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The Ordinary Cdbs Is Relation Database System - 1565 Words

This paper describes the ordinary CDBS is Relation Database System (RDBS), which has the great system for transactions processing and locking. Locking mechanism in DDBS is similar to that in RDBS, but it is more complex because of data distribution and transaction concurrence in distributed database system. state that the Lock table and Two-stage Locking convention (2PL) are utilized as a part of Relation Database Management System (RDBMS) with multi-granularity convention for accessing operation of lock scheduler. The lock table correspondence describes each element that s locked in the lock table.There are 3 locking models for RDBMS namely DB2,Oracle,Sql server 2005. Row-level shared locks allow multiple users to read data, but do not allow any users to change that data.Table-level shared locks allow multiple users to perform read and write operations on the table, but do not allow any users to perform DDL operations.Multiple users can hold shared locks simultaneously. An exclusiv e lock allows only one user/connection to update a particular piece of data (insert, update, and delete). When one user has an exclusive lock on a row or table, no other lock of any type may be placed on it. Each Xact must obtain a S (shared) lock on object before reading, and an X (exclusive) lock on object before writing. A transaction can release its locks once it has performed its desired operation (R or W). A transaction cannot request additional locks once it releases any locks. All locksShow MoreRelatedProject Managment Case Studies214937 Words   |  860 Pageson acid-free paper. @ Copyright O 2006 by John Wiley Sons, Inc. All rights reserved. Published by John Wiley Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of t he 1976 United States Copyright Act, without either the prior written permissionRead MoreDeterminants of International Trade Essay22457 Words   |  90 Pagesthis field was originally very poor but since the second half of the 1970s several theoretical developments have appeared in support of the gravity model (Anderson, 1979; Bergstrand, 1985 and 1989; Helpman and Krugman, 1996; Deardorff, 1995). In relation to why does gravity work, Harrigan (2001) discriminates between aggregated and disaggregated studies. This author states that “most of the evidence that gravity works comes from aggregated data (Â…) it is surprising how little work has been done

Social Media Marketing & Improved Consumer-Samples for Students

Question: Discuss about the Importance of Social Media in Conducting Business. Answer: Introduction: The importance of social media in conducting business in a highly competitive world can never be overstated. While on the one hand, the efficient use of social media sites such as Facebook and Instagram help the emerging companies gain recognition amongst the consumers, it also assists already recognized companies increase their traffic to their official websites. Since the inception of social media sites, these sites have been utilized by the business organizations to build relation with the consumers and keep them updated about the new products and services. However, presently, the advent of professional sites like LinkedIn has also simplified the job of the Human Resource Managers of an organization, helping them attract talented workforce without spending huge amount of money or long hours tryng to get in touch with the deserving employees. There can be no gain stating the obvious fact that social media marketing is no longer an optional matter, but an integral marketing strategy. It is indeed an essential way to reach out to the customers, gain valuable insights about their attitude towards the brand, and build the brand reputation (Aral et al. 2013). However, despite the potential advantages of social media marketing, there are certain intricacies of social media marketing which can prove to be hard and challenging to manage. For example, lack of security on the information shared on these sites, difficulty in controlling negative feedback of clients, and time-intensive marketing procedure requires much supervision over the social media activities. Hence, there are both advantages as well as serious disadvantages behind the use of social media. Discussion: Social Media Marketing and Improved Consumer Loyalty: One of the principal marketing strategies each organization wishes to incorporate in its business plan is to attract potential clients as well as to retain the existent customers. However, most of the companies in todays world encounter cut-throat competition and find it hard to retain its clients. Herein lays the importance of social media marketing. According to the survey report by Sensis, 90% of the Australians belonging to the age group of 18to 39 years have daily access to the social media sites out of which 95% of them use Facebook on a daily basis (Ngai et al. 2015). Similarly, research reports also suggest that in Australia, there are approximately 5,000,000 active users of Instagram while as many as 14,800,000 people daily watches videos on YouTube. Figure 1: Use of Social Media in Australia, 2017 Source: (Rodriguez et al. 2015) It becomes clearly evident that