Entering the Ice Cream Business Essay Sample free essay sample

The primary capable affair of this instance is strategic direction for little concern. specifically developing a new merchandise and come ining into a new competitory sphere for an established little household concern. Secondary issues examined include marketing scheme. human resource direction. and operations direction in the little household concern. The instance is appropriate for junior and senior degree undergraduate classs. The instance is designed to be taught in one category hr and is expected to necessitate about three hours of outside readying by pupils. The events described in this instance are based on existent universe experiences. CASE SYNOPSISJeff Kleinpeter. 4th coevals CEO of Kleinpeter Farms Dairy. has boldly led his family’s concern into a new product/market country. specifically the production and distribution of ice pick. For about one hundred old ages. Kleinpeter Farms Dairy has served the south Louisiana country as the taking milk processor and distributer. but now the company has invested 1000000s of dollars in a new. but related merchandise. Jeff seeks to construct on the trueness and good will generated among consumers because of Kleinpeter’s first-class repute for high quality milk merchandises in the south Louisiana country. Kleinpeter entreaties to local clients through cross-branding other Louisiana merchandises. such as Ponchatoula strawberries. Bergeron pecans. and Elmer’s Gold Brick Eggs. After the new merchandise is launched. the company experiences challenges in selling. operations. and human resource direction. Cardinal words: little concern scheme. new merchandise development. selling scheme. household concern Journal of the International Academy for Case Studies. Volume 16. Particular Issue. Number 1. 2010 IntroductionSteping into a quiet corner down the hallway from the bombinating noise of the auction. Jeff Kleinpeter smiled as he spoke into his cell phone. â€Å"Sue Anne. we are in the ice pick concern. â€Å"There is no turning back now. We merely spent $ 58. 000 on one piece of equipment. † â€Å"Jeff you know that I trust your judgement. but this is a spot over the top. don’t you think? Are you certain about this? † Sue Anne questioned in answer as any CFO worth their salt would make. â€Å"I know that this is traveling to be a immense investing for us. We discussed this at length with pa before winging out here to Dallas. Joe May. our ice pick works adviser. is here with us and he assures me that this is a great trade for us. † answered Jeff. â€Å"From the clip I received a notice in the mail that a immense ice pick company here was shuting down ; I thought that this might be our opportunity to purchase ice pick devising equipment at deal cellar mo netary values. † â€Å"Why did they shut down? † asked Sue Anne. â€Å"They said their biggest history had pulled out nightlong. It was 60 per centum of their concern. That was it – they had to close down. † Jeff replied. â€Å"I am glad that Joe is at that place for the proficient advice. We know about milk and the dairy concern. but ice pick is new for us. You are certain about this now. Jeff? † asked Sue Anne once more. â€Å"In the auction. we bid the $ 58. 000 on the ice pick freezer itself – the thing that pumps the air in and has the blades that turn to do the ice pick. It has three barrels and makes 1200 gallons of ice pick per hr. Additionally. we bought six all right pieces of equipment for approximately 10 cents on the dollar. It is beautiful. trade name new equipment – province of the art. Don’t worry ; Joe is reding us on the proficient facets of fillers and shrink-wrappers. † Turning THE Company: THE NEED FOR ICE CREAMWith the purchase of the ice pick equipment in Dallas. Jeff had started the household concern on a great escapade. possibly the biggest hazard taken in 95 old ages at Kleinpeter Farms Dairy. The thought was non new with Jeff. For old ages. the Kleinpeters had thought approximately and talked approximately ways to turn their company and come ining the ice pick concern in peculiar had been considered many times before. but this clip was different. Jeff remembered a recent conversation with his male parent. Ben Kleinpeter. merely before Jeff flew to Dallas to look at the ice pick equipment. â€Å"I love ice pick and I have wanted to acquire into the ice pick concern. Peoples have asked me about it for old ages. but I ever thought it would be excessively much. † said Ben. â€Å"I believe this clip we can do some ace purchases on the right equipment to acquire into the ice pick concern. † replied Jeff. â€Å"In many ways. the production of ice pick would be a natural tantrum for our company. We all know that we need an mercantile establishment to sell or utilize the excess pick from our milk production. † mused Ben. Journal of the International Academy for Case Studies. Volume 16. Particular Issue. Number 1. 