Waqas Sher Zaman, Assignment: Brief 1, MBA 731-01(F14), Prof.

Roger Kisiel,
September 19, 2014

To: Prof. Roger Kisiel

From: Waqas Sher Zaman
Date: September 19, 2014
Subject: Chads Creative Concepts
Introduction: Chads Creative Concepts is involved in design and manufacturing of wooden
furniture. The company was founded by Chad Thomas on the banks of Lake Erie in Sandusky,
Ohio. In the beginning the company only produced custom made wooden furniture for vacation
cabins. Because of the creative design, high quality product and workmanship the company
made a solid reputation in the wooden furniture industry and their sales increased by great
number. Increase in the sales brought additional growth opportunities and instead of just focusing
on selling the custom made wooden furniture Chads Creative concept started to sell its popular
pieces to the retail furniture outlets. Even though the company has grown and sales of custom
furniture remain strong whereas, the sales of standard furniture was increasing but, however,
company was not able to obtain the profits as it was expected.
Analysis: Chads Creative Concept has limited capabilities and resources and the company was
not able to cope with increased business and customer demands, and therefore the operations of
the company was affected by sales and marketing when the company started to sell standard
pieces to retail outlets. The company production facility was limited and was not able to meet the
increasing sales and marketing expansion which lead to increase in the product lead time of both
custom and standard line furniture. This will lead to reduction in performance and quality control
because of extra work load, rigid production schedule and limited human resources.
Furthermore, the company has to bear additional warehouse costs which were rented to store
materials and unfinished products.
Due to limited capabilities and resources of Chads Creative Concept was unable to meet the
increasing sales and customer demand. This led to increase in costs because of increase in
inventory, both in raw material and work in process which had to be stored in expensive rented
public warehouses that has led to increase in delivery times to the customers. This resulted in the
gradual reduction of companys working capital, increased COGS and longer Days Sales in
Inventory, hence affecting the companys financial structure.
Conclusion: In order to avoid the problems which Chads Creative Concept faces now is at first
the company should have identified the production capacity of the plant and thereafter they
should have made and efficient and effective plan that in order to cope with increasing sales and
customer demands without negotiating with the performance, quality and product lead time.
Another alternative is the expansion of business with the increase in sales by purchase of new
facilities, equipments and hiring additional employees to and thereafter the separating the
standard furniture production from the custom made furniture to meet the increasing sales and
demands. Furthermore, the company should have made an effort to find cheaper warehouses to
store material and work in process.