A. Executive Summary: Neptune Gourmet Seafood is facing a problem with their business operations and overall strategy. They are known for being the most upmarket player in the seafood industry and are able to sell their products at commanding premiums. However, they are currently facing a problem with inventory. New regulations and an infusion of new technology has caused their finished goods inventory to triple what it was just a year ago. Multiple potential solutions have been proposed to Neptune’s CEO, Stanley Renser. Strategies varied from cutting prices to creating a private label to geographical expansion. Neptune should expand into China, where they will be able to reach high demand while continuing to maintain their brand equity.
B.
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Financial Investment (short-term) – will the alternative require a large initial investment?
2. Financial Impact (long-term) – will the alternative produce favorable long-term returns?
3. Customer Perception of Brand – will the alternative affect the company’s brand equity?
4. Risks Incurred – will the alternatives have a high probability of success?
5. Competitor Response – will the alternatives entice a response from their competitors?
6. ASPD Response – will ASPD take away their gold seal of approval?
7. Inventory levels – will inventory shrink to normal levels?
F. Alternatives: The infusion of new efficient technology combined with increased regulation leads Neptune to produce more seafood than demanded. Rising variable costs of inventory holding costs and fueling costs has diminished their margins and in turn profitability. Neptune must make a decision that not only will alleviate their growing inventory, but will also advance the company going forward.
Option A – Launch a new mass-market product “Neptune Silver” and cut prices by 50%
Pros:
• Generates a potential $33.715 million in revenue on excess inventory, which otherwise would perish, eliminating the sunk
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Recommendations:
Short Term – Tactical: According to the alternatives evaluation matrix, Option C is the optimal recommendation based on the evaluation criteria. This solution will take time to implement, indicating Neptune should center their attention on the strategic decision to
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