La Z Boy Chair Company
Corporate Objective La-Z-Boy Company has a corporate objective to continue growing while remaining profitable within the furniture industry. ... 7 % Increase 20 20 20 20 20 20 Assumptions: 1) According to La-Z-Boy’s current sales trends, sales have increased at an average rate of 19. ... 2) Although the company wishes to reduce their currently high selling and general administrative expenses, operating income was compounded at a rate of 14% based on previous financial statement data. ... - Largest competitor, Action Chair, specializes in selling through department stores. ... Manufacturing o Long adaptation before the company uses new technologies. ... Product Planning and Development o New versions of the reclining chair are being developed. ... - Most company plants are not unionized. ... - Impact on employees and their opinion Alternatives 1) Status Quo 2) Allow for LZB takeover 3) Merge with another market leader 4) Acquire smaller furniture manufacturing companies Analysis of Alternatives 1) Status Quo Pros No additional required Traditional corporate image and policies maintained Approval and support of employees Cons No growth potential Possibility of lost sales Loss of market share to competition Competition will capitalize on opportunities Internal problems not being addressed 2) Allowing for LZB takeover Pros No additional funding required Possibility of positive restructuring and company build-up Shift away from current conservative corporate mentality Negative effect on LZB Stock Cons Loss of corporate image/identity Stockholder approval voting required Necessary buyout of family stock Negative impact on employees Unavoidable management shift and possible lay-offs 3) Merge with another market leader Pros Considerable market share gain Possibility of additional revenue Become market leader in the industry Sharing of company resources, technologies and knowledge Increase price of LZB stock Possible extension of product line Cons Loss of managerial control Issues arising from conflicting corporate commitments and policies Possibility of a difficult transition period Negative impact on employees High costs attached to merging companies 4) Acquiring smaller furniture manufacturing companies Pros Increase market share Possibility of additional revenue Possible extension of product line Add prestige to brand name Increase price of LZB stock Increase LZB’s assets Cons Additional funding required Take-over of the acquired company’s debt Internal problems not being addressed Recommendation Considering that LZB’s financial data reveals that they are already very competitive within the furniture industry, my recommendation is that the simply acquire smaller furniture manufacturing companies in order to experience growth while remaining stable.