Sample Report On Calveta Dining Services Inc
Calveta is a service firm providing dining services to the senior living facilities (SLFs) since 1966. It has witnessed a tremendous growth over the years and in year 2009 it was serving more than 1000 SLFs. It has more than 15000 employees and now is the fourth largest competitor in the market. The company has set values. The five values of the firm make the backbone of the company operations and is regarded as the “Antonio’s Way”. Now the firm is planning to expand and double its worth in the next five years. The new CEO of the firm has made a promise with his father and the founder of the firm to expand double in size in the next five years. However, the values of the firm and its aggressive expansion strategy are becoming conflicting and this goal seems unrealistic. The CEO is not able to achieve the goal of such aggressive expansion with the current strategies while maintaining the culture and values of the firm.
Food, service and innovation form the major part of the company’ operating strategy. The five basic rules often regarded as “Antonio’s way are the founding pillars of the strategic formulation of the company. The company operates strictly adhering to these values. These fives rules are stated in offices of the company as well as strictly followed. The company keeps the quality as the central focus in its operations ensuring maximum quality in their food and services offered to the diners at SLFs. While maintaining quality, they try to keep budgets in range of both the SLFs and the company. The freshness along with cost control and constant innovation is highly valued at the firm. The firm also values its employees and takes necessary actions for their growth and sustainability. The founder of the company despite being the wealthy person was extremely religious and god fearing. He never fired employees except the bad attitude or in extreme cases. This rule forms the basis of the HR policy of the firm and due importance is given to the employees of the firm. The company keeps all these things in view along with an objective of remaining profitable in its operations through its operations and expansion.
Porter’s Five Forces Analysis
The porter’s five forces analysis is very helpful in analyzing the firm shaping its competitive strategy. It analyses the five forces of the competition and provides strategic insights. The five forces analysis for the Calveta is given below
Threat of New Entrants
The market favors competition and there are less governmental regulations involved for the new players entering the market. However, new entrants may require expertise in terms of human capital and the technical knowledge to excel in the dining services for the SLFs. All these expertise are core competency of the Calveta. Moreover, the competition in the market is enormous; it also checks the entry of the new entrants. Therefore, threat of new entrants is low.
Bargaining Power of Suppliers
The raw materials required for the business operations of dining service providers are not very unique and therefore easily available. The supplies include the raw materials for mostly the food items required to produce meals. These materials are available in abundance reducing the bargaining power of the suppliers.
Bargaining Power of Buyers
There are many other players also available in the market of dining services. The institutions have a broad list of alternatives when choosing to outsource the dining services. Therefore, it gives more power of bargaining to the buyers of the dining services.
The substitutes are also readily available in the market. All kinds of the canned food and the other food items are perfect substitutes of the products offered by the Calveta. However, for the senior citizens, the food provided should be healthy and nutritious. Even there are a lot of products available in the markets which are healthy and nutritious
Rivalry among the Brands
The above mentioned four forces act simultaneously to shape the rivalry among the brands. The above analysis shows that the rivalry among the existing brand is high and efficient operations along with expansion is the only way to withstand the competition in the market.
Strengths of the Firm
In many of the strengths of calveta the one is that the offer high set of values to its customers. They are striving to give the food to its customers without compromising on the quality of food. They are making it sure that staff should know the names of the persons he or she is serving and should call them by name during the service that generates a higher sense of value and respect.
As discussed above that calveta is providing higher set of values that generates the sense of loyalty into the customers mind and as they are serving to the old age people, old age people need high level of care and respect when they are cared and respected they get loyal. Calveta have a lot of loyal customers on the bases of the values they are offering.
Calveta is serving in this industry from 1966, so they have many years of experience that is also a strength to calveta. Serving in the same industry for so many years means they have mastered the expertise regarding this industry, and they are only serving in SLF so they are having very good command over their market.
Calveta is the only SLF serving firm that have customized menu and prepare their food according to the desire of their customers, under the program that is called “eat, what you want”. They are offering their customers the facility to plan their food which they want to eat one day before. That also helps the company to plan their raw material required and helps in cost management. By this approach customers stay happy and company gets cost saving.
Calveta have a well-defined employee development system, they put their employees into trainings to get prepared for the changing trends. They also have performance appraisal management system they keep on promoting and developing their employees on the bases of their performance.
