Company Background
In April 2008, six Brescia University College students: Kathryn Kielstra, Breanne MacHardy, Lynn Mockler, Tara Price, Sunali Swaminathan and Ruth-Elen Tisdale were nearing the completion of their Management and Organizational Studies Program. They were considering launching Pack-iTS, an entrepreneurial venture. Pack-iTS would be a healthy lunch preparation and delivery service, serving elementary schools within the Thames Valley District School Board in London, Ontario. The six-person partnership had$25,000 to invest, but needed to know if additional financing would be required.
The Pack-iTS lunch program would provide flexibility for parents and children. Parents would select from a variety of menu options, as well as the regularity. The lunches would be prepared and assembled at a Pack-iTS facility. The lunches would then be marked with the teacher’s name and put into a container for delivery. A consideration for the partners was to position the program as a fundraising initiative, where a portion of the gross sales would be donated to the school.
The main objective of Pack-iTS is to promote healthy eating habits and reduce parental stress associated with planning. According to results from a Canadian Community Health Survey, obesity rates among children and adults had increased substantially during the past 25 years. In 1979, three percent of children aged two to 17 were obese. By 2004, eight percent were obese.
The partners were looking to gain useful business experience that would help them decide on their future careers. The constraints that were established early on were that all six students would remain full-time students. Because of this, all six girls would limit their involvement to approximately 10 hours per week.
Industry Analysis- Porter’s Five Forces Bargaining Power of Suppliers: The suppliers play an important role in the food preparation industry. The costs of materials and production have a direct impact on the selling cost of the product. With competition being high, selling cost will be the difference in customers choosing this program. Pack-iTS is priding themselves on a healthy lunch options, they must make sure that all products used in their lunches are healthy; these products usually are more in cost. Bargaining Power of Buyers: In any service industry the power of the buyer is the most important aspect, without the buyer you have no business. Canadian society is becoming increasingly concerned with healthy eating choices and work/life balance of parents. Pack-iTS could be a possible solution to these concerns. Competition: As stated in the case, none of the 154 elementary schools within the TVDSB operated cafeterias; as a result, parents either chose to send a lunch with their child or registered their children in one or more of the hot lunch programs available. Packaged lunch options, like Kraft and Schneiders sold prepackaged lunches designed for children. The price for these lunches ranged from approximately $2.59 to $3.99. Pack-iTS has determined that they would sell their lunches for $5.00, a large increase above its competitors. Threat of New Entrants: The threat of new entrants in the food preparation industry is moderate to low. The Ontario Student Nutrition Program, which was already in existence, provided funding for communities wanting to provide nutritious food. Threat if Substitution: Substitution is unlikely is this industry, school lunches and prepackaged food are a staple in the country.
SWOT Analysis When turning an idea into an opportunity, you need to look at all strengths, weaknesses, opportunities and threats, Pack-iTS should consider the following: Strengths | Weaknesses | Focus on Healthy Eating | Lack of Experience and Knowledge | Work/Life Balance for Parents | Six Person Partnership- Limited Involvement | Convenience | Experimental | Flexibility in Regularity | Cost | Different Meal Options Daily | 38 Week Sales | Fundraising Initiative | Fundraising Initiative |

The strengths of this concept are a strong focus of healthy eating in Canada. According to Linda Dietrich, regional director of Central and Southern Ontario Dieticians of Canada, “nutrition affected children’s physical and psychosocial well-being, as well as their academic accomplishments. Making healthy food more readily available to children during the school day would likely have a positive impact on their learning.” Work/life balance and convenience for parents is also strength. With the increasing number of families with both parents working, not having to worry about school lunch is one less hassle. The flexibility in regularity, as well as the different meal option daily also helps to cater to the needs of the parents and children. The fundraising initiative, in my opinion, can be classified as both strength and a weakness. All elementary schools participate in one or more fundraising initiative during the school year. If Pack-iTS were to position themselves as a fundraising initiative, they may be able to get into more school, but their profit would be less. Other weaknesses include the lack of experience and knowledge of the students. None of the partners have any experience in the food preparation industry or in running a business. Because the girls are all still full time students, they want limited involvement, broken down to 6 hours per week. This is certainly not enough time to get a business up and running. As students, this business venture is strictly experimental, there has not been enough thought put into the operations of the business.
Another major weakness is that this is only a 38-week school year. The partners would need to have enough sales in 38 weeks to keep the business running for the whole year. Because of this, the cost of a daily lunch is more than its competitors. Opportunity | Threats | TVDSB- No Cafeteria | Hot Lunch Days | No Funding through OSNP | Packaged Lunch Options | Obesity in Children Rising | Home Made Lunches | Focus on Healthy Eating | | Income Rising | |

