Hammond Cards, Inc: The Creative Acquisition
Hammond Cards, Inc: The Creative Acquisition
AUTHORS
Paul Mulligan
Fidelity Faculty Term Chair
Assoc. Professor; Technology & Operations Management
Babson College
Olin Hall
Babson Park, MA 02457-0310
(781) 239-4595 mulligan@babson.edu Alfred J. Nanni, Jr.
Professor of Management Accounting
Vander Wolk Chair in Management Accounting and Operational Performance
Babson College
Luksic Hall
Babson Park, MA 02457-0310
781-239-5137
nanni@babson.edu
Shahid Ansari
Zwerling Term Chair Professor
Behavioral and Managerial Accounting
Luksic Hall
Babson Park, MA 02457-0310
Phone: (781) 239-4277
Email: sansari@babson.edu
Electronic copy of this paper is available at: http://ssrn.com/abstract=921475
Hammond Cards, Inc: The Creative Acquisition
ABSTRACT
This case is designed to show the interconnection between operations management, markets and strategic cost management. The central integration point in this case is the relationship between the selection of an operations/production strategy and its impact on profitability. The case deals with the proposed acquisition of Creative Designs by Hammond Cards. The two companies have different manufacturing operations and different customer profiles. Hammond produces simple and standard-sized greeting cards that are packaged in sets of 20 cards to a package. Hammond’s business model is low margin high volume. In contrast, Creative Designs specializes in so-called studio cards. These are highend greeting cards sold individually at retail. Creative’s production operations are optimized for high margin-moderate volume production.
Since the two production operations have essentially the same production steps, Hammond is hoping to exploit the synergy by sharing the peak demand across the two plants and to transfer best practices between plants. It also hopes to exploit the different distribution channels and customer segments that Creative will bring and thus smooth out seasonal demand
AUTHORS
Paul Mulligan
Fidelity Faculty Term Chair
Assoc. Professor; Technology & Operations Management
Babson College
Olin Hall
Babson Park, MA 02457-0310
(781) 239-4595 mulligan@babson.edu Alfred J. Nanni, Jr.
Professor of Management Accounting
Vander Wolk Chair in Management Accounting and Operational Performance
Babson College
Luksic Hall
Babson Park, MA 02457-0310
781-239-5137
nanni@babson.edu
Shahid Ansari
Zwerling Term Chair Professor
Behavioral and Managerial Accounting
Luksic Hall
Babson Park, MA 02457-0310
Phone: (781) 239-4277
Email: sansari@babson.edu
Electronic copy of this paper is available at: http://ssrn.com/abstract=921475
Hammond Cards, Inc: The Creative Acquisition
ABSTRACT
This case is designed to show the interconnection between operations management, markets and strategic cost management. The central integration point in this case is the relationship between the selection of an operations/production strategy and its impact on profitability. The case deals with the proposed acquisition of Creative Designs by Hammond Cards. The two companies have different manufacturing operations and different customer profiles. Hammond produces simple and standard-sized greeting cards that are packaged in sets of 20 cards to a package. Hammond’s business model is low margin high volume. In contrast, Creative Designs specializes in so-called studio cards. These are highend greeting cards sold individually at retail. Creative’s production operations are optimized for high margin-moderate volume production.
Since the two production operations have essentially the same production steps, Hammond is hoping to exploit the synergy by sharing the peak demand across the two plants and to transfer best practices between plants. It also hopes to exploit the different distribution channels and customer segments that Creative will bring and thus smooth out seasonal demand