Nutrisystem Final Presentation FINAL

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NutriSystem Inc.:

1 NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek Nutri S ystem Inc.

Agenda:

Agenda Key Intelligence Topics Business Intelligence ( NutriSystem ) STEEP Analysis Patent Analysis Competitor Profile Financial Analysis Strategic Models Key Findings NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 2

Business Intelligence:

Business Intelligence NutriSytem: Internal Environment 3 NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek

Company Background::

Company Background: NutriSystem , Inc. capitalizes on America’s mounting problem with obesity by offering customers a home-delivery meal program which includes healthy, portioned controlled, pre-prepared meals. The company is currently engaging in the global marketplace NutriSystem , Inc. is a publically traded company on the NASDAQ stock exchange 4 NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek

Business Intelligence:

Business Intelligence Key Intelligence Topics: Methodology: Collect open source information Competition: Weight Watchers Pharmaceutical Companies ( GlaxoSmithKline ) Town Sports International Holdings EDiets.com 5 NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek

Summary/History of Business::

Summary/History of Business: NutriSystem , Inc. was founded in 1971 by Harold Katz after During the 1990’s NutriSystem was faced with numerous lawsuits alleging the food caused gallbladder problems NutriSystem rejuvenated itself in 1999 when it launched its website and saw higher revenues. NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 6

Internal Key Points: Strengths :

Internal Key Points: Strengths NutriSystem aligned itself with shopping network QVC in 2001 NutriSystem expanded from QVC to offer products similar to gift cards at Walgreens… NutriSystem offers the best value for its products NutriSystem also offers products for vegetarians and people with type-2 diabetes NutriSystem’s sales have typically come from female consumers; however, the company is willing expanding the market to males as well. NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 7

Internal Key Points: Weaknesses:

Internal Key Points: Weaknesses NutriSystem solely rely on third-party food manufacturers NutriSystem relies on a number of third-parties for internet access Roughly 5% of NutriSystem’s revenue is generated from QVC, though the contracts renew annually Some of NutriSystem’s counselors do not have extensive training or certification in nutrition, diet or health fields and have only participated in training by NutriSystem NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 8

STEEP Analysis:

STEEP Analysis External Environment 9 NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek

What is STEEP Analysis:

What is STEEP Analysis 10 NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek

STEEP Analysis:

STEEP Analysis General Population and Lifestyle T rends: 32 U.S. states with 25 % obesity prevalence Healthier Eating habits - 33 % improvement since 2008 Approximately 25 % are currently dieting 60 % admit not to being able to control their diets 11 NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek Social

STEEP Analysis:

STEEP Analysis 12 NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek Social 60 % of Americans suitable targets for diets

PowerPoint Presentation:

NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 13 Obesity Epidemic Social Implications: Product development Marketing campaigns

STEEP Analysis:

STEEP Analysis Threats : Manufacturing obesity treatment drugs Vivus Inc. Qnexa possible obesity panacea Asked for regulatory approval December 2009 Genetic engineering -> Obesity treatment Changing human metabolism 14 NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek Technologic al

STEEP Analysis:

STEEP Analysis Short-Term Economic downturn Low consumer confidence and high unemployment Lower demand for weight loss products 15 NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek Economic

STEEP Analysis:

STEEP Analysis Long-Term (Weight Mgmt and Weight Loss market Growth) 16 NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek Economic Global Weight Management Market’s Value by 2014 584 billion USD!