2010 â€Å"Yes. consumers are demanding more low-fat or skim milk. We have ever removed the pick from our milk. but now we have to make this even more so. The yearss of high demand for Golden Guernsey rich. thick creamy milk are past. I don’t think the tendency toward low-fat merchandises will alter. † Jeff added. â€Å"We do sell some butter and floging pick and half-and-half. but non plenty to put to a great extent in works and equipment. † â€Å"There are other options. Jeff. We could increase our grosss with other merchandises besides milk and ice pick. † Ben conjectured.â€Å"Yes. Dad. you are right. We do bottle juice and H2O. We buy the H2O from Kentwood. which is natural spring H2O. We would hold to make things like rearward osmosis with our H2O in order to utilize it. non that our H2O is bad. Plus. they buy the plastic bottles from us to set the H2O in. We have a reciprocating relationship. † said Jeff. â€Å"Another option would be to put more to a great extent in the production of cheese. † â€Å"Yes. I have thought of that every bit good. but which one is traveling to work out our job the best? Which one will utilize the most pick? † questioned Ben. â€Å"Producing ice pick will necessitate more pick than bring forthing cheese. That is one issue. but the other thing is which 1 might be the most profitable. With our conditions in Louisiana. we have merely two seasons – hot and hotter. † Jeff replied. â€Å"Do you think people will purchase more cheese here in Louisiana or ice pick? † â€Å"Do people buy more cheese or ice pick here? I think it would be ice pick. † answered Ben. â€Å"Cheese sells here in Louisiana. but I think that it is largely the wide market for generic cheese. I mean the cheese that goes on pizza and so forth. There are tonss of unnatural ingredients at that place. We have built the Kleinpeter trade name name by bring forthing high quality. great savoring milk. Our scheme is to do a better merchandise. non to be the low-price leader. Our doctrine is to supply a natural merchandise with no unreal ingredients like rBGH ( a growing endocrine that induces cattles to bring forth more milk ) . † â€Å"How many rivals are at that place in the cheese concern versus the ice pick concern? We would be the lone ice pick manufacturer locally in Louisiana. † stated Jeff. â€Å"We have been selling a oiler burden of extra pick every hebdomad. six 1000 gallons. We pay a premium monetary value to the dairy husbandmans for their milk. but so we sell this extra pick on the topographic point market at a loss. which is non good. † Ben declared. â€Å"What can we make with the extra pick? Well. we need a value-added merchandise. This has been traveling on for old ages. Grandfather used to sell pick to people in New Orleans and transport it via the railway to the eating houses. So. I have been believing about this. How could we add value to this and get down doing money alternatively of losing money? Ice pick! It has 12 per centum butterfat. which is reasonably high. † Jeff said enthusiastically. Journal of the International Academy for Case Studies. Volume 16. Particular Issue. Number 1. 2010 FAMILY AND COMPANY HISTORYDuring the 2nd half of the 18th century. Spain. which owned the Louisiana district at the clip. attempted to incorporate the invasion of Great Britain and France. The authorities of Spain issued a call for colonists. peculiarly Roman Catholics. to come and cultivate the land. In return for this pioneering work. the Spanish authorities offered generous land grants. Answering this call. Johann George Kleinpeter settled in Baton Rouge. Louisiana in 1774. Johann’s household and eleven other Catholic households made the backbreaking trip from Maryland. coming by raft down the Ohio and Mississippi rivers. Often. they traveled at dark through unsafe district. Once they arrived in Louisiana. the Kleinpeters received a big land grant. including much of the land area presently belonging to Louisiana State University. Developing deep roots. coevalss of Kleinpeters have remained in Baton Rouge. Some household members owned general shops. while others farmed the l and. turning harvests such as sugar cane or care cattles for dairy intents. Dairy husbandmans must milk their cattles every twenty-four hours and they need to treat that milk really rapidly. Therefore. local milk processing concerns sprang up across the United States. In 1913. Sebastian Kleinpeter and his boy. Leon Richard Kleinpeter. opened Kleinpeter Farms Dairy to run into the milk treating demands of dairy husbandmans in Baton Rouge and southern Louisiana. Like