Haefren Baum Case

Topics: Accounts receivable, Accounts payable, Generally Accepted Accounting Principles Pages: 4 (1004 words) Published: November 13, 2012
Business Analysis

Last four digits of student ID #: 8964

Name of business:

Haefren Baum

Nature of business:

Haefren Baum is an independent home furnishings retailer that sells high-end furniture. The company began as a partnership in 1965. Haefren Baum became a retailer for Wiegandt in 1968. Two years later, it officially became a corporate entity. Haefren Baum is located in Cologne, one of the most populated and prosperous cities in Germany. The company retails home furnishing from one location in downtown Cologne, and from three recently constructed outlet stores in the suburbs of Rhineland.

Marketing Analysis:

Haefren Baum’s business to business, distribution network with Wiegandt includes a 2% 10, net 30-credit term, which is consistent with competitors in the industry. Haefren Baum’s business to customer relation started to dwindle when consumer confidence and demand slipped due to negative percentage growth of real GDP in 1993. Consumer demand dropped, leading to slower furniture sales. Haefren Baum felt pressure to decrease prices in order to maintain sales volume. The on-set of this event forced Wiegandt to extend a more flexible credit term to Haefren Baum while attempting to maintain its own volume. However, the presence of high interest rates still threatens Wiegandt current business strategy. During the early months of 1995, the German furniture market continued to display weaknesses even though the overall economy began to recover. Competition intensified as other European furniture retailers entered the German market and several larger domestic retailers announced heavy losses. The retail industry also began introducing outlet stores in suburban areas, hoping to entice consumers back with low prices and wide selections. Although the number of outlets has grown to five times its size within a 2-year span, growth in sale volume remained stagnant. Wiegandt had to make a decision on whether to look out for the best...
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