Cate & Levi: Evaluating Options for Growth
(7 pages of text)
In 2011, Cate & Levi is a specialty gift manufacturer — primarily of children’s toys and clothing — based in Toronto, Canada. The founder of Cate & Levi is pondering growth options for his firm, recognizing that the business model so successfully employed to earn the company its first $1 million in revenues is not likely to sustain the company’s momentum. Just three years old, the company has grown dramatically in no small part due to its unique business model and design. Looking ahead, however, the founder is concerned that the business is not sustainable — the predominant raw materials used for the products are reclaimed wool sweaters, and each product is cut and sewn by hand both in-house and through contract labour across Canada. The case presents a series of growth alternatives for students to analyze and consider, contrasted against the constraints found in an adolescent business: constrained capital and human resources, limited brand recognition, and an underdeveloped supply chain.
This case is ideal for an entrepreneurship course at either the undergraduate or graduate level or one focused on managing high-growth companies. This case is grounded from an effectuation theory perspective; Cate & Levi illustrates a number of topics particularly salient for illustrating effectual approaches for new venture creation such as affordable loss and contingency exploitation. The case is also valuable for an entrepreneurial marketing class or a class centered on social consciousness and ecologically sensitive business models. This case sets out to:
- Illustrate the strategic, operational, and marketing difficulties associated with managing growth in young firms.
- Demonstrate the practical challenges associated with pursuing growth opportunities: at a tactical level, the choices and tradeoffs made and the capital required.
- Evaluate business model sustainability and evolution to accommodate new growth.
Canada, Small, 2011
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