NutriSystem Company Performance - Case Study Example

Introduction NutriSystem Inc is a company that deals with services and products related to weight management. This company has a program that provides free counseling of its clients online. This paper is dealing with the past history of NutriSystem in terms of the products it used to deal with. There is further elaboration of about the founders of the company and its past money issues. This paper also clearly looks at the current performance of the company in terms of finances and the stakeholders that are running it. (Maundy, 2001) Background Founder Research shows that NutriSystem Company emanates from the efforts of one man called Harold Katz. He was an entrepreneur who had only studied up to high school. By the year nineteen seventy he was thirty four years old and was changing from one job to another without success. (Michel, 2008) He was however very hardworking and determined to be a success story. After working for his father in their grocery shop, he later started an insurance business but this too did not last long. A business idea came to his mind after he watched his mother gain and lose weight for a period of time. In his business concept, he would incorporate counseling for clients on weight loss issues. (Michel, 2008) This would be both medical and behavioral based. He thought put all these ideas under one roof where clients would get advice on taking food with low calories would be a brilliant idea. This business idea later materialized and Katz opened a center in Philadelphia, Willow Grove. This was in the year nineteen seventy one. The centre gave clients services on weight loss. The company only had six employees to start with. Money As illustrated earlier on, NutriSystem Company was started by Katz Harold. He used his savings to begin the business. His savings were approximately twenty thousand dollars. Research shows that he later took a mortgage on his personal house. This also was part of the capital which was approximately twenty thousand dollars. Every center of NutriSystem got income from a fee that was charged on clients after being given the services. The charges were not fixed but depended on the extent of the loss of weight on the client. Apart from this income the centers also got money from sale of food that was privately labeled. (Michel, 2008) It was mandatory for the clients to purchase these food products. They were required to have a minimum of five purchases within one week. Analysis shows that this private food product was quite expensive. During the nineteen seventies, the business generally made millions out of the sales and the charges made on clients on each visit made to the centers. (Sparrow, and Hilltop, 1994) From the year nineteen seventy nine, the company performed so well that it was recorded to show growth by approximately eighty percent. During this season the company started operating in the New York stock exchange. By the year nineteen eighty two, NutriSystem company was valued to be approximately three hundred million dollars. This was a huge sum of money compared to the initial input of forty thousand dollars. The acquisitions later incorporated by Katz in eighties started bringing in less returns than expected. By the year nineteen eighty two the total earnings for the company had dropped by approximately one point nine million dollars. In the year nineteen eighty five, the company experienced a loss of approximately seventeen point five million dollars. Names When Katz started the company, it was known as Shape Up, Inc. This was in the year nineteen seventy one. In the year nineteen seventy six, it was known as Weight Loss Medical centers. The name also changed by the year nineteen seventy seven to Nutri-System Weight Loss centers. In the year 1980 it was changed to NutriSystem, Inc. Growth When Katz Harold started the company, he had only one center which was based in Philadelphia. Just two months after starting up the business, he opened another branch and later the third. He however sold the third branch to a franchisee. During the nineteen seventies, NutriSystem was ranked to be one of the fastest growing companies in United States. (Michel, 2008) By the year nineteen eighty, this company had approximately five hundred centers that operated in approximately fifty states in United States. This growth extended until there were eight hundred centers. With this type of growth, the company started having other acquisitions. In the nineteen nineties even after change of ownership from Katz, the company faced many legal battles and growth was very minimal. During the year nineteen eighty nine the company had had sales of approximately eight hundred million dollars. In the year nineteen ninety, it only had sales of approximately fifty million dollars. (Michel, 2008) Acquisitions When the company, experienced massive growth during the nineteen eighties, the founder started having some acquisitions. This included Nutrient Cosmetic Company that was worth eight million dollars. Others were Gloria Marshall that was worth fifteen point one million dollars and Fox Associates that was worth four point two million dollars. Products As illustrated earlier, when NutriSystem Company started, it used to sell food that was privately labeled. It was a must for the clients o purchase these products. In addition, the company’s centers gave the clients services in terms of advice that was related to weight loss. This was in regard to diet and other behavioral exercises that would assist in weight reduction. (Thomson, 2003) Founder (change of ownership) When NutriSystem Company started experiencing multiple losses in the mid eighties, the founder-Katz decided to change the management. This was due to the fact that the company had bad chemistry among the employees and himself. The new chief executive officer that took over was Donald McCulloch. This was in the year nineteen eighty five. His experience brought positive changes to the company. In nineteen eighty six Harold Katz surrendered the full ownership of the company to McCulloch and other four important personalities within the company. In the year two thousand and two, the company changed the CEO to Mike Hagan. Product change As the company experienced multiple losses, it decided to change its package. This was in the late nineteen nineties. Instead of offering programs at its centers for weight loss, it changed to be an internet weight loss service provider. All the centers were sold out to a company known as CWWM (Complete Wellness Weight Management). That’s when the company acquired the name-nutrisystem.com. (Michel, 2008) Current Company performance With the leadership of Hagan as the CEO and the chairman of this company, there has been remarkable growth. The sales of NutriSystem Company have grown tremendously from twenty seven million dollar. Analysis shows that the company currently produces sales of approximately five hundred million dollars. The company also later acquired Slim and Tone and Sweet success companies. These have played a great role in the success currently being experienced by the company. This company currently has more than one thousand employees. (Thomson, 2003) Products This company is currently providing meals that are pre-packaged and delivered to the client’s doorstep. Analysis shows that the meals help in the stabilization of sugar in the client’s blood. They greatly help in metabolism boost and utmost promotion of satiety. NutriSystem Company provides clients with a method that enables them to lose weight. This method is highly based on portion control meals that are quite balanced in nature. They are also found in different flavors like chocolate and lasagna. (Michel, 2008) The meals are described as index prepared and have low glycemic. Through the company’s website, customers can order for foods and other supplements. The calorie plans in this company are quite individualized in nature. There is also further provision of services like maintenance and education concerning weight management. This is carried out by a team of professionals. (Michel, 2008) The food packages consist of vegetables, fruits that are usually supplemented in the lunches, breakfasts, desserts and dinners. This company currently sales its products through a television program known as QVC. The company provides its services on a twenty four hour basis for seven days within the week. This means that there is high flexibility as clients can access services any time that they wish. (Michel, 2008) Future of the company Research shows that with the current trend, the future of the company is bright. This company intends to carry out expansion to the global market. This is considering that e-commerce can be operated or accessed all over the world. There are strategies to improve service provision to clients. Weight loss used to be an aspect of the west only. It is highly catching up to other nations. There is high demand in other markets other than United States. With the ready market, NutriSystem Company is destined for greater success. (Maundy, 2001) Conclusion NutriSystem, Inc. was started in the year1971 by Harold Katz. This business idea cropped up after watching his mother lose and gain wait. The company was known as Shape Up, Inc. It sold privately labeled food to clients and also offered advisory services in relation to weight loss. There was growth during the seventies and the company reaped multiple profits. After some mergers and acquisitions, the company started experiencing losses. The ownership changed in 1986 from Katz to Donald McCulloch. There were struggles during eighties and joining of Mike Hagan in 2002 as CEO brought positive changes. The company currently operates online. It sells pre-packaged meals to clients. They are delivered to the doorstep. The company shows improved growth as it has annual sales of over $500million. The future of the company is bright. This is as it intends to tap the ready market in global arena. Read More