Question

McNutt Coffee (branded Nutty Coffee) is a successful five year old company with three locations. Last year the company acquired al local coffee roaster to begin roasting its own coffee. What strategies is McNutt using and what are the benefits?

Answer 1

McNutt Coffee is using a vertical integration strategy by acquiring a local coffee roaster, which can lead to cost savings, better quality control, and enhanced supply chain management.

Step-by-step explanation:

McNutt Coffee, branded as Nutty Coffee, is employing a vertical integration strategy by acquiring a local coffee roaster, allowing the company to begin roasting its own coffee. This strategy involves the company taking over its supply chain elements to control the production process from raw materials to final product sale.

The benefits of this strategy include:

• Cost Savings: By eliminating the need for external suppliers, McNutt Coffee can reduce costs associated with purchasing roasted coffee from other businesses.
• Quality Control: Having control over the roasting process allows McNutt Coffee to ensure consistent quality and flavor profiles of their products, leading to a better customer experience.
• Supply Chain Control: Direct oversight of the roasting process means McNutt Coffee can better manage supply chain risks and respond more nimbly to market changes or consumer preferences.