Kransworth

Kranworth Chair Corporation Case Study

Arthur Velasquez

ACCT-6302 Section 795

Professor: Dr. Wayne Counts

August 8, 2016

Executive Summary

Kranworth Chair Corporation was established in 1987 by two businessmen Kevin Wentworth and Weston Krantz. KCC manufactured chairs of different sizes, designs, and purpose. Initially, KCC faced little competition from other players in the industry. Chair designs were protected by strong patents. KCC focused and produced various models of high quality portable folding chairs. However, the industry began to be more competitive and KCC’s profit margins began to reduce that would push KCC for extensive line of folding chairs. KCC founders added debt to the business by taking $30 million to set up their personal initiatives aside from the company, which made cash flow be more restricted. Other external forces such as the global business recession and increased competition affected the performance of the business by sales flattening and profits dropping. This led to the company wanting to restructure its organization.

Kevin began to restructure the company to focus more on the quality of products with the intention of increasing customer satisfaction and overall business efficiency. In addition, Kevin wanted the company to achieve optimum asset utilization while tying up less capital. Kevin decided to decentralize the operations of the company by disintegrating the company into two divisions, that is, retail products and custom products. Based on Kevin’s organizational concept, the retail products and custom products divisions of the business would be profit centers.

Kevin believed that decentralization of business operations would enable the business to improve on controllable returns, reduce the cost of doing business, and cement a sustainable customer service platform for the company. It would also eliminate unprofitable products/customers and give managers empowerment when it...