Whole Grain Pizza Case Study

MGMT630: Turning Concept into Business Case

(Final Exam)

Rama Raditya Sendjaja - G1515254R Problem Statement

In response to the slowing growth of Cucina Fresca’s sales and in an attempt to retain our leading position and extend our product line, we have invested in the development of a new whole grain pizza. Prior to decide whether to launch the frozen pizza offering, we must take into account that the new product’s wholesales volume estimations must exceed $12 million to meet our required returns. Time is of the essence as one of our main competitor, Rigazzi Brands, has already tested a whole grain pizza concept and is not far from introduction. Given these factors, we can either launch or suspend the product.

Option I: Launch the Whole

Having stated this, the excess returns can be reinvested into the firm and used to expand our manufacturing facilities or further extend our product line. As a result, our profitability and overall revenues will increase.

However, we must also review the potential consequences if the wholesale volume estimate is calculated using the percentage repurchases when the product is perceived to be of poor quality (see Exhibit 2: Whole Grain Pizza Concept Purchase Volume Estimate, Year 1 – Sensitivity Analysis

Although the market generates high sales, it is dominated by powerful players such as Kraft and Nestle. Moreover, we have to take into account the barrier to market a tasty whole-grain pizza crust and the difficulty to communicate its benefits because the American public has already perceived whole grains to be less appetizing than white flour. Attempting to change consumer preferences is timely and costly. Our whole grain pizza also considered more expensive ($12.38 vs. $10.09 for other refrigerated options, $11.72 for