Case Discussion: Smithfield Custom Furniture (Part 3)
It is now 2015, and Smithfield’s Custom Furniture has continued to grow. Its new product line of lower-priced
furniture was an immediate sensation in the marketplace. The company now has 344 stores and 21,000
employees. The company now has a total of 12 international retail stores evenly divided among Spain (3),
France (3), Germany (3), and England (3).
Margot Smithfield, Jonas Smithfield III’s only heir, is now running the company. She has a master’s degree in
design and an MBA degree. She has been running the company for 3 years.
Margot Smithfield and the 12-member board of directors have been assessing an opportunity to acquire You
Figure it Out, a moderately profitable 51 store chain of ultra-modern furniture. The furniture and furniturerelated accessories of You Figure it Out are all made in China and sold only in the United States. Their retail
stores are located in Texas (6), California (13), New York (15), Nevada (4), Florida (9), and North Carolina (4).
Margot and her board have reasoned that the company has excess capacity at their 5 manufacturing plants.
They are aware that producing a new line of furniture would mean retraining several hundred of their workers in
the new production process. However, if this change is successfully executed it would significantly increase the
profitability of the You Figure It Out brand. The company also sees a market for the ultra-modern style of
furniture in Smithfield’s existing foreign markets and believe the current Smithfield stores in Spain, France,
Germany, and England could display some of the new furniture along with their traditional lines of furniture and
take orders that would be produced in the US plants. Other than that, the Smithfield Custom Furniture product
line and the You Figure It Out brand would operate as they currently do.
They have decided to conclude the purchase with You Figure It Out executives and want to announce the
decision to their workforce as soon as possible.
The Management Issue: Margot Smithfield is concerned she will overlook something important in her
communications to employees and the decision-making of the board.
Sample Solution
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