The document discusses a company's strategy for entering the cereal market. It analyzes competitors' strategies and product offerings. It also performs a SWOT analysis, discusses choosing the right product mix based on contribution margin, and outlines a potential balance sheet. The key points are that the company aims to differentiate its products, gain market share, and create a monopoly through quality assurance and competitive pricing. It will focus on the niche market for strawberries, nuts, and raisins, which make up 59% of past sales.

1. JAY MODI
ACCOUNTING
# 1 ACOUNTING IMPLICATION ON PORTER’S FIVE FORCES
• Bargaining power of Supplier
• Bargaining power of customer
• Threat of substitute
• Threat of new entrant
• Rivalry of Competitor
STRAWBERRY
Companies Product Mix Prices (€)
Large Box Small Box Large Box Small Box
Company x 0.15 wheat 4.89
n/a 0.20 Oat n/a 3.69
0.15 Straw 3.89
Company Y
n/a n/a n/a n/a
Company Z 0.30 wheat 6.10
0.50 Oat n/a 6.10 n/a
0.20 Straw 6.10
Missouri S & T cereal 0.35 wheat 4.65
n/a 0.35 Oat n/a 4.65
0.30 Straw 4.65
Major competitor is Company X as they are targeting the small box market like our
company.
Reference: Integrated case

2. JAY MODI
ACCOUNTING
NUTS
Companies Product Mix Prices (€)
Large Box Small Box Large Box Small Box
Company x 0.30 wheat 5.39
0.45 Oat n/a 5.49 n/a
0.25 nut 5.59
Company Y 0.175 wheat 7.50
n/a 0.175 Oat n/a 3.81
0.15 nut 4.08
Company Z 0.25 wheat 5.82
0.40 Oat n/a 5.82 n/a
0.35 nut 5.82
Missouri S & T cereal 0.40 wheat 0.20 wheat 4.39 2.20
0.25 Oat 0.125 Oat 4.39 2.20
0.35 nut 0.175 nut 4.39 2.20
RAISIN
Companies Product Mix Prices (€)
Large Box Small Box Large Box Small Box
Company x 0.30 wheat 5.89
0.45 Oat n/a 6.19 n/a
0.25 raisin 5.39
Company Y 0.175 wheat 7.50
n/a 0.175 Oat n/a 3.81
0.15 raisin 4.08
Company Z 0.15 wheat 4.00
n/a 0.20 Oat n/a 4.00
0.15 raisin 4.00
Reference: Integrated case

3. JAY MODI
ACCOUNTING
Missouri S & T cereal 0.40 wheat 0.20 wheat 4.19 2.10
0.35 Oat 0.175 Oat 4.19 2.10
0.25 raisin 0.125 raisin 4.19 2.10
# 2 COMPETITORS STRATEGY
Based on the analysis we can say that following business strategies are used by the
Competitors:
COMPANY X
• Cost Leadership
• Produce small and large boxes
• Four products
• Grocery chains
– Advertised early and stopped
• Target Market: Everyone
COMPANY Y
• Product differentiation
• Independent Grocers
– High prices and High advertising $
• Grocery Stores
– Advertised early and stopped
• Target Market: Advertising sensitive consumers
COMPANY Z
• Cost Leadership & Product differentiation
• Grocery Stores
• Large and small boxes
• Four products
• Dropped prices 4th quarter
Reference: Integrated case

4. JAY MODI
ACCOUNTING
# 3 SWOT ANALYSES
STRENGTHS
• Capital
• Committed team
• Strong Business Plan
• Complete market segmentation
• Advance forecasting
WEAKNESS
• New to Market—Lack of Knowledge
• Limited suppliers of Raw Materials
• Lack of Market reputation
• Heavy debt
OPPORTUNITY
• Niche Market—creating new market for existing product.
THREATS
• Existing Competition
• Changing market
• Response time—from market, dependent on market, manufacturing in short
period after receiving the order.
Reference: Integrated case

5. JAY MODI
ACCOUNTING
# 4 MISSOURI S & T COMPANY’S STRATEGY:
BUSINESS STRATEGY
• Product Differentiation
• Quality Assurance
• Competitive Price
CORPORATE STRATEGY
• Gaining Market Share
• Creating Monopoly Market
Reference: Integrated case

