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Organic Valley

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Submitted By periksson4
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Case Study #1: Organic Valley

1. The reason behind Organic Valley’s supply crisis was the increase in demand for organic milk, which had grown in double digits for several years and it simply outran the supply.

2. The crisis had a negative effect on Organic Valley’s customers because most of their customers were small stores that felt they were being underserved. The reason they felt like that was because Organic Valley had Wal-Mart as a customer and the small stores felt like they prioritized Wal-Mart over them, resulting in the reputation being damaged.

3. Organic Valley had built its around independent organic groceries, which represented 45% of their sales. The rest of their customers were mass-market accounts.

4. Wal-Mart was Organic Valley’s third-biggest customer, but it was a love-hate relationship. They were grateful that Wal-Mart was able to sell that many of their products, take the company to the next level, and teach them certain techniques, but some employees were unhappy about supplying to Wal-Mart for ethical reasons and they didn’t want to contradict themselves by supporting the retailer that was known for killing small businesses.

5. The concern they had with Wal-Mart was that if they continued to work with Wal-Mart, the demand was going to get to a point where they would have to prioritize them over small independent stores. They were also afraid of the fact that Wal-Mart was going to ask them to cut their prices eventually.

6. Organic Valley had a choice between either mass-market accounts, such as Wal-Mart, or small natural food stores. If they would’ve chosen to go with the mass-market, they knew that they would eventually wind up with only serving Wal-Mart, which meant smaller margins due to Wal-Marts price cutting demands. If they ‘d chosen the small natural food stores, they wouldn’t have compromised their

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