case

20 Tyndall Furniture
Company (A)

Greg Procter, vice-president of marketing for the Tyndall Furniture Company, knew
that the single most important marketing decision a company made was the selec-
tion of products and markets to serve. He was acutely aware of the need to focus his
firm’s resources because sales growth in the most recent period had slowed signifi-
cantly. Profits were also below the industry average. Further complicating the task
he faced were the dramatic changes going on in the industry. He was most
concerned about the increasing competition at the retail level. A major problem was
the recent popularity of galleries in the retail store. He had to decide just where he
would marshall his energies, both on products and on markets.

Company Background
Established in 1898 by Henry H. Tyndall, the company remained a family-owned
business until 1963 when it was bought out by Berkron Industries Inc., a large
conglomerate with interests in textiles, chemicals, food, clothing, retailing and,
more recently, financial services. Although predominantly based in North America,
Berkron also has interests in Australasia and Europe.
Although the company had in the past been an above-average profit earner within
the furniture industry as a whole, in recent years its performance had declined
(Exhibit 1), a fact that led to the appointment of Matt Culley as chief executive
officer two years before. As with most markets, the furniture industry was
becoming increasingly more competitive and witnessing significant changes in both
products and market outlets (Exhibit 2).
Sales of the company had shown significant growth in recent years but slowed
dramatically in the most recently completed year (Exhibit 2). Productivity increases
and judicious cost cutting, combined with some advantageous product mix changes,
kept net profits growing. Unfortunately, profitability as measured by net profit
percentage and return on total assets was still below the industry average. It was felt

This case was prepared by Professors W. L. Berry (Ohio State University), T. J. Hill (University of Oxford), J. E. Klomp-
maker (University of North Carolina) and W. G. Morrissey (North Carolina State University) as a basis for class discussion
rather than to illustrate either effective of ineffective handling of an administrative situation. © Professor W. L. Berry,
Professor J. E. Klompmaker, Professor W. G. Morrissey or AMD Publishing (UK). Enquiries in the USA to Zip Publishing,
1634 N. High Street, Columbus, Ohio 43201.

531

T. Hill, Manufacturing Strategy

© Terry Hill 2000
532 M A N U FA C T U R I N G S T R AT E G Y : T E X T A N D C A S E S

that the increasingly competitive nature of the industry was largely responsible for
this below-average performance.

Exhibit 1 Furniture industry comparisons (per cent)

Current year minus
Companies Current
4 3 2 1 year
Tyndall
Sales 100.0 100.0 100.0 100.0 100.0
Cost of goods sold 79.1 78.3 78.3 79.2 78.1
Net profit before tax 4.8 3.7 4.4 3.5 4.2
Return on total assets 5.4 5.1 6.5 6.0 7.1
Return on investment – 8.6 9.0 9.4 10.5
Sales growth – 10.1 13.7 13.3 4.1
Average all case goods companies
Sales 100.0% 100.0% 100.0% – –
Cost of goods sold 75.9 75.2 76.7 n.a. n.a.
Net profit before tax 7.7 7.4 7.3 n.a. n.a.
Return on total assets n.a. n.a. 7.0 n.a. n.a.
Average all furniture companies
Sales 100.0% 100.0% 100.0% – –
Cost of goods sold 75.6 74.6 75.1 n.a. n.a.
Net profit before tax 7.6 8.3 8.4 n.a. n.a.
Return on total assets 8.2 8.7 8.9 n.a. n.a.

Note
n.a. signifies that the particular industry information is not available.

Exhibit 2 Tyndall sales analysis

Current year minus Current
Market types
2 1 year

Small chains
Sales ($) 1 188 189 1 468 848 1 389 077
Number of outlets 14 14 14
Small independents
Sales ($) 19 417 109 20 005 636 18 162 589
Number of outlets 577 594 601
Large independents
Sales ($) 1 504 000 1 841 000 1 742 000
Number of outlets 5 5 5
Galleries
Sales ($) 7 655 279 8 534 630 10 307 532
Number of outlets 48 50 50
Mom and pop stores
Sales ($) 6 813 000 4 288 000 4 921 200
Number of outlets 1 365 1 126 883
Mass merchandiser
Sales ($) 5 576 000 5 285 000 6 242 400
Number of outlets 1 1 1
Total sales ($) 42 153 577 41 423 114 42 764 798
Total outlets 2 010 1 790 1 554