MEMO
To: Mr. Stone, CEO, Global Household Brands
From:, Analyst, BMF Consulting Firm
Executive Summary BMF consulting has evaluated the structure of Global Household Brands, in order to give recommendations for possible growth and stability for the future of the company. In this analysis, I have gathered information regarding financial statements, internal and external factors in Global Household Brands competitive structure, and strategic priorities in order for the company to grow in the household product industry. The analysis of the internal factors shows that Global Household Products have strong distribution throughout the industry and have a core competency for developing quality products. This analysis allows for GHB to
Sales were intended to increase 50, 55, and $70 million in the three accompanying years, and the cash flows were to grow to $11 million within those years. After the first year of the buyout, sales have decreased and cash flow was down to $5million. In addition their profit margins declined by 6%. After seeing how the first year of this buyout has gone, the banks that financially funded this acquisition are threatening to call all loans early, because of their lack of liquidity and the fear of possible bankruptcy looming. This lack of solvency is a big concern for GHB, because of the lack of sales they are struggling to pay off short-term debt and therefore limiting their ability to market their products more effectively. Another reason why cash flow has been declining is because GHB accounts receivable department has problems. They are not collecting on the sale of their products, and doubtful accounts are growing. In order to get a strong hold on GHB’s core competencies, I decided to use a SWOT analysis.
Strengths
• Well recognized quality products.
• Great Marketing and Research and Development departments.
• Strong distribution channels Weaknesses
• Consolidated Industry
• Highly leveraged
• Lack of leadership from Management
• Low e’spirit de corps
Opportunities
• Develop synergy’s
• Develop more distribution channels
• Develop differentiated products
• Cost focus strategy Threats
• Larger competition
• New product advances
• Power of the