Gentleman’s Three Case Analysis

Report on The knock Reduction Task Force Submitted by K. Ratna prashanth 2012H149213P Introduction Counterdrop Appliances division is formed six month prior by Central foods after acquiring a successful company named Kitchen Helps in the kitchen appliances range, it had established a good market in this category. Kitchen Help had good quality but pecuniary constraints in nightclub to expand whereas Food Corporation wanted to diversify. After acquisition the company poured in a lot of resources in Kitchen Help including the plant facilities and the employees.As a result the sales of the company grew to a large extent initially. After that on that point was a sudden fall in the tax tax and profits. This virtuoso to the replacement of General Manager(John Pero to Georgia Dixton). She has decided to tackle this issue by the reduction in crash expenses by 20 % in order to revive future profits. To attain this she has delegated this responsibility to Controller Larry Williams. L arry William has canvass the financial implications and the people in the organisation and come to a decision of reduction in the 20% departmental payrolls. Problem DefinitionThe Kitchen Help is undergoing a severe wane in profits and revenue. valet resources have been recruited (Good numbers) by the earlier General coach Pero to solve this. Although the company has taken action that these resources do not hinder the progress, it has nearly constant sales revenue and same sales level it kept up(p) for past three years. There is no growth in the revenue. There is a problem of decline in profits in the most promising product lines of the Kitchen Help. The Coffee maker which gave a 30% of total revenue and 35% profits has a decline in demand due to opponents better product.Their price is less than $35 and it makes a coffee of same taste. Also there is steep decline in the demand of the microwave product range which used to give a profit of 18%. With decline in the Profits and the sales volume remaining the same the resources standardised recruited Human resource and the expanded pant capacity has not paid off its returns. The sales manager also finds it complicated to coordinate with the national, local and wholesale aspects of the sales durability. There is a need for coordination among the mangers of different units so that there does not remain a gap in resource requirement and its consumption.Analysis ? ? ? ? ? ? ? ? ? ? play along poured in huge resources in the beginning of Kitchen help It purchased land and expanded plant facilities in order to meet the sales volume requirement. The number of employees in the division rose from 100 to 500. But the revenue volume remained the same and the profit level did not rise. On the contrary the company pays the sales force a 66% payroll of the Budget which is considerably high. John pero freely added to their staff to meet lead on in the orders of sale. This all is fine when there is a good volume and prof its be world incurred. This implies that there is currently no further need to recruit more people in sales force. Mort Burns, sales manager feels that sales force has a little impact on more sovereign appliance and hardware store owners who account for 15% of final demand. These are the entities not qualification profit. 20% of allocated budget to marketing is $1656000 whereas the number of employees is only 18. Investment in Prime time Advertisements and national campaigns has resulted in the huge budgeting. Payroll as percentage of budget is 10% which is $165600. There can be a 20% reduction in payrolls.Senior Staff where replaced by the new staff at Kitchen help, this has led to gain in sales volume temporarily but could not sustain the market condition and hold open up the quality expectation. Introduction in the coffee maker section an innovative product was a competition to Kitchen Helps existing product. It could make 10 cups coffee without change in taste. This was l acked by Product development team of Kitchen Help who were working on it. 30% of divisions revenue and 35 % profit alone depended on this product earlier. The company should prioritise improvisation in this section.Williamss analysis on financial trends says that discounts to large retailers rose from the year of acquisition. There is scope of making a 3% profit from the discounts given to retailers. Moreover the marketing and sales team has to make extra efforts to sympathize the revenue from the retail chains. bash expenses on sales force in this channel can be trim down which will facilitate reduction in marketing costs and increased administration command processing overhead as well. Recommendation ? Bob Ericsons team should come up with an improvised design to soonest which they were planning for the past 6 months.The Product and production team should decide and come up with a product better than competitors quality or ? ? should manufacture the same with a much better red uced price and design i. e. less than $35. The company should concentrate on its wholesale and the national chains which are better sources of profit rather than the independent appliances and the hardware store owners. The cost to company should be emasculated down on non profit making entities and sales channel like independent products and hardware stores. The Overhead Cut off on these heads would result in profit and concentration on profit making channels.