Calveta Dining Services, Inc.: Case Analysis, Abstract Calveta Dining Services, Inc. was a $2 billion, privately held firm that managed food service operations for nearly 1,000 senior living facilities (SLFs) in the United States. It was built on Antonio Calveta’s passion for food and traditional family values It made better food that was more nutritious for the residents of the SLFs whose current food budgets did not exceed. It also provided with not only higher-quality food but also more personalized service. Presently, Calveta Dining Services ran food services for 976 SLFs and employed 15,000 people. When Antonio retired from his 35 years of leadership, he named his eldest son, Frank, as the new CEO and was asked to double the company’s revenues within five years, of which 2 years have passed without any credible strategy adopted yet. He did not want to disturb the special company culture or risk their reputation for quality food services on the race to double the revenue. Now he finds it difficult to carry out his father’s directives. The humanistic and emphatically pro-employee company culture should not be disturbed while the growth strategy takes place. Ct rently, he is in a dilemma whether to expand beyond the SLF market and he is worried if he could continue to maintai the quality level, for which Calveta is renowned, in this process. Analysis In order to increase the revenue as promised to his father, Frank has to consider growth strategies for his organ ation, He has around three strategies in his mind and has to work on them to see which one brings the maximum benefit and fulfils his needs aplly. The strategies that he has in mind are either to continue in the existing situation itself or introduce it to the hospital segment. He also has thought of taking up Great Southwest Dining Service Scanned with CamScannerCalveta Dining Services, Inc.: Case Analysis (GSD) which was situated in Phoenix and bringing a change to the organization structure as a whole, Continuing the existing business ‘The advantages of this strategy are as follows: > There is less risk as their running in the same status as before. > They would not be ini rring any additional costs. ization will not be lost. > The reputation of the org > The provision of customized service intertwined with the quality of food remains constant and it will also not be affected. » The organization will be able to uphold its own culture which was being ly. followed traditio ‘The disadvantages of this strategy are the followin > Any kind of growth or introducing itself to new markets would be restricted in choosing this strategy. wee of meeting the targets that are put across, > Avery lessel ii, Spreading its business to hospital segment ‘The merits on choosing this option are mentioned below: > ‘The hospital segment presented a more logical fit with Calvew’s core competencies > Hospital administrators might perceive Calveta’s skills at cost control as a means to containing expenses. Trends toward the provision of fresher, more healthful menu offerings for both patients and visitors would also work in Calveta’s favour. Scanned with CamScanner‘The demerits on choosing this option are mentioned below: > The culture of the company might not be maintained as it gets mixed with that of the hoypital demographic. > ‘There are entry bacriers in the financial point of view in this segment. > The ot nization cannot estimate or forecast its growth beforehand. It could also affect the reputation that the company has been having for « long, time. Acquiring GSD and restructuring the organization are as follows: trateg The pros of the company on taking up this There are more chances of reaching the targets and obtaining desired market attraction in this strategy. > Its geographical coverage did not overlap with that of Calveta, which increases > GSD is presently in a good position, when the revenue generation is taken into consideration, > Calveta would attain a great deal of customer potential as ‘was maintained by GSD. > The organization hierarchy could be restructured so that it could accommodate significant growth while preserving the company’s core values, The cons of the company on taking up this strategy are as follows: > They will have to face a huge risk. JSD had labour problems and substanti tumover in their management ranks. Scanned with CamScannerCalveta Dining Services, Inc.: Case Analysis > Spreading the company may reduce the quality of service. > They will have to bear heavy debts. > GSD was barely running in a profitable manner but it seemed to have a great potential. Interpretation It is understood that Frank is liable to choose a \y one of the mentioned strategies, so that Calveta is able to double its revenue by the end of the year 2011, Every strategy has got its own pro and cons from which a decision had 1 be made. As all the options have been analysed, it ean be derived that the third alternative is comparatively worth enough to be used ather than the others. Even though it has to bear huge risks. it seemed to be having a great customer potential if it could retain its customer accounts, The problems in taking up the other strategies are cleared out below: © If the company continues in the existing status, it would not earn much of revenue as such which therefore would make it unable to cover the desired target of doubling the revenue, even though it had less risk. no additional cost, reputation and quality of serviee. * As they have had a previous experience of spreading their company into the educational seament which turned out to be a failure, it would be better not to expand themselves into the hospital segment. It also includes huge risks. When GSD is taken into consideration, it produced annual revenue of $1.5 billion and has a growth in revenue. Since it was barely profitable, indirect expenses and administrative expenses were high in GSD. On using the cost-control system of Iveta, they could increase their net profit, The calculations are given below as follows: Scanned with CamScanner6 Calveta Dining Services, Inc.: Case Analysis Current Ratio = Current AssetvCurrent Liabilities = 0.993:1 Profit Mar in Ratio = Net Income Sales = $65 million / $2021 million * 100 Debt Equity Ratio = Total liabilities / Total Shareholders’ Equity = $272 million / $181 million = 1.50:1 to meet short term It is evident from the above that the company’s abil liabi ies is low as the required ratio for the current ratio is 2:1. The company’s debt is more than equity as the supposed ratio to be is 1:1. It’s better to increase the share capital than going for bank loan as the shareholders equity in the organization is low. Synthesis From the case analysed, the third option is chosen wherein Calveta has to acquire General Southwest Dining Services (GSD) as: © GSD does not generate revenue in a smooth or good manner for which they need Calveta to join them so that they could use Calveta’s cost-control system, © GSD has got geographical coverage which would enhance their strategy and it could also use the core values of Calveta, so that they could increase the reputation of the company as a whole. © Itis also better to increase the share capital than going for a bank loan, because the company’s finaneial position is bad. © The employees of GSD ha ve to he provided with training and they also have to recruit few into the company and restructure the organization by shifting managers from Calveta to GSD. © A new organizational structure has to be made that aecommodate significant growth while preserving the company’s core values, It has to consider in dividing the sales Scanned with CamScannerCalveta Dining Services, Inc.: Case Analysis and operations functions completely, creating additional regions and districts, and eliminating management levels. Learn ‘The case has shown the examination of the role of stalting, training, developing, and treatment of employees can play in a firm committed to high-quality service. It also explores the idea of the structure of the organization that can accommodate growth, effective cation, and the maintenance of the ethics and the culture of the company Scanned with CamScanner