Subanti Mortuza
MK 4900
MW 4:45- 7:15
Crafton Industries, Inc.
1. Situational Analysis
-The U.S. Flooring Industry · In 2009 businesses spent near $17 billion for floorcoverings. · The largest floor covering product is carpet and rugs followed by ceramic tile, vinyl, hardwood, stone, laminate and rubber floorings. · Residential sales accounted about 11.33 billion sales (2/ 3 of the sales) in the flooring industry and commercial accounted 5.67 billion sales. · The dollar sales of U.S. floorcoverings went down from $23,227 million in 2007 to $17,122 million in 2009 leaving a difference of $6,105 million. · In 2007 the industry sales tumbled 29% at the current prices and 27% after adjusting for inflation.
-The …show more content…

The cost of inventory is rising as well, since the inventory turnovers are 5% per year while the management sufficient to have 4% per year.

3. Alternative/Evaluation
Evaluating the idea of opening Crafton’s own distributing center in year of 2000.
Advantages
· By cutting the wholesaler Crafton can distribute directly to retailers and possibly increase its market exposure to public.
Disadvantages
· The company would need to open 7 warehouses in metropolitan areas such as Atlanta, Chicago, Dallas-Fort Worth, Denver, Los Angeles, New York City, and Philadelphia to maintain all 4000 of the accounts it holds. · Possible chances of losing the current market share by having the distributer turning to the competitor company. It may also give the company a bad reputation due to the fact of dropping wholesalers that’s been on the business with the company for more than 20 years. · The company would need to hire 31 more sales representative and 4 field sales manager in order to start a warehouse and maintain all retail account. This will increase expenses by $2.5 million · With the $700,000 in fixed operation cost for 7 distribution