Unformatted text preview: xtensively in edgebanding and therefore compete directly with FTI. The exact size of the market and FTI’s competitors is hard to determine because just about every company is privately owned. Edgebanding technology was invented 25 years ago and has still not permeated the market extensively, so the demand for edgebanding is expected to grow. Robert and Dianne made significant improvements to FTI after its purchase. The prior owners had operated the company less aggressively as they approached retirement and as a result sales had declined by ≈7% per year between 2000 and 2002. This trend was immediately reversed after the purchase and sales more than doubled between 2003 and late 2006. Gross margin percentage increased to over 50%, inefficiencies in operations were removed and customer service was improved. These results were due to a 3‐stage growth plan put into effect by Robert and Dianne: 1) House in Order would focus on improving existing products and services, 2) Optimization was about expanding at the existing margins to fuel organic growth, and 3) Breakout Growth was meant to rapidly increase company sales through a new product line or acquisition. Step 1: Assessment and Framing Assessment In late 2006 Robert and Dianne believed they satisfactorily accomplished stages 1 and 2 of their growth plan and were contemplating how to enact stage 3 in order to achieve breakout growth. They knew that this decision would define their growth strategy for years to come and was therefore very important. The competitive landscape for FTI in late 2006 did not seem particularly threatening. FTI was the leading edgebanding distributor with the largest inventory in the southwest region of the United States. Major competitors operated primarily in different regions of the country and were not perceived as immediately hostile to FTI’s market share. Accurate information regarding the overall business landscape in the edgebanding industry is hard for the decision makers to find because the industry is small and consists almost entirely of private companies for which no data is available. Only one of FTI’s vendors is a publicly held company which financial reports that can be used to glean market size information. Thus, the only way for the decision makers to get external information about competitors and the industry as a whole is by talking with industry contacts. The overall lack of information presented a major obstacle for FTI in meeting the challenge of continued growth. Framing In considering ways to achieve breakout growth, Robert and Dianne established a frame that was scoped so that only a few alternatives were considered. In general, only two broad frame boundaries existed. The first boundary considered what was feasible based on their personal financial condition, where bankruptcy was out of the question because it meant a lifetime of savings lost. The second boundary ensured that anything they did would maintain the kind of lifestyle that originally led them to buy FTI. Within these boundaries much could be considered. However, the boundaries were accompanied by a narr...
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This document was uploaded on 02/17/2014.
- Winter '14