Issues
Jamba’s struggles can be placed on their mismanagement. The excessive amount of store openings led to Jamba closing many underperforming stores. Store closures and lease cancellation fees dug Jamba into a deeper hole. Jamba’s products and prices have failed to separate themselves from the industry. Jamba’s moderately high prices put them at risk of losing customers to cheaper smoothie stores unless Jamba can differentiate their products. Jamba’s lack of organic growth is the result of Jamba not investing capital in R&D and innovation. Jamba’s must focus on organic growth before increasing their number of stores.
Alternative Strategies
• Reject – Retrenchment – The firm should halt growth and begin liquidating assets. This will infuse
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Jamba should invest into backward integration by acquiring a local produce grocer. The acquisition would eliminate mark-up costs from the grocer and allow Jamba to improve their margins by lowering direct costs. Additionally, Jamba should allow the supplier’s lower management and wage workers to continue normal operations. Along with decreasing direct cost, this will also guarantee that Jamba consistently provides fresh smoothies. As a result of the acquisition, Jamba enters the produce market as a supplier, diversifying their company and slightly reducing risk. Management will be responsible for establishing the cross-functional structure between produce supplier and smoothie store. They will also be responsible for establishing Jamba’s culture into the acquired company. Additionally, management will be responsible for determining how much of the acquired firm’s operations Jamba wants to continue. Marketing will be responsible for communicating Jamba’s shift through additional advertising in the hopes of increasing sales. Operations will take on the biggest burden, as they will be responsible for creating the supply chain that now includes growing the fruit and selling smoothies. Process controls will have to be set in place to limit produce waste during the process. The finance department will be responsible for ensuring Jamba has enough capital to acquire the firm. Additionally, they will set hurdle rates, obtain capital, negotiate interest rates, adjust the company’s control and limits, and continually monitor the return of the acquisition. Finance will also be responsible for adjusting the budget to include the expenses of the acquired company. R&D will now research Jamba’s new capabilities, including new product lines and flavors, after the