CASE23_ProClean

CASE23_ProClean - Pro Clean, Tennessee INTRODUCTION Pro...

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Pro Clean, Tennessee INTRODUCTION Pro Clean is a small carpet cleaning business based in Knoxville, Tennessee. Attempts to expand have met with limited success, and owner/operator Kevin Wilson is struggling to determine the strategic direction he should take. Despite the company's small size, Wilson can clarify business conditions and establish the best way to manage his resources by using the strategic management process. Conducting a situation analysis of the external and internal environments will help him to determine if steps can be taken to achieve competitiveness or, in his case, if the business can even survive. The following steps should be followed to complete his assessment. 1. How would Wilson define his greatest organizational strengths? 2. What are Pro Clean's biggest weaknesses? 3. Given the competitive conditions, what are the merits of opportunities that are available for Wilson to pursue? 4. What actions are required by Wilson to successfully position the company for growth and improved profitability? ANALYSIS Internal Environment Strengths . Pro Clean holds a respectable 5% share of the Knoxville carpet cleaning market and is growing at a rate of approximately 5% each year. The company holds a strong position in the city's northeast residential district. It has a loyal and satisfied customer base which generates 60% of revenues from repeat business. Non- repeat business is derived from: Marketing 10% Referrals 8.5% Other* 19.5% Website 3% *Leads from painted van sightings. While carpet cleaning services represent 77% of Pro Clean's sales, other sources of revenue include: Upholstery 9% - Higher price per piece than competitors' Area rug 5% - Pricing is 1/3 less than King Rug's Tile and grout 5% Carpet/fabric protection 3% Drapery 1% - Only competitor offering this service Pro Clean - 1
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Pro Clean, Tennessee Wilson has 15 years of experience in carpet cleaning. He has invested in establishing the Pro Clean brand with a professional image (logo, training, uniforms and painted vans) and engages in ethical business practices (contrary to bait and switch tactics used by competitors). Weaknesses . When Wilson emulated the King Rug business model by increasing staff, vans, and rented office space, he did not adopt the competitor's higher price structure to cover the additional expense items. Without higher prices or growth to support Pro Clean's new overhead costs, the company is experiencing poor financial performance. Due to payroll and van lease payments, cash flow has become an issue. And the expansion costs sunk into the business are not producing an acceptable level of return on investment for Wilson. In fact, as he seeks to find the answers to his current dilemma, Wilson has taken on additional expenditures which are contributing to further financial setbacks. Pro Clean is desperately in need of new business, but does not have the marketing
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This note was uploaded on 03/22/2011 for the course ACCT 3391 taught by Professor Turpin during the Spring '10 term at Troy.

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CASE23_ProClean - Pro Clean, Tennessee INTRODUCTION Pro...

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