Hansson Private Label Harvard Case Solution & Analysis

Hansson Private Label Case Solution

Introduction to HPL

Hansson private label Inc. is a firm which manufactures personal care products since 1992.Its long range of products includes soaps, shampoo, mouthwash, shaving cream and sunscreen. The company manufactures these goods under the name of its retailers,and sells them to the retailers, however these retailers usually produce goods as per the market demand and their needs and they sell them under their desired names.
Their wide ranges of retail customer are giant retailers such as Wall Mart, Cears, dollar stores, Costco and Kroger. All of these retailers make sales through different kinds of stores such as supermarkets, departmental stores and club stores.Tucker Hansson is the owner of the business and he contributed a lot to this business.His team is also quite efficient and because of this combined effort, the company has made sound financial performance in the period of 2003-2007 as indicated in the case.
The historical financial analysis indicated a growth of 8% per annum in 2004 and 2005. However, the company’s growth was still stable in 2006 which was almost 8.3% and after that the company faced a decline in of 1.3% in 2007. Therefore, these ratios and growth potentials are indicating that the company is maintaining its sales volumes as well as its profit margins in order to stay competent and grow as per the requirement of the investors.
However, the gross margins from 2003 to 2007 are showing significant positive results and the net profits are also indicating positive value in all the respective years.
The financial historical analysis indicates that the growth was 8% in year 2004 and 2005.The growth in 2006 was8.3%, followed by a decline of 1.3% in 2007 respectively, thus the growth predicts that the firm is consistently maintaining its standard revenue position, whereas the gross margins indicate that the company is working well and mainlining its revenues and profits, which are aligned with the company’s strategy.Moreover, the company is still competent and a major player in the private label industry.
However, the company is still looking forward towards more revenues and sales volume in order to be the number 1 in the industry and to compete in the international market. The company is seeking and projected a growth in sales of 2% annually; the cost of raw material will be increased by 1% annually, overhead expenses at 3% annually, and maintenance expense at 3% annually. However, the hourly labor wage will be increased at 3.5% annually and selling expenses will be remaining at 7.8% annually for the projected period of 2009 to 2018.

Hansson Private Label Case Solution

Problem Statement

Hansson Private Labels group was facing a problem that its marketing and production department analyzed that the growing population, consumers’ needs and the competition between branded companies such asP&G, Unilever and private labels has been increasing drastically. HPL’s current facility is using almost 90% of the capacity and still it is unable to meet the demand of its customers, since HP L's prime and regular customers were giant retailers such as Wal-Mart etc.In addition,the company’s marketing team forecasted that the demand for its products will increase in future and HPL will be unable to meet that demand and eventually the company would lose its market share because of the shortage. The reason behind the increasing demand was that the retailers were expanding their businesses into other global regions.
The company’s CFO is considering the option of 50 million investments in its plant expansion in order to cover the excess demand and to cover the remaining market share; however the company may face a problem of excess capacity because the contract which the company is making with its prime customers will be expired in 3 years. In addition, it could be possible that the company will not have that much demand at the end of this period....................

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