Inner City Paint Case

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Industry Eight Small/Medium Entrepreneurial Ventures Inner-City Paint Corporation Donald F. Kuratko and Norman]. Gierlasinski (Revised) HISTORY Stanley Walsh began Inner-City Paint Corporation in a run-down warehouse, which he rented, on the fringe of Chicago 's" downtown"business area. The company is still 10cated at its original site. Inner-City is a small company that manufactures wall paint. It does not compete with giants such as Glidden and DuPont. There are small paint manufacturers in Chicago that supply the immediate area. The proliferation of paint manufacturers is due to the fact that the weight of the product (52 '12 pounds per 5-gallon container) makes the cost of shipping great distances prohibitive. Inner-City 's…show more content…
Color overruns are tapped off into 2-gallon containers. Inventory records are not kept. The warehouse manager keeps a mental count of what is in stock. He documents (on a lined yellow pad) what has been shipped for the day and to whom. That list is given to the billing clerk at the end of each day. The cost of the materials to produce flat white paint is $2.40 per gallon. The cost per gallon for colors is approximately 40%-50% higher. The 5-gallon covered plastic pails cost Inner-City $1.72 each. The 55-gallon drums (with lids) are $8.35 each. (see Exhibit 1). Selling price varies with the quantity purchased. To the average customer, flat white sells at $27.45 for 5 gallons and $182.75 for 55 gallons. Colors vary in selling price because of the variety in pigment cost and quantity ordered. Customers purchase on credit and usually pay their invoices in 30 to 60 days. Inner-City telephones the customer after 60 days of nonpayment and inquires when payment will be made. MANAGEMENT The President and majority stockholder is Stanley Walsh. He began his career as a house painter and advanced to become a painter for a large decorating company. Walsh painted mostly walls in large commercial buildings and hospitals. Eventually, he came to believe that he could produce a paint that was less expensive and of higher quality than what was being used. A keen desire to open his own business resulted in the creation of Inner-City Paint Corporation.
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