Expert answer:In this milestone, consider your chosen company’s mission (purpose for existing) and values. It is also time to evaluate the internal and external environments of the company. You will do this with a Threats, Opportunities, Weaknesses, and Strengths (TOWS) analysis. Write in prose, expanding on the answers to compose a 2- to 3-page paper (exclude the leading questions). Identify the organization’s vision, mission and values.Explain the challenge(s) facing the organization. Support with specifics from the case.Identify and discuss two to three threats the company faces from the external environment. Similar to opportunities, these could take the form of shifts in market taste, changes in laws or regulations, competitor actions, and others. Support your response with information from the case.Identify and discuss two to three opportunities in the external environment that the company may be able to take advantage of. These could be new products, changes in laws or regulations, a misstep from a competitor, expansion into new locations/countries, and others. Support your response with information from the case.What are the company’s weaknesses? What does it not do well or needs to improve? Support your response with information from the case.What are the company’s strengths? In other words, what does it do well? Support your response with information from the case.Fill in the TOWS matrix below based on your analysis.USE THE 2.2 JOURNAL TO WORK OFF ATTACHMENTS Milestone 1 WorksheetMilestone 1 GuidlinesDeep Root Distillary Case Study 2.2 Journal
ol501_milestone1_worksheet_template.docx
ol_501_milestone_one_guidelines_and_rubric.pdf
deep_root_dis.pdf
2.2journal.docx
Unformatted Attachment Preview
OL 501 Milestone One Worksheet
In this milestone, consider your chosen company’s mission (purpose for existing) and values. It
is also time to evaluate the internal and external environments of the company. You will do this
with a Threats, Opportunities, Weaknesses, and Strengths (TOWS) analysis. Write in prose,
expanding on the answers to compose a 2- to 3-page paper (exclude the leading questions).
1. Identify the organization’s vision, mission and values.
2. Explain the challenge(s) facing the organization. Support with specifics from the case.
3. Identify and discuss two to three threats the company faces from the external
environment. Similar to opportunities, these could take the form of shifts in market taste,
changes in laws or regulations, competitor actions, and others. Support your response
with information from the case.
4. Identify and discuss two to three opportunities in the external environment that the
company may be able to take advantage of. These could be new products, changes in
laws or regulations, a misstep from a competitor, expansion into new locations/countries,
and others. Support your response with information from the case.
5. What are the company’s weaknesses? What does it not do well or needs to improve?
Support your response with information from the case.
6. What are the company’s strengths? In other words, what does it do well? Support your
response with information from the case.
7. Fill in the TOWS matrix below based on your analysis.
TOWS Matrix for:
List of Threats:
List of Opportunities:
1.
1.
2.
2.
3.
3.
List of Strengths:
[identify strategies to use
[identify strategies to use
1.
organizational strengths to avoid
organizational strengths to take
2.
threats]
advantage of opportunities]
3.
List of Weaknesses:
[identify strategies to minimize
[identify strategies to use
1.
weaknesses and avoid threats]
opportunities to overcome
2.
weaknesses]
3.
8. Based on the TOWS analysis, ascertain strategic areas for improvement in the
organization’s approach to doing business. Support with specifics from the case.
9. Prioritize the areas to address by how well they align with the organization’s mission and
values.
OL 501 Milestone One Guidelines and Rubric
Overview: In this milestone, you will submit the Introduction and Analysis of Business Environment for your chosen case study. Use the worksheet provided to
complete the introduction and analysis of the business environment.
Specifically, the following critical elements from the final project must be addressed:
I.
Introduction: In this section, characterize the organization you have chosen for your final project.
A. Identify the organization’s mission, vision, and values.
B. Explain the challenge(s) facing the organization. Support with specifics from the case.
II.
Business Environment: Analyze the internal and external setting of your chosen organization.
A. Perform a TOWS analysis to determine a strategic approach to threats, opportunities, weaknesses, and strengths for your chosen organization.
B. Based on the TOWS analysis, ascertain strategic areas for improvement in the organization’s approach to doing business. Support with specifics
from the case.
C. Prioritize the areas to address by how well they align with the organization mission and values.
Rubric
Guidelines for Submission: This 2- to 3-page paper must be submitted using the worksheet provided. Use double spacing, 12-point Times New Roman font, and
one-inch margins. All references must be cited in APA format.
