Ganong Bros. Limited was founded in 1873 by two brothers in St. Stephen, New Brunswick. It has gone through four generations of remaining a private family firm. The firm is an international company with exports to Middle East, USA, and Japan. Ganong Bros. Limited has recently established a factory in Thailand to enter into the Asian market. Ganong Bros. Limited is a small family owned company with over the past couple years Ganong Bros. Limited has shown a financial loss. Ganong Bros’ board consists of six non-executive board members and two family members; the composition was made to avoid conflict of interest and agency issues. The board has challenged Ganong to develop growth and profitability strategies. Ganong was also assigned take to increase sales revenue by 50%, this growth target was required to achieve thorough changes that were made to the main business lines, and was to be driven by business models, product or services that are not offered by Ganong Bros. Limited.
The Ganong Bros, Limited can be analyzed using PEST analysis,
Ganong Bros, Limited was doing well before the globalization and free trade but since the barrier to free trade is removed the performance of Ganong Bros, Limited has declined as it is struggling to remain competitive. Before free trade, foreign companies had to pay 15% traffic rate to enter into Canada while if a Canadian company has to move to USA it had to pay 5% to 7%. Due to free Canadian and USA companies, traffic has become almost similar.
The Economic environment of Canada has a good export industry and it is located at a strategic location that allows inventors and industry to benefit from the Canadian economy.
Canadian confectionery industry is affected by majorly two reasons; first, the low proportion of children, as Ganong Bros, Limited’s major customer of lollipops and candies are children. Due to the declining number of sales, the company is also affected and as well as the future of Canadian confectionery industry. Growing number of health conscious is also a major hurdle for Canadian confectionery industry as Canadians will avoid eating traditional chocolates and will prefer healthy organic and dark chocolates.
Technology helps to achieve efficiency in operations and reduces a cost that is essential to earn economic profits. By building automated plants, it will reduce fixed cost and will help to achieve economies of scale without manual human involvement.
The Canadian Confectionary industry was divided into chocolates and non-chocolates products and chewing gum. The chocolate and cocoa industry can use Porter’s five forces model as an analytical tool to determine the competitive market in the Canada. Porter’s five force analyze industry completion under following headings.
Price wars, higher quality of services, advertising battles and new product line can be created when there is intense rivalry among competitors. The intense rivalry can be created for many reasons such as due to slow growth in industry. High fixed cost companies are trying to increase the volume as the demand fell over the period of time and competitors are aggressive in nature.
Return on sales on the chocolate bar in Canada was less as compared to USA. Canada was the only country in which four multinational chocolate bar companies all of same size co- existed in the same market. This intense competition keeps profits in very tight range, and that the company which achieves their economies of scale seems to be too profitable.
Threat of new entrants
Markets yield higher return to attract new entrants. As new entrants enter the market, the profitability of the company declines as the volume would be shared among all other companies. All the new entrants are not a possible threat as threat of new entrant will depend on how new entrant’s product differs from Ganong Bros. Limited products, and other questions such as; what is the distribution network, what type of contract is available and how much customers are brand loyal……………………
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