Swisher Mower Case

Swisher Mower and form company Problem Wayne Swisher the refreshing president and CEO of Swisher Mower Company (SMC), is unsure of what the future holds for his firm. He was contacted by a major(ip) issue sell merchandising compass nearly a private-brand distribution arrangement. Wayne Swisher ask to determine if he should take away the strain that was proposed by the subject field retail merchandising chain of mountains or refuse it and continue on standard business. SWOT Strengths Facilities have an annual intersection pointion capacity of 10,000 riding lawn lawn mower units on a single 40-hour-per-week shift. Developed spectacular loyalty with dealers and distributors. Produced the first of all zero turning radius riding mower. Produce high-quality mowers that be rock-steady and have great longevity. Remained profitable since its founding. Weaknesses Limited distribution channels to solo nonmetropolitan bowls. Produce mid-engine riding mowers while front e ngine mowers atomic number 18 more powerful and can handle the bigger jobs. Relies heavily and their muster up top executive and their T-44 trail mower only accounted for 8. 2 % of SMCs total gross revenue. Opportunities Plans to expatiate a walk behind thin and edger. Have distributor arrangements in parts of Europe and the S out(a)h Pacific which made up 5% of total sales. SMC could develop a riding snow thrower with their zero turn radius for the winter months. Private brand distribution. Sales projections for 1995 and 1996 atomic number 18 increasing from previous years. Threats Sales trends seem to be up and down. The sales are presently on the rise but history shows they could drop. decade manufactures make up the major competition in the riding lawn mower food grocery. Private label riding lawn mowers have captured a growing component part of unit sales. Developing a new product, the trim-max, shows that the riding lawn mower is in the uprise or decline phase of t he product life cycle. unfavourable Issues Industry statistics show that the riding mower sales are up and down. Currently, the market is on the rise but history shows it could drop. SMC is a guest oriented company and Max Swishers wants to save a littler company image. The compel King mower is in its mature or decline stage. SMC recrudesces high quality products that have a simple intent for easy customer use and maintenance. Private-label riding lawn mowers sales account for 40% of SMC sales. Private-label mowers account for 65 to 75% of the total industry sales. 75% of SMCs sales are made in nonmetropolitan areas.Alternatives AlternativeProsConsCost Accept the offer from the major national retail merchandise chain for distribution of a private-brand. The chain leave alone cover all freight costs The chain will do all advertising The chain wants a sample club of 700 units and will place an order of approximately 8,200 units per year. Distribution will go to metropolitan a reas. Chain wants to purchase the mowers at a price 5% lower than SMCs manufactures. No seasonal or promotional discounts. SMC is nonimmune for all personal injury claims. Sales of SMC mowers by the chain could cannibalize existing sales.See Exhibit 1 Reject the offer from the major national retail merchandise chain for distribution of a private-brand. This would remain at the status quo. Net Income is $430,200. SMC could concentrate on underdeveloped the Trim-Max. impart not get the exposure to the metropolitan areas. If SMC rejects the offer, the chain whitethorn puzzle the offer to some one else and this would increase their competition. Private label mowers periodly account for 65 to 75% of the total industry sales. SMC will maintain status quo and profit around $400,000 More aggressively advertise the have words King to try to gain market share in the metropolitan areas.Not necessaryThis would gain a bigger percentage of the market share. 75% of SMCs sales are made in no n-metropolitan areas. SMC has this area covered pretty well. Could be the right time to move to metropolitan areas. Advertising costs will go up. lead need to produce more mowers therefore labor costs will go up. Will need a bigger sales force. Produce the new trimmer and edger product. Not necessary. The major decision is accept or reject the offer. seat King is in the mature or decline stage of product life cycle it may be time to introduce a new product. Walk behind trimmer is not on the market yet. Labor costs will go up. Storage costs may go up. R&D will go up. New products are sometimes tough to get on the market. Recommendations I would recommend that SMC reject the offer put on the table by the major national retail merchandising chain that was asking about private roundabout distribution for SMCs line of riding lawn mowers. As shown in butt against 1 net income decreases by a great deal. SMCs current gross profit margin is 15% and this would decrease to 2%. in that loc ation are also a few other negatives to accepting the offer that will cost SMC money.Sales of SMC mowers by the national chain merchant could cannibalize some of their existing sales and this is projected to be about 300 units per year. Also, the liabilities will go up on the SMC balance tatter because the chain wants SMC to assume all liabilities if any worker is hurt while using the mowerproducing the mowers. There are a few good reasons to accept the offer by the chain but I think the cons out weight the pros in this case. I think that SMC should try and advertise their Ride King more aggressively to the metropolitan areas while they are developing their new trimmer and edger product.Firms want to develop new products to stay profitable. each(prenominal) product has a life cycle and when one product reaches its mature stage and starts to decline it is the best time to introduce a new product. This is the situation that SMC is looking at right now. I think the Ride King is matur e and will start to decline. If SMC introduced the Trim-Max they will still be gaining profits because it will be going by its growing stage. They would be the first to the market with a walk behind trimmer. SMC is known for fashioning high quality products and they should not have a problem introducing a trimmer to the market.Based on the information in the case SMC produces many another(prenominal) different mowers that are mid-engine riding mowers. These are less powerful mowers and are great for use in metropolitan areas. This would be a great way to market their mowers and get them into the metropolitan areas easier. The national merchandising chain thought that there was a demand in the metropolitan areas for riding lawn mowers but the terms of their contract were not benefiting SMC. If SMC can get their mowers into these areas through their distributors without the national chain putting a private label on them they will become much more profitable.