Class or Mass Case

CLASS OR MASS

I. Executive Summary: Neptune Gourmet Seafood (Neptune) current faces an inventory surplus by accumulating a 60 days’ supply of their finished goods in the past three months, which is their short-term issue. Rita Sanchez wants to reduce prices by 40% to 50%. However, Sanchez recognizes that catches have grown bigger on average since Neptune invested $63 million in trawlers, and inventory will continue to increase – which is their long-term issue. Sanchez proposed a new reduced-price mass-market brand. Jim Hargrove feels that reducing prices would destroy Neptune’s premium brand image and cannibalize sales.

        My recommendation below shows that it is best for Neptune to expand their grocery chain market, and restaurant and cruise market to the West Coast.

II. External Analysis: The PESTEL Analysis (Appendix A) identifies the U.S Association of Seafoods and Processors and Distributors (ASPD) as a strong influencer of domestic and global policies. The grocery chain and seafood wholesaler industries are expected to grow (Appendix G4) along with per capita disposable income (Appendix G1). There is a trend in consumers becoming more health-conscious and value driven (Appendix G3) along with seafood becoming a healthier alternative to red meat (Appendix G2). There are new technologies that improve quality of catches along with being environmentally sustainable. There are new laws that reduced access to fish near the coast pushing industry member farther out to sea.

        The Stakeholders’ Analysis (Appendix B) shows there are many conflicting interests by individuals which will impact the evaluation of alternatives.

III. Internal Analysis: The Resources and Capabilities / VRIO Analysis (Appendix C) indicates that Neptune’s sustainable competitive advantage its brand reputation for best quality seafood. Neptune also has some “difficult to obtain” advantages including their technologically advanced trawlers and their contracts with the best restaurants, grocery chains and wholesalers. The 5 C’s Analysis (Appendix E) shows us that while being located on the East Coast, Neptune has still been able to expose their brand to other geographic locations including the West Coast.

The Root Cause Analysis (Appendix D) shows Neptune’s new technology as a key internal issue to their excess inventory problem.

IV. SWOT Analysis

Based on the review of the frameworks in the appendix and the summaries above, the following represents the key issues of the situation in a SWOT analysis:

V. Evaluation of Alternatives

A. Evaluation Criteria

1. Profitability / Sustainability – How does this effect the bottom line and its durability?
2. Customers – How are they impacted? Grocery Chains, Wholesalers, Restaurants, Consumers
3. Employees – Who is harmed and who is benefited? Are stakeholders satisfied?
4. Competitor Risk – Ability for competitors to easily responds and the ability to mitigate them
5. Competitive Advantage – Does it leverage and build competitive advantage?
6. ASPD Approval – Meets Gold Seal of Approval? Doesn’t disrupt market?
7. Risk – Likelihood of success for the direction of company, and ability to successfully implement changes
8. Brand Image – Upholds premium brand image

B. Alternatives: The problem description presented three notable potential alternatives:

1. Reduce prices by 40% - 50% to launch a mass-market brand, Neptune Silver, potentially losing ASPD Gold Seal of Approval and destroying brand image
2. Sell old ships to reduce production and launch ready-to-eat, fished based meals assuming the excess inventory is a temporary phenomenon
3. Supplying retailers with private-label products which has been known to pose problems for consumer goods manufacturers

Unfortunately, each of these alternatives had a conflict of interest with our evaluation criteria. An Ansoff Growth Matrix (Appendix F) was developed to brainstorm potential alternatives. I have developed three alternatives, two new solutions along with an improved alternative presented in the problem description. Alternatives proposed include:

1. Reduce prices by 40% - 50% to launch a mass-market brand, Neptune Silver, with the ASPD Gold Seal of Approval intentional left-off the brand to differentiate it from Neptune Gold
2. Expand Neptune’s grocery chain market, and restaurant and cruise market to the West Coast
3. Open high-end sushi restaurants in cities (Appendix G6)

C. Alternative Evaluation Matrix

Multipliers: X1 Low; X2 Med; X3 High