acme lamb alan lawrence tanesa leib megan lynch trista myers ag ec 495 december, 2006
TRANSCRIPT
ACME LambACME Lamb
Alan LawrenceTanesa Leib
Megan LynchTrista Myers
Ag Ec 495 December, 2006
Outline
History Operations Management Human Resources Marketing Financials Conclusion
ACME Lamb“Discover the difference”
Innovative company created by the Saskatchewan Sheep Development Board
Focus is to add value to lamb by producing additional products from less desirable cuts
Product Line
Seasoned Lamb Kabobs (cooked and uncooked)
Parmesan Lamb Meatballs Greek Style Lamb Meatballs Tunisian Lamb Cocktail Sausages Assyrian Lamb Sausage Mediterranean Lamb Sausage Roasted Garlic & Peppers Lamb Sausage Moroccan Lamb in Orange Sauce
Flow of Work
TML Production Layout
Processing
Cooking
Frozen Finished Product
Packaging
Spices
Capital Budget
Processing contracted out
Outsourced companies incur costs
Contract and rental costs
Working Capital
Description Estimated Cost
Accounts Receivable$63,623
Raw Inventory$72,379
Inventory in progress$1,814
Finished Inventory$1,814
Accounts Payable$57,591
Total Net Working Capital $82,038
Cost of Goods Sold
Beg Finished Goods Inventory $0
Cost of Goods Manufactured $662,191
Goods Available for Sale $662,191
End Finished Goods Inventory $0
Cost of Goods Sold $662,191
Accounts Receivable & Accounts Payable
RECEIVABLE
Co-op, Butcher Boy $5,302
Total $5,302
PAYABLE
Sunterra $37,917
Blends $1,517
Saputo $380
Sterling Packaging $3,150
VersaCold $1,274
Thompson Meats Ltd. $10,800
Total $55,038
Cash Conversion Cycle
37 day Cash Conversions Cycle
– Raw Material Inventory of 7 days
– Finished Goods Inventory of 30 days
– Receivables of 30 days
– Payables of 30 days
CCC = 7 + 30 + 30 – 30 = 37 Days
Operations Management
Organizational Structure
Board of Directors
(8 members)
General Manager
Administrative Assistant
AccountantMarketing
Representative
Human Resources Strategy
CPL Goals
– Operations administered by phone
– Keep CPL employee numbers low
– Hire marketing representative
ACME Employees
2007– General Manager – Accountant– Administrative Assistant
2010– General Manager– Marketing Representative
Marketing Objectives and Goals
Use all trim provided by Sunterra Meats by 2015– Approximately 360 000 units of sausage or meatballs
Alter proportion of product sales within CPL
Establish four to five working relationships with retail and wholesale outlets per year
– Large urban centers
SWOT Analysis - Internal
Strengths Knowledge of industry within company Unique product Minimal number of employees Physical resources
Weaknesses Limited capital Promotion Limited employee time
SWOT Analysis - External
Opportunities Market trends Convenient product
Threats Competitors
Agriculture and Agri-Food Canada, 2005
Place
Co-op Saskmade Marketplace
Expand into new markets
– Costco– Trader Joes– Thrifty’s – West Coast– Longo’s – East Coast
Promotion
Print Taste tests Trade shows Samples Coupons Meal ideas
Segmentation, Targeting & Positioning
Male and female customers Age range 25-45 Middle to High Income Urban consumer Ethnic consumers Large urban centers
Market Analysis
CPL Products
Unit Quantit
y (grams)
PriceCompetitor and
Product
Unit Quantity (grams)
Price
Lamb Kabobs 600 $ 12.99Chicken Pineapple Mini-Skewers
500 $ 8.99
Lamb Meatballs
908 $ 10.99Country Morning Swedish Meatballs
800 $ 8.99
Lamb sausage 300 $ 3.49Johnsonville Hot and Serve Bratwurst
500 $ 5.99
Financials
Investment of $79,000 in 2007– Equity capital– Loan at 8%
Inflation rate 2% Growth rate 10%
Financials - Comparison
2007 2014
Sales Revenue $ 774,075 $ 1,872,119
COGS $ 660,377 $ 1,463,464
Admin & Mkt Expense $ 96,260 $ 229,491
Net Income $ 17,438 $ 179,164
Financials - Ratios
Ratio
Company Average (5 years)
Liquidity Ratios
Current Ratio 2.84
Activity Ratios
Total Asset Turnover 4.78
Direct Expenses/Sales 0.84
Overhead/Sales 0.02
Administration/Sales 0.06
Leverage Ratios
Debt/Asset Ratio 34%
Profitability Ratios
Gross Profit Margin 15.9%
Net Profit Margin 2.4%
Return on Assets 10.9%
Return on Equity 16.4%
Financials
Net present value $-95,937 IRR 35.7% ERR 25.2%
-20%
0%
20%
40%
60%
80%
100%
Inflation Rate Price of Meatballs
IRR
Worst Case
Base Case
Best Case
Financials – Critical Variables
Price of lamb kabobs– Allowable change of -8%
Growth and inflation rate for direct costs– Allowable change of 8%
Conclusion
Focus on selling profitable products
Increase sales
Hire marketing representative
Explore different methods of promotion
Any Questions?