Calveta free essay sample

Antonio Claveta’s passion for food and traditional family values was the reason why Calveta Dining Services started. It begins in 1966 with a neighborhood restaurant which was features old family recipes. Eventually he started to expand his restaurants. In 1972 Calveta Dining Services entered into senior market which operating nearly 1,000 senior living facilities (SLFs) dining services in the United States. Calveta is operated all aspects of resident dining facilities such as menu development, meal preparation and service, and implementation of special programs. Calveta was the fourth largest competitor in the market. Calveta emphasize on the quality food and improving the services by making continuous innovations from time to time. When, Antonio Calveta retired in year 2007 after 35 years serving the business. Antonio handover CEO’s position to his son, Frank Calveta. Frank was by his father to double the company’s revenues within five years’ time. The revenue was $2 billion, 10% of the total market in 2007. 2. 0 ISSUES/PROBLEMS Frank as the president and CEO of Calveta Dining Services, he wants to fulfil his father’s desire, which is to double the company’s revenues within five years. He is confronting with lots of challenges such as:- 1. The company’s reputation, 2. Lack of infrastructure to enter into new market , 3. Management changing as well as high turnover of employees. Maintaining Antonio’s way. 4. The main issue is whether Frank Calveta should take over Great Southwest Dining Service (GSD) or not. However, according to Jennifer Calveta, chief operation officer of Calveta, GSD does not have good reputation and having high staff turnover. On the other hand, Frank would achieve or at least come close to the revenue goals his father set if he is to take over GSD. 3. 0 SWOT ANALYSIS After going through Calveta Dining Service case study, there are list of the strengths and weakness. 3. 1 Strengths: -High set of values (Antonio’s Way) -High revenues -Loyal customers -Family business -Years of experience -Very define niche (SLF’s) -Focus on employees’ development Calveta’s main culture is focusing on the high quality food and customized services. First, the high-quality food with more nutritious enables the company receive high ratings from SLF residents and managers. Considering the health reasons of their targeted customers, older people, Calveta provides fresh ingredients at a lower price, which creates a great advantage over competitors who provide canned ingredients. Furthermore Calveta had launched â€Å"At Your Service† catering program which allows their customers to pre-order their menus and personalize service by making customer feel more cared for. The third strength is that the unique human resource culture with the company motivates employees successfully by implementing pay-for-performance plan, wide-ranging training program, and the career progression program and among others. The employees are highly motivated by pursuing great opportunities to be promoted and receiving generous benefits. Calveta applies cost-control model that gives them advantage to sign the contracts at a low price and therefore provides a lower price to customers. They also discourage wastage therefore it helps them in reducing the cost production and yield saving in cost as well as raw materials. 3. 2 Weakness: (internal factors) -Unable to find growth strategy that fits core competencies. -Lack of infrastructure to expand into university campuses. -No debt philosophy -Re-assignment of managers -Low gross margin -Spending on services rendered -Missed entry point for hospital market. Calveta had divided its operations, each by a Regional Vice President, whereby each was supervised a Director of Operations and up to Six Area Mangers. Each Area Managers handled both operations and sales in their geographical, including obtaining contract renewal for existing contracts. Calveta has a great disadvantage was the organizational structure caused by the implementation of career progression programs, which encourages frequent promotions and instable job positions. Even though the program is an effective method to motivate employees and achieve rapid development, the frequent change in manage teams harms the service quality and efficiency and increases the employees’ dissatisfactions for the stressful organizational structure. The front line employees were no longer communicating well with the back-of-the-house employees due to the quantity of workers in each role varied widely from one account to the next, based on the number of residents, the food service options and client demands. 4. 1 PROPOSED SOLUTION After going through Calveta Diving Services case, we have come up with some proposed solution. Everything solution as their own drawbacks and benefits depending on the situation and decision took by the company. These are continuing the existing business, entering into new segments, purchase Great Southwest Dining (GSD) and acquire northwest Gourmet. Frank has to work on these solutions to see which one brings the maximum benefit and fulfils his promise to Antonio. 4. 1 Continuing the existing business The advantages of the strategy above are that there is less risk, and won’t be any incurring any additional costs. All the operating expenses will remain more or less same. Reputation of the organization will remain the same. Provision of customized service intertwined with the quality of food remains constant and it will also not be affected . The organization can still able to uphold its own culture which was being followed traditionally. The disadvantages of the strategy are that there are very less chances to meet target that is to double the revenue and growth of business into new market would be restricted if this strategy is chosen by Frank Calveta. 4. 2 Entering into new segment (hospital) The benefits is that it presents a logical fit with Calveta’s core competencies, and once the economy is back to track, the growth in hospital budgets would surely come as the demographics seemed to mandate that. Moreover 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 favor. Customers from the hospital segment would accept Calveta Dining Services as the residents of SLF without much hassle. The drawbacks are that the culture of the company might not be maintained as it gets mixed with that of the hospital demographic. However there is few entry barriers in the financial point of view in this segment such as the organization cannot estimate or forecast its growth beforehand and it could also affect the reputation that the company has been having for a longtime. 4. 3 Acquiring GSD and Northwest Gourmet The benefits are higher chances to reach the targets and obtaining desired market attraction. Plus point is that its geographical coverage did not overlap with that of Calveta, which indirectly increases its market and also coverage. GSD is presented in a good position, when the revenue generation is taken into consideration. Calveta would obtain a great deal of loyal customer as it was maintained by GSD and there will less cost in advertisement to promote and find new customers. The organization hierarchy could be restructured so that it could accommodate significant growth while preserving the company’s core values. The drawbacks are that GSD had labor problems and substantial turnover in their management ranks. Spreading the company may reduce the quality of service. They will have to bear heavy debts, as mention in case study that when Frank evaluated the debt his eyes popped. Whereas as according to Jennifer Calveta, GSD was barely running in a profitable manner but it seemed to have a great potential. 5. 0 IDEAL SOLUTION AND HOW TO IMPLEMENT THEM It is understood that Frank is liable to choose any 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 to be made. As all the options have been analyzed, it can be derived that the third alternative is comparatively worth enough to be used rather 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. Another solution is that untapped potential in SLF markets as the Calveta has only 25% contracted therefore the balance 75% is huge potential. They should all out to make sure those remaining at least worst case scenario 18% are contracted to them per year to at least reach the target at the very minimum. Now Calveta contracted 976 SLFs which results them $2 billion. If it increases by 18% to 1152 SLFs the Calveta can generate $2. 36 billion per year (estimated). By 2011 they can generate $2. 79 billion and 1360 SLFs (estimated). Calveta has always offers quality of food and great services at the very affordable prices Calveta should also have room for expansion on West Coast as there is no current operation and SLF are abundant in California, Arizona and Nevada. Calveta Dining Services should consider building headquarters and distribution center as these is necessary for operations and best if it is located in Nevada. This will help Frank to monitor and regulate the SLFs located in different regions of the country. As they have had a previous experience of spreading their company into the educational segment which turned out to be a failure, it would be better when expanding to hospital segment. Therefore venturing into hospital segment would be a better idea as the reason they failed was because they lack of infrastructure. By venturing hospital Calveta can earn more profit, eventually can venture into educational again without any problem. As about the employees falling apart from Antonio’s Way Jennifer should be promoted to President of West Coast Directors as she has most of the knowledge of operations and authority and relieves tension. Frank might have to try to meet every new employee as his father did. After that it is advised to hire a National Manager of company culture to maintain Antonio’s Way, to oversee human resources issues and to ensure consistency. 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 Calveta, they could increase their net profit. Calveta should hire more representatives to encourage old representative to teach the new ones, to work with new clients and create close relationship. By doing this Calveta can slowly develop GSD employees to attract or get used to Antonio’s Way. It’s better to increase the share capital than going for bank loan as the shareholders equity in the organization is low. 6. 0 SYNTHESIS From the case analyzed, if option is chosen where 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. It is also better to increase the share capital than going for a bank loan, because the company’s financial position is bad. The employees of GSD have to be 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 accommodate significant growth while preserving the company’s core values. It has to consider in dividing the sales and operations functions completely, creating additional regions and districts, and eliminating management levels. The case has shown the examination of the role of staffing; 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 communication, and the maintenance of the ethics and the culture of the company.