Key West Key Lime Pie Company: Financial Strategy & Risk Assessment

This case study delves into the strategic and financial challenges faced by Key West Key Lime Pie Company, a business that, despite impressive revenue, struggles with profitability. The analysis covers the company's strategic value proposition, considering its personnel, resources, and activities, revealing issues such as over-reliance on third-party products and inconsistent product quality. A value chain assessment identifies inefficiencies and opportunities for improvement, particularly in streamlining operations and focusing on core products. The report also examines the company's cost structure, distinguishing between fixed and variable costs, and highlights the impact of inefficient resource allocation. Key success factors, such as product quality, employee incentives, and operational improvements, are identified as crucial for turning the business around. Finally, the study addresses evident risk factors, including poor communication, lack of working capital, and operational management issues, underscoring the importance of strategic investments and employee satisfaction for future success. Desklib provides a platform to access similar case studies and solved assignments for students.

Running head: Accounting for Strategic Management and Control
ACCOUNTING FOR STRATEGIC MANAGEMENT AND CONTROL
Name of the student
Course name
Course ID

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Accounting for Strategic Management and Control
Table of Contents
Introduction................................................................................................................................3
Question 1: Company’s strategic value proposition? Discuss in terms of personnel, resources
and activities performed.............................................................................................................3
Question 2: Describe the value chain structure of the organization...........................................5
Question 3: Does the company appear to have more of a fixed or variable cost structure........5
Question 4: What measures or key success factors would you consider important to evaluate
the performance of this company?.............................................................................................6
Question 5: What risk factors are evident in this case?.............................................................7
Conclusion..................................................................................................................................7
Reference list..............................................................................................................................8

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Accounting for Strategic Management and Control
Introduction
The study is going to analyse mainly the development of strategic value proposition in
terms of personnel resources and activities that are being performed by the company Key
West key Lime Pie Company that is being owned by a temperamental owner. The value chain
analysis that has been done for the company will definitely increase the scope of the study to
indulge in the policies that are being taken by the company. The analysis of the fixed and
variable costs will underlie the development and resources allocation that will help in the
development of costs structure.
Question 1: Company’s strategic value proposition? Discuss in terms of personnel,
resources and activities performed
Resources
One of the key findings that have been witnessed from the activities of Key West key
Lime Pie Company is that they have stretched out their resources in multiple location
including the shipping facilities and have not seen the face of profit. Marcus believes that the
store is having accumulation of other and third party products that are not at all related with
the production of lime pie. However, Marcus believes that taking good strategies and placing
the manufactured pies in correct order will make the business highly successful (Appelbaum,
Kogan, Vasarhelyi & Yan, 2017). On the other hand, through the conversation with Marcus it
has been seen that the margin of the profitability that is earned from selling the third party
products is basically 20-25%. These products are utilising the vast majority portion of the
shop which was supposed to be a pie specialist shop.
Activities
Key West key Lime Pie Company is even not focussing on the quality of the products
that are being manufactured. The key lime pie is made up of pie filling powder that should

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Accounting for Strategic Management and Control
not have happened as it has been awarded as the best pie company by APC and they should
use more of natural products. The cost of making a lime pie is around 3 dollar and 77 cents.
Jim sells the pie at $4.50 cents (Bedford, Malmi & Sandelin, 2016). Big pie is the retail shop
for Key West key Lime Pie Company and that store actually ships the pie for broader
perspective. The revenue that has been generated from the business has been seen as $1.4
million and non-branded products generate $250,000.
Personnel
The company owner is not having that much level of communication and the video is
clearly showing the fact the owner is very rude with his employees. Tammy is one of the key
employee of the organisation and remuneration that she is receiving is just $300 per week.
Even the organisation is not being able to accept new orders as the company is running low
of the raw materials. For just $300 per week she has to done everything that is hard to
maintain. Even Jim does not have any secret recipe and the crusts that are being used are
easily available in the market. About 40,000 pies are being produced by the company every
year.
Suppliers New entrants Substitution Customers Rivalry
The suppliers of
the raw
materials are
not going to
increase their
communication
and the supply
The new entrant
in the pie
business will
automatically
increase the
development of
business but the
The substitution
for the company
is having high
chance of
getting into the
business
because of the
Customers are
really
concerned with
the quality of
the products but
the quality that
the Key West
The company is
becoming the
rival to its own
as they are
using more
amount of bad
quality of

