This strategy would give chipotle an npv of 815861580

This preview shows page 17 - 21 out of 24 pages.

This strategy would give Chipotle an NPV of $8,158,615.80. This is $764,777,09 better 1616
CHIPOTLEthan the states quo. This strategy does not have as high a revenue as Strategy A; however,customer satisfaction and believing in Chipotle due to changes in suppliers and promise that food will not cause consumers to become ill can benefit the companies’ consumer image. This strategy also saves the organization money by cutting supplier costs, without raising prices for the consumers. Appendix 8 is reflective of the revenues of Strategy 3 of offering more paid sick time to hourly employees. This strategy is not appealing at all due to increased costs for the organization. This would cause an increase in labor costs by approximately 1%. This strategy would give the organization an NPV of $7,393,838.70. The organization will stillhave a positive NPV; however, it has a negative effective on the estimated future revenues and could have negative effects on investor approvals. Selected Strategy and New Business ModelStrategy 2 will be selected because financially it offers the organization a middle ground NPV between the other two strategies. By changing suppliers and not being as selective, but still standing behind food integrity, Chipotle will generate a NPV of $8.158,615.80. By implementing this strategy Chipotle will be able to gain their ingredients at a lower price and lower their COGS by approximately 2.4%. The addition of these new suppliers should not have an effect on customers loyalty, because top suppliers can still provide quality food items that Chipotle can serve. Selecting this strategy allows for the organization to be prepared for an increase in supply costs over time, but switching to a large supplier such as Sysco will offer lower prices than smaller suppliers that Chipotle typically uses, this will allow Chipotle to still maintain a profit margins without increasing the price of goods and effecting the customers. Going forward1717
CHIPOTLEChipotle will still build a supplier relationship with a large supplier such as Sysco in-order to lower the price of supplies, while still selecting high quality products from this supplier; Chipotle will not leave their current smaller suppliers but they will rely on them less as they will make Sysco their main supplier. 1818
CHIPOTLEAppendix 1StrengthsWeightRatingWeighted Score1Strong brand loyalty0.0540.202Consistent growth in sales revenue0.1040.403Continual increase in net profits0.1040.404High quality products at an affordable price0.0330.095Successful supplier chain management0.0540.206Successful quality assurance strategy0.0540.207Successful food safety strategy0.0540.208Successful marketing strategies0.0530.159Skilled labor force/successful training program0.0530.1510Low cost structure0.0540.20Appendix 2WeaknessesWeightRatingWeighted Score1Easily copied business strategy0.1010.102Higher product costs than other fast-casual restaurants0.0520.103High supply costs0.0510.054High employee turnover rates0.0320.065Limited menu selection0.0120.026Bad publicity due to E. coli outbreak0.0420.087Lack of financial planning0.0510.058Lack of market research0.0410.049Lack of product innovation0.0420.0810

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture