Materiaux Boisvert Ltée sells hardware and building materials to retail customers as well as industrial contractors. Founded in 1992, the company has undergone many management changes. In 1996, the company was purchased by Produits Forestier Saguenay (PFS), whose goals were focused primarily on making money. Tension arose between management and employees, which resulted in the unionization of employees in 1997. Growing tension resulted in three consecutive years of losses for Materiaux Boisvert. In September of 2001, the Lachappelle’s purchased the company. The new owner of the company, Francois Lachappelle, is requesting a line of credit increase contrary to the commercial account manager’s forecast. Francois is calling for…show more content… The opportunities that arise for Materiaux Boisvert exist because of the industry they are in. Favourable industry terms, negotiated prices and the fact that they operate in both the retail and industrial markets means Materiaux Boisvert can take advantage of the opportunities the industry presents to them.
Materiaux Boisvert faces the threat of the industry’s volatility and the fierce competition in the area. Business peaks in May and June, is steady between May and November, and is slow in January and February. The company also faces stiff competition. There are 7 different companies in the Chicoutimi area who compete directly with Materiaux Boisvert comprised of pure hardware and building supply outlets and mass merchandisers, like Canadian Tire. These companies engage in intense, competitive price wars especially on most traditional materials and big-ticket items.
Materiaux Boisvert’s suppliers offer discounts at a rate of 2/15/n30. With plans to reduce Accounts Payable to 65 days, taking advantage of these 2% discounts seems unlikely. In order to reduce their Accounts Payable Days to 10 in 2002, Materiaux Boisvert would require a 55-day reduction. This reduction would cost (1938/65) x 55 = 1,639.80 or $1,639,800 (see Exhibits 1 & 2). This is an immense feat to accomplish that is not very realistic. The cost of reducing the payable days to 65 is already a costly task. While they would save 2% on their