Critical Elements
Introduction: Mission,
Vision, and Values
Proficient (100%)
Identifies the company mission,
vision, and values
Introduction: Challenges
Explains the challenges facing the
organization with supporting
detail from the case
Business Environment:
TOWS Analysis
Performs a TOWS analysis to
determine a strategic approach to
strengths, weaknesses,
opportunities, and threats for the
chosen company
Based on the TOWS analysis,
ascertains possible areas for
improvement with some
supporting information
Business Environment:
Areas for Improvement
Needs Improvement (75%)
Identifies the company mission,
vision, or values, but not all three,
or misidentifies one or two
Explains the challenges facing the
organization, but explanation
contains inaccuracies or lacks
supporting detail
Performs a TOWS analysis, but the
analysis is not complete or
contains inaccuracies regarding
content or strategic implications
Not Evident (0%)
Does not identify the company
mission, vision, and values
Value
10
Does not explain the challenges
facing the organization
18
Does not perform a TOWS analysis
26
Ascertains possible areas for
improvement, but lacks support,
contains inaccuracies, or misses
direct correlation to TOWS
Does not ascertain possible areas
for improvement based on the
TOWS analysis
18
Business Environment:
Prioritize Areas
Articulation of Response
Prioritizes the areas to address by
how well they align with the
company mission and values
Prioritizes the areas to address,
but they are misaligned with
company mission and values
Submission has no major errors
related to citations, grammar,
spelling, syntax, or organization
Submission has major errors
related to citations, grammar,
spelling, syntax, or organization
that negatively impact readability
and articulation of main ideas
Does not prioritize the areas to
address by how well they align
with the company mission and
values
Submission has critical errors
related to citations, grammar,
spelling, syntax, or organization
that prevent understanding of
ideas
Total
18
10
100%
For the exclusive use of C. Hendrickson, 2017.
W16113
DEEP ROOTS DISTILLERY
Professor Paul Beamish wrote this case solely to provide material for class discussion. The author does not intend to illustrate either
effective or ineffective handling of a managerial situation. The author may have disguised certain names and other identifying
information to protect confidentiality.
This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com.
Copyright © 2016, Richard Ivey School of Business Foundation
Version: 2016-03-09
INTRODUCTION
By September 2015, Deep Roots Distillery (DRD) had been operating for 22 months. While the start-up
had taken a little longer than originally estimated, material progress was now in evidence. By November,
the company expected to have six of its products (either spirits or liqueurs) available in the Prince Edward
Island Liquor Control Commission (PEILCC) outlets.
However, numerous questions remained for Mike Beamish and his small, family-run business. Given
capital and resource constraints, how could DRD grow into a competitive business? How should time be
allocated between research and development, production, marketing, and administration? Would the startup’s current product/market strategy allow it to achieve its goals? If not, which expansion route should
DRD take?
BACKGROUND
DRD was located in Warren Grove, Prince Edward Island (PEI), a village about 15 kilometres outside
Charlottetown, the largest city in Canada’s smallest province. PEI’s population was only 140,000, but the
province was a popular tourist destination, with 1.3 million visitors annually. The tourists were mostly
from Canada (87.7 per cent), but with material numbers from the United States (7.7 per cent) and other
countries (4.6 per cent). Most tourists visited from June to September, and tended to enjoy the area’s laidback lifestyle, beaches, fresh seafood, music, and scenery.
The family-owned Beamish Orchard had been growing tree and field fruit since 1990. With over 500 apple
trees, and by 1995, the orchard started to sell its apples by the roadside. As production grew, the family
opened the farm to customers looking to pick their own fruit (u-pick). With a consumer trend toward more
organically grown food products, the family decided in 2004 to move away from conventional agricultural
practices. In 2005 the Beamish Orchard acquired full organic certification from Atlantic Certified Organic.
The Department of Agriculture and Fisheries stated:
This document is authorized for use only by Carmen Hendrickson in OL-501 Business Foundations 17TW2 taught by Lindsay Conole, Southern New Hampshire University from November
2017 to May 2018.
For the exclusive use of C. Hendrickson, 2017.
Page 2
9B16M032
Fruit production was very diverse on Prince Edward Island. Lowbush blueberries made up the
largest acreage of commercial fruit crops at 13,000 acres. Commercial cranberry bogs and
strawberry fields were located across the province. Strawberry nursery stock was produced for
export to the Southern [United States]. Twenty-thousand apple trees filled Island orchards, and
the industry was expanding rapidly. Specialty fruits including raspberry, gooseberry, rose hips,
black currants, and highbush blueberry were produced on small acreages. Rising interests in
grape and the haskap berry had resulted in new developments of these crops. PEI had an active
honey bee industry, which supplied approximately 6,000 colonies towards pollination services to
the Island’s fruit crops annually. High-quality honey was also produced by the PEI beekeepers. 1
By 2012, the Beamish family fruit business had steadily grown, with sales reaching CA$17,000. 2 That year
Mike Beamish retired from his full-time teaching job. His plan was to develop value-added products to
increase the profitability of the farm. The business had previously introduced non-alcoholic apple cider,
apple/fruit preserves, and apple butter.
