Fenchel Lamps

1. What is your assessment of the business of Fenchel Lampshade Co.?What is the opportunity, people and context?

People

Steven Rogers (CEO)

* Business analysis

* Management

* Personnel management

* Purchasing

* Consulting

John Smith (Production Supervisor)

* 15 years on the job

Geri Wandall (Office Manager)

* 5 years on the job

Production Workers

* 67% of workforce is over 40 years old

* 55% of workforce has limited experience (1-2 years)

Oportunity

Competitive Advantage

* Industry leader in shadow-free lampshades

* Reputation for quality and service

Market Characteristics

* Market size is 20 million

* Growth is 5% per year

* 34 competitors (Low competition due to transport costs)

* Seasonal sales (Summers are slow / Holidays are good)

Product Characteristics

* Hand made

* Plenty of variety in shapes, materials, colors and trim

* Made to specifications

* Slow replacement interval

Manufacturing Characteristics

* Production is started with an order

* Made to specifications

Distribution Channel

* Department stores

* Independent retail stores

Importance of Scale Economies

* Only important for sourcing raw materials

Working Capital Profile

* Most of the sales are on credit

* Working capital as of 1987 was $139K

Plant & Equipment Requirements

* Machinery and furniture are currently $32K and are projected to increase to $50K

Potential Opportunities

* Increased cash flow due to lower owner salaries

* Selling lampshades to high quality lamp manufacturers

* Building retail outlets

* Taking advantage of minority incentive programs

Context

* Computers were on early adopters phase

* Bonds and T-bills are at above average rates

2.

a. What can go right?

* The company can transition smoothly into the hands of the Rogers

* Sales can skyrocket if a deal is landed with a lamp...