Jamestown Electric Supply Company Case Solution

Overall business objective and Key Strategies

Simply put, the business objectives of the leading manufacturing, designing and supplying electrical supplies company is to maintain the customer satisfaction, grasp the market share and grow and maintain the sales volume in the automobile segment. Additionally, the company aimed to keep focuses on those businesses that tend to connect to its core competencies and is a market leader in.

To accomplish stated business objectives, the company has heavily invested in research and development due to which it has successfully provide state of art functionality, safety and performance to its customers and to pace with the changing technologies and breakthroughs.Also, the company has developed its enormous market position by offering variety of quality products that tend to facilitate the production activities of client.

Primary business risks associated with the company’s strategies

The research and development R&D always carries an element of risk since it involves trying untested and new ideas. Proving cutting edge features by embedding the leading edge technology in the business operations posit threat to company in terms of increased cost. The company should employ risk experts to facilitate the risky strategies and use analytical tools for the risk-based decisions as effective in research and development activities, the tools includes templates and checklist.

Another risk related to product development involves operational risk and technical hurdles and financial risk that can be overcome by employing strategies to reduce the production cost such as simplifying the manufacturing process, agree on the overall budget for the various parts of the project.

Jamestown’s options regarding the treatment of these three customers and recommendedactions with each of these three customers?

It is imperative to note that the sales to profitability ratio of each customer of Jamestown is calculated in order to evaluate profits generated by sales. The table is provided below with individual sales to profit ratio;

  Alanson Boyne Conway
Sales 14500000 5600000 1800000
Profitability 450225 205170 55890
Sales & Profit Ratio 3.11% 3.66% 3.11%
COGS 70.0% 69.5% 70.0%
W&S Service charges 8.2% 8.2% 8.2%
G&A 18.7% 18.7% 18.7%

Table 01 shows sales to profit ratio of each customer

It is to identify that the sales level of each customer is different which results in different amount of profits. The sales to profit ratio of Boyne is more than Alans on and Conway which shows that the company makes reasonable profit on selling products to Conway. While, the company do not generate strong sales in relation to the cost, due to which it is important for the company to improve its margin by increasing the level of production to save cost and offer products in wide geographic area to gather larger customers’base, hence improving profitability along with sales.

Issues/challenges with the customer profitability measurements

Evidently, one of the customer of Jamestown Electric Supply Company is Boyne which is medium size non-automobile industry clientis generating healthy profits to company more than small and large automobile industry client but it would be difficult for the company to estimate that how much profits would be generated from selling products to Boyne. Also, the company cannot estimate the growth potential of the non-auto motive industry. In contrast, the company can evaluate the persistent high pressure in the automobile industry on the profitability of the company in future, industry trends, key drivers, outlook and ups and downs in auto mobile industry so that it would be able to mitigate the risk and make strategic planning / actions to overcome the challenges and to forecast the sales growth, hence survive in the industry that is facing pressing and new challenges with passage of time…………

 

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