JAMBA JUICE: MIXING IT UP& STARTING AFRESH

Introduction:

Juice Club was founded by Kirk Perron in April 1990 who has opened the first store in San Luis Obispo, California. The Juice Club started with a franchise strategy and opened its second and third stores in Northern and Southern California but in 1994, the management decided to expand the business by adding more company-based stores as they want more quality and operating control. In 1995, the company decided to change its name to Jamba Juice Company to differentiate itself from the competitors who have also started offering similar products in the market.

In 1999, Jamba Juice company merged with a smoothie retail chain, Zuka Juice Inc. In March 2006 Services Acquisition Corp. international acquired Jamba Juice Company in $265 million while in November 2006, the company went public as Nasdaq-traded JAMBA. The company had to experience significant leadership changes in August 2008 when Steve Berrad started working as interim CEO.

Overview and Issue:

Few of the issues that Jamba currently facing are decrease in revenue, loss for the year 2016 and declining stock prices which is no doubt a major concern of the investors. Company attributed these issues to expenses incurred due to adjustment in business model which is not likely to occur again and relocation of the headquarter of the company. Keeping in view the current situation o the company, the major shareholder, Engaged Capital demanded the company to reduce its cost and close all its loss-making stores.

The CEO of the company announced that they are going to shift their corporate office from California to Texas, which is relative less expensive state. Restructuring of the organization and change in upper management was also announced by the CEO. In his view, they are looking for leadership team that can support them in changing the company business model from company owned offices to full franchised model.

In January 2017, Jamba announced new protein smoothie line with the help of Harley Pasternak, who is professional fitness trainer. The question is, whether introduction of new product line and shift in business model can help Jamba in retaining current customers and attracting new customers especially in a highly competitive business environment where Macdonald’s, Burger King and Dairy Queen and other known brands are offering the similar products.

Current Conditions and Strategies:

In December 2008, Berrard continued working as the chairman of board of directors while James D. White started working as new CEO and President of the company. During 2009-2011, James D. White worked to implement following “BLEND 2:0 strategic priorities”.

  1. Get rid of the short-term loans.
  2. Expanding the menu by introducing new products.
  3. Mixing up the product line – introduction of protein smoothie line which is developed with the help of professional fitness trainer.
  4. Changed the business model by shifting to a franchise business model,
  5.  Increasing international presence through new and existing formats and
  6. Commercializing product line
  7. Implemented an organized expense reducing strategy and comparable sales.

In 2012, James D. White focused on achieving targets of next phase of growth, called BLEND Plan 2:0. By 2016, this plan has developed into “BLEND 3:0. The focus of this plan is to become the top of mind brand for existing as well as potential customers by improving Jamba’s image in the eyes of their target market as a healthy food and beverage brand. By 2017, it has become the world’s No.1 smoothie brand.

Environmental and Internal Analysis

Good nutrition plays an important role in living a healthy life. Now a day people are getting more conscious about their health as more knowledge is available through internet and other media. More education and awareness about health-related issues compel people to opt healthy life style. That is why trend is being shifted towards eating healthy food. This trend compels the food industry to add healthy food options in their menu. With this on-growing competition, strong competitors like Macdonald and others that were not following healthy food also introduced fresh smoothies.  

The case has shown that Jamba Company has made intense strategic moves to cope up with the rising competition in healthy lifestyle market like extending its healthy food menu, adding meals for kids, introduction of new protein smoothie range with the help of celebrity fitness trainer Harley Pasternak, experimenting new delivery channels (social media, traditional and non- traditional store location) and transition from company owned stores to a full franchise model etc.

Despite taking all these strategic shifts in the company’s policies, the company has to face the decline in revenue and a loss for the year 2016. Over the years, as Jamba company expands, it faces many challenges to manage the pace with the innovation by picking the direction that can help in capitalizing on the company’s core competencies.

Other factors that crucially affect the company’s overall performance were:

  1. Validating the new ideas by testing them in the market place
  2. Financial recourses to invest in sustaining needed operational components
  3. Availability of human resources to cope with increased work load

These internal and external forces are a crucial part of every industry and influence the competitiveness of every firm. Here we have used SWOT Analysis and Porter’s Five Forces model analysis to ascertain the competitiveness of Jamba Juice company in the industry.

JAMBA JUICE SWOT Analysis

JAMBA JUICE PESTLE analysis

JAMBA JUICE Porters five forces model analysis

Market AnalysisJAMBA JUICE: MIXING IT UP& STARTING AFRESH Introduction: Juice Club was founded by Kirk Perron in April 1990 who has opened the first store in San Luis Obispo, California. The Juice Club started with a franchise strategy and opened its second and third stores in Northern and Southern California but in...Capital Budgeting Techniques and Investment analysis