'Haverwood Case Analysis Essay\r'

'Haverwood piece of article of furniture Individual Summary\r\nIntroduction:\r\nIn 2008, Haverwood piece of furniture and Lea-Meadows Inc. merged into one fellowship. The issue at go involves merging the selling efforts of the two companies. They both go more or less selling their products diversely and the stovepipe image of action is uncertain. John Bott, of Haverwood, believes that Haverwood gross gross r eventideue representatives implement the best selling strategy whereas Martin Moorman, the national gross revenue conductor at Lea-Meadows believes that they rush the superior strategy. Haverwood is a manufacturing alliance that makes medium-high priced furniture made out of wood. Net gross revenue for Haverwood was 75 million in 2007 with a in advance tax profit of 3.7 million. They employ their own sales representatives who represent 1000 different sell accounts for the club. These representatives draw in an annual salary of 70,000 (plus expenses) and receive a military mission of .5% of the company’s concluding sales. Haverwood believes that their sales strength are extremely regarded in the furniture application, conditioned almost wood furniture, and willing to work with buyers and sell sales personnel.\r\nThe provided negative aspect roughly Haverwood’s selling strategy is that all of the retail accounts that the merger will create do non carry the complete Haverwood crinkle. In order to beset this, Botts was instructed to push the sales reps, urging them to make 10 sales calls per week and increasing the call oftenness to seven calls per year. On the other hand, Lea-Meadows is a small, in private owned manufacturer of upholstered furniture for living and family rooms. The company is known for using some of the finest fabrics and frame construction. Their crystallize sales in 2007 were 5 million. Total industry sales for upholstered furniture manufacturers were 15.5 billion.\r\nThis number is expected to affix 3% annually in the future. Lea- Meadows employs 15 sales agents. These agents alike represent several manufacturers of noncompeting furniture and home plate furnishings. gross revenue agents are paying 5% of net company sales. The agents call on specialty furniture and department stores. They called an estimated 1000 retail accounts in 2006 and 2007. all(a) of the agents had relationships with and worked closely with their retail accounts.\r\nAlternatives:\r\nOption 1: invest Lea-Meadows Line to Haverwood Sales Force\r\nBotts believes that assigning the line to Haverwood sales deplume was the correct finale because they keep a professional, adaptable and knowledgeable sales draw and they know many of the buyers privately who were responsible for upholstered furniture. In addition the Haverwood sales team has a 5% higher profit margin than that of Lea-Meadows. In addition, victorious on the Lea-Meadows line would require only about 15% of current sales call time, dev ising it relatively easy for the sales force to wages on. Botts also called on the company motto that â€Å"only our people are able and willing to urinate”, think ofing that Lea-Meadows salespeople would non represent the principles the company was founded on.\r\nHis utmost reason was that it wouldn’t look favorably on the company if representatives and agents called on the same stores and buyers, which would also mean that Haverwood would maybe be paying commission twice on one sale. However Bates knows that it would be tight to train the Haverwood sales representatives on all of the different aspects of the Lea-Meadows line.\r\n chisel in Even Analysis:\r\nCosts:\r\n$700,000 in salaries\r\n$130,000 in sales administration\r\nTotal: $830,000\r\nBreak Even Equation\r\n$830,000+(.005x)=.05x\r\nX= $18,444,444.44\r\nThis number way of life that if the expected sales volume is greater than $18,444,444.44 whence the company’s sales force should be used. If the expected sales volume is less than $18,444,444.44 wherefore the independent sales agents should be used. For Haverwood, since their projected sales is equal to 78 million [((12,900,000-12,400,000)/12,400,000) industry ontogeny is 4%, applied that to Haverwood sales], it signifies that Bates should use the Haverwood Sales force to sell the Lea-Meadows line.\r\nOption 2: Keep Lea-Meadows Sales Agents\r\nMoorman believes keeping the sales agents for the Lea-Meadows line is the right decision. He called upon the fact that the agents (and he, himself) have already established contacts and were highly regarded with years of experience. The sales agents would also be a very small cost beyond commission. In addition he believes that the agents are committed to the line. furthermore he argued that some of the Lea-Meadows agents called upon buyers that were not contacted by the Haverwood sales reps. Finally, he disagreed that the Haverwood sales reps could easily learn about the Lea-M eadows line. With the combinations of fabric, skirts, pillows, springs, and fringes the company has, the sales rep would have to be knowledgeable about over 1 billion possibilities.\r\nHowever, as shown by the break even analysis, it is not economically justifiable for these two companies to operate separately any longer. Just by the economics, it is an easy decision for Bates to just use the Haverwood sales agents. Bates, However has personal ties with Moorman which affects his decision. If they do not use the Lea-Meadows sales agents, then(prenominal) Moorman will lose his job. Although this is a significant actor for Bates, it is obvious that using Haverwood sales representatives if the right decision for the company in terms of profitability.\r\nOption 3: Hire More Sales Reps\r\nThe third weft that Bates is considering is hiring additional sales representatives. These sales representatives would be happy to understand Haverwood and Lea-Meadows furniture. However, doing so w ould require restructuring the sales territories and would possibly take commissions away from existing sales representatives. It also does not seem necessary to take on additional sales reps after conducting the break even analysis.\r\nRecommendation\r\nBecause of the break-even analysis, it is easy to see that Bates should decide to exclusively use Haverwood, Inc. sales representatives. It is more profitable for the company to give these accounts to the Haverwood sales reps. It would also allow Bates to have more control over the sales representatives as they would all be Haverwood reps and not Lea-Meadows.\r\n'