Big Decision:

Calveta

Situation

Calveta wants to double revenues within next 5 years

Want to keep and continue core elements of Antonios Way

Complication

Difficult to achieve expected target with current business

Increase in dissatisfaction from current accounts

Complicated organizational structure

Question

Should we acquire GSD to fuel growth?

Yes, we should acquire GSD

Challenges in implementing Antonios way at GSD

Employees at GSD not able to adapt to core values of Calveta

Substantial employee turnover and labor problems continue

Maintaining quality on such a large scale may have its challenges

Decrease in personalization with accounts as scale increases

A medium to high intensity of resistance is expected from GSD as the

chances are personal. The staff and personnel must learn new skills. Some
psychological issues will need addressing as well. There may also be
element of uncertainty regarding job security that needs to be addressed

Key elements to considered for acquisition of GSD

Market Share

-Access to the West coast to complement Calvetas market in the West

-Diversification of business into serving non gourmet fare

Value-Cost Leverage
-GSD revenue generation is not the smoothest. Calvetas cost control system to assist them smoothen
out operations and increase profitability

Human Capital
- Employee satisfaction is high at Calveta. Training and promotions are high on the agenda. Knowledge

transfer can be initiated through trainings and best practices. Innovations through employee suggestions

Organizational Structure
- Calvetas organizational structure has to be changed in the long run and accommodating GSD will not be
difficult

Financial considerations
- Capital investment is needed. Loan is not the best option as the companies Current Ratio is .993 , which
suggests that we cannot service our loan debt

Implementation Plan at GSD

Operations
-Shared headquarters will give more control on the operation to Calveta
-Cost control model to be implemented through workshops and meetings

Human Capital
- Increase internal recruitment at GSD to improve employ satisfaction
-Performance incentives to reduce attrition rate

System integration
- Long term contracts with suppliers to build good reputation
- Implementation of at your service ordering system

Restructuring of organizational hierarchy

- Restructure the hierarchy to accommodate growth and reduce client/account attrition

Strengths and Weakness of

the plan
Cons

Pros

Revenue objective can be

achieved

Huge risk on the timeline

and quality of integration

Geographical coverage and

diversification of business

Labor issues and turnover in

management ranks

New customer base

Opportunity to restructure
the organization

Expansion of company into

unknown business may
impact quality of service

Financing the takeover is a

concern

GSD has potential

Control on the proceedings

and preservation of core
values

COO of Calveta should be in charge

Synergy due to common headquarters

Managers should be shifted from Calveta to GSD to transfer knowledge

Should make flatter organizational structure Sales and operations

functions should be separated out.

More regions and districts can be created and internal power should be
given at the lower managerial levels

Management should organize quarterly meeting within the firms to

share pain points and brainstorm solutions

5-6 months timeline for

implementation

2-3 months

2-3 months

1 months

3 months

Risks and Mitigations

High Cost of Debt

-Arrange capital from equity financing rather than loan

Employees at GSD not able to adapt to core values of Calveta

- Hire new employees

-Facilitation and support of training

Substantial employee turnover and labor problems continue

-

Performance incentives

Automation of facilities

GSDs profitability
- Cost control implementation

Recommendation

Yes, Calveta should buy GSD for the following reasons:

Revenue target will be reached

Increase presence and customer base

Opportunity to improve & implement best practices at GSD to improve

operations

Pyrami
d