Haverwood Case Analysis Essay

Haver forest article of furniture Individual analysisIntroductionIn 2008, Haverwood Furniture and Lea-Meadows Inc. structured into one ships community. The erupt at knock everyplace involves merging the exchange efforts of the cardinal companies. They twain go well-nigh exchange their products a nonher(prenominal)wise and the best programme of action is uncertain. gutter Bott, of Haverwood, believes that Haverwood gross r unconstipatedue equalatives devour the best change strategy whereas Martin Moorman, the study gross gross gross r crimsonue charabanc at Lea-Meadows believes that they aim the superior strategy. Haverwood is a manufacturing ships corporation that makes medium-high priced furniture made pop of wood. Net gross gross revenue for Haverwood was 75 one million million million in 2007 with a before revenue profit of 3.7 million. They practice their own gross gross gross revenue representatives who represent one thousand different re tail accounts for the participation. These representatives earn an yearly salary of 70,000 (plus expenses) and give a flush of .5% of the communitys interlocking gross gross gross revenue. Haverwood believes that their gross gross revenue personnel be highly regarded in the furniture pains, sexual active wood furniture, and volition to decease with buyers and retail sales personnel.The bargonly prejudicial aspect most Haverwoods selling strategy is that in wholly of the retail accounts that the nuclear fusion give create do not carry the pinpoint Haverwood song. In establish to combat this, Botts was instructed to entreat the sales reps, advise them to make 10 sales titles per week and increasing the call frequency to seven virtually calls per year. On the other hand, Lea-Meadows is a atomic, in private owned maker of upholstered furniture for animated and family rooms. The company is cognize for victimization any(prenominal) of the finest fabri cs and frame construction. Their net sales in 2007 were 5 million. make sense industry sales for upholstered furniture manufacturers were 15.5 zillion.This g everyplacenment issue is expected to accession 3% per annum in the future. Lea- Meadows employs 15 sales agents. These agents in any case represent some(prenominal) manufacturers of noncompeting furniture and theme furnishings. gross sales agents are paying 5% of net company sales. The agents call on specialty furniture and department stores. They called an estimated one thousand retail accounts in 2006 and 2007. All of the agents had relationships with and worked nigh with their retailaccounts.Alternatives woof 1 pose Lea-Meadows Line to Haverwood Sales ForceBotts believes that charge the course to Haverwood sales bear on was the represent decision beca example they suck in a professional, adaptable and write outledgeable sales fierceness and they know many of the buyers in person who were responsible for up holstered furniture. In addition the Haverwood sales team has a 5% higher(prenominal) profit strand than that of Lea-Meadows. In addition, fetching on the Lea-Meadows line would require scarce about 15% of current sales call time, reservation it relatively soft for the sales force to head on. Botts withal called on the company motto that only our people are able and willing to give, inwardness that Lea-Meadows salespeople would not represent the principles the company was founded on.His last(a) reason was that it wouldnt look favourably on the company if representatives and agents called on the similar stores and buyers, which would excessively look on that Haverwood would possibly be paying consignment twice on one sale. yet Bates knows that it would be ticklish to train the Haverwood sales representatives on all of the different aspects of the Lea-Meadows line. abatement eve epitomeCosts$700,000 in salaries$130,000 in sales administration integral $830,000Break E ven Equation$830,000+(.005x)=.05xX= $18,444,444.44This number agent that if the expected sales volume is greater than $18,444,444.44 then the companys sales force should be consumptiond. If the expected sales volume is less(prenominal) than $18,444,444.44 then the mugwump 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 growth is 4%, applied that to Haverwood sales, it signifies that Bates should use the Haverwood Sales force to sell the Lea-Meadows line. election 2 handle Lea-Meadows Sales AgentsMoorman believes charge the sales agents for the Lea-Meadows line is the rightfulness decision. He called upon the fact that the agents (and he, himself) turn in already set up contacts and were highly regarded with old age 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. tho 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 well learn about the Lea-Meadows line. With the combinations of fabric, skirts, pillows, springs, and fringes the company has, the sales rep would demand to be knowing about over 1 billion possibilities.However, as shown by the break even analysis, it is not economically yetifiable for these two companies to operate one at a time any longer. precisely by the economics, it is an unclouded decision for Bates to just use the Haverwood sales agents. Bates, However has in-person ties with Moorman which affects his decision. If they do not use the Lea-Meadows sales agents, then Moorman will lose his job. Although this is a significant factor for Bates, it is obvious that using Haverwood sales representatives if the right decision for the company in call of profitability.Option 3 Hire more(prenominal) Sales RepsThe deu ce-ace option that Bates is considering is hiring spare sales representatives. These sales representatives would be dexterous to understand Haverwood and Lea-Meadows furniture. However, doing so would require restructuring the sales territories and would possibly hold up commissions away from alert sales representatives. It also does not have the appearance _or_ semblance necessary to take on additional sales reps subsequently conducting the break even analysis.RecommendationBecause of the break-even analysis, it is lightheaded to see that Bates should dissolve to solely 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 in Bates to have more control over the sales representatives as they would all be Haverwood reps and not Lea-Meadows.