A Case Analysis Of Calyx And Corolla

A Case Analysis of Calyx and Corolla

This analysis focuses on the case study of Calyx & Corolla, a mail order flower company.

Calyx & Corolla is a relatively new company that utilizes a different distribution channel than conventional companies for fresh flowers. Calyx & Corolla mails flowers direct from the growers to the customers via Federal Express and eliminates the middleman (Appendix A). This permits Calyx & Corolla to provide fresher, longer-lasting flowers to consumers. The management of Calyx & Corolla is contemplating a change in their long-term business strategy as they examine their ability to compete with more traditional outlets such as retail flower shops and wire services like FTD. Ruth Owades, the founder of Calyx & Corolla, has hired Marketing Consultants (MarCo) to assess the strengths and weaknesses of her business and make recommendations on how her company can fully develop their mail order concept.

Background:

Calyx & Corolla is a small mail order flower company that was founded in 1988 by Ruth

Owades. Ms. Owades secured $2 million in capital from approximately 18 different investors in order to launch the company. By 1991, Calyx & Corolla exceeded $10 million in annual sales and Owades and her associates were reassessing the firm's long-term growth strategy (Wylie and Salmon, 1991). Up to this point, Calyx & Corolla was primarily a mail order company, but management is now considering expanding their market and is unsure of how they should proceed. Recently, a well-financed venture capital-backed start-up failed and Calyx & Corolla acquired some of its assets. Another unproven competitor recently entered the market, financed by a large Japanese conglomerate.

The company's success is primarily due to a few key employees. Ruth Owades plays a

major part in the selection and pricing of flowers and other merchandise that appears in the catalog. Fran Wilson, the vice president of operations, is responsible for customer orders and service, day-to-day communications with growers, systems development, and finance. Ann Hayes Lee is responsible for merchandise development and catalog creation and production. She is also responsible for non-direct mail initiatives that are aimed at accelerating the growth of the business. Calyx & Corolla espouses the values and creativity of these individuals and their employees. Taking into consideration the skills, values, and aspirations of the entrepreneurs and the investors, and the external elements which confront them, MarCo is prepared to present a plan to fully develop the Calyx & Corolla model.

Strengths of Calyx & Corolla:

Calyx & Corolla provides a much fresher product to the customer than their competitors.

Fresh flowers are delivered within one to four days after being cut by the growers. The

competition (such as FTD) delivers flowers that were cut one to three weeks prior. Calyx & Corolla works closely with the supplier or grower to provide the most optimum process from cutting to point of shipping.

Calyx & Corolla have an excellent relationship with the growers. Calyx & Corolla uses

30 quality growers to supply their flowers. The top eight of these growers supply close to 80% of their orders, however no one grower supplies more than 25% of its products to Calyx & Corolla (Wylie and Salmon, 1999). Calyx & Corolla has exclusivity agreements with all growers they do business with. The management of Calyx & Corolla works very closely with the growers on a continual basis to ensure that quality arrangements and packaging are achieved.

Growers are paid wholesale prices and an extra surcharge to provide the extra services of

arranging and packaging the flowers. To accomplish these extra services or retail

responsibilities, the growers employ additional people. Calyx & Corolla senior managers stay in close contact with representatives from each grower they do business with to collaborate on availability of flowers, arrangements, schedules, accessories and packaging supplies.

Calyx & Corolla's relationship with their shipper, Federal Express, is just as strong and

critical as their relationship with the suppliers. They have a special contract with Federal

Express that includes special handling of the packaged flowers. During peak periods, Federal

Express provides trailers to the growers to expedite the shipping process. During adverse

conditions, such as extreme weather, Federal Express provides extra delivery services by not

leaving packages in situations where the flowers could be damaged or ruined. To help track

shipments and provide better customer service, Federal Express provides computer terminals to

both Calyx & Corolla and the suppliers.

Because the majority of their business is realized during peak periods, around holidays,

Calyx & Corolla is working to help alleviate the peaks. By offering continuity programs,

promotional tie-ins and corporate client business, they can offset slow periods and lessen the

impact of sudden demand during peak periods.

The management team at Calyx & Corolla works very closely with their own staff.

Realizing the importance of a high quality sales and customer service staff, they hire serviceoriented

people with a genuine interest in flowers and plants. Senior managers are personally

involved in the training and daily working environment of their employees.

Calyx & Corolla had nearly an 80% margin of flower sales (Wylie and Salmon, 1991),

and possessed an experienced and dedicated management team and a sophisticated information

system and customer database to analyze sales. Calyx & Corolla appears to have a strong

potential