Jamba Juice Essay

495 Words2 Pages
Q1) What are the roots of Jamba Juices problems? As Jamba Juice transitioned to the different positions, it was not able to mobilize an efficient value chain to capture the value created. Primary activities are not linked aligned: * Operations: * lack of operation excellence – managers found it difficult to manage a 700 store system: (See exhibit A for analysis of costs as a percentage of sales, operating expense is 35% of sales and has stayed constant) * Outdated stores * Lack of free cash flow * Marketing & Sales: * lack of targeted product specific marketing * Lack of innovation – menu not being regularly updated Secondary activates are not aligned: * Firm infrastructure * Business model based on company-owned stores * No support provided for potential franchise owners * Technology: * No IT infrastructure to consistently review/understand performance at individual store or overall company level * Procurement: * Lack of a robust supply chain – sensitive to raw material price volatility (costs of goods sold as a percentage of sales increased from 2007 to 2008 (Exhibit A)) Other factors that have contributed to Jamba Juice’s problems: * Rapid uncontrolled expansion * Lack of barriers to entry * Market is fragmented Q2 & Q3) Which of the strategic options should White undertake? How should he sequence them? Immediately: * Engage with suppliers to optimize inbound logistics to reduce costs * Close unprofitable stores * Incentivize current managers for increasing the operation margin of their stores Short-term: * Transition the culture of the company: hire new executives (who have experience with a franchise model) in key strategic roles * Transform to a franchise based business model – sell franchise to small propriety operators: this

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