1. Problem Identification describes the current problem or opportunity facing the organization. The current problem that is facing Janmar Coatings is how to cost effectively market the products and what area is the best place to market. Companies rely on the leadership to help make decisions regarding the market and after two senior executive meetings, there is no resolution.
2. Industry, Market, and Buyer Analysis provides an external analysis of the organization. Consider industry structure and performance; competitors’ strengths and weaknesses, and buyer behavior. Also consider whether the market can be segmented, and if so, whether the segments can be quantified. (15 points)
The US paint industry is an established industry. In 2004 it was just over a sixteen billion dollar industry. It is expected to grow steadily in line with the rate of inflation. The US paint coatings industry is divided into three parts or segments: architectural paint coatings, original equipment manufacturing coatings, and special purpose coatings. Forty-three percent of the market is held by architectural paint coatings. Architectural paint coatings are defined as general purpose paints, varnishes, and lacquers. It is used in the residential market, the commercial market and institutional structures. It is sold by wholesalers and retailers. Contractors, professional painters, and do-it yourself painters are the buyers.
Thirty-five percent of the market is made up of original equipment manufacturing coatings. These are made specifically for an industrial buyer to use on products during manufacturing. These products include cars, trucks, appliances, furniture, and equipment. This would be used in the commercial market. It is sold by the manufacturer to a company manufacturing the product. The final segment of the market holds twenty-two percent, the special purpose coatings. The special purpose coatings are used for environmental applications. This is used for extreme conditions such as temperatures and exposure to chemicals. It is used on roads, roofs, and other products that are affected by chemicals or temperatures. Some of the competitors are Sherwin-Williams, Valspar, Glidden, Benjamin Moore, and PPG Industries.
3. Organizational Analysis provides an internal analysis of the firm. Consider the organization’s mission and resources, its strengths and weaknesses, and its past performance. (15 points)
Janmar Coatings sells architectural paint coatings and supplies needed. They are based in Dallas, TX. They currently market to over 50 counties in Texas. The 11 counties in Dallas/Ft Worth area is the major service area. In 2004 the industry was at 16 Billion, and the sales for Janmar was 80 million. The company divides into the Dallas Ft Worth area and non Dallas Ft Worth area. Forty-eight million was made in the Dallas Fort Worth area, and thirty-two million was made in the non Dallas Ft Worth area. This is a 60-40 split. The company’s sales are divided into 50% do it yourself painters, 25% professional painters, and 25% government sales.
4. Alternative Courses of Action describes the viable alternatives the organization might take to solve the problem. These options are often outlined in the case. Provide the pros and cons as well as the related costs and revenues for each alternative. If your quantitative analysis is extensive, please put it in an appendix to your report. (25 points)
One alternative the senior management executives talk about doing is increasing advertising, with an emphasis on television. This will reach non-DFW consumers in 15 countries. This will cost them $350,000 above what they are already spending in advertising. The con to this is 75% of consumers are not purchasing paint so spending $350,000 for advertising would not reach the number they are trying to reach.
The Vice President of sales wants to add one additional sales representative to the non-DFW market whose sole responsibility is to develop new retail account leads and presentations or call on professional painters to solicit their business through dealers. This will cost them approximately $60,000 excluding commission.
The Vice President of Finance alternative was to continue on the approach they are heading by guarding their margins. He claims they have and will still be profitable through controlling costs. The contribution margin is 35%.
5. Recommendation/Discussion outlines and justifies the specific actions needed to address the problem. (20 points)