Hero Dog Treats

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Manitoba Institute of Trades and Technology *

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Marketing

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Feb 20, 2024

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Hero Dog Treats Case Study Manitoba Institute of Trades & Technology Global Sourcing Hero Dog Treats Case Study 1 | P a g e

Hero Dog Treats Case Study Table of Contents Executive Summary ..................................................................................................................................... 3 Issue Identification ...................................................................................................................................... 4 Short-Term Issues .................................................................................................................................... 4 Long-Term Issues ..................................................................................................................................... 5 Operating Environment ............................................................................................................................... 5 Root Cause Analysis ..................................................................................................................................... 6 Alternatives ................................................................................................................................................. 7 Option 1: No Change ............................................................................................................................... 7 Option 2: We We We ............................................................................................................................... 7 Option 3: Es7ab Wala .............................................................................................................................. 7 Recommendation ........................................................................................................................................ 8 Implementation ........................................................................................................................................... 9 Monitor & Control ....................................................................................................................................... 9 SWOT Analysis ........................................................................................................................................... 10 2 | P a g e

Hero Dog Treats Case Study Executive Summary Based in St. Catherines, ON, Hero Dog Treats is an organization that manufactures, processes, and packages organic dog food. Their aim is to grow the company in the pet food industry. They are looking to increase their annual sales by 40% by the end of the next calendar year. The organization has three main distributors. The distributors are looking to match market and consumer trends by offering products that are high quality yet maintain a low retail price. The market is focused on pet humanization, looking to make pet food close to human food through innovative recipes and technology. Currently, Hero Dog Treats’ products come in three forms, Bully Sticks, Antler Chews, and Dog Treats. Nevertheless, they are facing several issues like limited product offerings to distributors and limited experience in global sourcing. The root cause of their issues is mainly their inability to source materials overseas where the costs might be lower. It is our recommendation that Hero Dog Treats proceed with a project to source their materials globally while they can focus on developing new products that meet customer and distributor needs. In this case study, we have discussed the short-term and long-term issues that HDT is facing and explained their root cause. We have analyzed the environment and developed several alternatives while discussing the pros and cons of each one. Based on our recommendations, we have created a plan that HDT can use to implement their process and guarantee long-term sustainability in the market. 3 | P a g e

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Hero Dog Treats Case Study Issue Identification We have identified the issues that Hero Dog Treats is facing and categorized them as short-term and long-term issues. Short-Term Issues 1- Limited Product Availability HDT is currently focused on their existing organic dog treats, resulting in a limited product line that the distributors are requesting. 2- Limited Global Sourcing Experience The organization has limited experience in global sourcing, hence limiting their resource pool. They will not be able to meet customer demands so long as they source all their needed materials locally. 3- Customer Reach The organization has minimal reach for consumers, hence resulting in low sales. Their audience can only be reached through the distributors and online sales through Amazon. Long-Term Issues 1- Cost Reduction Hero Dog Treats aims to drive down production costs by 20%, and it will be an issue for the organization if they don’t meet their target. The current operation does not guarantee long- term sustainability. 4 | P a g e

Hero Dog Treats Case Study 2- Transparency The organization does not have the information needed to make decisions. This is a list of topics that Hero Dog Treats have not yet addressed.  Financial Risk  Cultural & Language Barriers  Negotiation Technique with Foreign Companies 3- Increasing Sales The organization’s goal is to increase sales by 40% by the end of the next calendar year. This will be a tough task given the circumstances and the lack of a suitable environment. Operating Environment The pet industry is on a consistent growth trend and is projected to reach an all-time high in terms of industry capital. However, the few top organizations hold almost two thirds of the pet food market. On the other hand, the top five hold around 20% of the pet products sector. Moreover, the increased dog population in Canada, along with inflated dog food sales tells us something about the market. It is not only an increase of quantity; in fact, the accelerated growth is tied to product differentiation in the market. The diversity in the products relates to food formulas directed towards age and breeds. Pet owners are looking for healthy, specific, and natural products that are affordable. The industry is booming, and this presents a great opportunity for Hero Dog Treats to target different segments of the market by diversifying their product line to meet customer needs. 5 | P a g e

