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Haverwood Furniture Inc Case Study

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    Background on the amalgamationIn April 2008 Haverwood Furniture merged with Lea-Meadows.

    a maker of upholstered furniture for life and household suites. The amalgamation was non planned in any conventional sense. The amalgamation proceeded swimmingly since the two houses were located on next locations and the two companies would keep as much liberty as was economically justified.The lone existent issue that still remained was unifying the merchandising attempts.

    The inquiry was straight-forward “do we give the upholstery line of chairs and couch to our gross revenues force. or do we go on utilizing the gross revenues agents? ” Haverwood’s frailty president said the line should be given to his gross revenues group. but Lea-Meadows said the upholstery line should stay with gross revenues agents.Lea-Meadows Inc.

    Lea-Meadows Inc. is a little. in private owned maker of upholstered furniture for usage in life and household suites. The house is more than 75 old ages old.

    The company has some of the finest cloths and frame building in the industry. Their net gross revenues in 2007 were $ 5 million and the entire industry gross revenues in 2007 were $ 15. 5 billion. A forecasted industry sale for 2008 is about $ 16.

    1 billion.Over the past 5 old ages gross revenues had increased 3 % yearly. besides believing that this tendency would go on. Lea-Meadows employed 15 gross revenues agents to stand for its merchandises.

    Gross saless agents found it necessary to cover with several purchasers in a shop in order to stand for all the lines carried. On a typical gross revenues call. a gross revenues agent foremost visited purchasers to discourse new lines. in add-on to any publicities being offered by makers.

    These new orders were sought where and when it was appropriate. Lea-Meadows paid an agent committee of 5 per centum of net company gross revenues for these services. Besides were thought to hold spent 10-15 per centum of their in-store clip on Lea-Meadows merchandises. There is no influence on who to sell their merchandises to but there is a stigma of non selling to price reduction houses.

    Records show that agents were naming on forte furniture and section shops. An estimated 1. 000 retail histories were called on in 2006 and 2007. All agents had established relationships with their retail histories and worked closely with them.

    Haverwood Furniture Inc.They are a maker of medium- to costly wood sleeping room. life room and dining room furniture. Their net gross revenues in 2007 were $ 75 million ; and the industry gross revenues of wood furniture in 2007 were $ 12.

    4 billion. It is projected that in 2008 they will hold $ 12. 9 billion in industry gross revenues. The company has 10 fulltime gross revenues representatives.

    who call on 1. 000 retail histories. They perform the same activities as gross revenues agents but were paid a salary plus a little committee. In 2007 the mean gross revenues representative received an one-year wage of $ 70.

    000 and a committee of 5 % on net company gross revenues.Entire disposal costs were $ 130. 000 Haverwood’s sales representatives were extremely regarded in the industry. They were known peculiarly for their cognition of wood furniture and willingness to work with purchasers and retail gross revenues forces.

    Gross saless representatives were soon doing 10 gross revenues calls per hebdomad with an mean gross revenues call running three hours. Their leftover clip was accounted for by administrative activities and travel. It was besides recommended that the call frequence be increased to seven calls per history per twelvemonth.Professionals and ConsPoints in favour for combing the two companiesHaverwood has one of the most well-thought-of gross revenues force in the industry.

    Their gross revenues force could easy larn the slang to interacting with upholstery purchasers. Selling Lea-Meadows would merely necessitate 15 % of present gross revenues call times More control over gross revenues attempts is possible and a combined gross revenues forces tantrums with the belief that “only our people are willing and able to give” It would non look right if both representatives and agents called on the same shops and purchasers because of the convergence on the companies on both companies’ histories.Points in favour of maintaining in the gross revenues agentsAll gross revenues agents had established clients and were extremely regarded among the shop purchasers. Gross saless agents represent small cost beyond committee Gross saless agents were committed to the lea-meadows line.

    Gross saless agents were naming on purchasers non contacted by haverwood gross revenues force. Haverwood gross revenues people would hold a tough clip larning the ways of lea-meadows because there are over 1 billion possible points to larn. Both companies make valid points but the chief thing is to find the cost and profitableness. Financial computations based off the cost of gross revenues force.

    and gross revenues agents. 

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