The idea of operating a distillery had been “fermenting” with Beamish for some time as a “fun retirement
project,” and as a succession-planning business venture to ensure a viable future for younger family
members. With increasing consumer demand for specialty alcoholic beverages, Beamish felt that a niche
opportunity existed to produce and market a selection of “organically certified” vodka spirits and flavoured
liqueurs. It would utilize fresh local fruit, contribute to PEI’s agri-culinary tourism, and add to the
increased economic performance of the PEI organic food sector.
In February 2013, an Artisan Distillery Workshop was offered through the PEI BioFoodTech, a
government unit that provided technical services to PEI food and bioprocessing industries. Mike Beamish
and his son, Paul, participated in this one-week comprehensive course from the Artisan Craft Distilling
Institute of Washington State. It covered the fundamental technical aspects of distilling, equipment,
licencing, processing, marketing, and sales. Additional workshops were offered in PEI in January and
February of 2014.
DRD was incorporated as a craft distillery in November 2013, using its own and other organically grown
PEI fruit from which to generate distilled beverages. It used its own equipment and facilities, plus some
newly purchased equipment. DRD already had access to a recently constructed Beamish Orchard building
for its manufacturing and tasting area, which had cost the Beamish family $85,000 to build. The family
also put together a budget of $58,000 for distilling equipment and some lease hold improvements, and was
able to access a provincial grant to cover half this amount. Distillation required less space and equipment
than the production of hard cider or wine.
DRD complied with the prescribed PEILCC and Canadian Food Inspection Agency regulatory
requirements to acquire a manufacturers licence. The business was a member of the PEI Vintners/Distilled
Beverages Association and certified as Atlantic Certified Organic. It took about 18 months to obtain all the
regulatory approvals for the distillery.
DRD as a craft distiller featured hands-on operation in the making of small-batch spirits and liqueurs.
Using craft pot/column distillery technology, it allowed for finer control over flavours and gave broad
room for experimentation. In some instances, DRD used its own organically certified fruit and
incorporated other local organic ingredients and employed unusual techniques to make small batches of
1
Prince Edward Island Department of Agriculture and Fisheries, “Agriculture on Prince Edward Island,” revised July 2015,
accessed December 31, 2015, www.gov.pe.ca/agriculture/AgonPEI.
2
All currency amounts are in Canadian dollars unless specified otherwise.
This document is authorized for use only by Carmen Hendrickson in OL-501 Business Foundations 17TW2 taught by Lindsay Conole, Southern New Hampshire University from November
2017 to May 2018.
For the exclusive use of C. Hendrickson, 2017.
Page 3
9B16M032
high-quality liqueurs and spirits. In a few instances, the product was crafted with locally sourced but not
certified organic produce.
The production process included the harvesting of fruit, the pressing of fruit to dispel the fruit cider, the
fermenting of this cider liquid, and the distilling of the fermented liquid to produce 180-proof ethanol
alcohol (90 per cent). DRD’s distilled spirits resulted from the collection of the ethanol (alcohol) that had
been made by heating the liquid resulting from the initial fermentation of apple cider so that it became a
vapour. The vapour was condensed on a cold surface and collected. A portion of the produced ethanol was
bottled and sold as a pure vodka-type beverage (45 per cent alcohol), and the remainder was blended with
fruit or liquid flavours to generate 25 per cent alcohol liqueurs.
COMPETITION
In the last 20 years the PEI alcohol beverage processing sector had grown considerably. By March 2014,
there were three small distilleries, four wineries, and a growing number of craft brewing companies in PEI.
The wineries were: Rossignol Estate Winery, Little Sands; Newman Estate Winery, Murray River; Matos
Winery, St. Catherine’s; Honeydew Apiaries/Winery, Canoe Cove. The distilleries were: Prince Edward
Distillery, Hermanville; Myriad View Artisan Distillery, Rollo Bay; and Matos Distillery, St. Catherine’s.
Per capita sales of spirits and alcohol in PEI were $226, versus a national average of $182.
Prince Edward Distillery was founded in 2007, and was best known for a vodka it produced using PEI
potatoes. Its vodka was available in the PEILCC and some of PEI’s better-known restaurants and pubs.
