The Groundhog's New Clothes

Many employees have enhanced their friendship by

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: cs to the internet. Many employees have enhanced their friendship by inviting the Franklins to countless baptisms, weddings, and graduations over the years. Steve and Eileen value these relationships with their employees greatly, citing them as one of the main reasons that they love coming to work each day and as essential to Beauti-Phil’s success in the future. As in all goods markets with low barriers to entry, competitors have been moving into the northwest Pennsylvania region where Beauti-Phil operates over the past five years. Steve recently received a call from Curtis Howser, the president of the Inner Circle, the group that organizes and operates the Groundhog Day Festival. Curtis told him that another company had made a pitch to become the official clothier of the festival. Steve analyzed the proposal but regretfully declined to match the offer because his cost structure could not compete with the other bid. Beauti-Phil still has a loyal customer base, but the loss of the Groundhog Day Festival account will undoubtedly dampen the company’s revenue stream. In anticipation of this kind of new competition for souvenirs, the Franklins have been expanding their sales efforts to companies’ logo merchandise and festivals and events in other areas such as Erie, Du Bois, and Oil City, Pennsylvania, and Conneaut and Ashtabula, Ohio. These efforts have been met with mixed success thus far; while they will lessen the loss of the Groundhog Day account, the Franklins are skeptical that they will be able to match the prior level of revenue in the future. Drake et al. 2004 Georgia Institute of Technology 3 The Groundhog’s New Clothes 3 The Factory The Beauti-Phil factory in Punxsutawney is a 20,000 square-foot facility with quality but somewhat antiquated machinery. The factory is leased from a major industrial landowner at a monthly rate of $0.75 per square foot. This equipment is mostly the original capital that the Franklins used to start the company fifteen years ago. The Franklins own most of the equipment used in the factory, but they still have two $10,000 payments due in February and August 2005 on the note they signed to pay for the newest piece of equipment...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online