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Accounting for Strategic Management and Control
is not at all
helping in the
development of
business.
way Key West
key Lime Pie
Company is
doing business
is not at all
ethical in
nature.
fact that the
quality of the
products that
are being
manufactured is
not up to that
mark.
key Lime Pie
Company is
using is under
doubt.
products.
Question 2: Describe the value chain structure of the organization
The margin of the company is not increasing by huge margin by gathering unused and
third party things would have decreasing the margin and profitability of the company. On the
other hand, through the development of business, it is important for increasing the
profitability of the organisation. Marcus has increased the salary of kimmy to $1000 per week
so that the company is going to increase the development of resources. Marcus identified the
things that are not working for the company and improving them helped the company in
increasing the revenue of the company. The development of process and using natural
ingredients will increase the quality of the products that will increase the revenue of the
company. The profitability is increasing for the company and it is long time profitability is
improving the condition of the situation.
Question 3: Does the company appear to have more of a fixed or variable cost structure
The company is giving payroll tax of $70,000. Apart from this the company is not
having any cash to pay to banks as it is having debt a day. 80% of the revenue of $1.4 million
comes from selling pies having high margins and the retail store named as Big Pie is having
20% revenue contribution. More than 60% of the space is given to those business that are not

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Accounting for Strategic Management and Control
generating any kind of revenue and is also not having high rate of margin. The payroll tax
and operating cost of that 60% space is the fixed costs that the company is bearing.
Every year the renovation costs of the retail store is around $20,000-$25000 and not
only this, the store is also having huge dry ice to refrigerate the products that will be
transformed through shipping. By upgrading multiple locations the company is losing most of
the earned revenue. The process that are being used in this company is backdated and
upgrading them is one of the biggest costly. The employee costs is one of the variable costs.
The big pie store is having profit of around $65000 and the cost of operation of this store is
around $90000. This is itself one of the biggest variable costs that the company is having in
their business.
Question 4: What measures or key success factors would you consider important to
evaluate the performance of this company?
The decision that has been taken by Marcus to invest $150,000 in the business that
will help in the development of the business. Marcus will be aiming to increase the
development of business bring in some the decision will bring some of the working capitals
in the business. The main success factors for the business is that Marcus is going to believe in
product, process, and the people. Moreover, the development and up gradation of the store
will definitely bring in more amount of development to the store. Giving incentives to the
employees will allow the employees to ensure that they are doing only one job. Another
success factors that has been identified is that every employee will get a piece of pie they are
making. The new strategy that Marcus took is that from now on they will not be the pie
assembler but they will be pie maker. The big pie store is having profit of around $65000 and
the cost of operation of this store is around $90000. The company is losing more than $25000
every year among rent, utility, labours and other factors. One of the most effective decision is
that the retail stores is not generating any kind of revenue.

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Changing the layout of the business and making the business more live for the
consumers will help in improving the business. It is important for the development of the
business and the change in layout has increased the profit margin of 80-90%. Making own pie
crust will bring in better development in the business that will not only increase the revenue
of the business but will also increase the quality of then products.
Question 5: What risk factors are evident in this case?
One of the major risks that has been seen in this case is that the lack of
communication and lack of using working capitals. When Marcus took the decision to invest
in the business, he took the decision to bring some live for the business. They are taking the
advantage of home-made crust that will definitely increase the development of revenue of the
company. On the other hand, upgrading the technology and the price of the products is going
to increase the revenue of the company. One of the risk that is associated with the business is
the huge lack of operational management. But the decision that has been taken by Marcus is
doing great job by increasing employee satisfaction. Moreover, the risk of employee
satisfaction is one of the risking factors that has been identified as the factor that is not
increasing the revenue till date. The renovations were required in order to increase the
development of the business but apart from these increasing the employee motivation and
employee satisfaction is important to increase the development of the business.
Conclusion
The whole study is studying the fact that in order to increase the development of the
business it is important to indulge the development of problems that are bringing the
negativity within the business. On the other hand, increasing the solution will never increase
the development of business it has been seen that Marcus is bringing some lives in the capital
so that business will improve.

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Reference list
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