Case Analysis for Cutco Corporation
Define the problem
How the company could grow revenues to $500 million for the next five years with the ultimate goal of reaching $1 billion annually in a decade.
Decision Factors (alternatives and uncertainties)
1) Recruiting Approaches: Recruiting is an obvious driver of Vector’s revenue growth. Additional investment is required to improve the recruiting approach. * Most of Cutco Revenue comes from Direct Sales * Use of Social media for recruiting * Recruiting students for winter and spring vacation beside summer vacation * The process is costly and time consumable.
2) International Expansion: Given the state of the present global economy, it is important to capture
…show more content…
Other info: * Prices of the products are increased by 5% every other year to offset half of raising labor and material cost. * Total revenue for 2009, 2010 and 2011 are $259m, $254m and $260m. * The International Revenue dropped from $13m in 2009 to $4m in 2011 * The Internet Revenue increased from $11m in 2009 to $19m in 2011. Internet sales contain 50% of the sales during December. * Direct sale and catalog revenues are similar for 2009,2010 and 2011. * 7% operating margin for direct sales * 5% operating margin for other marketing Initiatives * 9% operating margin for internet sale * 60% of consumers are between 40 and 59 years of age and have a net income of $50,000 to $100,000 per year. * Investment of $5-$10 million in technology and recruiting approaches which I predict would increase the direct sale by 25% in 5 years. The direct sale was $219m in 2011. 1 * Expenditure of $10-$15 million per entry for international entries. I predict that Cutco can make $180m in 5 years from the international sale.3 * Investment of $3 million in catalog and online revenues, which I predict would increase the sale by