Forefront Manufacturing
1.What is the organization trying to achieve?Forefront Wood Products would like to become China’s leader for wood doors manufacturing, goal which will be induced by increases in profitability - necessary both for the financial survival in the immediate term and for the viability of an IPO planned for 2007.
2.What seems to be the immediate problem?Forefront Holdings consists in two different companies: Forefront Manufacturing and Forefront Contracting. For the last 15 year the financial situation were consolidated, but in 2005 when were divided it was discovered that Forefront Manufacturing was affected by the “portfolio effect”. The holding was profitable, but its Manufacturing division is struggling to survive with only 3% in pretax earnings.
3.What is the significance of this problem?This issue’s significance is that Forefront Manufacturing is trying to survive on a side, but on the other side they also need to prepare for the upcoming IPO expected to happen in less then two years. In order to be ready for the IPO they need to develop a profitable track record, tighten its corporate governance, streamline its operations and reduce investor risks.
4.How would you describe the operating environment of the industry, company, customers, decision makers, and other aspects of the general operating environment? So what?In conformity with China’s National Bureau of Statistics the GDP rise by 9.9% from 2003 to 2004 and the construction industry increased by 20% in the same period. Please see Appendix No.1So What?This indicates high growth opportunities for Forefront Manufacturing. This is also a main strength for Forefront Manufacturing, their product being always in demand as “other features and fixtures in a building may vary – the floors may be wood or marble or carpet, for example…But every single building in the world need doors.”As described in the case the door manufacturing in China is characterized by complications such as relationship issues, resources
2.What seems to be the immediate problem?Forefront Holdings consists in two different companies: Forefront Manufacturing and Forefront Contracting. For the last 15 year the financial situation were consolidated, but in 2005 when were divided it was discovered that Forefront Manufacturing was affected by the “portfolio effect”. The holding was profitable, but its Manufacturing division is struggling to survive with only 3% in pretax earnings.
3.What is the significance of this problem?This issue’s significance is that Forefront Manufacturing is trying to survive on a side, but on the other side they also need to prepare for the upcoming IPO expected to happen in less then two years. In order to be ready for the IPO they need to develop a profitable track record, tighten its corporate governance, streamline its operations and reduce investor risks.
4.How would you describe the operating environment of the industry, company, customers, decision makers, and other aspects of the general operating environment? So what?In conformity with China’s National Bureau of Statistics the GDP rise by 9.9% from 2003 to 2004 and the construction industry increased by 20% in the same period. Please see Appendix No.1So What?This indicates high growth opportunities for Forefront Manufacturing. This is also a main strength for Forefront Manufacturing, their product being always in demand as “other features and fixtures in a building may vary – the floors may be wood or marble or carpet, for example…But every single building in the world need doors.”As described in the case the door manufacturing in China is characterized by complications such as relationship issues, resources