Weaknesseses of the Firm
Organizational structure of the calveta is a hindrance towards the growth of the company. They issue is that the core competencies of the company does not suit to the growth. As calveta have a mission to provide the finest quality food that mission does not correlate with the aggressive growth.
As calveta is serving about 1000 SLFs but there are many untapped segments that can be tapped to gain the maximum share, so calveta should collect the scattered market share by accumulating the dispersed market share.
Calveta is running its business only on the capital owned and using the no debt approach. They must leave the no debt philosophy and must use the facilities available into the market for the rapid growth. For that purpose they can take loans etc.
The competitive advantage of the firm is customized menu they provide to the SLFs, their unique services and the continuous improvement. It is the only firm in the market that provides the senior living facilities with an option of customizing the menu for the diners. In this way diners are able to eat what they want. Calveta staff then ensures maximum quality and freshness in the meals provided. The company believes and ensures freshness in the food. Therefore, they do not use canned food materials and produce their own raw materials. In this way two fold benefits are achieved. Firstly, the freshness and quality is maintained. Secondly, cost is kept low. It is estimated that Calveta saves one dollar on each meal by following this strategy. This is the competitive advantage of the firm. The company is also moving to the continuous improvement process. It also serves to maintain its competitive advantage as well as keeping the cost low. They are offering the diners with a facility of eat what they want. The diners are given a liberty of selecting their meal in advance. They are given menus in the morning and their choices are noted down by the evening. In this way the diners are able to plan their meals according to their will. It serves the purpose of customer satisfaction as well as cost control. The company is able to plan for the needed materials which save a lot of cost.
Recommendations and Reasoning
The recommendations for the firm are given below:
The firm should expand its operations in the hospital industry as it is believed that the core competencies of the firm are more fit for the hospital industry. There are certain benefits of expanding into the hospital. Firstly, it is not the operational focus of the institutions like the hospitals and they lack competencies. This is the opportunity for the firm to offer its services. It will save the cost of the hospitals and will provide opportunity of expansion to the firm. The trend of fresh food for the patients in the hospital is in the interest of the Calveta as the firm ensures fresh food concept as its USP. The aging people at the hospitals tend to accept the healthy menus of the firm in the similar way as the SLFs inmates do. There are certain drawbacks of this expansion as well. Firstly, the culture of the firm might get mixed as it expands into the operations into the hospital industry. The current culture of the firm tends to be rigid and does not welcome change. The company should be open to the change process and should train employees to welcome the change. In this way this problem can be overcome. Secondly, there are financial barriers as well. The company will need a lot of resources for this expansion. They will have to turn to financial institutions for debt financing as well. It is conflicting with the company history of never taking any debt. However at this point it seems inevitable and necessary for the expansion.
Moreover, the company can satisfy its expansion aspirations by acquiring Great South West dining services (GSD). The company may acquire and then restructure the whole organization to expand into the hospital as well as untapped geographical areas. The advantage of this expansion is that the geographical distribution of GSD customers does not overlap with the operations of the Calveta. GSD is catering to the customers in those areas where Calveta has no presence. In this way, this acquiring will help the firm to expand into new geographical areas. GSD is in good performance and the financial constraints are not the reason behind the selling of GSD. Therefore, Calveta will not face financial constraints after acquiring firm. However, the firm may need to restructure the organizational structure to make this acquiring more beneficial.
The overtaking of GSD has some financial implications for the firm. It may need huge capital to own the said firm. For this purpose they will have to turn to financial institutions for the financing. The annual revenue produced by GSD was 1.5 billion and it is growing. With proper restructuring and efficient control systems of the Calveta, the operations can be turned profitable. Some calcualtions are given below:
Profit Margin Ratio = Net Income Sales = $65 million / $2021 million * 100 = 3.22%
Current Ratio = Current Assets/Current Liabilities = 0.993:1
Debt Equity Ratio = Total liabilities / Total Shareholders’ Equity =
$272 million / $181 million = 1.50:1
The above calculations show that the current ratio is 2:1 that implies that the ability of the firm to meet short term liabilities is low. The company has more percentage of debt in its financing than the shareholder’s equity. The ratio is supposed to be 1:1. Therefore, it is better to increase the shareholder’s equity or go for the long term long
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