Strategic Case Analysis #1
1.What problems do you see at SDI, and which of these problems is the most important issue facing management?
The most important issue facing management is the lack of a business plan and a logical strategy and objectives. It seems as though there was never a plan to make money. Strategic and financial objectives were not considered and goals were not measurable, time bound or assignable. Producing high quality squirrel resistant bird feeders is both time consuming and costly. In addition to high costs, demand is not being met and sales opportunities are being lost. Management needs to troubleshoot both production issues and sales strategies in order to reduce costs and build sales.
Other problems involve the assembly line, accounting for the inventory, accurate financial statements and high debt.
2. How many units of the Solar Feeders (both the Town and the Country models) does SDI need to sell each year in order to break even?
Using units sold in 1999, I have weighed the sales contributed by each product.
Weighing fixed costs, I have projected that the Town model break even point will be 1361 and the Country model will need to produce 228 units in order to break even. A total of 1589 units need to be produced in the year 2000.
What are the strategic and economic implications of your calculation of the B/E point for this company?
SDI will need to meet and exceed this Break Even Point in units in order to maintain and to build their business. In order to be economically possible, more units will need to be produced and more demand will need to be created. Successfully achieving these goals will not take care of the debt and lost opportunities. A radical cut in...