Marketing Analysis : Hafren Baum Retails Luxury Home Furniture Essay

Marketing Analysis : Hafren Baum Retails Luxury Home Furniture Essay

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Marketing analysis: Hafren Baum retails luxury home furniture which makes the demand for it being cyclical. Over the last two years from 1994 to 1995 the net sales for Hafren Baum have fallen by 21.05% and 1.24% respectively. There are number of factors which have caused this change. According to German economic statistics, we can see that the economy slowed down which forced retailers to reduce their prices to keep the old demand. Despite the fact that Hafren Baum constructed 3 more outlets in the expectation of higher sales volume their sales went down by almost 18% which seems to be the result of boom turning to bust in 1993. Later in 1995, the economy started recovering, but the sales for small retailers like Hafren kept declining. The reason for this further shortage of sales in 1995 was due to European furniture retailers entering German market and taking the market share from local retailers like Hafren Baum.
On the contrary, the supply chain for Hafren Baum seems to be effective, as distribution is controlled through Wiegandt GmbH Cologne. Wiegandt kept themselves consistent in the market with competition. Furthermore, on the promotion side, Hafren Baum had been paying their invoices on time, but only taking discounts rarely, even though they could receive 2% 10, net 30 terms and reduce their cost of goods sold.
Operations analysis: Operating successfully is the key factor to sustain competitive advantage in industry, as the efficiency can alter the profitability. Ratio analysis of Hafren Baum are the evidence for the lack of efficiency in 1994 and 1995. First, the total asset turnover implies that the firm is investing high as compared to its sales growth. However, in 1994 Hafren Baum constructed 3 addition outlets in s...

... middle of paper ...

...negative as the company had losses in 1994 and 1995.
Summary: Question that arises by looking at the Hafren Baum analysis is that with fallen sales, two original owners leaving, and construction of new outlets; from where the company is obtaining funds. By constructing cash-flow from financing we can see that Hafren Baum mortgage rose to 607 in 1995 and another funding of 184 came from shareholders. In addition, in 1994 due from shareholders was -344 and in 1995 it was reduced to -119 which provided Hafren Baum with additional funding for their survival. Presently, the company is not in a good position. For the last two years, Hafren Baum is generating losses. The key factors that could have brought Hafren Baum in this situation are the construction of new outlets, leaving of two original owners, competition from European retailers and German economic conditions.

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