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Submitted by mallu_hockey on January 17, 2008
Category: Miscellaneous
Words: 1203 | Pages: 5
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Business
Retail distribution of lumber products in local area – plywood moldings and sash & door products
Competes on price
Controls operating expenses
Purchases materials in large quantities at substantial discounts
Most of the products sold are for repair work (not too affected by new home sales)
Target market is growing suburb of large city in Pacific Northwest
Bulk of sales (55% to 60%) came in 6 months – April through September
Company owns land and four large storage buildings on the land
Strengths
• Energetic and passionate owner-manager and his assistant
• Personal control over every feature of the business; sound business judgment; works hard
• Controls operating expenses (almost as low as top profitable companies)
• Favorable sales prospects with ready market at all times; Sales were somewhat hedged against slow down in new home construction because most of the sales were for repairs
Weaknesses
• Negative cash flows
• Competes on price (because it gets quantity discounts and controls operating expenses) even though its cash flows are negative
• Target market segment heavily dependent on local economy (suburban pacific northwest city)
•
Opportunities
• Favorable prospects for continued growth in volume of Clarkson Lumber business over foreseeable future
• Expand to other products and geographic areas
• Opportunities to improve financial performance
Threats
• Slow down in general economy might slow down rate of increase in sales
• Slow down in local economy would adversely affect the business
• Rapid increase in accounts and notes payable in the recent past
• No purchase discounts availed in the last two years because of shortage of funds (notes payable to Mr. Holtz and increase WC requirements)
...
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