TN Business Retention & Expansion Course 2013 Case Study Documents

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The Tennessee Business Retention and Expansion Course is a one and a half day course which focuses on how to develop, implement and evaluate an effective retention and expansion program. The course included these interactive case studies.

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TN Business Retention & Expansion Course 2013 Case Study Documents

  1. 1. LIFEBOAT An  Exercise  in  Identifying   Your  Best  Customers         The  Scenario:     You  are  the  business  retention  manager  for  Anytown,  Tennessee.    A   “perfect  storm”  is  brewing  in  Normandy  Lake.    There  are  seven  companies   adrift  in  these  rough  waters.    You  are  navigating  a  lifeboat  towards  the   storm  in  hopes  of  saving  as  many  of  these  companies  as  possible.         Your  Dilemma:       The  lifeboat  can  only  accommodate  five  companies.    You  have  to  decide   which  five  companies  to  take…and  which  two  companies  to  leave  adrift.     The  companies  are  as  follows.     • A  candy  store  on  Anytown’s  Main  Street                 • A  small  manufacturer     • A  mid-­‐sized  legal  firm     • A  12-­‐person  IT  firm     • One  of  Anytown’s  largest  employers   • A  third-­‐generation  family  farm     • A  five-­‐and-­‐dime  store  on  Main  Street       Which  companies  do  you  rescue?    Which  companies  stay  behind?    Why?   © ExecutivePulse, Inc. All Rights Reserved
  2. 2. A CANDY STORE ON ANYTOWN’S MAIN STREET Carvelli’s  Candies  on  Main  Street  only  looks  like  an   ordinary  small  town  candy  store.       Behind  the  front  counter  is  an  aggressive,  growing   company  specializing  in  high  quality,  low  fat   chocolates.    Originally  sold  from  just  this  one  retail  outlet,  Carvelli’s  chocolates  are  now   sold  nationally  through  its  interactive  web  site  which  accounts  for  80%  of  its  total  sales.           With  18  full-­‐time  and  10  part-­‐time  workers,  Carvelli’s  has  established  a  national   reputation  in  the  world  of  candy.    Now,  it  is  about  to  announce  a  major  supplier   agreement  in  which  it  will  supply  Wal-­‐Mart  with  private-­‐brand,  low  fat  chocolates  on  a   regional  basis.    There  is  the  further  potential  to  supply  all  Wal-­‐Marts  in  North  America.       To  accommodate  this  new  customer,  Carvellis’  will  build  a  new  25,000  s.f.  facility  and   hire  another  75  full  time,  workers  earning  family-­‐sustaining  wages  in  the  next  6-­‐9   months.    Further  expansions  are  planned  as  the  product  rolls  out  to  all  Wal-­‐Marts   nationally.   Does this company get saved? Yes ¨ No ¨ A MID-SIZED LEGAL FIRM The  law  firm  of  Krayer  Moyer  and  Smythe  is  well   known  in  the  Anytown,  Tennessee  area.     The  trio  has  been  in  business  for  35  years  and   each  has  been  active  in  the  community.     As  the  founders  near  retirement,  the  company   has  stagnated.    The  trio  seem  reluctant  to  expand  their  market,  preferring  instead  to   concentrate  on  the  immediate  Anytown  area.    Employment  at  the  firm  has  dropped   from  25  to  10  good-­‐paying  jobs,  primarily  through  attrition  and  retirement  over  the  past   five  years.      Almost  all  of  the  staff  is  nearing  retirement.     Most  troubling  of  all,  the  trio  does  not  have  a  succession  plan  and  have  started  to  spend   more  time  at  their  ‘winter’  homes  in  California.   Does this company get saved? 1 Yes ¨ No ¨ © ExecutivePulse, Inc. All Rights Reserved
  3. 3. A SMALL MANUFACTURER Dovetail  Wood  Products  makes  high-­‐end  wood   cabinetry  (case  goods)  for  office  and  bank   lobbies.    The  firm  is  well-­‐known  for  the  quality   of  their  work  and  design.    Major  architectural   firms  within  a  500  mile  radius  of  Anytown   gravitate  toward  Dovetail  because  they  can   purchase  high  quality  case  goods  for  their   clients  at  prices  far  less  than  other  case  good  manufacturers  in  the  major  cities.     Dovetail  is  just  six  years  old  and  started  with  five  highly  skilled  craftsmen.    Growth  has   been  steady  and  the  owners  have  willingly  invested  in  new  technologies  and  training.     