There are significant opportunities for a business like Pack-iTS, the fact that TVDSB does not have an operating cafeteria is a major opportunity. Parents are responsible for providing lunch to their children. The convenience of Pack-iTS would be a great help. Also, TVDSB does not have funding through OSNP (Ontario Student Nutrition Program). Because of the growing concern of obesity in children and the focus on healthy eating, currently not being provided in Thames Valley, Pack-iTS can definitely succeed if planned correctly.
Opportunities for Pack-iTS also include the rising family income in London, Ontario. According to the case, in 2005, the median income level of individuals and families was $25,800 and $66,100 respectively. The London, Ontario, median family income has increased 13.6 percent between 2001 and 2005. While there are many opportunities, there are also threats to starting a business like Pack-iTS. The main threats revolve around competition. Hot Lunch Days are already in existence at the schools, although these might not be healthy alternatives, some parents may not feel that Pack-iTS is necessary. Packaged lunch options are also a threat, as discussed in competition, the prepackaged lunches sell for less then what Pack-iTS will be charging. Lastly, the threat of homemade lunches is always present. For the parents that feel that healthy lunches are important, they may want to make it themselves and send it to school with their children. For the cost of a daily lunch with Pack-iTS, parents could buy double the amount and make the lunches themselves.
Financial Analysis Given that the partners have $25,000 to invest and the primary question before starting Pack-iTS is, if external financing is necessary it is important to assess their sales strategy and financial situation. The partners have decided to use “backpack mail” as their primary sales strategy. They would distribute forms directly to children to take home to their parents on a monthly basis. This strategy may not be the best way to inform parents of the program. Other options included a website, promotional packages for principals and attendance at the TVDSB fundraising fair. Although, these strategies would have cost more, I believe the payoff would have been better.
The lunches were to be sold at $5.00 per lunch for 38 weeks. The partners decided to target 7 schools with an average population of 400 students. They estimated participation is as follows, predicting that only 50% of the students will participate in the program: # Lunches Per Week | Proportion of Students | 0 | 50% | 1 | 30% | 2 | 10% | 3 | 6% | 4 | 2% | 5 | 2% |

Given the estimated participation, the following production would be required, resulting in 344 lunches being produced every week: # Lunches Per Week | # of Students | # of Lunches needed weekly | 0 | 200 | 0 | 1 | 120 | 120 | 2 | 40 | 80 | 3 | 24 | 72 | 4 | 8 | 32 | 5 | 8 | 40 | TOTAL | 400 | 344 |

The startup costs as indicated by the partners would be approximately $22,195.00. The monthly expenses are approximately $7,485.88.
Strategic Issues and Recommendations The strategic issues that the Pack-iTS company faces are: 1. Would additional financing be required? 2. The likelihood of obtaining external financing 3. Should the partners proceed by the end of April? 4. The limitation of workable hours. 5. The cost of operations. 6. The presence of growth
In assessing the concept of Pack-iTS, I do believe that the idea is good, but the execution at this time is poor. The main concern for the founders of Pack-iTS is time, the girls have put a strict time constraint on the amount of hours they are willing to work. This is a terrible detriment in any start-up company. Also, the lack of knowledge and experience of the students is also a detriment. None of the founders have any experience in the food preparation industry or in business itself. Additional staff would be required in order to run day to day operations. Financial aspects also need to be greatly considered. The partners have $25,000 to invest, which would cover the start up costs, but they would need additional financing to cover the daily operations and growth. My recommendation to management would be to hold off on this business venture until the partners have more time and experience to devote to this idea. The other option the partners have is to launch Pack-iTS as a non for profit organization.