Since the company prints the word acrylic on the sweater label, customers perceive the sweater as inferior and hesitate to buy the product. Independent buyers are going bankrupt Steinhouse knitting mills of retailers such as Walmart p.
All sweaters are done as per booked orders from the retailers and distributors and the company has created a huge stock of acrylic raw material that it sources from the same supplier, since 30 years. The market is growing in US were the products can be sold but by using wool yarn of a higher gage p.
The supply cycle for the fabric and yarn takes eight weeks hence the company has to create enough stocks. From this figure, annual overheads, excluding management salaries would be about 1. Subsequently, Steinhouse incurs greater expenses p. The yarn Steinhouse knitting mills for these machines would have to be imported p.
Start outsourcing the production It is obvious that Steinhouse cannot manufacture at the prices demanded by Tesco and other retailers and must drastically reduce its prices.
Consequently, the brand is very weak in originality and creativity. There is an increased demand for higher gauge lightweight sweaters that are made of natural fibers such as wool and cotton. Alternative 1 — Option 1: Consequently, the brand is very weak in originality and creativity.
The sales people receive a commission of 7. Since the financials are sound, it should quickly exit the industry. The higher the gauge, the finer the knitting and more lightweight and expensive is the sweater.
There obviously is a market for sweaters and needs to be exploited p.
The investment can also be lower since it can balance the inventory, bill payments and dues so that a constant flow of good and money can be effected. Steinhouse does not have its own designers and Abe and Mark, the owners physically travel to Europe, gather the best samples and try to copy them.
There is a prospective market that sees increased sales, but Steinhouse with current product mix is not able to enter the market. The company makes individually cut and stitched items and uses over 27 steps in the manufacturing process. Steinhouse has faced decreased sales and profits and high overheads.
Subsequently, Steinhouse incurs greater expenses p. The company uses softeners to pre shrink the fabric and also uses presses to create a good crease while other low cost companies do not do this step. The higher the gauge, the finer the knitting and more lightweight and expensive is the sweater.
The company needs a strategy to survive and increase its sales. The case is taken from the the work done by Mark Haber Haber, Problem Statement The following problem statements are proposed: Steinhouse operates in the higher price band and this sector is dominated by named brands such as Polo and others and departmental stores and the customers prefer such brands over the lesser-known brands such as Steinhouse.
The capital cost for modem knitting machinery is aboutUSD and about 20 machines would be required to meet the demand. Steinhouse does not have its own designers and Abe and Mark, the owners physically travel to Europe, gather the best samples and try to copy them. It can thus be seen that there is a reduction in the profitability of the company.
The market exists for high end products with named brands and also for low end products made in China and Bangladesh and Steinhouse cannot compete in both these markets. Steinhouse has faced decreased sales and profits and high overheads. The company should enter into an agreement with Walmart for bulk procurement.
Walmart and other retailers buy directly from low wage manufacturers and Steinhouse cannot match the prices offered by these companies. They are also allowed to sell in Europe and sales would depend on their quality, brand and price p. Profits and ROI If the alternative mentioned above is used, then the company can have a share of the million USD market and the overheads can also be lower.
The yarn fabrics are individually cut and this reduces the efficiency but increases the cost while low cost companies cut a number of fabrics in one setting and this produces variations between the top most and the lowest in the pile.
The company uses softeners to pre shrink the fabric and also uses presses to create a good crease while other low cost companies do not do this step.Case Study Steinhouse Knitting Mills (Canada) Essay gauge lightweight sweaters that are made of natural fibers such as wool and cotton.
The higher the gauge, the finer the knitting and more lightweight and expensive is the sweater. Steinhouse Knitting Mills The paper provides an analysis of the Case Study for Steinhouse Knitting Mills, Canada Ltd. (Steinhouse).
The case is taken from the the work done by Mark Haber (Haber, ) The following problem statements are proposed: Steinhouse has faced decreased sales and profits and high overheads.
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Primary problem: Sinesales had been declining steadily. Evidence: sales-$ million; $ million; $million. Situation Analysis A Environment fresh-air-purifiers.com-wage developing countries with an abundant supply of labour provide tough competition to Canada.
Steinhouse Knitting was founded in A family business, that specialized in the manufacture and sale of men’s sweater.
The company produces three different brands: Steinhouse, Etcetera and Espana. The three brands do not differentiate on the basis of style, price, or fabrication. The company. Steinhouse Knitting Mills Words | 5 Pages fresh-air-purifiers.comng industry is labour intensive; Knitting is more capital intensive; men`s sweaters-less susceptible to style changes and quicker to embrace technological advancement 2 Sweaters will be in fashion again.Download