Decorative Interiors

1041 Words Nov 13th, 2008 5 Pages
Rocco Rapini, owner of Decorative Interiors Inc (DI), aged 47 years has suffered an unexpected heart attack on 8th July, 2006 and is advised by doctors to reduce stress significantly in daily routine. This has forced him to take an appropriate decision about his business. He is in a dilemma and not able to decide which course of action will be beneficial both for his business as well as his health. Keeping this in mind, he has hired the services of a management consultant to help him take a decision on how to proceed.

Keeping ourselves in his shoes, we have analyzed various alternatives based on the following data:-

a) Balance Sheet as on 31st December 2005.
b) Statement of earning for year ending 2005.
c) Population and housing
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Establishing new business connections will be very difficult as he will be new to that area. Being suburb area, there will not be enough opportunity for his wife to support him financially, if needed.
Continuing the business in the same showroom:

It is estimated that the cost of hiring a sales manager and part time installer to run his business from the current show room will be $90,000 per annum. Although, his sales figures will increase to the level of 2004, [How can you assume that? Morris was an exceptional person. The spurt in sales in 2004 was due to her.] the monitoring of hired personnel will also add to his stress. Moreover, his past experience with Mary Morris was not less than a nightmare for him. Being a perfectionist, he is not at ease with anyone he hires. If the work undertaken by the hired personnel is not perfectly customer oriented, he will lose reputation and good will. Looking at the nature of his illness, any unfavorable condition will be detrimental for his health. In contrast to the big show room he possesses, the sales figures have gone down. He is of the opinion that purchasing of the new show room had not been a good decision. Moving to home based operation:

Since discounts are offered only to those retailers who own their show rooms to meet the overhead expenditure, he will be deprived of any favorable discount. Although the total operating expenses will go down by 35%

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