The  owners,  both  of  whom  are  Anytown  natives,  conservatively  project  a  15-­‐25%   growth  rate  in  sales  and  employment  over  the  foreseeable  future.    They  plan  to  stay  and   grow  in  Anytown  as  they  expand  to  markets  beyond  Tennessee   Does this company get saved? Yes ¨ No ¨ A 12-PERSON IT FIRM   Integrated  Sales  Solutions  is  a  small  software   development  firm  that  hit  the  big  time  four   years  ago.    At  the  time,  its  Tracker™  database   system  was  revolutionary,  enabling  small,   independently  owned  retailers  to  track   inventory,  communicate  and  place  orders  with   major  suppliers.         Unfortunately,  Tracker  has  been  eclipsed  by  other  products  on  the  market  and  ISS  has   not  been  able  to  develop  a  hot  new  product.    From  a  high  of  25  programmers,  ISS  has   declined  to  a  12-­‐person  firm.    One  of  the  co-­‐  founders,  an  Anytown  native,  just  left  after   a  highly  publicized  feud  with  Julie  Hopkins,  the  other  co-­‐founder.       Hopkins  is  a  New  York  native  who  has  never  adjusted  to  Anytown.    She  recently  sold  the   headquarters  mansion  on  Main  Street  and  is  now  leasing  space  in  a  suburban  strip   plaza.      There  are  rumors  that  she  is  trying  to  sell  the  Tracker  system  to  a  competitor.   Does this company get saved? 2 Yes ¨ No ¨ © ExecutivePulse, Inc. All Rights Reserved
  4. 4. ONE OF ANYTOWN’S LARGEST EMPLOYERS CJ  Industries  originally  started  life  as  the   Anytown  Chair  Company.    It  was  purchased  by   CJ  Industries  from  Texas  15  years  ago.     With  75  employees,  CJ  Industries  is  still  one  of   the  major  employers  in  town  but  the   handwriting  is  on  the  wall.    Employment  is  down  from  a  high  of  190  workers  as  recently   as  2002.    A  manufacturer  of  high-­‐end  office  furniture,  sales  are  down  40%  -­‐-­‐  just  like  the   premium  office  furniture  industry  as  a  whole.    Industry  experts  do  not  expect  the   premium  office  furniture  industry  to  recover  for  at  least  five  years.     The  Anytown  facility  has  been  operating  at  a  loss  for  the  past  four  years.    Once  actively   engaged  in  the  Anytown  facility,  management  at  the  parent  company  has  reduced  the   number  of  its  annual  visits  from  four  to  two.    In  the  last  year,  the  parent  company  has   discontinued  membership  in  the  local  chamber  of  commerce.       Does this company get saved? Yes ¨ No ¨ A 3RD GENERATION FAMILY FARM Enchanted  Valley  Farms  is  on  a  mission.    The   third  generation  owners  are  young,  college   educated,  and  understand  the  growing  trend   toward  organic  foods  among  big-­‐city  dwellers.     In  the  last  four  years,  they  have  transformed   Enchanted  Valley  Farms  from  a  dairy  farm  selling   milk  to  one  that  is  generating  over  65%  of  its  sales  and  profits  from  high  margin,   organically  grown  specialty  produce  sold  in  major  grocery  chains  under  the  Enchanted   Valley  Farms  brand  name.     Now,  the  owners  want  to  bring  packaging  and  labeling  operations  in-­‐house,   necessitating  a  $1.8  million,  30,000  square  foot  expansion  that  includes  cold  storage,   production  and  assembly  areas  as  well  as  additional  loading  docks.    Up  to  65  full  time   jobs  will  be  created,  adding  to  the  firm’s  current  25  full-­‐time  and  100  seasonal  workers.     The  expansion  is  part  of  the  strategic  plan  for  this  agribusiness  that  outlines  a  15-­‐20%   annual  growth  rate  in  sales  and  employment  over  the  next  five  years.   Does this company get saved? 3 Yes ¨ No ¨ © ExecutivePulse, Inc. All Rights Reserved
