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Strong Tie Ltd

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Strong Tie Ltd
Case 1: Strong Tie Ltd.
Background
Located in Winnipeg, Minnesota, Strong Tie Ltd. is a family–owned corporation that is still owned by the Johnstone family. Strong Tie Ltd. designs and makes custom structural connectors. These connectors are used to reinforce wood joints in the construction of houses, fences, and other edifices. Strong Tie Ltd. has been a major leader in this industry, however there is growing competition from low-wage countries such as China.
They previously had a market share of 70 percent but that number has now dropped to around 60 percent. The competition from China has a growing market share of 30% due to their more affordable prices. Currently the Chinese corporations are not customizing their products but if they did, then Strong Tie Ltd. would lose even more of their market share.
In recent years the cost of metal has gone up. This caused Strong Tie Ltd. to attempt to implement a just-in-time strategy in order to save costs. They wanted to reduce inventory but the strategy was inefficient for their business. With their high demand of customized goods, it was difficult to forecast demand for their products. Strong Tie Ltd. also uses Net 60 payments which is inefficient. Many of their clients go past the due dates when it comes to payment. Large clients such as Home Depot are often late. Strong Tie Ltd. is losing available cash by this method of payment since most of their payments are received late.
In order to reduce labor costs, Strong Tie Ltd. has reinvested its factories. They upgraded to new equipment and faster computers. More labor was being automated in order to improve competitiveness. Despite these efforts, Strong Tie Ltd. is still losing market share.
If Strong Tie Ltd. does not change their current situation, then they are expected to have a huge loss. The CATO forecast will be negative and gross debt will continue to increase. There is a low growth of .92 percent for the next three years. Strong Tie Ltd. will have a
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