Section A: Case Study -

Remark: Of its nature, the case questions don't lend themselves to "model answers". What we are looking for in the answers to these questions is a level of maturity, and the concepts, theories, and logic that they present to support your discussion. Classification of marks is based largely on how a student shows evidence of critical or evaluative thinking, evidence of synthesis, etc.

*It is highly suggested to use the internet to find relevant information to supplement your answers. Relevant information is not limited to the case and can be sourced elsewhere.

eavenly Pet is an entrepreneurial venture based in Hong Kong, S.A.R. Founded by schoolmates Tommy Leung and Paige Chan in 2015, the company aims to provide customers with "the highest quality cat and dog foods to ensure that animals will lead a heavenly life". Heavenly Pet slowly but surely built up a reputation for selling organic, environmentally sustainable, and healthy pet foods. Heavenly Pet does not sell prepackaged pet food from large corporations; instead, based on the cat or dog's specific dietary needs, the company mixes specialized batches of food and offers customization of their products. By 2017, Pet Pet's revenues had grown over 80%. The company had become so popular that it had expanded into five brick-and-mortar outlets across Hong Kong as well as an online portal for e-commerce. It was projected that the company will have an annual revenue of 30 million HKD by the end of 2018.

Although the business was blossoming, Tommy and Paige felt that growth of the company could expand even more healthily. In order to sustain business popularity, profit, and longevity, Tommy and Paige felt that they needed to explore their options to strategically grow their business. They could not help wondering whether it was viable or worthwhile to global and explore the international market. And, if they did, which country should they consider on their list of expansion? Should they extend operations to other developing countries in Asia, or enter larger markets such as the United States? If international expansion wasn't worthwhile, what else could they do to further grow their company? Tommy and Paige felt overwhelmed with the number of decisions they had to make at the present conjuncture.

How The Idea Became a Business

Growing up, Tommy had always wanted a pet - in particular, a siberian husky who were playful dogs (albeit a bit loud). However, his parents refused on the basis that their flat was too small and there was just no space to accommodate such a large dog. Nevertheless, Tommy couldn't help but noticing that despite the lack of space, there were many dogs around Hong Kong. He then became determined to open his own pet shop when he was financially able to.

Paige, on the other hand, had a French bulldog growing up. Unfortunately, it passed away relatively young in life due to digestive diseases. Paige was convinced it was due to the preservatives in the dog food and vowed one day to open a store that provided natural and high-quality foods for pets. When the two of them discussed opening up the business, they both agreed that it had a good chance of succeeding because of the attention Hong Kong customers gave their pets and their willingness to spend on their furry friends.

In surveying the existing competitors, Tommy and Paige noticed that many of the pet products in existing stores were big name brands and were mass produced with low quality meat by products, high sodium, and preservatives. Paige noted "In the past, there were not that many pet food choices for Hong Kong pet owners to have access to. Now, with the increase in technology and globalization, the access for higher quality products is much better, and so is the level of awareness and education of pet owners to buy higher quality products." Tommy added, "having a pet is also a noticeable investment, both financially and emotionally. Pet owners are willing to pay for and extend their pets' lives because they have an emotional connection with their cats or dogs."

Tommy and Paige envisioned a great business idea in selling authentic, organic, high-quality pet food and products in Hong Kong. They hypothesized that pet owners in Hong Kong would have the motivation to pay premiums for their pets due to having an emotional connection with them. Thus, Heavenly Pet was born. It was determined that the pet supplies in the company had to meet certain criteria, mainly: 1) be organic and preservative free, 2) use all-natural ingredients, 3) be cruelty free, and 4) be environmentally sustainable.

While Heavenly Pet initially sourced pre-packaged pet food from high-quality suppliers, the owners quickly realized that if they produced their own pet food they would get a competitive advantage in the market. Additionally, Tommy had a good idea about how pet food was manufactured, based on his internship in the pet foods department at Mars Incorporated, one of the largest producers of pet foods in the world. Therefore, Tommy and Paige spent almost 8 months working with a licensed veterinarian in perfecting ideal blends of pet food ingredients for their cat and dog food lines. Customers had the option of purchasing premixed blends of the pet food or blending their own chosen ingredients for their own mix. This way, customers had direct input as to what they wanted to include in their pets' diet. All ingredients were sourced through local suppliers. While some popular pre-mixed blends of pet food were made available at the physical stores, larger orders and heavily customized blends were packaged a factory in Tai Po and delivered to homes and/or pickup locations. Tommy headed pet food production at the factory while Paige managed the major functions at the Heavenly Pet stores as well as online.

Sample Pre-mixed Blends

Premixed Blends for Dogs

Ingredients

The Energy Booster

Organic chicken, organic sweet potato, organic spinach, organic whole grains

Gluten Free Mix

Organic almond meal, organic brown rice protein, organic carrots

Premixed Blends for Dogs Ingredients The Energy Booster Organic chicken, organic sweet potato, organic spinach, organic whole grains Gluten Free Mix Organic almond meal, organic brown rice protein, organic carrots Premixed Blends for Cats Ingredients Sleek and Shiny Fur Mix Organic salmon, organic mackerel Sample Pick and Mix Option Proteins Vegetables Grains Vitamins Organic Chicken Organic Carrots Organic oats Omega-6 Fatty Acids Organic Brown Rice Organic Sweet Organic brown rice Calcium Protein Potatoes