large number of people uses social media and thus advertising a product on these sites will help in attracting attention of the consumer towards a new brand or a new offer of an old brand. The use of interesting, emotional and catchy stories in the form of videos on YouTube can also help the customers become aware of a brand, even though the consumers themselves may not realize that a brand name was endorsed in the process of playing the video. Often many companies share pictures of their new products, offer discounts by engaging consumers who are their followers on these sites and respond to the consumer grievances and queries via social media sites like Facebook Messenger, Twitter, etc. This form of continuous interaction with the client helps in building relation with the consumers. Gain Insights into Customer Needs: In order to make better business decisions as well as to ensure longer sustainability, business organizations need to understand the changing needs of the consumers. Each new day, there are approximately 500 million tweets, 4.5 billion likes on Facebook as well as 95 million photos posted on Instagram, and a company can easily understand its position in the competitive market, by analyzing the number of likes and shares its posts and pictures receive each new day (Agnihotri et al. 2016). Further, it should be noted that most of the earlier studies have focused on the benefits of social media tools and have overlooked the significant use of social media analytic tool like Hootsuite Insights, that help in gauging customer response to these social sites, as well as critically analyze the interaction of the consumers about the specific brand over the social media sites (Holt 2016). With the help of prominent graphic visualizations, this analytical tool helps in informing the company abou t the changing behavior of the customers. Social Media Aids in Targeting Relevant Audience: While targeting relevant audience is a matter of primary importance, creating customized clients and sharing advertisements exclusively with them is important. The use of popular hash tags on Instagram and Twitter can always attract the relevant audience, for example, #glasses can help in attracting sunglass consumers. Since the Facebook newsfeed becomes overcrowded with multiple adverts, organizations seeking immediate consumer attention can also employ the use of Google+ and Sprout that enable demographic or interest-based audience targeting, which in turn enhances the visibility of the adverts (Scott 2015). Use of Blogs in Marketing a Product and Enhancing the Brand Image: While discussing about social media marketing, it should be noted that most of the organizations focus on the well-known and most popular social media sites like Facebook and Twitter. However, many companies fail to develop consumer awareness simply because they ignore blogs and review sites which also help in enhancing their visibility. This is the reason why companies, especially the small and emerging ones, which are present on Yelp and Pinterest, are able to network and promote their business much more effectively (Tuten and Solomon 2014). Besides, many companies use online blogs to attract strangers, turn them into regular visitors and ultimately sell them products. Figure 2: Diagram Showing how Blogs Work Source: (Fuchs 2017) As evident from the above diagram, engaging bloggers to write blogs for a company help in enhancing the traffic coming to the company website, ultimately helping to convert the traffic into leads. Social Media as a Recruitment Weapon: Although it is less acknowledged a fact, social media does assist an organization attract talented workforce as well. According to research reports, 61% of the employees use social media sites to research about a company, and hence the presence of an organization on social sites helps in creating the employer brand (Treem et al. 2013). Hence, having an established social media presence is highly important. Besides, needless to state that many potential employers connect with the suitable and deserving employees via professional social media sites like LinkedIn. Cost-efficient Marketing Tactic: Endorsing a product or developing the brand image via social sites was never so cheaper with traditional media such as newspapers or television and radio adverts. According to research reports, social media sites like Facebook and Google are not only going to overtake a major part of the TV audience, but also enables business organizations to endorse their products absolutely at free of cost. Unlike any other media, social media allows an organization reach out to a huge number of people at once with no cost other than installation of social media sites. Social Media is Time Intensive: Although the social media sites have been considered to be efficient tools for marketing, the use of social media marketing takes a lot of time. In fact, the idea of social media site is based on two-way communication process (Okazak and Taylor 2013). Hence, a marketing manager will have to actively monitor the interaction over the sites, respond to each individual comment, as well as handle customer queries about product information, price details, and others with much time and patience. Social Media as a