Case Study of Sabores Da Serra-Free-Samples-Myassignmenthelp.com

Question: Discuss about the Case Study that highlights a Firm in Brazil named Sabores da Serr. Answer: Introduction The particular firm that has been presented in the case study is of the name Sabores da Serra and markets products under the brand name of Quitanda das Especiarias. It is a Brazilian firm and deals in jams. The sole partners of the firm are Joao Carlos Cunha and Debora Bartolomeo. The firm Sabores da Serra was founded in the year of 1983. The primary motivation behind the creation of the firm was that the founders discovered the fact that Brazil did not have much competition in the market of fruit preserve jellies and therefore the founders decided to build a plant in order to produce high quality preserves. In the beginning, Sabores da Serra as a firm did prosper and also did introduce a wide variety of premium quality jams such as red berries, apricot and blue berries. The current situation that is faced by the firm is that its profits are diminishing at a constant rate since the past few years. The key issues that are faced by the firm as can be understood from the case study are increase in the competitive aggressiveness of the fellow competitors, increase in the price of the raw material or input, obsolete machinery and reluctance on the part of the firm to increase its scope of sales. In order to resolve the situation faced by the firm, the chief executive has convened a meeting as mentioned in the case study. The primary dilemma that has come up from the meeting is that, different officials are of different opinion as to how to lift the profits of the firm. Some have focused on extending the target market of the firm in a different domain of jams (diet jams), some are of the opinion that the fundamental infrastructure is the reason for such a downfall whereas some recommend increase in the scope of sales will aim to resolve the issue. Case Analysis Sabores da Serra is in a situation that it has been facing for the last few years. This is evident from the income statement of the firm that reveals that the net income obtained by the firm since 2006 has been diminishing in an increasing rate. The net income obtained by the firm in the financial year of 2006 was $1484.5(thousand) and then it decreased to $932.1(thousand) in the financial year of 2008. Lastly in the financial year of 2012 the net income decreased to $132.1(thousand). The proceedings of the meeting as depicted in the case study provide the key issues or facts that have majorly contributed to the downfall of Sabores da Serra. The first major issue that has come up from the discussions conducted in the meeting is that the firm though has taken initiative to increase its sales overseas the economic crisis in Europe has prevented it from incurring the desired revenue from the export markets. In fact the business plan developed by Debora indicated that export would be a rational and profitable solution for the company. But over the last six years exports have only accounted for 10% of the annual production. Next the commercial director points out the key issue to be the highly aggressive pricing policy undertaken by the big competitors of the industry in order to carry out the dumping practices in the market. The commercial director gives the entire credit of the 2% increase in sales to the entire sales team. But the production manager is of the opinion that even if the records show that the company has increased its sales overseas but the sale to the large retail chains which account for 80% of the total sales has shown no improvement in the last six years. The production manager here provides a crucial opinion that the only solution to the unprecedented rise in the input prices, is that the company should consider reducing the cost of production by purchasing less expensive units and frozen pulps for incurring higher profits. He also feels that the company should consider investing in a new plant altogether that is facilitated with higher production capacity and modern, technologicall y improved equipment as because the equipment utilized according to him has become obsolete. But this opinion is strongly argued by Debora that the quality of the product is the priority of the firm and has to be maintained at all costs. Another recommendation that is provided by the commercial director is that the company should launch a line of diet products. Joana, the commercial director then recommends the expansion of the sales team in order to increase the scope of sales. The case as discussed in the above provided analysis depicts a dilemma as to which particular recommendation should be implemented in order to lift the current financial condition of Sabores da Serra. All the recommendations provided by the director of the company stand correct. As revealed in table 2 of the provided case study, the average annual increase in price of the inputs is 5.5%. Therefore the commercial director has rightly deduced that one of the reasons for diminishing profit of the firm is increase in the input prices of the firm. But the solution provided by the commercial director that a new product in the domain of diet products should be launched is not viable in the present situation. This is because given the current financial condition of the firm it cannot afford launching a new product (Arpi Wejke, 2016). Therefore the recommendation provided by the production manager should be looked into. The key issue highlighted by the production manager is infrastructure development. The production manager stands correct in pointing out of the key issue. This is because according to table 5 of the case study the jars produced per hour has decreased from 174 to 138. Another reason for such an occurrence may be that the labor lack motivation to work. In such a case incentive or other reward schemes can also be introduced in order to increase the productivity (Hasniza Haron, Kamal Abdul Rahman Smith, 2013). But in addition to it the company should consider building another plant with modern equipment and infrastructure. Though the production manager also recommends compromising the quality of the product in order to increase the profits of the firm, building a plant with modern equipment and motivated workforce will probably increase the productivity of the firm. In addition to the implementation o f this particular recommendation the expansion of the sales team should also be considered. This is because the sales team as mentioned in the case study has increased the total sales by 2%, therefore this positive trend should be influenced by expanding the sales team and thus expanding the scope of sales (Carnmarata, McArthur Steeb, 2014). Therefore Joao should develop a strategy or plan that involve construction of a new plant and also conduct a research in order to target the potential customer base. The expansion of the sales team should be done in accordance to the targeted customers, so that both the demand for the product and the productivity of the firm increase so as to reverse the trend of diminishing profit of the firm. The firm may also consider expanding its markets in the export market (El Sayed, 2015). Conclusion Therefore it can be concluded from the above discussion that Sabores da Serra as a firm has to make major structural changes in order to improve its financial conditions. The executives of the firm should stand united and implement the above discussed recommendations sincerely. The strategy or turnaround plan that has to be developed by the management of the Sabores da Serra should be properly researched and analyzed. As mentioned in the study jam industry in Brazil has a prosperous future provided that the consumers are made aware about the product. With the implementation of the recommendations it can be expected that Sabores da Serra will bring back its long lost glory. References Arpi, B., Wejke, P. (2016). International Turnaround Management: From Crisis to Revival and Long-term Profitability. Springer. Carnmarata, S., McArthur, D., Steeb, R. (2014). Strategies of cooperation in distributed problem solving. Readings in Distributed Artificial Intelligence, 102. El Sayed, T. M. H. (2015). How to turn around a company in decline: a case study approach (Doctoral dissertation, Cardiff Metropolitan University). Hasniza Haron, N., Kamal Abdul Rahman, I., Smith, M. (2013). Management accounting practices and the turnaround process. Asian Review of Accounting, 21(2), 100-112.