MANAGEMENT COMMUNICATIONS
WRITTEN CASE ASSIGNMENT 1 DUE DATE: FEBRUARY 8, 2019
ASSIGNMENT OVERVIEW
The case studies in this class are assigned to highlight connections between management communication and real-world societal issues and applications. In the following assignment you are provided with a narrative describing a specific business situation. You are required to synthesize the most salient information contained in the case and effectively communicate it to the audience identified in the prompt at the end of the assignment.
NEPTUNE GOURMET SEAFOOD INC.
Who are you?
You are the Executive Assistant to the CEO at Neptune Gourmet Seafood Inc. located in Pine Key, Florida. You prepare reports and financial data, as well as train/supervise other support staff.
What’s the current situation?
Seafood is a high-end business in North America and Neptune is a leading player in this industry space. During the past 50 years, the company has earned a reputation for producing the best seafood, and it has done everything it could to preserve that premium image among customers. Neptune's Gold canned products have enjoyed a 30- 35% higher price point, on average, than rival brands. Facing fierce competition, Neptune has invested heavily to stay ahead of rivals. Most recently, Neptune invested $9 million in six fishing boats equipped with autopilot mechanisms to guide them to the best fishing grounds, manipulate fishing gear, land catches, and report catch-data to shore.
Today’s meeting was very important. Potential strategies to counter recent problems faced by the company were being discussed. Due to a family emergency overseas, Chairman and CEO Stan Rensler would not be present. He requested that you prepare and send to him a recommendation based on the options proposed in the meeting.
Rena Sanchez, head of sales, started the meeting: "We need to reduce prices by 50%. It's pretty clear that we have a big inventory problem. We have to slash prices to get rid of this excess stock.”
Everyone at the meeting knew what Rena was talking about. In the past three months, Neptune's finished goods inventory had shot up to 60 days' supply - twice the normal level and three times what it had been a year ago. Despite this, you saw that Jon Hargrove, director of marketing, disapproved. As far as Jon was concerned, the company's image, investments in new technologies, and focus on quality made any price cut unthinkable.
Rena continued: “New laws have reduced our access to fish near the coast and forced us to go farther out to sea. Because the fishing grounds are richer there, and because we're using new technologies, our catches have grown bigger on average. That's why, even in the past four weeks when we've seen demand reach an all-time high, our inventory has continued to grow.”
MANAGEMENT COMMUNICATIONS
WRITTEN CASE ASSIGNMENT 1 DUE DATE: FEBRUARY 8, 2019
"First of all, it makes no sense to me to cut prices when demand is rising,” Jon said. "Besides, think about how customers would perceive a large price cut. If you slash prices by 50%, people will think there's something wrong with the fish - like it's rotten or full of mercury! It would destroy our image and permanently damage our brand equity.”
Rena refused to back down. "Our warehouses are so full that it's going to take a lot more than that to change my view. And with $9 million tied up in the new ships, you know we won't be keeping them in the harbor. Our inventories are going to keep growing unless we do something radical. Another solution would be to launch a mass-market brand at a reduced price, which would allow us to generate at least 18% more revenue.”
Nelson Snow, the company's legal counsel, addressed Rena directly: "I'm sure you have thought about this,” Snow said, "but one issue concerns me. Have you thought about how the Association will react?” Nelson was referring to the powerful U.S. Association of Seafood Processors and Distributors, whose members, such as Neptune, accounted for 80% of America's seafood production. The ASPD influenced American and global policies related to the fishing industry and imposed quality standards on members. It also conducted surveys of wholesale and retail seafood prices and biannually published prices that influenced pricing policies of producers and distributors.
"I don't know, Nelson," Rena sighed. "But I doubt that the Association can do anything.”
"I wouldn't be so sure," said Nelson. "At the prices you're suggesting, you’ll endanger our ASPD Gold Seal of Approval. We're the only company that has the seal on every product we sell. The Association could easily change that.”
"No!" Rena said. "It can't! Regardless of the prices we charge, our products will still meet the ASPD's quality standards. Besides, we're just selling the same fish under a different brand.”
"Don't fool yourself, Rena. The Association is very careful about who gets the Gold Seal and who doesn't. If it believes that our pricing strategy will cost the fishing industry a lot of money, it might withhold the seal on our low-end products-for starters. I'd like us to remember that the Association isn't going to stand by while we disrupt the industry," Nelson warned.
Rena insisted, "I still feel we should create a mass-market brand called, say, Neptune's Silver.”
"That's terrible!" said Jon. "By calling it Neptune's Silver, in the eyes of consumers, you're positioning the cheap product right next to Neptune's Gold. Then they'll be more likely to try it and, once they do, they'll realize there's no difference in quality. We'll end up eating into our own sales. Why would any company do something so crazy?”
Bernard Germane, Neptune's finance director, spoke up: "Surely we aren't the only company with excess inventory. It would be stupid of us to believe that all our competitors will maintain prices just for the good of the industry.”
"I can't believe it!" Jon said. "You're in favor of price cuts too?”
MANAGEMENT COMMUNICATIONS
WRITTEN CASE ASSIGNMENT 1 DUE DATE: FEBRUARY 8, 2019
"I don't know yet, Jon,” Bernard replied. “I'm trying to understand why Rena's suggestion that we introduce a low-priced seafood brand is so off-the-wall. Why can't we use a new brand to appeal to value-minded customers? If customers like our new brand, it might represent a better growth strategy. The way I look at it, the second brand could prove to be a win-win.”
"I don't know if it's as simple as that," Jon said. "Every luxury company I know of - Gucci, Mercedes- Benz, BMW, Tiffany, even Hyatt - has struggled to go mass market without destroying its premium image. For that matter, when fashion designers like Isaac Mizrahi create an affordable line for a retailer like Target, I wonder if that adds to the brand or hurts it?”
What are you supposed to do?
Summarize the two options presented and make a recommendation to CEO Stan Rensler on which option to pursue (select one of the two options). Justify your recommendation with information presented in the case.
What are the writing parameters?
Page Length: One/one-and-a-half (no more one-and-a-half, please). Format: Single-spaced, one-inch margins
Are there any other instructions?
Yes. Promise me you won’t overthink or sweat this assignment. There are no ‘wrong’ responses.
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