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Swisher Mower Company
Executive Summary:
Wayne Swisher recently became the owner of Swisher Mower Company which his father, Max, founded 51 years ago in 1946. Swisher's major revenue source is the riding mower and the parts market for their riding mowers, additionally, they also generate revenue from the Trail Mower as well as sell push lawn mower kits which do not add to the bottom line. In the last 20 years sales for Swisher riding mowers have been constant while the industry has significantly grown. Mr. Swisher was recently approached by a national retail chain to sell his mowers under a private label which would nearly double sales. However, if Swisher does accept the private labeling offer it would be at a 5% discounted selling price. Alternatively, or simultaneously, Swisher could more aggressively go after the larger market share. Additionally, they are close to a new product launch for Trim-Max which is a mower, edger, and trimmer in one unit.
Problem Statement:
Swisher sales have been stagnant for the last 20 years even though they are still making an average annual profit of 10%. Mr. Swisher is deciding whether or not to double sales volume by accepting a private label offer from a large retail chain. By accepting the offer they would reduce their selling price by 5% and potentially cannibalize some of their own sales. Additionally, Swisher Mower has always had a strong relationship with wholesalers and independent dealers and accepting the offer could potentially lead to a loss of some of their current sales base.
If Mr. Swisher declines the offer then another manufacturer would probably accept the offer which would increase ...