  5. 5. A FIVE-AND-DIME STORE ON MAIN STREET Anchoring  the  block  across  the  street  from   Carvelli’s  in  downtown  Anytown  is  Kennedy’s  Old   Fashioned  Five  and  Dime.         Complete  with  wooden  floors,  original  store   fixtures  and  soda  fountain,  Kennedy’s  has   become  a  bona  fide  attraction,  attracting  those  seeking  the  five  and  dime  stores  of   yesterday.    It  has  become  nationally  known  and  has  even  been  featured  on  the  Travel   Channel.         Despite  its  old  fashioned  image,  Kennedy’s  does  a  robust  Internet  business.    In  just  three   years,  Internet  sales  have  grown  to  40%  of  its  total  and  the  percentage  continues  to   increase.    With  sales  growing  at  a  steady  10%  clip  and  approaching  $1.5  million,   Kennedy’s  employs  20  in  the  store  and  another  40  in  its  modern  distribution  center  at   the  edge  of  town.     With  as  many  as  10  bus  tours  per  day  in  the  summer  season,  Kennedy’s  draws  over   450,000  people  annually  from  around  the  US  and  even  Canada  and  Europe.    The  success   of  Kennedy’s  has  prompted  a  successful  Main  Street  program  in  Anytown  that  captures   the  small  town,  old  fashioned  feel  of  the  store.    Several  restaurants  and  other  specialty   stores  have  opened  in  downtown  Anytown,  encouraged  by  the  traffic  generated  by   Kennedy’s.   Does this company get saved? 4 Yes ¨ No ¨ © ExecutivePulse, Inc. All Rights Reserved
  6. 6.   September  15,  2013     To:   File  (For  Internal  Use)   From:   Mr.  David  Tyler   Re:   Music  City  Lighting  Industries  Inc.         I  recently  visited  with  Steven  MacDonald,  the  president  of  Music  City  Lighting  Industries   in  Nashville.    Here’s  a  brief  narrative  of  our  meeting.     Steven  is  a  second-­‐generation  owner  of  this  firm  that  makes  high-­‐end  lamps,  track  lighting  and  other   lighting  fixtures  for  residential  and  commercial  applications.    He  became  president  early  last  year  when   his  father  retired.    Steven  spent  15  years  in  Los  Angeles  working  for  a  major  architectural  firm  before   returning  home  to  this  area  in  2009  to  assist  with  the  company’s  expansion.    He  earned  both  his   undergraduate  and  MBA  degrees  at  The  University  of  Tennessee.           Steven  is  proud  that  the  firm  has  never  used  any  kind  of  government  assistance.    The  company   completely  financed  their  new  headquarters  and  manufacturing/distribution  facility  that  opened  in  March   2011.    Music  City  Lighting  Industries  generates  $25  million  in  sales  and  employs  110  people,  most  of   whom  are  highly  skilled.         Steven  was  not  especially  complimentary  about  state  or  local  economic  development  activities.  He  made   a  point  of  mentioning  that  no  one  from  any  agency  ever  welcomed  him  home  or  contacted  him  or  his   father  about  the  expansion.       If  it  weren’t  for  his  family’s  loyalty  to  their  workforce  (most  have  been  with  the  firm  for  over  20  years),   Steven  would  have  relocated  the  firm’s  headquarters  and  manufacturing  to  Los  Angeles  where  he  feels   most  at  home.  He  said  that  California  officials  contacted  him  in  early  2013  during  one  of  their  recruiting   trips  to  the  area.    The  California  officials  noticed  a  large  number  of  storage  trailers  next  to  Music  City’s   main  building  and  concluded  that  the  firm  was  strapped  for  space.    They  then  offered  an  attractive   incentive  package  but  Steven’s  father  had  already  decided  to  expand  in  Nashville.    Steven  wondered  with   a  laugh  why  local  economic  development  officials  did  not  notice  the  same  thing.  He  further  noted  that  he   was  personally  not  interested  in  incentives  when  making  a  site  decision.    He  prefers  the  California  lifestyle   and  is  bullish  on  the  LA  area.           When  we  talked  about  business  conditions,  Steven  acknowledged  that  global  competition  has  impacted   his  firm  because  their  products  are  high  end.    He  would  like  to  reduce  manufacturing  costs  so  they  can   maintain  margins.    He  would  like  to  evaluate  suppliers  as  well.    Finally,  he  would  like  to  “get  really   aggressive”  about  expanding  his  market  share  among  the  growing  gambling  market  in  the  U.S.    He  would   also  like  to  break  into  the  resort  markets  in  the  Caribbean  and  Central  America.    He’s  been  unable  expand   into  new  markets  because  he’s  being  stretched  to  the  limit  with  day-­‐to-­‐day  operational  issues.         I  reminded  him  that  we  want  to  see  his  company  grow.    I  gave  him  a  list  of  contacts  that  he  can  call  if  he   needs  help.   Copyright ExecutivePulse, Inc., All Rights Reserved

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