Calyx

Topics: Strategic management, Supply chain, Mail order Pages: 13 (4107 words) Published: July 3, 2013
AGRI-BUSINESS MANAGEMENT

ASSIGNMENT I CASE ANALYSIS

CALYX AND COROLLA

Submitted to: Submitted by

INSTITUTE OF RURAL MANAGEMENT ANAND

INTRODUCTION Calyx and Corolla (C&C) is a company started by a entrepreneur, Ruth, M. Owades in 1988 which delivers flowers to the end customers using the courier service provided by Fed ex. Customers are provided with an option to order fresh flower and bouquets from a four-color catalogue by placing an order to the company, which also shows floral bouquets, plants, preserved designs, and corporate gifts. The fresh flower order goes immediately to one of 30 growers in the C&C network, who picks and packages the flower and ships them via FedEx. The flowers arrive fresher and last about 10 days longer than flower ordered from stores-best retailers. The credit for such an efficient value chain goes to the sophisticated system and C&C strong alliances with FedEx and the grower. Calyx & Corolla was primarily a mail order company, but management is now considering expanding their market and is unsure of how they should proceed. FTD1 florist network is one of the major competitors of Calyx & Corolla which has a member owned worldwide co operative of 25000 florists2. The calyx & Corolla top management team has exceptionally talented members like Owades and Lee but the things that the company is concentrating upon is that of the future strategy of the company to tackle various externalities faced by the company in future due to arrival of IT as a very strong medium. Again to capture significant market share they will have to spend specific amounts on the advertisement therefore it will have to assess the financial implications of spending heavily on the advertisements. Moreover what should be the strategy to advertise is also an issue because the catalogue medium was already fetching results then would it be safe getting into aggressive indirect advertising. VALUE CHAIN Before Calyx & Corolla: The industry was highly fragmented at each and every level, where small family run business were the major players. The channel of the flowers from the field of a grower to the consumer is depicted in the above flowchart. The consumers were buying 59% of flowers from the florists; supermarkets were holding a share of 18% in this market.3 Payments: Growers were paid by the distributors after a span of 60 to 90 days and distributors were paid by the whole sellers on the same terms. Retailers had to pay in cash as they were

1 2

FTD stands for Florists' Telegraph Delivery The members of FTD took orders from local customers for delivery by member florists at other locations. 3 The data has been taken from the case facts given in the Calyx&Corolla case

searching for quality i.e. price and suitability from the whole sellers who were supplying them the flowers. The conventional distribution channel in the flower market is as follows: $5 GROWERS

$10 DISTRIBUTO RS

$20 WHOLESELL ERS

$40 FLORISTS, SUPERMARK ETS, RETAILERS ORDER BY CONSUMERS

CONSUMERS

Markup: Distributors were marking up fifty percent on the cost to the whole sellers. Whole sellers were marking up another hundred percent on the cost to the retailers. Retailers were marking up a huge two hundred percent on the cost to the consumers. Thus consumers were paying a hefty forty dollars to the florists and the growers were getting a meagre sum of five dollars.

Operations in the traditional market: Flowers were gaining popularity in USA as the people were purchasing them at each and every occasion like marriages, funeral, birthdays, anniversaries, Valentine’s Day and s called other days. Flowers are a perishable product and their shelf life varies from hours to weeks. Roses were acceptable after two to three days from their picking and anthuriums were acceptable for a long period of one to two weeks. This resulted in varying prices of the flowers of the same category. A flower, if not sold loses its value the very next...
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