Cost-Intensive Medium is a Myth: Social media marketing can also get very expensive. First of all, since social media marketing requires constant engagement with client, it is important to hire at least a couple of marketing managers who will be entrusted with the duty of sharing posts or responding to consumer queries. Although content marketing helps a company to increase traffic to its website, each new day at least 500 new websites are being created writing blogs and articles and promoting various products. In order to stay in the competition, companies have to spend huge amount of money for paid advertisements, and as per the recent IZEA survey, 61% of the marketers pay a higher amount to an external marketer for promoting their products (Hays et al. 2013). Opening up an account on these sites is easier, but without paid advertisements, attracting new consumers is almost impossible. Social Media Sites Often Lead to Negative Reputation: Consumer dissatisfaction is not a new issue, and in fact a earlier times also, consumers used to complaint about the product or service they did not like. However, the problem arises when these unhappy customers get an opportunity of giving a company one star rating, poor review openly on the social media sites (Rokka et al. 2014). This negative feedback can instantly malign the reputation of a company and dissuade its potential customers to stay loyal to the company. In fact, the negative feedback, information leaks or hacking remain some of the most potential drawbacks of social media marketing. Social Media and Hacking Issues: The social media sites can also prove to be intrusive to the privacy of many companies. A variety of malware, spyware, adware and ransom ware can lead to hacking issues. In case the official account of a company is hacked, it can lead to the offensive customer reactions and failed marketing efforts (Georgescu and Popescul 2015). Identification of Literature Gap: Although most of the literary articles and business journals reviewed, state the importance of the social networking sites in enhancing brand reputation and increasing sales, the number of research articles discussing the limitations and drawbacks is very limited. Further, most of the literary articles have primarily focused on the most well-known social media sites such as Facebook, Twitter and Instagram. However, some of the less known social media sites find no mention here. Conclusion: To sum it up, it becomes clearly evident that the social networking sites are of much use to help a company in its marketing efforts. It is a well-known fact that the social media is critical to the marketing and customer service success of any organization operating in any part of the world. Reduction in the price of marketing and promotion, easy access to a larger customer base, opportunity for direct customer interaction and customer feedback, as well as improved ranking on search engine websites definitely boost the sales and brand reputation of a company. However, social media tools used for business must be managed well in order to ensure marketing success as there are potential drawbacks as well. Reference List: Agnihotri, R., Dingus, R., Hu, M.Y. and Krush, M.T., 2016. Social media: Influencing customer satisfaction in B2B sales.Industrial Marketing Management,53, pp.172-180. Aral, S., Dellarocas, C. and Godes, D., 2013. Introduction to the special issuesocial media and business transformation: a framework for research.Information Systems Research,24(1), pp.3-13. Fuchs, C., 2017.Social media: A critical introduction. Sage. Georgescu, M. and Popescul, D., 2015. Social Mediathe new paradigm of collaboration and communication for business environment.Procedia Economics and Finance,20, pp.277-282. Hays, S., Page, S.J. and Buhalis, D., 2013. Social media as a destination marketing tool: its use by national tourism organisations.Current issues in Tourism,16(3), pp.211-239. Holt, D., 2016. Branding in the age of social media.Harvard business review,94(3), pp.40-50. Ngai, E.W., Tao, S.S. and Moon, K.K., 2015. Social media research: Theories, constructs, and conceptual frameworks.International Journal of Information Management,35(1), pp.33-44. Okazaki, S. and Taylor, C.R., 2013. Social media and international advertising: theoretical challenges and future directions.International marketing review,30(1), pp.56-71. Rodriguez, M., Peterson, R.M. and Ajjan, H., 2015. CRM/social media technology: impact on customer orientation process and organizational sales performance. InIdeas in Marketing: Finding the New and Polishing the Old(pp. 636-638). Springer, Cham. Rokka, J., Karlsson, K. and Tienari, J., 2014. Balancing acts: Managing employees and reputation in social media.Journal of Marketing Management,30(7-8), pp.802-827. Scott, D.M., 2015.The new rules of marketing and PR: How to use social media, online video, mobile applications, blogs, news releases, and viral marketing to reach buyers directly. John Wiley Sons. Treem, J.W. and Leonardi, P.M., 2013. Social media use in organizations: Exploring the affordances of visibility, editability, persistence, and association.Annals of the International Communication Association,36(1), pp.143-189. Tuten, T.L. and Solomon, M.R., 2014.Social media marketing. Sage.

