The Atherley Furniture was founded by John Atherley in Orilia, Ontario. As the economy fluctuates, the Canadian furniture industry has been experiencing declines. Profits have declined by nearly 24%, from $340,000 in 1995 to $260,000 in 1998
The Atherley plant produces 3 types of chairs:
Sales for both Atherley and Parkdale have been declining, but Caledonia has been increasing in the past few years.
Competition has been identified as one of the causes for profit decline. Atherley Furniture is losing money on the Atherley and Parkdale models.
Sales in the chairs division has been in decline
Atherley and Parkdale profit are declining
Caledonia model accounted for 36% of 1998 sales
Increase sales in the chair division
Improve efficiency for future competition
Do what it takes to strengthen the brand of the Atherley and Parkdale models
Identification of Alternatives
1. Totally eliminate the production of the Parkdale model since it is out of date in order to minimize the high labour wage cost, increase sales and include more efficient forms of production (wood forming machines) toward the Atherley and Caledonia models
2. Allocate the money and resources earned from the Atherley and Caledonia Models to redesign and strengthen the Parkdale model to make it a recognizable brand again.
3. Eliminate the Parkdale model but allocate the skilled workers to work in the other plants in order to significantly strengthen the other 2 brands in the long term.
Analysis of Alternatives
1. Totally eliminate the production of the Parkdale model since it is out of date in order to minimize the high wage cost, increase sales and production toward Athlerley and Caledonia models
By doing this, the company’s other two division will be able to grow strong efficiently because they will have more money and resources to allocate to these 2 brands. By doing so, John will be able