Artisan products are goods made through non-industrial production methods, and hand-crafted by a tradesperson who processed the raw materials. It was common …show more content…
With such high levels of art and quality required to successfully produce cheese with a low existing competition in Ontario, this could be a strong option for Klahsen. Moreover, since the byproduct (whey) could externally be sold and help the company generate more profits and be a lucrative investment. Moreover, the idea of CSR for Klahsen of donating Monforte’s whey to local pig farmers, she would also be able to increase the firm’s brand loyalty over time. With regards to the financials, Klahsen would have to take into account the projected start-up costs for this option as well as the projected NPV of ~67000. Lastly, the other relevant factor that Klahsen would need to consider while making a decision is her supply chain that is not explicitly mentioned in the case. Considering the cheese is of extremely high quality, she will have to ensure the raw products are being delivered to her production facility around …show more content…
First starting with the affinage option. This would allow Monforte to become the first affineur in Ontario and be a strong strategic move in the cheese space. When breaking down the project costs and sales projections (shown below), the option is very viable. Selling the cheeses for $10 and only having to buy them for $3 will increase the margins of Monforte Dairy and they will be able to make a profit within the second year of operations, assuming 66,000 pounds of cheese each year. In terms of break even, Monforte will be able to break even on their initial investment in around 4 years. This may seem long, but we also factored in that our projections were extremely conservative and included no sales growth and no increased capacity. Most likely, Monforte will be able to break even sooner. Outside of the finances, the affinage option provides great opportunity to vertically integrate into the supply chains of other cheese producers, acting as a storer of