Between 2009 and 2014, the company had received a grant from the provincial government of over
$70,000 for marketing and trade assistance, and a “conditionally repayable grant from the Atlantic Canada
Opportunities Agency of $75,000 to build markets in Germany and Japan.” In March 2014, the owners
announced that they were personally moving to Nova Scotia to open a second distillery, but planned to
continue to operate the PEI distillery. 3
The Myriad View Artisan Distillery was founded in 2006. Overlooking the Northumberland Strait (the
body of water separating PEI from the provinces of Nova Scotia and New Brunswick), it was advertised as
the “Producers of Canada’s First Legal Moonshine and PEI and Atlantic Canada’s First Vodka, Gin, and
Rum.” The pride of its distillery was a hand-crafted copper still from Germany.
Matos Winery & Distillery had its start in 2007, when the two owners (both of Portuguese descent),
purchased 50 acres of land and began planting Chardonnay and Gamay-Noir vines. Matos was best known
for its award winning wines. It also had a distillery, and produced Portuguese-style alcohols such as
licorice-flavoured anisette liqueur, a version of grappa, and a light port or sherry. Its products were
available in PEI liquor stores and many restaurants on the island.
Exhibit 1 provides a selection of the products (and prices) of some of the locally (and off-PEI) produced
spirits and liqueurs.
COMPANY PRODUCTS
By September 2015, DRD had four products for sale in-house and at the PEILCC:
3
Teresa Wright, “Vodka Distillery Owners Leaving P.E.I.,” The Guardian, March 21, 2014.
This document is authorized for use only by Carmen Hendrickson in OL-501 Business Foundations 17TW2 taught by Lindsay Conole, Southern New Hampshire University from November
2017 to May 2018.
For the exclusive use of C. Hendrickson, 2017.
Page 4
•
•
•
•
9B16M032
Island Tide — 45 per cent spirit similar to a moonshine or vodka
Blueberry — 45 per cent single-release spirit from a one-time available supply of wild blueberry wine
Maple Liqueur — 25 per cent liqueur with maple syrup
Camerise Liqueur — 26.5 per cent liqueur made from the haskap berry (edible blue honeysuckle)
In addition, the company offered a gift pack containing 50-millilitre (ml) mini bottles of the first three
products
DRD expected to have two additional products for release by late November 2015 (both had gone through
the required analysis and approval processes):
•
•
Spiced Apple Liqueur — 33 per cent liqueur made from organic apples and flavours
Absinthe — 72 per cent spirit from a blend of herbs and spices (small batch)
Furthermore, before December 1, 2015, DRD expected to have all products available in individual 50-ml
minis so as to take advantage of the tourist trade and the increased demand for small Christmas gift items.
The choice to produce spirits versus liqueurs (or both), and mainstream versus more niche products, was
motivated by a combination of founder preference, opportunity (in the case of converting blueberry wine
into a liqueur), experimentation, and a perceived link to PEI.
FINANCIALS
In order to initiate production, DRD had incurred approximately $21,200 in capital costs to obtain the
required equipment. Its production facility was leased from Beamish Orchard at $500 per month.
In 2014, its first year of operation, DRD had a financial loss of $16,822 (see Exhibit 2). This was in line
with expectations.
In 2015, DRD expected to have a slightly larger net gain than forecast. Early expectations were that the
company would break even for its first full year of sales; however, this estimate proved to be slightly
conservative. The financial gain for 2015 was estimated to be $62,600, but this excluded all salaries and
included $40,000 of year-end inventory (see Exhibit 2). The company balance sheet was also expected to
improve in 2015 (see Exhibit 3).
The price of the product sold to the PEILCC was $8.37 per bottle. The “final retail” price was just below
$20.00 per 350-ml bottle. The remaining $11.58 went towards bottle deposit, provincial health tax,
harmonized sales tax (HST), PEILCC mark-ups, and excise tax.
For bottles sold at DRD’s retail store (or the Charlottetown Farmer’s Market), DRD earned approximately
$12.24 per bottle, before production costs. For each of the four products, the production cost was $4.73 per
350 ml of spirits or fruit-flavoured liqueur. This $4.73 included ingredients for the production of the liquor,
the bottle, label, cork, and boxes (approximately $3.50) (see Exhibit 4). Sales forecasts were $53,000, at
retail, for 2015.
No employee salaries had been paid to date. Mike Beamish wanted to first create a stable operation with
sustainable income before withdrawing additional funds or paying salaries from the business. In practice,
This document is authorized for use only by Carmen Hendrickson in OL-501 Business Foundations 17TW2 taught by Lindsay Conole, Southern New Hampshire University from November
2017 to May 2018.
For the exclusive use of C. Hendrickson, 2017.
Page 5
9B16M032
this meant that any of his children could work evenings and weekends to help out, but woul …
Purchase answer to see full
attachment