Swisher Motor Case Analysis Essay Example

Swisher Motor Case Analysis Paper Wayne Swisher, President and Chief Executive Office of Swisher Mower and Machine Company (SMC), was weighing the proposal of a private branding arrangement for SMC’s line of riding mowers. He thought the inquiry presented an opportunity but details should be studied more closely. Situation Analysis: Company Background: Established in 1945 by Max Swisher, SMC grew steadily with unit volume for SMC riding mowers peaking at 10,000 units with sales of $2 million in 1966. In the 1990s, the unit volume remained constant with around 4,250 riding mowers per year. Compared with 1,263,000 unit sales in riding mowers and tractors industry, SMC only occupied around 0. 3% market share. Max Swisher, the current CEO, thought maintaining a small company image had also been an important aspect of his business philosophy, which led to the good personal relationships with dealers and customers alike. SMC produced limited but differentiated products. SMC’s flagship product, the Ride King, was credited with the first zero-turning-radius riding mower. SMC also produced a trail-mower called T-44 with a cutting width of 44 inches. Kits, the self-propelled push mower, accounted for 8. 2% of SMC’s total sales, though it did not provide a material contribution to the company’s gross profits. The replacement parts for mowers posed a good business for SMC, accounting for 20% of the total sales. The following table showed the detailed comparison of the percentage in total sales and total gross profits across different modes of mower together with replacement parts. 1995 dataRide KingT-44KitsReplacement Modes of MowerRiding MowerTrail-mowerPush mower/ % of total Sales63. 60%8. 20%8. 0%20% % of Gross Profits57. 80%13. 20%029% SMC planned to broaden SMC product line in 1996 by introducing a high-wheel string trimmer product, Trim-Max, a high-wheel, walk-behind product. With manufacturing plant in Warrensburg, Missouri, SMC owned an annual capacity of 10,000 riding mower units on a single 40-hour-per-week shift with distribution mainly in non-metropolitan areas. About 75% of sales of SMC were made in non-m etropolitan areas. SMC sold 30% through wholesalers, 25% through direct-to-dealer, 40% as private-label, and the rest 5% as exports. We will write a custom essay sample on Swisher Motor Case Analysis specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Swisher Motor Case Analysis specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Swisher Motor Case Analysis specifically for you FOR ONLY $16.38 $13.9/page Hire Writer It sold the Ride King through wholesalers, who located throughout the country, focusing on farm dealers situated in the south central and southeastern US. SMC remained a profitable company since its founding with a net profit return on sales of 10 percent or more annually. The sound financial position minimized the need for any major short-term or long-term financing. Industry Backgrounds: Riding lawn mowers are classified as lawn and garden equipment with two basic configurations, the front-engine lawn tractors and rear engine riding mowers. However there are some mid-engine riding mowers on the market, such as those produced by SMC. Front-engine lawn tractors are the most popular design followed by rear-engine and mid-engine models. Rear engined lawn tractors are perceived as stronger and more durable. Competition in riding lawn mower market was fierce with ten manufacturers comprising major competitors in 1995, while SMC only occupied around 0. 3%, based on sales units. All these companies made Riding mowers under a nationally branded name and at the same time were engaged in private-label production. It was estimated that private-label mowers account for 65 to 75 percent of total industry sales. Each riding mower manufacturer priced its products at price points. The representative retail prices for national and private-label riding mowers typically ranged from $800 to $5,000. The manufacturer’s price of Ride King of SMC, $ 650, was quite comparative, compared with industry average. Sales trends of riding mowers were cyclical and highly seasonal. With slice decline of sales in 1991, projections for 1995 and 1996 point toward further increases in unit volume. Industry statistics show that over half of manufacturer shipments of these products occur in the four-month period from January to April. A SWOT Analysis on current situation of SMC: InternalStrengthsWeaknesses Producto Distinct products o High quality, simple design, ease-to-use and maintain, no significant claim o Interchangeable parts o Competitive priceo Limited range of products o Perception on rear and mid engine not as strong and durable as front-engine Managemento Customer-oriented Personal relationship with dealer, distributors and end-customers o CEO expertise in marketing, VP of Sales for 6 yearso One man makes all the decision o Small business mentality Marketingo Co-op advertising with its dealers o Good relationship with dealers and end-customerso Previously neglected consumer advertising o Insufficient attention for promotion and advertising campaign o No national distribution network RDo One new product on the way (Trim Max)o Not so aggressive Financeo Consistent net profit of approx. 