Hero Dog Treats Case Study Root Cause Analysis In Canada, there are several regulations regarding the import of pet food. In addition, manufacturing products in Canada can be quite expensive when compared to other countries that have lower production costs. However, for companies to continue to operate in Canada, they must find the same quality and specifications abroad. Nowadays, consumers are educated on the health benefits of certain ingredients used in pet food manufacturing, forcing organizations to adapt to changing customer needs. Alternatives Option 1: No Change Advantages: 1- Focus on Current Distributors 2- Build Stronger Relationships 3- Discuss Potential Exclusive Deals Disadvantages: 1- Risk of Losing Distributors 6 | P a g e

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Hero Dog Treats Case Study 2- High Production Costs 3- No Product Diversity Option 2: Focus on Online Sales Advantages: 1- Maintain Existing Supplier Relationships 2- Penetrate the Global Market Online 3- Market HDT’s Core Competencies Disadvantages: 1- High Production Costs 2- Limited Product Lines 3- Global Marketing is Expensive Option 3: Source Materials Globally & Introduce New Products Advantages: 1- Decrease Production Costs 2- Product Line Expansion & Diversification 3- Contract an Import Merchant Disadvantages 1- No Experience with Global Sourcing 2- Potentially Long Lead Time Risking Product Availability 3- No Lessons Learned in Foreign Markets 7 | P a g e

Hero Dog Treats Case Study Recommendation It is our recommendation that Hero Dog Treats move forward with Option #3 whereby the organization can initiate a global sourcing process whereby they can source raw materials and packaging internationally in cheaper countries meanwhile an import merchant introduces the products to a new market. First, using an import merchant is an efficient way of sourcing materials globally. The company does not have to get into the details of foreign markets. Instead, they can invest in R&D and focus on the introduction of new product lines to the market through their distributors. Hero Dog Treats aims to decrease their production costs by 20%, and sourcing their packaging material internationally can help achieve that goal. By introducing more products to the market and maintaining cost efficient sourcing strategies, HDT can generate more revenue through increased sales and grow the organization further. After the recommendation is implemented, Hero Dog Treats may invest in the Online Marketplace to further grow their business in the future. Contingency If a global sourcing contract is not established in the allotted time frame, Hero Dog Treats can tank the high production costs until they find a suitable agreement that maintains the same quality and specifications they need for their products. They can directly focus on broadening their market reach and invest in marketing efforts directed at growing their sales in the short term. 8 | P a g e

Hero Dog Treats Case Study Implementation Below is a list of steps needed to implement the above recommendation successfully. 1- Research Potential Import Merchants in China (2 Weeks – Purchasing Department) 2- Research Potential Material & Packaging Suppliers in China (2 Weeks – Procurement) 3- Develop Contracts (2 Weeks – Contract & Procurement Teams) 4- Set up Transportation & Logistics Services (1 Month- Supply Chain Team) 5- Team Training on Logistics Programs (2 Weeks – Supply Chain Team) 6- Develop New Product Lines (1 Month – R & D Team) 7- Create a Distribution Plan for New Products (2 Weeks – Supply Chain & Logistics Team) Monitor & Control To measure the effectiveness of our implementation and the success of our project, it is necessary to measure our performance and keep track of our results. Below is a list of KPI’s and metrics that will help monitor our performance levels. 1- On Time Delivery Report Measured through OTD & POD Rates 2- Sales Tracking Measured through sales revenues, sales growth, and conversion rates. 3- Production Cost Measured through material cost percentage, COGS, and labor cost per unit. 4- 9 | P a g e

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Hero Dog Treats Case Study SWOT Analysis Strengths 1- Affordable Prices 2- Product Accessibility 3- Loyal Customer Base 10 | P a g e

Hero Dog Treats Case Study Weaknesses 1- Lack of Experience in International Relations 2- No Global Sourcing Strategy 3- Unclear Supply Chain Process Opportunities 1- Adopt Global Sourcing Strategy 2- Increase Income & Market Share 3- Diversify Product Lines 4- Increased Dog Population in Canada Threats 1- Pressure from Distributors 2- Regulatory Issues 3- Missing Potential Sales Online 11 | P a g e

Hero Dog Treats Case Study 12 | P a g e

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