Day: October 9, 2017

Cretors Case Study

Cretors Case Study

CRETORS VIDEO CASE STUDY STRATEGIC MANAGEMENT SUMMER SEMESTER 2011 PROFESSOR STEPHEN COURTER Santiago Ennis Exporting has become a very important business strategy nowadays. In order for firms to expand to the international market, and also to maintain and grow their share of market in whatever industry they are in, depending on their goals and objectives, any company must at least explore this possibility. A few and important advantages might come into place, in that they can extend their sales potential of their existing products, increasing margins through a larger customer base.

Also, these small to large businesses can consolidate by gaining global share of market, they can reduce their dependence on their existing markets, enhancing competitiveness, making their business models, from production of consumer goods, to offering services, a lot more efficient. Entering a foreign market forces these companies to modify their current products, developing a whole new set of promoting these products, as well as the package and presentation they come in. By enhancing in this strategy, sometimes these businesses come up into subordinating short term profits to the potential of long term gains, if managed effectively.

Compared to large firms, small / medium firms are relative, in that they wait for new markets to come to them, even if they sometimes are not prepared to respond to these opportunities. Throughout the following analysis, we will talk about a small family business, which chose and waited for the market to come to them, and managed the exporting business effectively: Cretors & Company. Cretors & Company was founded in 1885, when their founder, Charles Cretors, patented a popcorn machine, exporting it right from the beginning.

Throughout the years, this company has grown to be a leader in the $10 billion U. S. concession business. With over 10 product lines, including industrial level equipment, small and large concession poppers, all up to hot dog and cotton candy equipment, Cretors has found an amazing business model that are leading them to be recognized in the international market. They focus in making specialized products, which is a competitive advantage to them. As we all well know, popcorn is mainly consumed in the US, and as the case states, is mainly “an American product, like pizza is an Italian product”.

Their main objectives and goals were set from the beginning, which made it easier to have a clear picture of their internal and external environment. Creator reacted positively when the international market made an approach and showed up, in order for them to provide all their products around the world. They knew, internally, how to dominate the movie theatre business well, through simple visible popcorn maker displays. Once they had their local business dominated, they were well prepared and ready to face the external environment overseas, where they had no influence whatsoever, and were pioneers in the business.

They had little time to get acquainted, and many future businesses that they could construct. Getting acquainted with different business cultures, way of living, negotiation skills and requisites, is not an easy task to do. Western Europe, Canada, Mexico and Romania being their main customers, had different product specifications that they well needed. International sales for Cretors were 36% of their total sales. What does this tell us? External Analysis was thoroughly made, and results of this analysis were well implemented.

This percentage of their sales was mainly constituted by commercial machines for movie theatres abroad (US Movie Chains opening on these markets). Also, they knew that the international market demanded industrial machines. One customer base started feeding another customer base. Movie theatres brings popcorn to customers, which is a new product to them, which then they could find from a snack manufacturer in a grocery store (made by Cretor’s Machines). Cretors modified machines individual, in order to comply with the technical specifications of a host of an international market.

They had to stay current with different voltages, safety & operational procedures (temperature and electrical). Strategic Formulation and Implementation came into place. Relationships were the core of their export business. International partnerships gave them presence in North and South America, Europe and Asia. Working through distributors, made it easier to sell their products. These distributors knew every little aspect of their clients, and made it easier to find potential clients than Cretor could. These made them ave both bargaining power of suppliers and buyers, in that they were still one of the very few making these machines, and throughout these distributors, they had specific knowledge of their current and potential clients overseas. Cretors also kept personal relationships. They had good friends internationally. There were some businesses that started small, which had a more personal relationship with them. In order to assure that their machines stayed in good conditions, they currently have approved service centers around the world. These centers would act as a link between Cretors and their customers.

A service representative was at the center, who would fix the problem almost the first time, making them look smart and professional, and also making very cheap centers to maintain. Having a single distributor in each part of the world (Spain, Italy, Germany) These representatives had to drive 200-300 miles, and you definitely want them to get it right the first time, making it easier to reduce costs. Financing international trade was challenging. It does not exist one right way to do it. Cretors faced many obstacles throughout the process that were very well controlled.

For small orders, they had open accounts and make to order accounts. They had to ask for a deposit so these customers did not change their minds. Depending on the longevity of the customer, Cretors would charge them accordingly, if brand new, the payment had to be upfront. On industrial machinery, they would ask for 25% deposit so they again, do not change their mind, and if the client is brand new, they would ask for a wire transfer payment beforehand. In these cases, Cretors is the larger company, and these customers know that they will not run out on them.

Moving equipment from Chicago to the international market was not an easy task. This strategy was well formulated by Cretors. Small machines were shipped by air, but large machines by LTL or “Less than a Truckload”. This machinery was packed into a large container that was later shipped by sea. These containers were carefully loaded in Cretor’s HQ, and a new business opportunity came into the picture. Clients wanted the container to be 100% full, so Cretors would also sell corn, oil, bags and buckets to them.

This was working as a consolidator, as they also filled their containers with other products from other companies, benefiting the cost of freight, creating good will with the customer, having strategic control and corporate governance. Also, through many years in the exporting business, Cretors has learned to become quite flexible. A good example that the video explains, is that, in Europe, companies can’t export raw wood. Being labeled HT, meant that wood was cooked in an oven for 3 or 4 hours to kill all bacteria that could be in the material.

Upgrading existing products, meeting higher standards and creative innovative products and services are three key factors of globalization, which have been met by Cretors, by the information mentioned throughout the analysis. An advantage of globalization is that exporting is getting easier to do. Better communication tools have been built, and the evolution from the telegraph to the email, gives you an increased flow of communications allowing important information to be shared between you and your clients, and another being that the organizations have higher opportunities to work across borders.

Globalization also has its downside, in that there could be an increasing exchange of skilled or non-skilled labor from developing to non-developed countries. Cretors knew this, and made their products locally, and made sure that their sales representatives were local, knew their clients, and got things done. Also, throughout their key distributors throughout the world, Cretors managed to enable them to manage their final products more effectively, in that they kept a close relationship with them, letting the distributor’s expertise on their clients be the main driver for international sales.

Cretors has been very meticulous in following very aspect of the strategic planning process. They are in control of their production and supply process, their customer, distributors and sales representative’s relationships. Also, their financial management allowed them to keep loyal customers and gain new ones through loyalty and excellent services. Throughout this effective management, Cretors has to look to expand even more in the international market, throughout becoming commercial partners with the companies they are selling their products to.

Movie Theatres and snack manufactures could be a good start up for them to have. Since they have their exporting business well over consolidated, they can start looking abroad, even with more product differentiation for different continents around the world (ie. Africa, Australia, Eastern Europe). Also, with the advantages that globalization is giving to business expansion, they can start looking for one more production and distribution headquarters that could distribute all their industrial machinery throughout Western Europe.

The startup would be slow in the beginning, but with all the knowledge that the local distributors have, they could start looking for long term gains, and cost reduction. This strategy can also help bringing overseas products to the US, produced in Cretors overseas productions facilities. The foreign food market is still waiting to be grown in the US, and is a very good opportunity for Cretors to start thinking about. ——————————————– [ 1 ]. www. cretors. com (homepage)