Academic journal article Journal of the International Academy for Case Studies

Green Enterprises, Inc

Academic journal article Journal of the International Academy for Case Studies

Green Enterprises, Inc

Article excerpt

CASE DESCRIPTION

The primary subject matter of this case concerns strategic planning. Secondary issues include financing, working capital analysis, cash flow estimation, and break-even analysis. In this field-researched case, Toppy Green, the CEO of Green Enterprises is faced with resolving some key questions about the direction of his company's strategy and turning around the company's operation. The company distributes good quality food products and makes profits, but is faced with negative working capital and cash flow difficulties. As the case closes, his advisors have asked him to address several key strategic questions. The case has a difficulty level appropriate for the firs-year graduate level. The case is designed to be taught in 1.5 class hours and is expected to require 4 hours of outside preparation by students.

CASE SYNOPSIS

The case centers on an entrepreneur by the name of Toppy Green, whose business has grown from a single truck food distribution operation into a $6 million food distribution business in the State of North Carolina. After 23 years, the company faces significant growth hurdles in order to achieve nominal profitability with few cash flow difficulties. The company focused on distributing food products such as sandwiches to convenient stores mainly in North Carolina. Toppy's primary goals, in the context of this case, are to achieve better profitability, build a strong balance sheet, and to build the brand name on a limited budget. This case communicates the challenges experienced by an entrepreneur, and provides students with the opportunity to simulate the creation of strategy and implementation in the context of this case.

INTRODUCTION

On a warm and humid day in May of 2004, Toppy Green, the founder, CEO, and principal owner of Green Enterprises, was looking down at the first quarter financial reports that lay on his desk. He had been reviewing recent company data to help him determine the direction that Green Enterprises should pursue. The financial statements reported that although the company enjoyed a better profit in the first quarter, the quarterly revenue had decreased by about 13.2% in 2004. While he recognized that no business could maintain a high growth rate forever, the reality of the decline in company growth would have an impact on the way Green Enterprises would move forward in its business. "Right now our most serious problem is cash flow," said Toppy. "We could have sold more products if we had had more capital. We're often cash-poor because some of our customers pay too slowly. One of our biggest chain customers had recent organizational changes and is paying us slowly. We don't want to push them too much, because we might loose them to our competitors." Toppy had to make decisions concerning accounts payable, staffing, marketing, merchandising, and financing that would ensure his company's long-term profitability.

Green Enterprises, with revenues of more than $6 million in 2003, was a privately held corporation offering a full line of sandwiches, meats, and desserts. The company relied on food manufacturers for his products. A direct store delivery system (DSDS) composed of 12 route people and one branch office delivered food to over 800 customers serving consumers in its primary trade area of North Carolina.

Competing against old established companies in the sandwich category was a challenge. Toppy knew that to be successful he had to be better than the competition, which had advantages of economies of scale, advertising campaigns, and brand name. The company's abilities to satisfy the regional taste preferences of consumers and to move quickly were strengths of the firm.

Toppy turned to his computer and skimmed the memo he had begun to his sales staff. Two of these people had been with the company for over one year. Several of the staff had good experience in the food industry. Through his memo, Toppy hoped to initiate discussion among his team about the future of the company. …

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