10 percent o Adequate cash flow to finance operation o Minimize the need for short-term or long-term financingo Poor cost management o Possible liabilities – self-insurance of products External OpportunitiesThreats Market expansiono Limited market coverage (south central, southeastern). Potential expansion to the west o New target market include consumer housing, in addition to farms o Private labels business may be growingo Many big competitors like Honda, John Deere, American Yard Production etc with stronger financial resources and economic size of capacity Industry Outlooko Growing industrieso Cyclical industry o After next year, industry may be down Technologyo Possibility for automation by technology development in long term (production streamline, cost reduction)o Imitation is allowed as patent expired Problem Statement How to grow the business since sales plateau existed for almost 20 years despite continuous profits? This is what Wayne Swisher had been concerned for several years. In early 1996, Wayne Swisher received a certified letter from a major national retail merchandise chain, inquiring about a private branding arrangement for SMC’s line of riding mowers. Wayne had to decide whether or not to accept the proposal as well as the next step to grow SMC. The Private-label Proposal Contract: A 2-year contract which could be automatically extended on a year-to-year basis, with price and other terms negotiable then. Also can be terminated by any party with a 6-month notice. ? Product: Minor changes based on Ride King ? Order: An annual order of approximately 8,200 units, a sample order of 700 standard riding mower units to be delivered in Jan1997. ? Price: FOB; 5% discount on SMC’s manufacturer’s list price for its standard model; Reorders will be at the same price Marketing: SMC did not need to make any promotion effort to either the chain or the consumers. In addition, the private label relationship with the chain should be held confidential. ? Negotiable Inventory holding payment term: The chain would carry inventories in its regional warehouse. However, only until the mowers were shipped to a company store, or only when they had been in a regional warehouse for 2 months, would title be transferred and would the 45 da ys’ payment term start to take effect. Warranty: SMC’s standard warranty would be required for all mower parts. SMC was expected to bear any labor costs resulting from warranty work at $22 per hour. Replacement parts would be sold to the chain at present price point and shipped FOB factory. Proposal evaluation To facilitate our analysis with limited information, the following reasonable assumptions are taken: a) Unit sales without cannibalization, selling prices and costs (except the additional costs mentioned in the case) of Ride King would remain the level of 1995. b) Ignore the impact of decreasing unit fixed cost with expanded production volume. ) Recognize sales in late 1996, though the sample order of 700 was to be shipped and sales were to be recognized in 1997 d) Assume consistent cannibalization rate among two-year contract period (=300 cannibalized annually/8,200 annually) e) Average the one-time costs of $10000~12000, i. e. $11,000, and the costs are expense d when accepting the proposal. f) Assume SMC could well arrange production and avoid excess OT work for PL/Ride King over the minimum of 2100 units/year. g) Assume the new mowers under proposal (â€Å"PL†) occupied the same capacity as Ride King did. ) Assume after negotiation, title can be transferred upon shipment from SMC. Sales Analysis (Table A) Total Ride King Sales, both the original and those from Private Label proposal (â€Å"PL†), would be 4,874, 12,100 and 12,100 units for year 1996~1998 respectively, with net increase of 674, 7,900 and 7,900 after cannibalization. Financial Analysis ? Additional income per unit (Table B) * As stated in Assumption b), united fixed cost is overstated. Hence, gross profit of the proposal would be slightly higher. Hence, the proposal would bring an additional per unit income of $42. 5 (gross profit of 6. 5%) if within the 10,000 capacity with a single 40-hour-per-week shift and an additional income of $16. 25 (i. e. GP of 2. 5% ) if over capacity with overtime work. ? Capacity Analysis (Table C) Assume SMC could manage to arrange a smooth production without significant fluctuation to counter the seasonal delivery. Hence, production volume could be consistent with sales volume as shown in Table A. Hence, in 1996, as total production volume still under capacity, no overtime work for PL needed. While for both 1997 and 1998, 2,100 units of PL would be produced with overtime work. Incremental Income (Table D) Based on the assumption and calculation above, total incremental income can be derived as follows. The proposal would generate an extra net profit before tax for SMC of $11,098, $88,850 and $88,850 in year 1996, 1997 and 1998 respectively. On the base of year 1995, the sharp increase in sales by 178% would bring in a 21% increase in net profit before tax. Table D Ride King199619971998 Cannibalization loss Gross Profit per unit97. 