Swisher Mower Case Study
Swisher Mower and Machine Company
Problem: Wayne Swisher the new president and CEO of Swisher Mower Company (SMC), is unsure of what the future holds for his firm. He was contacted by a major national retail merchandising chain about a private-brand distribution arrangement. Wayne Swisher needs to determine if he should accept the offer that was proposed by the national retail merchandising chain or reject it and continue on normal business.
SWOT:
Strengths:
• Facilities have an annual production capacity of 10,000 riding mower units on a single 40-hour-per-week shift.
• Developed great loyalty with dealers and distributors.
• Produced the first zero turning radius riding mower.
• Produce high-quality mowers that are reliable and …show more content…
Private-label mowers account for 65 to 75% of the total industry sales.
• 75% of SMC’s sales are made in nonmetropolitan areas.
Alternatives:
Alternative Pros Cons Cost
• Accept the offer from the major national retail merchandise chain for distribution of a private-brand. • The chain will cover all freight costs
• The chain will do all advertising
• The chain wants a sample order of 700 units and will place an order of approximately 8,200 units per year.
• Distribution will broaden to metropolitan areas. • Chain wants to purchase the mowers at a price 5% lower than SMC’s manufactures.
• No seasonal or promotional discounts.
• SMC is liable for all personal injury claims.
• Sales of SMC mowers by the chain could cannibalize existing sales. See Exhibit 1
• Reject the offer from the major national retail merchandise chain for distribution of a private-brand. • This would remain at the status quo.
• Net Income is $430,200.
• SMC could concentrate on developing the Trim-Max. • Will not get the exposure to the metropolitan areas.
• If SMC rejects the offer, the chain may present the offer to some one else and this would increase their …show more content…
Firms want to develop new products to stay profitable. Each product has a life cycle and when one product reaches its mature stage and starts to decline it is the best time to introduce a new product. This is the situation that SMC is looking at right now. I think the Ride King is mature and will start to decline. If SMC introduced the Trim-Max they will still be gaining profits because it will be going through its growing stage. They would be the first to the market with a walk behind trimmer. SMC is known for making high quality products and they should not have a problem introducing a trimmer to the
Problem: Wayne Swisher the new president and CEO of Swisher Mower Company (SMC), is unsure of what the future holds for his firm. He was contacted by a major national retail merchandising chain about a private-brand distribution arrangement. Wayne Swisher needs to determine if he should accept the offer that was proposed by the national retail merchandising chain or reject it and continue on normal business.
SWOT:
Strengths:
• Facilities have an annual production capacity of 10,000 riding mower units on a single 40-hour-per-week shift.
• Developed great loyalty with dealers and distributors.
• Produced the first zero turning radius riding mower.
• Produce high-quality mowers that are reliable and …show more content…
Private-label mowers account for 65 to 75% of the total industry sales.
• 75% of SMC’s sales are made in nonmetropolitan areas.
Alternatives:
Alternative Pros Cons Cost
• Accept the offer from the major national retail merchandise chain for distribution of a private-brand. • The chain will cover all freight costs
• The chain will do all advertising
• The chain wants a sample order of 700 units and will place an order of approximately 8,200 units per year.
• Distribution will broaden to metropolitan areas. • Chain wants to purchase the mowers at a price 5% lower than SMC’s manufactures.
• No seasonal or promotional discounts.
• SMC is liable for all personal injury claims.
• Sales of SMC mowers by the chain could cannibalize existing sales. See Exhibit 1
• Reject the offer from the major national retail merchandise chain for distribution of a private-brand. • This would remain at the status quo.
• Net Income is $430,200.
• SMC could concentrate on developing the Trim-Max. • Will not get the exposure to the metropolitan areas.
• If SMC rejects the offer, the chain may present the offer to some one else and this would increase their …show more content…
Firms want to develop new products to stay profitable. Each product has a life cycle and when one product reaches its mature stage and starts to decline it is the best time to introduce a new product. This is the situation that SMC is looking at right now. I think the Ride King is mature and will start to decline. If SMC introduced the Trim-Max they will still be gaining profits because it will be going through its growing stage. They would be the first to the market with a walk behind trimmer. SMC is known for making high quality products and they should not have a problem introducing a trimmer to the