Leg 1. Understanding “core business”. Part II.
The core business is one of the most important concepts we must understand in our companies when we wish to strategize.
We profit from the “core”… and if you think of it, it has sense. Every single human being has talents or prodigious capacities or abilities. Sometimes we acquire them by learning. And sometimes we are gifted with a bent because of genetic reasons. I believe the best thing that could happen to someone is to work with your talents and make a living with them. I can´t think of a better reason to wake up in the morning and know you are making your own money by doing with your talents what you love the most. The sadness of this world is that more than 50% percent of the economically active people on the planet (people who are working) doesn´t work in what they like, neither in what they study, neither they work in what they have the talent to do. “The paradox of work is that many people hate their jobs, but they are considerably more miserable doing nothing”.
Let’s go back to the “core”. When reviewing the material about “core business”, I thought how different could be if we can work in what we like to do, and we can find our own “supply chain”, suppliers and buyers, in order to sell what we are meant to do. Maybe if we can focus a little bit more in our own “core inner business”, this could be the beginning of a better world, a bit happier and less conflictive.
I would like to answer the questions of Christine Ferber case of study from yesterday. First of all, I find her business a wonderful tale of “years” of hard work and superior quality products. The first thing that comes to my mind when studying her beautiful business: Christine knows what she does. She is an artist of exquisite jams. She knows what to buy, where to find her supplies and fruits, how to mix and mingle and marriage different fruits, and she prepares her jams or preserves through the “artisan” way. She knows the timing for each type of jam, the process step by step and she does it herself with her team, in her jams lab. “Au Relais des Tres Epis”: A “Made in France” spot in the world.
What is Christine Ferber core business?
Christine Ferber Core business is the artisanal fabrication of fruit preserves and jams. At her “Au Relais des Trois Epis” shop, she also sells pastries, “les petits gateaux”, traditional bread, and fresh cakes. In addition, I found information on the internet about other products in her shop as sandwiches, fruit and vegetables, her books, magazines, newspapers, cheeses, small-goods, chocolates, pots, pans and local pottery: But none of these products are her core business.
What is Christine Ferber industry?
The industry is Artisanal “French Origin” Fruit Preserves. We can´t position her business in any other group because her preserves can´t compare with other French industrial confiture companies such as Goergelin or Confit de Provence in France.
Can you tell which is the circle (or circles) that identify the core business?
Can you distinguish the characteristics that enable Christine Ferber to achieve competitive advantage to survive in her own industry and competitors?
- Expertise and Excellent Know-how on how to do preserves with each type of fruit ingredients and added flavors.
- Superb quality: See: http://video.lefigaro.fr/figaro/video/les-meilleures-confitures-de-fraises-de-paris/4781118991001/
- Superior dedication to detail process and quality by the owner (Ms. Christine Ferber).
- The control point in a network of local French distributors and online retailers internationally.
- Product differentiation strategy: her jams are not cheap, but her customers are willing to pay for it, given their jams good quality.
- Branding: She has built a consistent branding for her jam pots.
- Customer loyalty to her brand. Particularly from hotels and restaurants.
Do you think Christine Ferber business is ready to approach “shark investors” or “private equity investors” in order to grow? Does she want to grow?
About this question, I do not have a realistic answer. Why? Because I do not have financial information from Christine Ferber, and before giving a precise reply, it is cautious and better to ask her directly about her finances. What I have read on the internet is that 5 years ago, she was selling around 120,000 jam pots per year. But we have no data about her key financial numbers. To understand Christine Ferber growth and profitability patterns, we have to ask her how she manages her revenues and expenses, how she manages her working capital and investments, how she does financing decisions (managing liabilities and her family equity) and what is her dividend policy. Her earnings performance in recent years will give us an idea of her profitability. But a Financial Statements Analysis (ratios and cash flow analysis) of the last 5 years has to be done before giving an answer to this question. In addition, I am sure she knows better than anyone what is the value of her company (valuation).
All I can do as an outsider, and based on public information we have read about her business status on the internet, it is just a vague approximation.
Shark Tank Investors such as Barbara Corcoran, Daymond John, Mark Cuban, Kevin O’Leary, Robert Herjavec and Lori Greiner; from the TV series “Shark Tank” are a typical example of private equity investors who invest in companies as Christine Ferber business. Putting myself as a “shark investor”, all I can say at the moment, and without available financial data, is that Ms. Ferber has shown us at least several strategic characteristics any investor would like to see inside a company´s owner heart:
- Christine Ferber loves what she does. She is passionate about her jams.
- She knows what she is doing, and she has a clear core business to start with for expansion
- She has proven to be able to sell her products (locally and internationally) for more than a decade.
- She has proven with her jams for several years, excellence and superior quality above her local and international competitors
- She is a constant innovator: She has more than 200 formulas for jams, and I am sure she is all the time creating new flavors using fruits from the “campagne française”.
- She also knows what she doesn´t want to become. She has clear “boundaries” to her core business. The secret of Ferber´s success is her “artisan made in France” method. To force her to grow by industrializing her products maybe is not a good idea, but I am sure she knows where she needs capital investments, and she will be able to tell us.
- She has a product differentiation strategy that has been marketed mainly through public relations, good reputation articles or videos from well-recognized media such as DW, NYTimes, etc.
- She seems to have fun with what she does. And that is the most important key to success.
Merci beaucoup pour votre intérêt. Je vous remercie pour votre temps.
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