STEEP Analysis:

STEEP Analysis Health Care Reform: Lowering insurance premiums for slimmer people Michelle Obama’s Let’s Move Campagin More access to healthier food Guidelines for healthier lifestyle 17 NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek Political /Legal

Patent Analysis:

Patent Analysis 18 NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek

Patent Analysis:

Patent Analysis NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 19

Industry-related patents:

Industry-related patents Patents for Product Expansion: Weight Loss Composition for Burning and Reducing Synthesis of Fats Dietary supplement to enhance weight loss Highly referenced patent (41 times) Expiration date 2015 Dial Tracker Scale Unique pocket-sized weight loss “PDA” NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 20

Competitive Profiling:

Competitive Profiling 21 NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek

Weight Watchers International:

Weight Watchers International 1963: Founded by Jean Nidetch 1978: Bought by Heinz Company 2001: Become publicly traded 2005: Acquires full ownership of WeightWatchers.com Nutrisystem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 22

Weight Watchers: Revenue:

Weight Watchers : Revenue Weight loss corporation utilizing: Community meetings Product sales Internet support Licensing and endorsing 23 Nutrisystem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek

Weight Watchers: Strengths:

Weight Watchers: Strengths High Profit Margin Good consumer and investor confidence Unique weight loss strategy Acknowledgement of adjusting to internet demands NutriSystem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 24

Weight Watchers: Weaknesses:

$1.82 billion in debt Severe lack of technological redundancy Reliance on consumer confidence and stable market NutriSystem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 25 Weight Watchers: Weaknesses

NutriSystem Financial Analysis:

NutriSystem Financial Analysis NutriSystem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 26

Liquidity:

Liquidity Steady increase in NutriSystem’s current ratio Investment in the Hispanic community Weight Watchers is struggling due to its current liabilities Nutrisystem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 27 Current Assets Current Liabilities Current Ratio

Leverage/Solvency :

Leverage/Solvency NutriSystem has no debt Weight Watchers is $1.82 billion in debt Nutrisystem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 28 Total Debt Shareholder’s Equity Debt to Equity Ratio

Profit Margin:

Profit Margin NutriSystem and Weight Watchers have steady profit margins Weight Watchers still fiscally strained; despite high profit margins Nutrisystem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 29

Strategic Models::

Strategic Models : SWOT, 9 Forces Model, Growth Vector Model NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 30

SWOT Analysis:

SWOT Analysis NutriSystem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 31 Outsource Operations Increase in demand for organic

Strategies:

Strategies NutriSystem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 32

Porter’s 5 Forces Model:

Porter’s 5 Forces Model NutriSystem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 33

9 Forces Model (5+4 STEEP):

9 Forces Model (5+4 STEEP) NutriSystem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 34

STEEP Threats:

STEEP Threats Overall US populace may adapt healthier lifestyles High unemployment rates Rising cost of food NutriSystem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 35 Social / Consumer Shifts International / Economic Shifts

5 Forces Threats:

5 Forces Threats Saturated market Low levels of product differentiation Many options for consumer NutriSystem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 36 Degree of Rivalry Threat of Substitutes

Growth Vector:

Growth Vector Diversification in Asia NutriSystem expands into Japan Use similar product lines and expand into other Asian markets Market Extension Expand advertising to Spanish media outlets NutriSystem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 37

Key Strategies:

Key Strategies Retain cost leadership in short term Adapt and expand the beauty consultant model Increase employee training Expand organic niche market NutriSystem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 38

Strategic Implications:

Strategic Implications Lack of expansion will keep profit margins low Organic market may become overly saturated Loss of market share due to medicine such as Qnexa NutriSystem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 39

Key Findings:

Key Findings NutriSystem’s management has a strong marketing background Future growth in the weight loss industry Weight Watchers remains fiscally strained NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 40

PowerPoint Presentation:

NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 41 Contact Information : Riaz Ahmad ahmad 79 @mercyhurst.edu

PowerPoint Presentation:

NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 42 Contact Information : Marek A. Chodkiewicz mchodk61@mercyhurst.edu

PowerPoint Presentation:

NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 43 Contact Information : Alexander Leigh Leigh81@mercyhurst.edu

PowerPoint Presentation:

NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 44 Contact Information : Dominic Zronek dzrone80 @mercyhurst.edu

PowerPoint Presentation:

NutriSytem Inc. Final Briefing: Ahmad, Chodkiewicz, Leigh, and Zronek 45 Questions and Answers

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