their dairy agriculture neighbours. the Kleinpeters besides had a little herd of â€Å"woods† cattles. The â€Å"creamery† or milk processing operation is still booming today as the largest independent dairy in Louisiana. Sebastian and Leon Kleinpeter learned from LSU agricultural professors that Guernsey cows produce milk of superior gustatory sensation. so they decided to augment their herd of cattles in late1913 by buying two boxcars full of Guernsey cattles from Wisconsin and conveying them by train to Baton Rouge. The experiment worked and the Kleinpeters began to specialise in Guernsey milk. This remains one of the keys to the Kleinpeters’ success even today. as Kleinpeter milk is go od known for its exceeding gustatory sensation. Upon the decease of Sebastian Kleinpeter in 1929. Leon Kleinpeter continued to pull off the creamery concern. Leon and his married woman. Mary Lillian. had eleven kids. of these ; five boies and one girl worked extensively in the milk processing operation. Mary Lillian worked as a bookkeeper for the company for many old ages. Leon divided the duties of the concern among his kids. Leon. Jr. became president. Thomas was in charge of the farm. Vincent was the corporation secretary. Michael was the works director. Ben was in charge of gross revenues and bringing. and Betty served as bookkeeper following her female parent? This sibling partnership managed the household concern from the late 1940’s until 1987. Leon passed off in 1984. go forthing the concern in the custodies of his kids. At this point. immature Ben Kleinpeter. who had spent most of his calling in gross revenues. made the bold fiscal determination to purchase out his brothers’ involvement in Kleinpeter Farms Dairy. In 1987. Ben obtained a bank loan and purchased the concern. paying his brothers with the returns. In this mode. Ben gained complete leading of the company and steered it off from possible household webs. Journal of the International Academy for Case Studies. Volume 16. Particular Issue. Number 1. 2010 Through a combination of difficult work to increase gross revenues and belt-tightening on disbursals. Ben Kleinpeter was able to pay off the bank loan in four old ages. Although Ben was successful in retiring the bank loan. the sum of work and complexness of the concern was about overpowering. Ben’s boies Kenny. Ben. Jr. . and Steve and girls Mary Alice and Sue Anne worked with their male parent in the concern. The youngest boy. Jeff. entered the household house in 1987. To assist bridge the spread left by the retirement of his four brothers. Ben hired Tom Zicarelli. from outside of the household. as general director. in 1989. Tom’s assignment consisted of runing the concern and developing the following coevals of Kleinpeters to pull off the house. Unfortunately. Ben. Jr. passed off in 1994. Mary Alice left the concern in 1995. Then. Kenny left the concern to prosecute his involvement in music in 1998. and Steve besides left in January 2003. This left Sue Anne and Jeff as the chief household member directors. Current OperationsTom Zicarelli served as president of the company and provided first-class preparation and advice until his decease in 2003. Today. Jeff Kleinpeter has taken the reigns as president of the company and Sue Anne Kleinpeter Cox is the secretary-treasurer and CFO. They form the 4th coevals of Kleinpeters to run the operation and now lead a squad of 185 employees. Ben has retired and passed his stock on to his kids. Jeff and Sue Anne own the voting stock. while the other siblings hold non-voting stock. In kernel. this leaves the corporation in control of the household members really pull offing the concern. The non-voting shareholders portion in one-year dividends and in the returns were the concern to be sold. The current line of Kleinpeter merchandises include milk. orange juice. butter. margarine. eggs. bungalow cheese. yoghurt. java. tea. clout and containers made for both Kleinpeter and other companies. a service that was added in 2005. Milk histories for approximate ly 80 per centum of company gross revenues as Kleinpeter Farms Dairy processes 60. 000 gallons per twenty-four hours. The company distributes the milk and other merchandises to about 3. 000 shops. eating houses. and institutional installations within a 150-mile radius of Baton Rouge ( Riegel. 