Smit's Company

Smit's Company was a small, family owned manufacturer and marketer of roasted and candy covered nuts. The company sold its products through a retail store, national fund raising groups, and a catalog distributed throughout the country. The current CEO, who was the great-grandson of the founder, took over the company in 1996. The three distribution channels offered varying prospects for growth. The retail store was successful but hampered by a less than attractive location, while the fund raising business posed a number of problems such as slow growth and difficulty in retaining customers. The direct marketing (catalog) business appeared very attractive in terms of growth and profitability, but the CEO was unsure whether the company had the competency to compete effectively in this segment. Faced with limited resources, the company has to decide which distribution channel to emphasize to achieve its growth objective. More specifically, the CEO has to decide if he should make an offer on one of the two companies available for sale.