tried different marketing and operations strategies to grow their business. However, nothing has been particularly successful in taking their business to another level.

Strategic Posture

Although the Fudge Cottage has no formal mission statement or list of objectives, its main goal is to establish itself as the dominant fudge store in Michigan. Some objectives are to: raise profits by increasing market share, attract corporate clients, and strengthen customer loyalty.

Strategies: Offer outstanding customer service and free services (gift wrap, etc), emphasize freshness and natural ingredients, compare the fudge's quality to other retailers' more inferior fudge, sell non-fudge candy, introduce new foods seasonally ("unique line of handmade chocolates, including a dietetic version"), and develop new distribution channels. Concentration (current corporate strategy) based on differentiation (current generic strategy).

Policies: Provide excellent customer service, maintain its high reputation in the community, and apply the highest standards of excellence to its fudge.

Strategic Managers

North, the current strategic manager, is performing poorly. Mr. and Mrs. Fred Overhiser previously owned the Fudge Cottage in 1981. Both of them made, packaged, and sold the fudge to local drugstores and supermarkets. Soon afterwards, the whole family was involved in producing the store's goods. Due to the Overhisers' health problems, North took over most of the store's responsibilities. Although she is a dedicated worker, she...