2009 ) . Recently. following the Interstate 10 corridor. Kleinpeter connected with retail mercantile establishments as far west as Lake Charles. LA and as far east as Biloxi. MS. Enjoying a close relationship with Rouse’s Supermarkets. Kleinpeter has benefited from the south Louisiana grocer’s purchase of 20 former A A ; P Sav-A-Center Supermarkets in the New Orleans and southeasterly Louisiana part. Rouse’s operates 16 of those shops and affords ample shelf infinite for Kleinpeter merchandises. At present. supermarket gross revenues account for about 70 per centum of Kleinpeter’s overall concern. Additionally. the company sells to eating houses. nursing places. infirmaries. schools. offshore providing. nutrient services. and makers. Journal of the International Academy for Case Studies. Volume 16. Particular Issue. Number 1. 2010 Beginning ICE CREAM OPERATIONSAfter winging back to Baton Rouge. Jeff instantly began the procedure of constructing an ice pick works. â€Å"I called the designers. the builders. and the contractors that we knew here in Baton Rouge and said. ‘We have to construct an ice pick works. ’ This was in July and I wanted to hold the edifice ready by December 31 in order to reimburse money on the Geaux Zone funding and revenue enhancement recognition inducements. † Amazingly. Kleinpeter was able to carry through this ambitious end. â€Å"The contractors worked their dress suits off. The equipment people got us all the other things that we needed – the piping. the compressors. and a immense generator that can run this whole installation in instance we lose power during a hurricane. We did it in four and a half months. † Jeff explained. The CEO’s energy and enthusiasm. along with solid local ties to builders. contractors. and authorities bureaus. enabled the company to construct the ice pick works in record clip. The entire investing for the undertaking came to $ 5. 5 million. The Kleinpeter ice pick was foremost sold in Baton Rouge country supermarkets on January 28. 2008. Constructing on their established relationships. Kleinpeter began their ice pick gross revenues with the half-gallon size. which is targeted for supermarket clients. Soon after. the company developed a pint size and mini-cup size. Harmonizing to Jeff Kleinpeter. â€Å"The pints are a convenience shop point. The bulk of the gross revenues of pints are in convenience shops. We are shopping right now for 30 or 40 chest-height show instance deep-freezes to set in convenience shops. It is portion of what you have to make sell the ice pick. † The mini-cup size is chiefly targeted for kids. LOUISIANA FLAVORSJeff led the selling research for the company to find which ice pick spirits consumers in Louisiana preferred. Consequences showed that the best merchandising spirits are vanilla. cocoa. and so strawberry. Vanilla leads all spirits with 60 per centum of the market. So. Jeff started with the top three and so began to add other spirits. Harmonizing to Jeff. â€Å"We started with vanilla. went to chocolate. and so to strawberry. made with Ponchatoula strawberries. † Possibly. the Ponchatoula strawberry spirit served as inspiration to bring forth other ice pick spirits with the Louisiana local genius. â€Å"Then. we went to butter pecan. made with Bergeron’s pecans from New Roads. a 3rd coevals household concern. † explained Jeff. â€Å"We went to pralines and pick. made with Aunt Sallie’s pralines from New Orleans and Bergeron’s pecans. Louisiana cane sugar. and Kleinpeter milk and butter. rBGH free ( no unreal growing endocrines are given to the cattles ) . Then. we went to no-sugar vanilla and no-sugar cocoa. Then. we went to sweet potato pie. made with Bruce Food’s Sweet murphies from New Iberia. a 4th coevals household concern. Then. we did the Community Coffee spirit –cafe aulait. These are all Louisiana spirits. Then. we did the Gold Brick Egg spirit. Elmer’s Gold Brick Egg was started in New Orleans and has been in concern for 140 old ages and is now in Ponchatoula. The people at Gold Brick are thrilled because 95 per centum of Journal of the International Academy for Case Studies. Volume 16. Particular Issue. Number 1. 2010 their gross revenues occur in merely two and a half months. Now. they can get down selling their merchandise in the summer clip. † One twe lvemonth after the debut of ice pick at Kleinpeter. gross revenues of the sweet comprise eight per centum of entire company gross revenues. Kleinpeter Farms Dairy now produces all of the top merchandising spirits of ice pick and has worked its manner down the list to the smaller merchandising spirits. For case. while vanilla is 60 per centum of the market. no-sugar vanilla is merely approximately 1. 