Haverwood Furniture Inc Case Study
Haverwood Furniture Inc. (B)
Background on the merger
In April 2008 Haverwood Furniture merged with Lea-Meadows, a manufacturer of upholstered furniture for living and family rooms. The merger was not planned in any conventional sense. The merger proceeded smoothly since the two firms were located on adjacent locations and the two companies would maintain as much autonomy as was economically justified. The only real issue that still remained was merging the selling efforts. The question was straight-forward “do we give the upholstery line of chairs and sofas to our sales force, or do we continue using the sales agents?” Haverwood’s vice president said the line should be given to his sales group, but Lea-Meadows said the upholstery line should remain with sales agents.
Lea-Meadows Inc.
Lea-Meadows Inc. is a small, privately owned manufacturer of upholstered furniture for use in living and family rooms. The firm is more than 75 years old. The company has some of the finest fabrics and frame construction in the industry. Their net sales in 2007 were $5 million and the total industry sales in 2007 were $15.5 billion. A forecasted industry sale for 2008 is about $16.1 billion. Over the past 5 years sales had increased 3% annually, also believing that this trend would continue.
Lea-Meadows employed 15 sales agents to represent its products. Sales agents found it necessary to deal with several buyers in a store in order to represent all the lines carried. On a typical sales call, a sales agent first visited buyers to discuss new lines, in addition to any promotions being offered by manufacturers. These new orders were sought where and when it was appropriate. Lea-Meadows paid an agent commission of 5 percent of net company sales for these services. Also were thought to have spent 10-15 percent of their in-store time on Lea-Meadows products.
There is no influence on who to sell their products to but there is a stigma of not selling to discount houses. Records show
Background on the merger
In April 2008 Haverwood Furniture merged with Lea-Meadows, a manufacturer of upholstered furniture for living and family rooms. The merger was not planned in any conventional sense. The merger proceeded smoothly since the two firms were located on adjacent locations and the two companies would maintain as much autonomy as was economically justified. The only real issue that still remained was merging the selling efforts. The question was straight-forward “do we give the upholstery line of chairs and sofas to our sales force, or do we continue using the sales agents?” Haverwood’s vice president said the line should be given to his sales group, but Lea-Meadows said the upholstery line should remain with sales agents.
Lea-Meadows Inc.
Lea-Meadows Inc. is a small, privately owned manufacturer of upholstered furniture for use in living and family rooms. The firm is more than 75 years old. The company has some of the finest fabrics and frame construction in the industry. Their net sales in 2007 were $5 million and the total industry sales in 2007 were $15.5 billion. A forecasted industry sale for 2008 is about $16.1 billion. Over the past 5 years sales had increased 3% annually, also believing that this trend would continue.
Lea-Meadows employed 15 sales agents to represent its products. Sales agents found it necessary to deal with several buyers in a store in order to represent all the lines carried. On a typical sales call, a sales agent first visited buyers to discuss new lines, in addition to any promotions being offered by manufacturers. These new orders were sought where and when it was appropriate. Lea-Meadows paid an agent commission of 5 percent of net company sales for these services. Also were thought to have spent 10-15 percent of their in-store time on Lea-Meadows products.
There is no influence on who to sell their products to but there is a stigma of not selling to discount houses. Records show