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Staff Analysis : Dave Jones And Dave Verden

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Staff Analysis
Statement of the Problem
Two college roommates, Nelson Jones and Dave Verden, started Jones Electrical Distribution (JED) in 1999. JED acts as the middleman, purchasing products from manufacturers and selling to general contractors and electricians. JED purchases products, ranging from controllers to signal devices and fuses, from nearly 100 different suppliers. JED’s customers mostly use the products purchased in the construction and repair of commercial and residential buildings. As a result, JED’s sales follow the seasonality of its customers’ businesses, which are most active in the spring and summer months.
Jones also faces strong competition from national distributors, home centers, and other supply stores. Jones has grown sales volume by competing on price and incentivizing an aggressive sales force. Jones, to compete on price, has tried to minimize operating expenses by paying the salesforce heavily based on commission. Additionally, Jones has taken advantage of the 2% discount offered by its suppliers for quick payments. Jones has also been proficient at demand forecasting and inventory management, which has allowed him to satisfy his customers’ needs with a moderate level of inventory and stay in business in a competitive market.
Since 1999, Jones has turned JED into a profitable business operation, growing sales to $2.24 million and earning a net income of $30,000 in 2006. Although Jones has been successful over the past several years, he has

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