5 per centum of the market. â€Å"We followed the market until we got down below three per centum. Now. we are free to make whatever we want. What has been effectual has been utilizing Louisiana ingredients and Louisiana companies that we all know and love. The biggest hit has been Gold Brick Egg. It keeps selling out and we haven’t been able to do sufficiency to acquire it in all the shops. † provinces Jeff. To day of the month. Kleinpeter is the lone manufacturer of Gold Brick Egg ice pick and sweet murphy pie ice pick in the universe. Jeff exudes enthusiasm for the new merchandises. â€Å"In the nutrient subdivision of the paper ( Baton Rouge Advocate ) last Thursday. the nutrient editors voted Gold Brick Eg g their most favourite spirit. It could be bigger than pralines and pick and the 3rd most popular spirit. Gold Brick Egg now has a dark cocoa Heavenly Hash. which may be our following spirit. What is following? Possibly. bananas surrogate spirit. made with Aunt Sallie’s bananas foster pralines or banana split or banana pudding. We are looking at a blueberry spirit. made with Louisiana blueberries. or Ruston Prunus persica. † External ChallengeWhile Kleinpeter has begun selling ice pick in south Louisiana. there are some external challenges that have affected the company. It has non been all Prunus persicas and pick. The first major component in the external environment is the country’s economic recession. Kleinpeter built their ice pick works as the state stumbled into a recession. â€Å"I watch our gross revenues closely every twenty-four hours. comparing this twelvemonth to last twelvemonth. Every month our gross revenues have increased. Restaurant gross revenues have slowed. but our food market gross revenues have increased. To keep our market portion and seek to maintain clients from exchanging to hive away trade names of milk and ice pick. we have run some advertisement runs to raise the consciousness of our trade name. † Recently. Kleinpeter has run two really interesting advertisement runs – one featuring Ben and Jeff as a male parent and boy in a household concern and another that shows the Kleinpeter cattles as employees of the company. The household concern ads appeal to households with kids. a premier mark market for Kleinpeter. Consumers love the employee cow ads. which have besides been adapted to frost pick. Jeff explains. â€Å"A group of our employees come to me with an thought. The screen splits and there are three cattles coming up to me. Since our milk is so good. why don’t we make ice pick? So. we listened to them. It shows me in the lab experimenting with cocoa. In another commercial topographic point. we talk about utilizing local ingredients. Now. we are proud to present Kleinpeter ice pick. We show the ice pick. We thank you and the employees thank you. We show three cattles. † The 2nd major component in the external environment for Kleinpeter Farms Dairy is intense competition in both the milk and ice pick spheres. While the lone rival that sells both merchandises in the south Louisiana market country is Borden’s. there is plentifulness of competition for food market shop shelf infinite. In add-on to hive away trade names such as Great Value and Rouse’s. milk rivals include Barbe’s. Brown’s Dairy. Horizon Organic. Lactaid. Lala Foods. and Silk Soy Milk. Kleinpeter is non the cheapest milk on the shelf. typically pricing at about one dollar to two dollars higher per gallon than the low monetary value leaders. but still turn toing the wide market. In footings of scheme. Kleinpeter relies on superior tasting ; rBGH free. locally produced milk to make a competitory advantage ( Barney. 1991 ) . This competitory advantage allows the company to command a higher monetary value for its merchandises. utilizing the generic scheme of mercha ndise distinction ( Porter. 1980 ) . In the ice pick sphere. the taking rival is Blue Bell. which is a regional company runing in 12 provinces with workss in Texas. Alabama. and Mississippi. Perceived as a strong selling company with a good merchandise. Blue Bell leads the market in south Louisiana with every bit much as 70 per centum of the concern. Harmonizing to Porter’s five forces theoretical account. Kleinpeter. as a new entrant in this merchandise market must happen a manner to vie successfully with entrenched rivals ( Porter. 1979 ) . Following the same scheme as their milk. Jeff Kleinpeter provinces. â€Å"In order to distinguish ourselves. we have to do ice pick as good or better and give it more value. Our ice pick is rBGH free. We market the fact that we are a Louisiana merchandise and that we are purchasing other Louisiana merchandises to set in our ice pick. which is called cross stigmatization. Peoples here in Louisiana like to utilize local merchandises. † Other ice pick rivals in the wide or general market include store trade names. Brown’s Velvet. Blue Bunny. Kemp’s. Edy’s. and Breyer’s. Ben A ; Jerry’s and Haagen Dazs. while surely good known. compete in the ace premium class of ice pick. These companies make a merchandise with 14 per centum butterfat and are priced about two times higher than Kleinpeter. OPERATIONAL CHALLENGESThe cool forenoon mist was merely get downing