5097. 5097. 50 Cannibalized volume-26-300-300 Cannibalization lost-2,535-29,2 50-29,250 Additional Income from PL Within capacity Volume7006,1006,100 Gross Profit per unit (see Table B)42. 2542. 2542. 25 Additional Income29,575257,725257,725 Over capacity Volume02,1002,100 Gross Profit per unit (see Table B)16. 2516. 2516. 25 Additional Income034,12534,125 Total Additional Income29,575291,850291,850 Incremental Income27,040262,600262,600 Additional Cost One-time cost-$11,000$0$0 **Additional Financial expenses For additional AR (ignore that of sample)$0-$57,929-$57,929 For additional Inventory (Average inventory of 2100units. )$0-$116,091-$116,091 Additional net profit before tax$16,040$88,580$88,580 1995199619971998 Additional net profit before tax $11,098$88,580$88,580 Net Profit$430,200$446,240$518,780$518,780 % increase in net profit 3. 73%20. 59%20. 59% Sales -Ride King $2,713,354$2,535,000$2,535,000 -PL $432,250$5,063,500$5,063,500 Sales$2,730,000$3,145,350$7,598,500$7,598,500 % increase in sales 15. 21%178. 33%178. 33% For detailed information on Additional Financial Expenses, please see the Table F as follows: (To simply analysis of AR financing cost, we ignore cannibalization of the sample order, and use the same selling price and payment term of PLs for the small quantity of cannibalized Ride King. Also, we ignore the inventory financing cost for 1996. ) ** Additional Financial Expenses 199619971998 Cost to finance additional AR Cannibalized Ride King-26-300-300 PL7008,2008,200 Net Additional Unit Sales 6747,9007,900 Net increase in Sales (@617. 5)$416,195$4,878,250$4,878,250 Impact on AR (45 days /360)$52,024$609,781$609,781 Cost to finance additional AR (@ 9. 5%)$4,942$57,929$57,929 Cost to finance additional Inventory Additional average inventory (assume nil for sample order)02,1002,100 Average unit cost [=((6100*(650-42. 25)+2100*(650-33. 5))/8200]$0$582$582 Average inventory cost$0$1,222,008$1,222,008 Cost to finance additional Inventory (@ 9. 5%)$0$116,091$116,091 ? Sensitivity Analysis: In order to gauge the risks associated with the terms and conditions of the proposal, SMC tried to analyze the sensitivity of the sales and profits to the changes of terms and conditions in payment terms, inventory costs, interest rates and cannibalization volume. To illustrate the point clearer, the breakeven point of each terms and condition is calculated with other situation held constant. SensitivityNo Additional Profit Payment terms -65% 114 days Extra holding inventory-131%3,700units Interest rate-196% 14. 3% Cannibalization volume -22%1,690units Because all these conditions above are unlikely to happen, SMC can be rather confident that the proposal is quite favorable in making profits. Evaluation of the proposal Just like a coin has two sides, the proposal also has pros and cons. SMC can benefit from the private label proposal from six aspects. SMC can enjoy the increase in sales and profits after accepting the proposal. The details can be seen in the following table: 19951996 Increase*1997Increase*1998Increase* Sales2,730,0003,145,60415. 22%7,598,500178. 33%7,598,500178. 33% Net Profits430,200446,2403. 73%518,78020. 59%518,78020. 59% * % increase versus those in 1995 If SMC accepted the proposal, its sales could rocket up almost 178% in 1997, compared to sales in 1995. It profits could be increased by 21% in 1997, compared to those in 1995. The proposal posed a good opportunity to SMC to increase sales and profits. †¢SMC could also benefit from stable demands for its products in the next two years. The private proposal would offer stable orders to SMC. †¢SMC could fully utilize its currently idle production capacity. Without acceptance of this private label proposal, the idle manufacturing capacity is 5,800 units per annum, more than 50% of total capacity. The high opportunity cost incurred could not be neglected. †¢Furthermore, SMC could utilize this opportunity to make entry into the most important retail distribution channel: national retail merchandise chains, which currently accounts for 24% of the national market. †¢Moreover, this proposal could provide an extra benefit of free test market! In fact, SMC remains a regional manufacturer of riding mowers for almost half a century. Its sales had plateaued for a decade while industry as a whole embraced record increase in recent years. SMC could take this precious chance to survey customer reaction across US to its unique mid-engine products with the help of the mass merchandise distributor’s strength of marketing without even using any of SMC’s scarce valuable marketing resources. †¢Additionally, this new challenge would be a best learning opportunity for SMC when it operates on a scale twice the size of current operation. SMC could learn how to cope with the production within or even exceeding full capacity. For example, stretched manufacturing would lead to unprecedented pressure for