Canadian Distribution Rights To The Nutrifusion Product Assignment

Canadian Distribution Rights To The Nutrifusion Product

Instructions

Canadian Distribution Rights To The Nutrifusion Product

Question Description

It was early June 2010, and two months had passed since Heather Larson had been granted exclusive Canadian distribution rights to the Nutrifusion product. She had been very busy trying to develop the best strategy for this exciting new product. Nutrifusion had been sold successfully in the United States, and Larson believed it had the potential to earn strong profits and to provide her with a new career; however, as with any new venture, inherent risks were involved.

Larson, in partnership with her father, Jeff Larson, was contemplating the launching of Healthy Life Group (HLG) to market Nutrifusion throughout Canada. The partners wanted to evaluate the product’s financial feasibility before deciding whether to proceed with the opportunity. If they did decide to proceed, HLG would incorporate and begin operations on January 1, 2011.

NUTRIFUSION

Nutrifusion was an intriguing new product in the health-food industry. A patented production process used select parts of the fruits and vegetables, namely the stem and core, and protected micronutrients1 and phytochemicals2 to retain 99.7 per cent of their nutritional value.

The end result was a tasteless powder that could be added to baked goods or to liquids to provide additional servings3 of fruits and vegetables, thereby significantly increasing the food’s nutritional value. Nutrifusion also had the benefits of high levels of antioxidants, was an excellent source of plant-derived vitamins A and C, was 100 per cent natural, and had a shelf life of 36 months. See Exhibit 1 for a comparison of the nutritional value of normal tortilla chips and tortilla chips made with Nutrifusion.

HEALTHY LIFE GROUP

The Partners

Heather Larson was a fourth-year student at The University of Western Ontario. She was working towards a bachelor’s degree in management and organizational studies, with a double major in sociology. Larson had spent the previous summer working as an assistant product manager at Loblaws in the dairy, snack and beverage department. She had been exposed to entrepreneurial activities most of her life since her father had founded and owned several companies. Upon graduation, Larson hoped to have a full-time job in a venture that would allow her to start up her own company.

Larson’s father, Jeff Larson, was eager to support his daughter with her business venture. He offered an array of experience in the retail food industry, including a valuable network of contacts. In 1994, Jeff Larson co-founded Concepts Food and also worked for Cott Corporation. While at Cott, he worked closely with Dave Nichol, the long-time president of Loblaws who launched the “President’s Choice” label.

The pair was involved in the management buy-out of Destination Products, a division of Cott Corporation. Currently, Jeff Larson (no longer working for Cott Corporation) owned Innovative Food Group, a company that specialized in private-label sales and marketing.

Objectives

Larson and her father hoped HLG could earn a profit of $50,000 in its first year of operations, with plans to grow profits by 20 per cent each subsequent year. This growth could be achieved by broadening the product line and expanding into additional stores. Another of HLG’s goals was to help society move towards a healthier lifestyle: the Nutrifusion product would allow Canadians to improve their diets and overall health by supplying servings of fruits and vegetables in products like bagels, chips and cookies, which may otherwise be considered junk food.

Investment

In order to start the business Larson and her father planned to invest $25,000 each, and, in return, each would receive 1,000 common shares. The largest portion of this capital investment would be used to obtain the Canadian patent on the Nutrifusion production process. The company’s law firm, Stikeman Elliot LLP, estimated the drafting of this patent would cost $10,000, and the cost to prosecute the patent into issuance would be $12,000.4 HLG would also incur fees, estimated to total $8,000, to incorporate the business, obtain a master business licence and complete name registration. These start-up costs would be expensed in HLG’s first fiscal year.

RUBRIC
Excellent Quality 95-100%	Introduction 45-41 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.		Literature Support 91-84  points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.			Methodology 58-53 points Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.
Average Score 50-85%	40-38 points More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.		83-76  points Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.			52-49  points Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.
Poor Quality 0-45%	37-1 points The background and/or significance are missing. No search history information is provided.		75-1 points Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.			48-1 points There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met
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