Strategic audit on the tasty baking company
Developed around taste, with the slogan: “Nobody bakes a cake as tasty as TastyKake!” b. “Moments” campaign featured 15-second ads of families enjoying the product, and with a wide range of music. c. Whenever they entered a new market they used freestanding inserts in Sunday papers, promotions, and heavy in store sampling to get people to try it. 2. Finance a. a. Took a loss in 1993 as the result of stock split from Phillips and Jacobs and postretirement benefit expenses for retiring CEO. b. Sales increased by 2% from 1996 to 1997, operating income slightly increased, net income decreased from 4.3% to 4.1% due to pretax charge.
Revenues increased by 10%; operating income slightly increased; net income decreased from 4.3% to 4.1% d. Some ratios are troubling, such as a 56% debt ratio, ROE, ROA, ROI, and EPS slightly decreased from 1996 to 1997 e. Liquidity ratios also decreased slightly d. Acceptable activity ratios; good inventory management 3. R&D a. They have responded to needs from research of consumers health needs as well as holiday shopping. b. Have designed entire new products for different parts of the world, like Tropical Delights for the Puerto Rico market.
Always innovating their building and manufacturing to stay ahead of demand 4. Operations & Logistics a. Tasty Baking
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Human Resources a. The company has a good relationship with its employees and highly values them. Employees are not unionized, despite several tries to organize from different unions. b. Tasty Baking has invested in a funded noncontributory pension plan that supplies retirement benefits for nearly all employees. Approximately 93% of employees own company stock through their 401K. c. The company spends $300,000 to $400,000 on the Tasty Baking Company Thrift Plan for employees.1. Growth through a combination of Horizontal & Vertical Growth, Acquisitions, and Strategic Alliances: Company has history of buying companies to expand distribution and production, as well as partnering with various companies, such as Kroger’s, to help them break into and expand into new markets.
Pro: This will make the company less likely to become victim to hostile takeovers from competitors. b. Con: Company runs the risk of immersing themselves in higher debt at a time when they can ill afford it. 2. Stability Alternatives: Pause/Proceed with Caution Strategy: Make incremental improvements because this company doesn’t have the financial resources to acquire other businesses at a fast enough pace to make a positive difference. a. Pro: Allows the company time to regroup their finances to strengthen their purchasing power between acquisitions. b. Con: If this company takes a time out they not only are at risk to lose market share but also could risk being taken over by a competitor. Retrenchment Alternative: Turnaround Strategy: Company has focused on streamlining production, distribution chain, and utility costs. Pros: Reduced cost of goods sold and increased sales.
Cons: Limits growth and expansion opportunities for company and runs risk of increasing employee turnover. B. Recommended Strategy: 1. Recommend Pause/Proceed with Caution Strategy until debt service falls below 50%. Prefer company achieve this without selling more stock. 2. Tasty Baking must continue to build strong strategic alliances and focus on creating dynamic and synergistic relationships with partners. 3. Company must continue concentrating on internal controls to keep costs down, profit margins up and productivity margins up. 4. Must maintain status quo of frequent quality tests. 5. Investigate acquisitions possibilities from the 21% of “other” regional or local bakeries (since Tasty Baking has the smallest market share and cannot afford to buy major competitors).