to lift. uncovering dark green grass heavy with dew. In the distance. the soft groans of cattles fresh from milking and returning to the grazing land could be heard above the smooth boom of gum elastic auto tyres on Airline Highway and the bump and rattle sounds of bringing trucks resiling out of the Gatess at Kleinpeter Farms Dairy. Inside the unpretentious. but serviceable company central office. Jeff met his sister. Sue Anne Kleinpeter Cox. at the door to Jeff’s office and greeted her warmly with a steadfast handshaking and a cheery smiling. â€Å"It’s good to see you. Sue Anne. Thanks for dropping by this forenoon ; I would wish to discourse a few things with you refering our ice pick operations. † â€Å"Jeff. you know I am ever willing to listen and offer my sentiment. but it seems to me that things are traveling good with the ice pick. † replied Sue Anne. Journal of the International Academy for Case Studies. Volume 16. Particular Issue. Number 1. 2010 â€Å"Well. they are. Sue Anne. We planned things out reasonably good. We knew that we would hold to add some employees and some trucks to present the ice pick. We have added about 20 employees and we have bought six new trucks in the first twelvemonth since presenting ice pick. We are up to about 110 units including dawdlers. dry new waves. and trucks. As you know. the ice pick truck has to be -20 grades and the milk has to be 35 grades. It is a whole different truck. This is raising some challenges for us because ice pick does non hold the same bringing demands as milk. † said Jeff. â€Å"For large shops. we deliver milk every twenty-four hours. but ice pick can be delivered every other twenty-four hours. We do need to look into the show of ice pick every twenty-four hours. Our turnover in ice pick is non every bit fast as it is for our milk. I wish it were. Even if a truck driver had ice pick on his truck. he would merely present it every 3rd twenty-four hours or so. Now. on an ice pick truck. the driver has 75 histories as compared to about 20 histories for milk. It is a different bringing plan. † â€Å"We realized from the beginning that we could acquire some synergism between milk and ice pick production through the usage of our extra pick. but we still need to unite the bringing operations because we are one little concern. non some kind of inefficient pudding stone. † remarked Sue Anne. â€Å"I hope we will acquire to the point where we have to travel to all the shops for ice pick every twenty-four hours. but even our rivals do non make that. † Jeff stated. â€Å"I have seen companies that have both milk and ice pick. They wound up holding separate representatives for their milk and their ice pick. † â€Å"We surely do non desire that state of affairs here at Kleinpeter. † agreed Sue Anne. â€Å"I did non believe that we did either. So. I told the reps. ‘When you go into a shop. you check both the milk and the ice pick. ’ Doesn’t that make sense alternatively of two cats walking into a shop with one look intoing ice pick and the other look intoing milk? † questioned Jeff. â€Å"We do hold separate gross revenues directors for milk and ice pick. † remarked Sue Anne. â€Å"One rep holding two foremans is non a truly good thing. † â€Å"That is why it is a challenge for those two gross revenues directors to be truly close. They are right following to each other in the same office. sharing ideas on how to direct the reps. † Jeff replied. â€Å"There are ever turning strivings when we expand our concern. It sounds like we have an unusual organisational construction traveling here. † Sue Anne offered. â€Å"With a new ice pick division. you may hold to portion and work together because the new division is non large plenty to back up an full squad. † Jeff added. â€Å"Jeff. we have some human resource and organisational construction issues here. Meanwhile. we are spread outing with an wholly new merchandise line in the ice pick. developing wholly advanced new spirits of ice pick. and come ining new geographic market countries both to the West in Lake Charles and to the E with the new Rouse’s shops and into Mississippi. Are we distributing ourselves excessively thin to cover all this gr owing? † asked Sue Anne. Mentions Barney. J. 1991. Firm resources and sustained competitory advantage. Journal of Management. 17: 99-120. Galbraith. J. ( 1973 ) . Planing Complex Organizations. Reading. MA: Addison-Wesley Publishing Co. Porter. M. E. 1979. How competitory forces form scheme. Harvard Business Review. March-April. Porter. M. E. 1980. Competitive Strategy. The Free Press. New York. Riegel. S. 2009. Buying the farm. Greater Baton Rouge Business Report. April 7. 32-33. Journal of the International Academy for Case Studies. Volume 16. Particular Issue. Number 1. 2010