Celestial Seasoning Inc.

Presented to; Mehedi Hasan Md. Hefzur Rahman

Presented By;Md. Mottasim Billah (EMBA-100303)Sharif Rezwan Kabir (EMBA-100340)

Peter Upal (EMBA-100304)Suman Saha (EMBA-100339)

Company Briefing

• Pioneer herb tea producer of tea industry of United States

• Established by Morris J. (Mo) Siegel in 1968

• Privately Held Company• More than 40 products• Occupy 50% of Herb tea

industry in US

Market Share

Celestial Seasoning

50%

Lipton31%

R.C. Bigelow

15%

Others4%

Strategy

Differentiation Strategy• Provide superior value to the customer providing quality

herb tea.• Have a good quality control systemCore Competencies• Highly Integrated Production Process• Effective HR policyDistinctive Competencies• Unique packaging system• More Customer Involvement (Loyalty)

Situation AnalysisSWOT analysis of Celestial Seasoning Inc.

Strength: • Effective HRM Policy• Friendly and Ambience

corporate Culture• Integrated and goal oriented

and customer focus marketing strategy

• Strategic Planning and corporate development

• Green Marketing approach • Recognized Brand name • Highly Integrated Production

Process

Weakness: • Larger debt• Less money and capacity for

expansion and new product development

• Highly seasonal business• Company doesn’t have

promising liquid tea segment (ready to drink tea)

Situation Analysis (Cont’d)

Opportunity: • Herb Tea is increasingly

important segment in the industry

• Opportunity to enter in liquid tea segment

• Growth orientation for the company

• Scope of diversification in other health food areas

Threats• Environmental Risk• Volatile Political condition • Market share loss by the

leading tea company• Failure to meet FDA

regulation• Emerge of substitute product

out of the industry and within the industry

TOWS Analysis (SO strategies)

Strength: •Effective HRM Policy•Friendly and Ambience corporate Culture•Integrated and goal oriented and customer focus marketing strategy•Strategic Planning and corporate development •Stable Customer loyalty•Green Marketing approach •Recognized Brand name

Opportunity: •Opportunity to enter in liquid tea segment•Growth orientation for the company •Scope of diversification in other health food areas

SO Strategies: New Product development in the liquid tea and other health food areas with the existing setup and infrastructure to boost the profit.

TOWS Analysis (ST strategies)

Strength: •Effective HRM Policy•Friendly and Ambience corporate Culture•Integrated and goal oriented and customer focus marketing strategy•Strategic Planning and corporate development •Stable Customer loyalty•Green Marketing approach •Recognized Brand name •Superior product quality

Threats• Environmental Risk• Volatile Political condition • Emerge of substitute

product out of the industry and within the industry

ST Strategies•Product differentiation to give the customer superior value. •To diversify the supply chain.

TOWS Analysis (WO strategies)

Weakness: • Larger debt• Less money and capacity for expansion and

new product development • Highly seasonal business• Company doesn’t have promising liquid tea

segment (ready to drink tea)

Opportunity: •Opportunity to enter in liquid tea segment•Growth orientation for the company •Scope of diversification in other health food areas

WO Strategies Continue to the existing setup as there is no scope for Celestial Inc for expansion as the debt are high and taking new initiative could be crucial.

TOWS Analysis (WT strategies)

Weakness: • Larger debt• Less money and capacity for expansion

and new product development • Highly seasonal business• Company doesn’t have promising liquid

tea segment (ready to drink tea)

Threats• Environmental Risk• Volatile Political condition • Market share loss by the leading

tea company• Failure to meet FDA regulation• Emerge of substitute product out

of the industry and within the industry

WT Strategies • Continue its market with existing setup•To diversify the supply Chain•To strengthen the quality control system

Functional Strategy

Marketing

• Market more than 40 different types of teas and produce both specialty teas and traditional teas to cater market needs

• Customer focus marketing and Integrated and goal oriented Philosophy

• Expanded distribution to Supermarket chains, gourmet stores and foreign markets from health food stores.

• Capitalized the trend of health and natural foods interest• Marketing strengths are focused growth via health

consciousness, brand awareness, strong consumer loyalty and distinctive packaging

• Adopt a penetration pricing strategy

Marketing (Cont’d)

Promotion and Advertising: • Print advertisement tend to be simple, dignified and

information oriented • Special cause related marketing (sponsorship of a bicycle

race called Red Zinger Classic)• Advertising Budget boost up to some 6 million dollar• National television commercials

Human Resource

• Recognized benefits, job security, advancement opportunities and ambience for the employees

• 216 employees • The company doesn’t have time clocks and is not unionized • Number of plans for motivating the employees • Stock ownership plan and gain sharing program• Provides opportunity for self advancement • Low turnover because of reputation and company receives

100 application for each job opening

Finance

• Not publicly disclose the financial statement• The company was acquired in a leveraged buyout from

Kraft (An estimated 60 million)• A venture capital firm, Vestar Capital Partners financed

the buyout • 15 million of equity and the rest in debt• 45 million debt requires annual interest of 6 million• Exhaust all the profit for interest payment

Thank You