Pasta Perfect Inc.

Case Teaching Package

A case teaching package is available for this case. It includes strategies for case presentation, solutions to the assignment questions in the case, and suggestions for the most effective ways to work this case into your course.

Length

This case is 11 pages in length, and its case teaching package is 9 pages.

Abstract

Pasta Perfect is a chain of retail stores that sells fresh pasta and sauces to take home. By late 1988 there were ten shops in high-traffic areas of St. Louis and four more in Chicago. The company's plan was to cluster groups of stores in large metropolitan areas to provide economies of scale in preparation and delivery, as well as advertising and store supervision. Pasta Perfect has grown rapidly, but has not been able to achieve positive cash flow.

By 1988, new technology for packaging fresh pasta has enabled other companies to sell similar products in supermarkets. Tom Walker, president and founder of Pasta Perfect, recognizes this threat to Pasta Perfect's success; but at the same time, he sees a potential opportunity for his company to begin to market its products through supermarkets instead of, or in addition to, its retail stores.

The board is faced with the decision of whether or not to make the change, which is made difficult by various business as well as ethical factors.

This case is intended for an undergraduate business strategy or entrepreneurship course or elective course in competitive environments or managing adversity. The case is positioned to discuss the growth and competitive positioning issues facing an early-stage company in an emerging market segment and on the brink of possible failure.

This case can also be used to discuss the role of the entrepreneur in starting and growing a business and the legal and ethical obligations involved with a proposed change in strategy in a public company.

Study Questions

1. What has Pasta Perfect done well to date?
2. What has gone wrong and why? What are the root causes? Can performance problems be fixed?
3. What are the competitive forces in the industry affecting Pasta Perfect?
4. What are the key success factors in the specialty store segment?
5. Describe Tom Walker's marketing strategy. How do you think it has worked so far?
6. What would it take to be successful selling fresh pasta through supermarkets? How likely is it that Pasta Perfect can achieve success in this distribution channel?
7. Does Tom Walker have at hand any other alternatives worthy of consideration?
8. What recommendations would you suggest for Tom Walker and the board at this time?
9. What is Tom Walker's obligation to the shareholders and the board? What is the responsibility of the board members to the shareholders?

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