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Cardon Carpet Mills Case Analysis

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Cardon carpet Mills, Inc.

Case analysis

Xinyu Kang

i. Executive Summary
In early July 2000, the possibility of establishing own distribution centers or wholesale operation was raised in Cardon Carpet Mills, Inc.   Thus, Suzanne Goldman, the special assistant to the president of Cardon Carpet Mills, Inc. was given a task to prepare a position paper for the president.   The company’s policy is to finance programs from internal funds except for capital expansion.   In late September 2000, just as Goldman was about o draft her position paper for Robert Meadows, she received some stresses from their long-time co-operated wholesalers who threatened a mass exodus from Cardon Carpet Mills once the first company warehouse operation was opened.

  ii. The Industry
U.S. consumers and businesses spend about $50 billion annually for floorcoverings. The largest category of floorcovering is carpet and rugs, followed by resilient coverings (vinyl), hardwood, ceramic tile, and laminates. Cardon Carpet Mills, Inc. is in the Carpet and Rug industry.

The U.S. carpet and rug industry recorded sales of $11.69 billion at manufacturer’s prices in 1999. Carpet and rug retail sales were estimated to be $17.9 billion. Industry Sales are divided between “contract,” or commercial, sales for institutions and businesses and residential sales for household replacement carpets. The carpet and rug industry was lack of marketing. A result was an erratic upward trend in dollar sales over the past decade but marginal profitability for the industry as a whole.

The compare of costs on consumer advertising |
Industry | costs |
Carpet and rugs industry | 2.1% of sales |
household furniture | 4.2% of sales |
household appliances | 2.5% of sales |

By 1999, it was estimated that 10 companies in the industry produced 91% of carpet and rug sales in the United States. The sales distribution in the residential segment was even more skewed. The U.S. sales leader is Shaw...

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