Nantucket Nectars: The Exit – Case Solution

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Nantucket Nectars: The Exit Case Answers

1. Develop your own possible choices for the company, Nantucket Nectars.

Nantucket Nectars has the following choices:

a. Merge with another company.

b. Go public with an initial public offering (IPO).

c. Remain independent.

d. Sell the company.

2. Explain how your answer was derived.

A. Merge with another company

Nantucket Nectars needs a more extensive distribution network to maximize its profits. The company needs to utilize more experienced management/production teams to further organizational growth. The company needs to reduce its overhead costs and share budgets with a more substantial buying power. It is unable to compete effectively with its rivals.

B. Go public with an initial public offering (IPO)

Nantucket Nectars is experiencing several problems and needs a significant cash injection to support any future growth strategies. The company is underperforming and has negative cash flows. The company is unable to increase its share due to various monopolies within the market. The company is operating in a very profitable high-end niche beverage market. Therefore, the number of competitors entering the market is continuously increasing, exceptionally large brands, creating problems for the management of the company.

There are over 100 companies vying for the leader position in this market. Large companies have brand strength. They make reliable brand advertising and trade and consumer promotions and have premium packaging. Large companies are blocking smaller players from getting any shelf space; they are securing premium shelf space for themselves.

Nantucket Nectars has 1% of its sales from supermarkets compared to 55% from other companies and 6% of its sales from convenience stores and mass-volume stores compared to 35% from other companies. Large companies are…