See's Candy Case Study Report

xxx

Professor Alexander Kalafatides

INTB-200-130; SP 16-17

29 May 2017

See’s Candies: Individual Case Study Analysis

1. The Background and Defining the issue(s)

In this case, I reviewed the case of See’s Candies and will briefly introduce the company’s history along with identifying the challenges the company is facing during the time of the article (2012), and analyzing the data to present viable solutions and alternatives to the identified issues.

See’s Candies is an American manufacturer and distributor of candy, particularly chocolates. The company was founded in 1921 in Los Angeles, California by Charles See, his wife Florence See and his mother Mary See. See’s Candies has a rich history of marketing, customer and brand loyalty, fresh ingredients, and a strong and loyal executive board. The firm’s primary presence is located on the West Coast and its popularity diminishes as it goes across the country.

In addition to having over 200 brick and mortar stores, it has a solid online presence. Approximately 65% of consumer orders now originate online, according to CNNMoney1. Warren Buffett, the business magnate, acquired the firm for $25 million in 1972. This boxed-candy industry is relatively small; therefore, See’s Candies has low growth margins per year. This issue has persisted because of its failure to make significant growth year over year.

The company has been around for so long despite other high-end competitors like Hershey because of its rich history with simple but iconic black-and-white tiles, fresh ingredients, low overhead costs, as well as brand and customer loyalty. Early in Buffett’s years, he adopted the “cigar stub” technique whereby he buys shares of a company which is trading less than its book value and sell when the share price increases due to any reason and take profits. However, the foundations that See’s Candies has been built upon is a strong brand “that Californians loved” (Roberts 2). Buffett has described See’s Candies as a “dream business”

In any business, there are challenges and setbacks that will test the morale of the company. To gain market share and overtake competitors, it must expand across the country and/or internationally or it will fall behind in the growth curve. Because See’s Candies deals with perishable products, logistics and supply chain management will be difficult. It must have close plants and warehouses close by for just-in-time inventory. What this means is that top executives of this up and coming candy manufacturing firm must have almost 100% accuracy in terms of appealing to consumer tastes when entering new markets. In addition, the company’s patient and cautious style that was encouraged by Buffett needs to transition to a more change-ready culture where it can embrace variations of products in different settings. The overarching challenge for See’s Candies is addressing how to maintain its well-known brand and customer loyalty while venturing out into new markets and appealing to different types of consumers, tastes preferences, and cultures. This is the main challenge because as Bernard Pacyniak of the Candy Industry magazine states, See’s Candies doesn’t mean anything “where people are exposed to higher-end chocolate products,” (Roberts 4)