Monday October 28, 2013
Cutco Corporation Case

Situation Analysis

Company

CUTCO is held by ALCAS.
CUTCO currently manufactures the cutlery in North America.
CUTCO manufactures about 80% of KA-BAR knife products.
CUTO currently has about 800 employees in their head quarters.
The company has sales revenue of $250 million.
The company has over 500 Stock Keeping Units.
The price of a knife ranges from $39 for a vegetable knife- $1599 for a signature set.
Cutting edge Cutlery items account for 90% of sales.
The price of products increase 5% every other year.
Direct Selling
Currently was marketed via Wear Ever sales, then later taken over by ALCAS
In-house sales
Distributed by Vector Marketing corporation and CWE industries

Industry

The direct selling industry consists of well-known firms.
Customers range from 35-54.
Annual income of $50,000 and above.
CUTCO’s major competitors are retail outlets, who use department stores and mass merchandisers to distribute their products.

Trends

The price of products increase 5% every other year.
Direct sales in the United States have increased from 580,000 in 1979 to 700,000 orders in 2008
Direct selling sales amount to $30.8 billion, with an average growth rate of 3.2% in the past 10 years.

Company Situation

CUTCO must develop a strategic focus for the next ten years; they must also make a decision to continue retail sales pilot program by either expanding or ending it. The main goal for the company is to grow their revenues to at least $500 million annually in the next five years.

Alternatives and Evaluations

International Expansion:

Pros

1. A great amount of revenue can be earned if the company decided to expand into new markets.

2. The success of Canada and Korea proved it is possible to occur, the North America revenue growth also shows life.

Cons- Many attempts have been made to in the past to brake into international markets, only a few countries showed success, which makes international expansion a big gamble

Supplemental Sales Channels:

Pros

1. Catalogs and web sales hold potential to generate much higher profit margins than direct selling channels.
2. Based on recant history sales through these sales channels have increased significantly
3. Minimal investment required

Cons

1. This option is very risky, because the student program would have some negative impact.
2. Customers would not feel safe making such a large purchase with out being contacted by sales representatives.
3. May create greater loss

CUTCO