Business Analysis of Peak Garage Doors Inc

1494 Words3 Pages

Business Analysis of Peak Garage Doors Inc INTRODUCTION

Peak Garage Door Inc. has set a goal to increase their sales for 2004. Garage door industry is expecting a growth of 2.4% while the management of Peak is looking to increase company’s sales 26.4%. The company currently has 50 exclusive dealers and 300 non-exclusive dealers. Management has three proposals in front of them. The first suggestion is to increase the number dealers in their existing markets. The second recommendation is to develop an exclusive franchise agreement with existing non-exclusive dealers. The third recommendation is to decrease the number of dealers and focus company’s resources on increasing support for the existing dealers. Of course there is an option for them to leave everything as it is. My suggestion is to go with the second recommendation due to the fact that exclusive dealers produced 70% of company’s sales and non-exclusive dealers contributed only 30%. In order for Peak Garage Doors Inc. to reach their sales goal for ‘04 they will have to gain more exclusive dealers since they contribute much more profit to the company.

THE INDUSTRY

The residential garage door industry sales for 2003 were $2 billion; 90% ($1.8 billion) of these sales were steel doors, the type of door the Peak specializes in. Projected industry sales for ’04 were $2.05 billion, representing 2...

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Net Sales $8,452,518.40

Cost of Goods Sold $6,900,000.00

Gross Profit $1,552,518.40

Selling, General and Admin Expense $1,600,000.00

Net Profits Before Taxes -$47,481.60

Choosing option 3 would lead to a loss.

Option four is to do nothing. This would mean that everything would stay the same, and Peak could expect a 2.4% increase in sales.

INCOME STATEMENT 2004

Net Sales $9,420,800.00

Cost of Goods Sold $6,900,000.00

Gross Profit $2,520,800.00

Selling, General and Admin Expense $1,840,000.00

Net Profits Before Taxes $680,800.00

CONCLUSION

According to the calculations, it will be impossible for the company to reach the sales goal of 12.5 million regardless of which option they choose. However the best outcome is with the option number two which is to develop an exclusive franchise agreement with existing non-exclusive dealers.

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