1. