Stacey Tile Case Study

Stacey Tile Company

1. SWOT analysis of Stacey Tile Company

Strengths:

+ competitive advantage: the position of the location - within a radius of 500 km which represents 60% of the U.S. market of floor & wall tile (its biggest assest)

+/- one operational tunnel kiln

+ good production manager with over 10 years in the company (Mr. Henley)

+/- financial capacity of Mr. Gilbert

+ Mr. Gilbert’s experience

+/- Mr. Gilbert’s motivation

+/- equipment for glazing ¼ of the production

Weaknesses:

no fans; wooden floor (dust)

no improvements of the factory building

low number of trained workers

high level of payables (including mortgage)

-/+ no MIS system (inventories); visual control for production planning

+/- equipment for glazing ¼ of the production

Opportunities:

+/- increasing market for wall tile – strong demand

+ higher prices for wall tile

+ production of high quality wall tiles - differentiation / specialization

+ higher entry barrier for wall tile – higher margins

Threats:

high competition

low price for floor tile

low entry barrier for floor tiles

extensive advertising for substitutes (glass, linoleum & cork)

2. Stacey Tile’s Mission

Concentrate production on high quality/colored wall tiles

Concentrate sales efforts on tile setters.

How will its MISSION be achieved?

Take advantage of the housing construction increase impact on the sale of tiles – Summer 1987

Low entry barriers in the floor tiles segment versus the wall tiles segment (Use of more expensive equipment, better trained workforce and a more skillful management of resources)

Contrary to wholesalers, tile setters do not seek quantity discounts and favor a low-pricing strategy

Gilbert’s Intentions:

Hire competent workers and managers to improve quality

Obtain a higher selling price by going directly to tile setters

Adopt a 2% discount/15 days payment policy

Purchase raw materials as cheaply as possible (same as competitors)

Develop a strong management team

3. Analysis of Mr. Gilbert (Fayol):

Planning:

Mr. Gilbert’s plans go for the full modernization of the company, for having it operating efficiently, resulting in selling high-quality products. He changes his plans as he goes along (ex. Letter April requesting for investing in a second tunnel kiln);

From the staff point of view, he plans to have a competent production manager – he kept Mr. Henley – and six good capable foremen;

He plans to sell directly to the tile setters

By the first week of September, the glazing machines are planned to be installed

He plans to buy raw materials on a day-to-day basis

Organizing:

Mr. Gilbert is a good organizer. He intends to eliminate the dust in the air, to reduce

production errors, by better training of the workforce, and to eliminate the debris