FINANCE FOR MANAGERS

Finance for manager



Introduction

Julius Smith-Brown founded Jools Furniture in West Yorkshire in 1990 as a sales operation specializing in goods made by local companies. In 1995, Smith-Brown invested in the Huddersfield-based Sandy Furniture, manufacturers specializing in kitchen and bedroom furniture for major retailers. By the year 2005 the enlarged company offered a line of roughly 150 different furniture products, and had focused all its design and manufacturing toward middle and higher-income buyers. The company's growing customer network included wholesalers, mass-retailers and smaller retailers

The enlarged business now consists of four major divisions (Kitchen, Bedroom, Quality and Office) employing over 500 people.

The UK furniture manufacturing industry is currently worth nearly £10 billion in terms of wholesale prices, and directly employs around 124,000 people within 7,500 enterprises. In addition the industry supports (and is supported by) a large supply chain (with its associated wealth and employment creation) comprising materials suppliers, component manufacturers, designers, distributors, contractors and retailers. The industry has no distinct geographical base, with companies and employment spread nation-wide, and is often segmented into three primary groups, based around the end market:

Domestic: serving the public, mainly through retail outlets and for household use. (approx. 58% of output by value)

Office: desk, seating, tables, cabinets and other items for the office environment. (Approx. 13%)

Contract: furniture for public areas such as hotels, schools, residential accommodation and airports (approx. 29%)

Discussion

The present position of the Jools furniture industries Ltd is that the owner Smith-Brown invested in the Huddersfield-based Sandy Furniture, manufacturers specialising in kitchen and bedroom furniture for major retailers. By the year 2005 the enlarged company offered a line of roughly 150 different furniture products, and had focused all its design and manufacturing toward middle and higher-income buyers. The company's growing customer network included wholesalers, mass-retailers and smaller retailers. Later developments involved the creation of an office supplies division (wholesale, rather than manufacturing) and the development of a quality products division (echoing the 'local' and high-income nature of the company's roots).

The business of Jools furniture industries Ltd is growing and making new innovations in the business line to make their customers satisfy and indulge. The enlarged business now consists of four major divisions (Kitchen, Bedroom, Quality and Office) employing over 500 people. The company has received offers to take the company public, but Smith-Brown prefers to keep it under local control. Control, however, is a word that Smith-Brown uses loosely - he has always been a strong believer in a laissez-faire form of management where divisional controllers are given free rein to manage as they see fit - subject only to the achievement of a target return on investment of 10%. This principle has been severely challenged in the recent past, however, as the company has suffered the effects of a strong growth in imports, particularly from China and Poland - imports now account for 42% of the total UK market (up from 15% ten years ago).

The Divisions

The Quality Products Division was created at the turn of the century, but expanded significantly ...