Saline Salt

This was the first case writeup I ever did.

Question: What are Lawrence and Stephen’s biggest problems?

 

Answers: Lawrence and Stephens’ biggest problems were their dependence on Silver Salt Granulating Company and not producing enough salt.

 

Supporting Case Observations:

  1. Dependence on Silver Salt Granulating Company
    1. Source of dependence (p. 2, ¶ 3)[1]:
      1. Silver Salt bought first batch of salt, offered to buy all salt production
      2. Lawrence and Stephens accepted
      3. Only one buyer; became dependent on this single buyer
    2. Silver Salt is middle man; they refine and sell the salt (p. 2, ¶ 3):
      1. Saline Salt needs a middle man as they don’t have the facilities needed to refine and sell the salt on their own. [2]
      2. As the agriculture system changes, there could be fewer middle men to sell salt[3]; Saline Salt must keep the middle man they currently have in order to maintain sales.
    3. Not producing enough salt
      1. Saline Salt pans only produce about 3220 tons of salt a month (p. 2, ¶ 2)
      2. Sea salt production varies widely due to changes in wind speed; production can change from year to year (Grini et al., p. 13, ¶ 3)
      3. Solar evaporation method takes a long time and is inefficient
        1. Takes a month for a pan to create 805 tons of salt (p. 2, ¶ 2)
        2. Requires large amounts of land, land is expensive to buy more of
      4. Labor costs more than it used to; minimum wage rising[4]
        1. Spending more money on labor

 

Weakness of position:

  • Increased sales; market thriving; higher demand for salt
  • Salt extraction gets more efficient over time; might be able to produce more salt
  • Increased demand for salt water; government wanted to convert salt water to fresh water because of depleting fresh water supplies[5]

[1] Saline Salt Case Study

[2] Henehan, Brian M. “Eliminating the Middle Man”,  http://agribusiness.dyson.cornell.edu/SmartMarketing/pdfs/henehan1-03.pdf

[3] See source above

[4] US Department of Labor, Minimum Wage Chart (http://www.dol.gov/featured/minimum-wage/chart1)

[5] 42 USC Chapter 19; Saline Salt and Salt Waters