Havewood Case
Case: Harverwood Furniture, Inc (A)
Eduardo Barroca de Moura
04/09/2015
1. State the Central Strategic Issue
A. State the central strategic issue identified in your situation analysis.
Haverwood needs to decide whether go with their agency ad suggestion or else. Mike Hervey, from Hervey and Bernham suggested increasing their expenditure by $225,000 by 2008, through various shelter magazines ads. However, that approach is lightly out of line with the current policy of budget of 5% of expected sales for total promotion expenditures. Also, the vice president of sales had requested more sales representatives. So the funds allocated to promotion is just one side of the problem. The allocation of theses funds within the budge is the other problem.
B. State the four to six most relevant factors (from the your situation analysis) that led you to this strategic issue definition.
1. The ad agency suggested to invest in ads in shelter magazines to creat brand awareness and enhance image.
2. To back the idea of a expenditure of $225,000 for 2008 a study shows that 85% of readers, red furniture ads before they actually need furniture, and 95% say they get redecorating ideas or guidance from magazines.
3. The 2007 stock market is worrisome and grew 2.5, even though economists are predicting 4% increase for 2008 in industry sales.
4. Contribution margin will fall to 20% due to rising material costs.
2. Formulate Strategic Alternatives (Include estimates of market potential & BEA.)
A. Alternative 1
Reject Mike Herverys budget. Accept John Botts’s sales projected sales expenses, and have a more compatible with the budget promotion mix.
1. Advantages/Benefits
All 50 new accounts would be covered with a new representative, and the cost of sales would be ready for the 2008 increase.
2. Disadvantages/Costs
The disadvantage would be that would offer other furniture retailers to increase their marketing share in a very delicate ere – the late 2000s economy recession.
B. Alternative
Eduardo Barroca de Moura
04/09/2015
1. State the Central Strategic Issue
A. State the central strategic issue identified in your situation analysis.
Haverwood needs to decide whether go with their agency ad suggestion or else. Mike Hervey, from Hervey and Bernham suggested increasing their expenditure by $225,000 by 2008, through various shelter magazines ads. However, that approach is lightly out of line with the current policy of budget of 5% of expected sales for total promotion expenditures. Also, the vice president of sales had requested more sales representatives. So the funds allocated to promotion is just one side of the problem. The allocation of theses funds within the budge is the other problem.
B. State the four to six most relevant factors (from the your situation analysis) that led you to this strategic issue definition.
1. The ad agency suggested to invest in ads in shelter magazines to creat brand awareness and enhance image.
2. To back the idea of a expenditure of $225,000 for 2008 a study shows that 85% of readers, red furniture ads before they actually need furniture, and 95% say they get redecorating ideas or guidance from magazines.
3. The 2007 stock market is worrisome and grew 2.5, even though economists are predicting 4% increase for 2008 in industry sales.
4. Contribution margin will fall to 20% due to rising material costs.
2. Formulate Strategic Alternatives (Include estimates of market potential & BEA.)
A. Alternative 1
Reject Mike Herverys budget. Accept John Botts’s sales projected sales expenses, and have a more compatible with the budget promotion mix.
1. Advantages/Benefits
All 50 new accounts would be covered with a new representative, and the cost of sales would be ready for the 2008 increase.
2. Disadvantages/Costs
The disadvantage would be that would offer other furniture retailers to increase their marketing share in a very delicate ere – the late 2000s economy recession.
B. Alternative