Haverwood furniture inc case study essay
Background on the merger
In 04 2008 Haverwood Furniture merged with Lea-Meadows, a maker of padded furniture pertaining to living and family bedrooms. The merger was not planned in any standard sense. The merger proceeded smoothly because the two businesses were located on adjacent locations and the two companies could maintain all the autonomy while was economically justified. The one issue that still continued to be was joining the advertising efforts. Problem was straight-forward “do we offer the upholstery line of furniture to our sales force, or do we continue making use of the sales agents? Haverwood’s vice president said the queue should be directed at his revenue group, but Lea-Meadows explained the upholstery line should remain with sales agents.
Lea-Meadows Incorporation. is a small , privately owned or operated manufacturer of upholstered pieces of furniture for use in living and friends and family rooms. The firm much more than seventy five years old. The organization has some in the finest fabric and body construction on the market. Their net sales in 2007 were $5 , 000, 000 and the total industry sales in 2007 were.
5 billion. A forecasted industry sale to get 2008 is approximately $16. you billion. Within the last 5 years sales acquired increased 3% annually, as well believing that the trend will continue. Lea-Meadows employed 12-15 sales agents to represent its products. Sales agents found this necessary to deal with several buyers in a shop in order to signify all the lines carried. Over a typical revenue call, a sales agent initial visited purchasers to discuss new lines, furthermore to any special offers being offered by simply manufacturers.
These types of new orders were searched for where so when it was suitable. Lea-Meadows paid an agent commission payment of 5 percent of net company sales for these providers. Also were thought to have spent 10-15 percent of their in-store time on Lea-Meadows products. There is not any influence in who to offer their products to but there exists a stigma of not supplying discount properties. Records present that providers were calling on specialty furniture and malls. An estimated 1, 000 selling accounts had been called upon in 2006 and 2007. All agents experienced established interactions with their selling accounts and worked strongly with these people.
Haverwood Pieces of furniture Inc.
They may be a company of medium- to high-priced wood room, living place and dining area furniture. Their very own net product sales in 3 years ago were $75 million; as well as the industry product sales of solid wood furniture in 2007 were $12. four billion. It really is projected that in 2008 they will have $12. being unfaithful billion in industry revenue. The company offers 10 fulltime sales reps, who contact 1, 500 retail accounts. They conduct the same activities as sales people but were paid an income plus a tiny commission. In 2007 the standard sales rep received an annual salary of $70, 500 and a commission of 5% in net business sales. Total administration costs were $130, 000 Haverwood’s salespeople were highly regarded on the market. They were well-known particularly for their knowledge of wood furniture and willingness to utilize buyers and retail product sales personnel. Sales representatives were presently making 10 product sales calls per week with a typical sales call running 3 hours. Their particular remaining time was accounted for by administrative activities and travel around. It was also recommended which the call frequency be increased to several calls per account each year.
Pros and Cons
Points in favor pertaining to combing both the companies
Haverwood has probably the most respected sales force in the industry. All their sales force can easily understand lingo to interacting with upholstery buyers. Providing Lea-Meadows would only require 15% of present sales call up times More control over revenue efforts may be possible and a combined product sales forces matches with the belief that “only our people are willing and able to give It would not really look proper if both equally representatives and agents named on the same shops and potential buyers because of the terme conseillé on the corporations on both equally companies’ accounts.
Points for keeping within the income agents
Every sales agents got established customers and had been highly regarded among the list of store potential buyers. Sales agents symbolize little price beyond commission
Phone sales agents were devoted to the lea-meadows line.
Sales agents had been calling on buyers not called by haverwood sales force. Haverwood sales people may have a tough time learning the ways of lea-meadows since there are over 1 billion likely items to study. Both businesses make valid points however the main point is to identify the cost and profitability. Economical calculations based off the expense of sales force, and sales agents.
10 (sales force members) x seventy dollars, 000 (average salary) = $700, 1000. 005 (commission) x $75, 000, 000 (net sales) = $375, 000 times 10 sama dengan $3, 750, 000 $130, 000 (total sales operations costs)
Total cost of sales force
$4, 580, 000
your five, 000, 500 (net sales) x. 05 (commission) sama dengan $250, 500 x 12-15 (sales agents) Total cost of sales agents
$3, 750, 000
Even though Lea-Meadows pays off their phone sales agents less with 5 more employees, their particular profit margins show up 5% listed below that of Haverwood. It in the end will impact them more than the cost intended for Haverwood influences them. In the event that Lea-Meadows would be to give their particular line to the Haverwood salesforce, they would only have to pay for 15% of the cost to get the sales force.
Total salesforce cost sama dengan $4, 580, 000
$4, 580, 000 back button. 15 (percentage of time devoted to Lea-Meadows line) = $687, 000 Your decision to give the line to Haverwood saves Lea-Meadows $3, 063, 000.
Haverwood’s sales process
Haverwoods personal Product sales forces Full Consumer
Lea-Meadows sales procedure
Lea-Meadows Sales firm Retail Client