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Case Scenario 3: Barracuda Inc

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Case Scenario 3: Barracuda Inc.
Barracuda Inc. is a lamp-fixture manufacturer that is considering an entry strategy into the U.S. home-furnishings manufacturing industry. The existing landscape consists of many players but none with a controlling share. There are currently 2,500 home furnishings firms, and only 600 of those have more than 15 employees. Average net profit after tax is between 4 and 5 percent. While the industry still primarily comprises single-business, family-run firms that manufacture furniture domestically, imports are increasing at a fairly rapid rate. Some of the European imports are leaders in contemporary design. Relatively large established firms are also diversifying into the home- furnishings industry via acquisition. Supplier firms to the home-furnishings industry are in relatively concentrated industries (such as lumber, steel, and textiles). Retailers, the intermediate customer of the home-furnishings
industry, have been traditionally very fragmented. Customers have many products to choose from, at many different price points, and few home-furnishing products have strong brands. Also, customers can switch easily among high- and low-priced furniture and other discretionary expenditures (spanning big-screen TVs to the choice of postponing any furniture purchase entirely).
-(Refer to Case Scenario 3). How intense is competitive rivalry likely to be among incumbents of the home- furnishings manufacturing industry?


Definitions:

Financial Position

An overview of a person's or organization's assets, liabilities, and equity at a specific point in time, showing the net worth or financial health.

Operating Budget

A detailed projection of all expected income and expenses based on forecasted sales revenue during a given period, typically a fiscal year.

Accounts Receivable

Amounts owed by customers on account.

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period, often used to assess liquidity and cash requirements.

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