purchasing department, warehouse management, logistics, etc. On the other hand, SMC should look at the other side of coin and analyze the cons of the private label proposal as well. †¢Upon adopting the proposal, SMC would contribute more than 50% of its capacity for Ride King to one single private label mower production. Furthermore the improvement of SMC’s own brand could be limited by the remaining 42% production capacity. Limited capacity could hamper the introduction of new product, say missing the good timing, or could lead SMC to miss the good chance to grow current brand, say if demand for current brand increased. Other than capacity, the proposal also put pressure on SMC’s other resources, such as financial budget, labor, general management, etc. Private label production would consume a certain part of the limited and valuable corporate resources. †¢Moreover, accepting proposal to manufacture private brand and distribute the private brand through other channels might lead to potential conflict with its traditional distributors. Although the chain’s outlets were located in metropolitan areas, there would be some overlap in trade areas with SMC’s current dealers. SMC, a small concern, relies heavily on its regional dealers to promote its products to consumers. Such a bold move might lead to certain percentage of independent dealers to drop the SMC line. †¢The less profitable Private Label could cannibalize 300 units of the sales of more profitable Ride King annually in 1997 and 1998. What is more, the cannibalization rate could be higher than estimated 300 units a year. †¢ Additionally, SMC had to bear the risks ssociated with the private label plan. Accepting the proposal is confronted with two uncertainties. One is that the mower producer had committed two third of its current capacity to one single distributor. Once there was no renewal of the contract, it would be difficult to develop another comparable buyer. The other is that the contract would be terminated midway, i. e. one par ty is entitled to break the deal with a six-month notice beforehand at any time. Furthermore, although the total sales and output would expand almost twice, the increase in profits will not keep the same pace with the increase of the sales. Finally, SMC should consider other potential costs. For example, sudden expanded production might lead to quality insurance challenges. The product liability claims might eat up the minute increase in profit from the contract. Plus, the warranty costs would $22 per labor hour. Alternatives: ? Alternative 1: Accept the proposal and, in the long run, develop own brand based on the experiences of private label production: SMC should incorporate the consideration of the following elements when accepting the offer. Firstly, during negotiation with the mass distributor, SMC should try its best to make the contract terms more favorable. Albeit its bargaining power is somewhat limited, as a reliable provider of a highly differentiated mower product, SMC had some say on the some part of the contract. To negotiate to transfer title upon shipment by SMC would be very reasonable and fair. Holding inventory of an average of 2,100 units in the chain’s regional warehouse under SMC’s title would be very unfavorable to SMC, given PL’s high average monthly inventory financing cost of ~$4. 61 per unit per month and even higher AR financing cost of ~$4. 9 per unit. Although SMC would not hold a big chance for this as in title transfer, still Wayne could try as 15-day could save SMC an AR financing cost of ~$19,310 a year. †¢ Secondly, in order to enhance its own brand and strengthen its own brand product, SMC should make this deal only as a short run option. Production of private label can only be regarded as a temporary way to improve SMC’s sales and profits, and is not a reliable one in the long run. To develop its core competency, SMC has to emphasize on improving its own brand image and establishing its own national distribution channel. Further actions should be taken if SMC decides to accept the proposal: Aimprove its current product mix. In its four core products, Kits makes up to 8. 2% of its annual sales yet offer zero profits. With the coordination among its relevant functional area within the firm, SMC could gradually drop the whole product line of Kits if it could not improve its profitability. BHire more temporary labor to avoid excessive overtime work Since the firm scaled up its production, it should hire temporary labor with adequate training to ensure the on-time delivery and quality control. Excessive overworking for a long period might causes the decrease in both workers’ productivity and production quality. Of course, SMC should reach a good trade-off between the costs to hire extra hands and the improvement in productivity and quality. C Establish nationwide distribution network Unsatisfied being a regional riding mower provider, SMC should take the chance of free market test provided by the private label proposal to help establish its own national distribution network. Western part of United Sates poses great new