Case Study Ganong Brothers

Ganong Brothers is a small Canadian confectionary company, that was founded by two brothers in 1873. Although the company has built a name for itself in boxed chocolates, it has been struggling financially and is facing a downturn. After a board meeting looked at two consecutive years of financial losses on the company’s financial statements, David Ganong was given the task of developing a plan to restore the profitability of the Ganong Brothers. One of the factors that has impacted the success of Ganong brothers, is that existing rivalry in the confectionary industry is high. There are several large, multinational competitors, who have been able to maintain a competitive advantage due to more resources. Canada is unique in that it was the …show more content…
Ganong Brothers was approached by an international chocolate firm who was interested in becoming a minority partner. This would allow the company to increase its funds and make up for the lack of resources, both of which have been the biggest causes behind Ganong’s financial losses. While this would help with the objective of becoming financially flexible, there could be some future control issues if the firm does not remain satisfied with a minority position. Another alternative was to focus on contractual business lines. The firms would require a reliable source of supply that would meet certain specifications, in exchange for allowing the supplying firm to obtain the financing necessary for specialized equipment. This would allow Ganong Brothers to obtain financing, while maintaining control of the company. On the other hand, the specifications would cause the company to lose bargaining power and possibly lose its own product features. The next alternative was to become more proactive in the private label sector. This would allow the company to increase volume and develop relationships with retailers. Another alternative was to move the factory to a more central location. This could potentially lead to more company exposure and sales, but it could also hurt the company, since it has placed an emphasis on its community. Additionally, it could be costly to move factories. The last alternative presented was …show more content…
Cutting costs is a good starting point for Ganong Brothers, since its fixed costs and underutilized capacity are major issues facing the company. While cuts to unsuccessful product lines would be beneficial, it is not a sustainable method to increase growth and profitability. In order to turnaround, the company needs to introduce new products and initiatives. The company has the potential to be inventive, it just needs to find a way to increase initiatives and utilize its capacity fully in doing so. Since the demographic in Canada is changing, it could be beneficial to introduce a new, healthier product that appeals to older people. Also, if the product is not seasonal it will decrease fixed costs and help improve