Dancing Deer Baking Company by Trish Karter

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Dancing Deer

Case Analysis

Team 1

Collin Duffany, Anna Harper,

Gayoung Park, Yash Saraf, Cem Soylu

Professor Gale

EPS 3520

March 3, 2015

Dancing Deer Baking Company, founded by Trish Karter, is a profitable cookies and cakes enterprise started in 1994. Dancing Deer created its own production line in 1996 which led to retail operations, where they won the “Oscars” equivalent of the food industry in 1997. After winning the award and being labeled “the best cake in America,” Dancing Deer encountered rapid growth, receiving many mail orders which gave a kick start to sales. They were profitable between 1999 and 2001, yet other costs caused 2001 and 2002 to end in net losses. However, the business has been doing very well in the following years, recording profits with vastly increased sales; Dancing Deer doubled sales from approximately 3 million to 6 million between 2002 and 2005. Trish’s target is to grow to 40 million in sales in the next 5 years, and faces some challenges if she wants to meet her target. The key question she has to address is “How can Dancing Deer establish growth strategies that can scale its business to be successful for the next five years?”

Dancing Deer has not had a significant bank loan since 2005, and its current growth is self-funded. Augmenting this strength with external funding would be beneficial, but self-funded growth will be the core of growth planning for Dancing Deer. Even though the company has been growing consistently at a healthy rate, most expenses come from salaries which have dramatically increased over the years as shown in Exhibit 5, indicating that Dancing Deer production has increased sharply as more labor is needed to fulfill demand. By moving west as planned, expenses will increase, while these expenses will be offset by the increase in sales there will be, given that they have enough customers in the west coast.

One of the major issues Dancing Deer is currently facing is forecasting inventory in holiday season. In the holiday season, Dancing Deer makes aggressive forecasting decisions and takes many orders for the unusual flavor cookies/cakes. This makes it difficult for them to predict the inventory levels needed, as well as dispatch products on time. Moreover, Dancing Deer currently has 200 SKUs and various unusual flavors (Exhibit 1). This can be an operational nightmare especially in the holiday season due to time constraints. Trish also noted that the overall capacity is reduced due to the large number of SKUs. 

Another very important issue Dancing Deer faces is the fact that Trish does not spend time to closely look at the financials. They currently have no CFO, and with her plan to grow her company by 500% over the next 5 years, the financials need to be given more attention.

Thirdly, with most orders coming in during the November to December timeframe, the manufacturing side of the business is under-capacity for the majority of the year. This leads to high overhead allocation on most of the year, as the company accounts for cost of equipment.