abhishreshthaa
Abhijeet S
Future Prospects:-
With respect to the future plans, Shumaker wanted to double their production capacity by 2007-08 but unfortunately the business went down by 40%. Along with that they also had planned to set up a new unit in order to increase the production but this plan had to be stalled. As far as forward integration is concerned the only way to expand the business is to open an office abroad which now is highly unlikely.
And as far as backward integration is concerned, Shumaker has set up a standard where they cannot go back and it is necessary that they make the same amount of profit as before in order to keep the business going at a steady pace, so backward integration would not be a feasible option. So now the only way to increase the profit is to get so many orders that the volume should increase drastically or to get into the manufacturing of niche product, go to a better market and sell at a better price.
Now the target market for the Shumaker is to increase its exposure to the European market and cut down the exposure to the American market. This is due to the reason that the American dollar now is at 39 (i.e. depreciating) but Euro is still at 52. Presently, the Shumaker are targeting agents who are more involved within the European Sector.
Problems:-
At present, the company’s main problem is the depreciating dollar and the inflation in India. . The cost of the leather has gone up by 20% whereas the cost of the adhesives has increased by 15% so even though the orders have increased the profit margin is still unstable.
Usually the profit margin for the manufacturing unit is about 25 to 30% but now due to the inflation, it has reduced to 10%.
With respect to the future plans, Shumaker wanted to double their production capacity by 2007-08 but unfortunately the business went down by 40%. Along with that they also had planned to set up a new unit in order to increase the production but this plan had to be stalled. As far as forward integration is concerned the only way to expand the business is to open an office abroad which now is highly unlikely.
And as far as backward integration is concerned, Shumaker has set up a standard where they cannot go back and it is necessary that they make the same amount of profit as before in order to keep the business going at a steady pace, so backward integration would not be a feasible option. So now the only way to increase the profit is to get so many orders that the volume should increase drastically or to get into the manufacturing of niche product, go to a better market and sell at a better price.
Now the target market for the Shumaker is to increase its exposure to the European market and cut down the exposure to the American market. This is due to the reason that the American dollar now is at 39 (i.e. depreciating) but Euro is still at 52. Presently, the Shumaker are targeting agents who are more involved within the European Sector.
Problems:-
At present, the company’s main problem is the depreciating dollar and the inflation in India. . The cost of the leather has gone up by 20% whereas the cost of the adhesives has increased by 15% so even though the orders have increased the profit margin is still unstable.
Usually the profit margin for the manufacturing unit is about 25 to 30% but now due to the inflation, it has reduced to 10%.