6. JAY MODI
ACCOUNTING
# 5 & # 6 PRODUCT MIX
What constraint stops us from increasing our capacity?
THEORY OF CONSTRAINT
---Internal Process Constraints
1. Identify the systems constraint
The materials in calibrated machine flows in sequence (one-to-one) i.e. the
plant takes one raw-material and can make only one final product. Because of this
we are facing the constraints of slow production.
2. Decide how to exploit the system the constraints
The constraint can be solved if our company will come with the calibrated
machine in which the flow of sequence should be one-to-many i.e. the plant takes one
raw-material and can make many final products.
3. Scheduling the production based on available capacity
If our company follows the above decision than it can increase its capacity
from 25000 units per day to 30,000 units per day.
4. Available options to utilize the capacity 100%
Right now the company has very limited options to increase the capacity and
implement the decision as it requires further investment. So the company is
focusing towards utilizing the available resources to the maximum extent.
5. If new problem arises go to step 1
GIVEN:
Reference: Integrated case

7. JAY MODI
ACCOUNTING
• Our company has three machines
• Maximum capacity is 25,000 units per day
ASSUMPTIONS:
• Current constraint cannot be changed in the short-run
Which products offer the highest contribution margin per unit of
the constraint?
CALCULATION OF CONTRIBUTION MARGIN
Product/Activity Selling Variable C.M (€)
price (€) cost (€)
Strawberry 4.65 1.87 2.78
Nuts 4.39 1.66 2.73
Raisins 4.19 1.5 2.69
Blueberry 4.46 1.72 2.74
Original 4.14 1.46 2.68
Mixed Fruit 4.18 1.49 2.69
CALCULATION OF INTEREST PER UNIT
LOAN € 14,000,000
APR
7.50%
Reference: Integrated case

8. JAY MODI
ACCOUNTING
UNITS PER
ANNUM
€ 90,00,000
TOTAL
INTEREST
€ 1,050,000
INTEREST PER
UNIT € 0.12
NUMBER OF UNITS TO BE PRODUCED PER DAY: DECISION RULE
Label Units
Strawberry 8,000
Nuts 10,000
Raisin 7,000
TOTAL 25,000
QUANTITY OF INGREDIENTS
INGREDIENTS
Labels Whea Oats Strawberry Nuts Raisin Blueberry
t
Strawberry 35% 35% 30% No No
No
Nuts 40% 25% No 35% No No
Raisin 40% 35% No No 25% No
Original 55% 45% No No No No
Blueberry 40% 35% No No No
25 %
Mixed 25 % 25
Fruits % 50 %
Reference: Integrated case

9. JAY MODI
ACCOUNTING
CONTRIBUTION MARGIN
Product/Activity Selling Variable Fixed Cost Interest C.M (€)
price (€) cost (€) (€) (€)
Strawberry 4.65 1.87 1.85 0.1167 0.8133
Nuts 4.39 1.66 1.85 0.1167 0.7633
Raisins 4.19 1.5 1.85 0.1167 0.7233
Blueberry 4.46 1.72 1.85 0.1167 0.7733
Original 4.14 1.46 1.85 0.1167 0.7133
Mixed Fruit 4.18 1.49 1.85 0.1167 0.7233
CALCULATION OF INTEREST
LOAN €
14,000,000
APR
7.50%
UNITS PER
ANNUM
€ 90,00,000
TOTAL
INTEREST
€ 1,050,000
Reference: Integrated case

10. JAY MODI
ACCOUNTING
INTEREST
PER UNIT € 0.12
TARGET CUSTOMERS
Packaging/ Strawberry Nuts Raisin
Labels
LG BOX X X
SM BOX X X X
LG BAG X X
SM BAG X X X
As we are targeting the ‘niche’ market so will offer only three products i.e. Strawberry,
nuts and raisin. The reason for selecting this products being its sales in the past. For both
the categories i.e. large and small, the total sales consisted of 59 %.
BALANCE SHEET for the year ending….
Assets Amt. ( million $) Liabilities & Amt. ( million $)
Owner’s Equity
Land 2 Equity shares 14
Building 10 Bank Loan 6
Assembling Line 6
Liquid Cash 2
TOTAL 20 TOTAL 20
Reference: Integrated case

11. JAY MODI
ACCOUNTING
DEBT/EQUITY RATIO
= Total Liabilities
Shareholder’s Equity
= 20, 000,000
14, 000,000
= 1.43
Implication: As the ratio is above 1 we can say that most of the assets are financed
through debt i.e. loan.
Reference: Integrated case