Before we discuss Mr. Flemings good moral character, we should examine if he's on the right path with respect to the company.
Does the company have a reasonable business model and will it create any profits?
Porter's 5 force analysis will help discuss.
1. Threat of new entrants: fairly difficult, Companies need a good distribution network. GLUC uses Walmart distribution. Also need government approval. There must be some government type regulation regarding labeling "health products" that GLUC has met.
2, Power of Supplier: GLUC seems to be vertically integrated with Natural Solution Labs. However, if Natural Solution Labs raises prices significantly, GLUC may have a problem switching. I assume there is incentive for Natural Solution Labs to keep prices stable.
3. Power of Buyer. GLUC does not have power to negotiate with Walmart, the only buyer.
However maybe GLUC can make up profits through volume of sales.
4 Substitution: Four big competitors. Glucerna, Boost, Metamucil, and Blood Sugar Support. However, the cost to switch to a competitor is high since GLUC has a significant cost advantage. Perhaps if buyers try GLUC they will stay with it due to the lower cost.
5. Competition Intensity: Seems to be a growing market. The competitors are advertising on TV and probably bringing buyers into this market. Lots of differentiation of product such as different flavors, ingredients, packaging. In a growing market there should not be price wars. And the uniqueness of flavor and packaging will attract certain buyers.
It seems to be making some profits. Interesting to see if the model works.