chance for SMC. DDiversification of product lines It is important for SMC to build more consumers-oriented mower in addition to its current farm mower offering. For example, mowers used in cutting the grass in garden offer great potential for SMC since SMC are already quite specialized in movers used by farmers. The change in product orientation would help it to capture different market niche and widen its target customer base. ? Alternative 2: Reject the proposal and concentrate on the development of own brands: On the other hand, SMC should consider further actions to develop alternative strategies if it rejects the proposal to produce the private label. ALaunching of new product: Trim Max. If rejecting the offer, the company could put more of its limited resources to the launch of Trim Max as a strategic move, widening its product line of trail-movers under the Swisher name. But the firm will possibly be confronted with some uncertainties, such as poor sales of Trim Max. BImproving profitability of Kits or discontinue it Among SMC’s four core products, Kits makes up to 8. 2% of SMC’s annual sales yet offers zero profits. With better coordination among its relevant functional areas within the firm, SMC could examine closely the root causes of the unprofitability of Kits and try to eliminate the non-value added portion of the value chain. If SMC cannot improve Kits’ profitability at last, it should consider dropping the production of Kits at all. CEstablishing nationwide distribution network Upon rejection of the offer, in the long run, SMC should put its efforts on establishing national distribution network for its product mix, especially Trim Max, the new introduction to the market. As we mentioned earlier, the western part of United Sates is untouched yet. SMC could try to push the distribution channel toward the western part. DDiversifying product lines The advent of the new product, Trim Max, would no doubt improve the product diversification. Furthermore, SMC should expand the newly introduced products and reduce the reliance on its old flagship product, the Ride King, which was designed in the 1950s. EMore advertising Obviously, the introduction of the new product should be fully assisted by full-scale advertisements and vigorous promotions. SMC can promote its products in the current geographic scope of distribution channel to expand the sales. Furthermore, SMC could consider vigorously promoting its product to the untouched part, the western part of US, and help to set up the national distribution channels. Final decision: After delving into all the pros and cons of the two alternatives, Wayne believes that SMC should adopt this private label proposal with eyes on the long-term development of own brand. Major reasons: For SMC, the benefits are comprised of both direct and indirect contributions. Direct cost saving and profit generation, Aexcess capacity utilization The most important reason to accept this offering is that SMC can make a full use of its capacity and make more profit. As we have explored previously, SMC has around 60% of idle capacity which comprised a potential opportunity costs. In addition, analyzing from economics’ angle, we find that total fixed costs of SMC’ s products remain unchange d with the utilization of idle capacity. The additional revenue arising from the sales of private label may possibly increase profits in SMC. BProfitability In 1996, sales can increase by 15. 2% and net profits would boost by 3. 74% after accepting the proposal. In the next two years, the sales and net profits will be rocketed to 178. 3% and 20. 59%, respectively, comparing with those in 1995. †¢ Indirect benefits on regarding the production of private label as a stepping stone to promoting SMC’s own brand AAccumulation of profits to finance future development The increased profit aroused from the contract could be accumulated as retained earning to finance the company’s future expansion. This is especially true, when SMC is of such a small scale (market share is less than one percent). It would be quite difficult to fully expand after sales and profits had plateaued for more than a decade. At this stage, private label production could provide SMC with necessary profits, which could finance future development. BAccumulation of operational experience The firm can get much precious experience on operating business on a larger scale and in full capacity. The experience includes management, marketing, operation and technology experience. All of these experiences should be considered as a preparation for great leap in the future. One afternoon in early 1996, Wayne Swisher, satisfied with his analysis about the current and future development of SMC, was confident that SMC could both benefit from the private label proposal, the birds at hand, and stay in track with the long-term development of SMC’s own brand. The funds, raised by utilization of excess capacity and the production of private label, and the experiences learned from production in full capacity, could assist SWC to step further to fully develop its own brands in the long run.