Smith Design Case Analysis
LIM College – MBA Program
This paper is an MBA analysis of the Smith Designs case study written by Sylvia M. Asay, Larry Carstenson, and Susan M. Jensen from the University of Nebraska at Kearney. The purpose of this paper is to determine problems within the company and to find possible solutions and recommendations. The detailed analysis of this case showcase knowledge of Global Management and Leadership course materials learned thus far. Smith Design Case Analysis
Introduction and Summary
Owned by Cindy and her husband Greg Smith, Smith Designs is a seemingly successful home-based business, mainly selling crafted headbands to a single account, a department store buyer who supplied fifty-six stores. After five years of major changes and growth, the company has made a combined total of $165,405 in sales, $57,990 for their fifth year alone, and has a projected sales amount of $75,000 for their sixth year. Along with the projected growth in sales are major opportunities for growth and expansion. These opportunities leave the couple to review all aspect of their life, family, and business, including past business decisions, decisions that can help their company move forward in the short and long terms, and if there is actually a future for the company in the long-run. A Look Back
As a stay-at-home mom with two small children of her own, Cindy began her home-based business by exploring her creativity and fashion training to find her niche in what is called “wearable art” (Asay, 2006).She designed baby rompers from plain cotton tee-shirts and sold them, along with leggings and tee-shirts for adults, at local craft fairs and boutiques either ready-to-decorate or pre-decorated.
By the second year of selling at boutiques and fairs, Smith Designs caught the attention of high-end department store buyer who became their major account - ordering infant rompers to supply twenty-seven stores. To go with the rompers, Cindy expanded her product line to include crafted hats and headbands, which grew in popularity. Soon, the headbands took the lead in sales and production increased while hat and romper production decreased. Sales continued to grow; with their major account now supplying thirty-seven stores, expenses grew and demand became impossible for Cindy to manage with Greg’s part-time help alone. To help, the Smiths progressively made some major changes. Three part-time piece-sewers were hired to keep up with demand, Greg quit his job to work full-time with Cindy, and they moved their family to the Midwest to help cut costs.
Now supplying fifty-six stores with headbands through their major account, and seeing growth in sales, profit, popularity and opportunities, Smith Designs is now left to evaluate their options and make major decisions. Questions and Problems
Even though Cindy is very excited about the potential opportunities, she is forced to ask herself she could manage the volume of demand, and what options would she need to pursue to be successful. Almost from the start of Smith Designs, Cindy found her merchandise to be time-consuming to produce and incurred expenses mainly due to the continuous need to increase inventory to fulfill demand; which always seemed to be a struggle. Other major expenses are those linked to contract part-time labor, and equipment and repairs. Thus, with the business at its present state, the answer to the meeting demand question is, no; the problems being Cindy’s struggle to meet demand and growing expenses. These obvious issues can be the result of a number of initial causes such as, lack of business know-how, not enough on-hand workers, inadequate equipment and technologies, and lack of money and support. From the information given, the assumption can be made that all of these issues play a part in Smith Designs’ production and costs issues. Fixing the Problems
At this point, the decisions that Cindy needs to make are risky and...
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