ASSIGNMENT

Assignment 1: Identify the Client and Problem

MGMT 495: Senior Seminar in Management

Professor Willie Davis

November 10, 2013

Woodman’s markets are among the many employee owned supermarkets in America. Headquartered in Janesville, the supermarkets operate in the northern part of Illinois and Wisconsin. Woodman’s markets received recognition between 2010 to 2012 ranking fourth among the top 50 small and independent chains in America. In 1919, John woodman incepted the business as a produce stand located in Janesville. With the passage of time, the corporation grew shedding old business antics to engage in ultra modern practices facilitating gradual growth (Lawrence, 2013). The company operates through the indoctrination of a warehouse business model that contravenes the typical model entrenched in grocery businesses. Woodman’s markets constructs warehouses using inexpensive materials availing the minimal prerequisites.

Over the years, the company’s management shies away from debt financing explaining the slow and gradual growth. The company offers a variety of distinct products usually dissimilar from numerous competitors. For instance, since the corporation sources most of its products from low cost suppliers, the company garners a wide variety of products at affordable rates. The company’s liquor section depicts a similar business technique incorporating national, regional and imported brands. Woodman’s markets offer unique requests where clients avail their requirements and the management organizes the delivery. Through the use of the bulk purchasing model, Woodman’s markets avail lower prices for commodities compared to rivals. The sales model entrenched in the corporation emanated from consultative sessions between the management and the company’s consultant (Lawrence, 2013). Ever since this engagement, the consultant routinely visits the company seeking to unearth new developments or mitigate adverse upcoming eventualities.

Woodman’s markets have attained recommendable progress over the years. This affirms that the management has fundamentally instituted feasible policies spearheading sustainable growth over the years. Surviving the global financial crisis among other challenging and trying moments reaffirm the firm’s commitment to excelling amid challenges eminent in the business field. Financial constraints curtail numerous well thought-out endeavors by corporations. Woodman’s markets enact a prudent financing concept that inhibits the corporation to source for debt financing at any one moment. Debt financing is the third cheapest source of finance after retained earning or shareholders monies (Brick & Palmon, 2004).

Retained earnings depend on the size of the organization, garnered revenue in any financial period and recurrent expenditure in the industry. Close consultations with the company’s management indicate that retained earnings only finance minimal developments, and at times expansion projects span four years. These prolonged time frames inhibit the company’s growth as competitors permeate Woodman’s markets prime locations. The company’s shareholding confines to minimal members as the management reserves the right of dissolving the membership structure. This implies that the company does not float additional shares into the market averting dissolving the prevalent ownership structure. The financing problem is long overdue dating back to the yesteryears when interest rates were skyrocketing.

Modern institutions financed through total debt soar above Woodman’s markets creating a dynamic market structure. With controlled growth, the company might not thrive into the foreseeable future as consumer loyalty sheds away gradually. The management’s decision-making framework aggravates the inalienable situation as it encompasses old aged directors. Primitive mindsets rarely beget new ideas as the directors lack skills, knowhow and training to harness astute decision making (Vere & Kleiner, 2007). The impending problem though at the initial stages might generate into a full-blown tussle leading to the company’s collapse.

To avert from this detrimental eventuality, Woodman’s markets need to redesign the both the financial and leadership structure. It is imperative that the company adorns timely growth venturing into diverse markets seeking to increase in market share and returns. This way, the organization would pay off the debt in a timely fashion increasing its asset base commanding a comprehensive section of the global market. The leadership structure requires an overhaul to incorporate ultra modern thinkers who will steer the corporation into a new business level. Critical decision-making is a vital element in business, and if Woodman’s markets entrench new directors, sustainable development both in the short and long run remains inevitable.

References

Brick, I. E., & Palmon, O. (2004). Interest Rates Fluctuations and the Advantage of Long-Term Debt Financing: A Note On The Effect Of The Tax-Timing Option. The Financial Review, 27(3), 467-474.

Lawrence, P. (2013). Enterprise in Action A Guide to Entrepreneurship. New York: Wiley.

Vere, S. L., & Kleiner, B. H. (2007). Practices of Excellent Companies in the Retail Industry. Managing Service Quality, 7(1), 34-38.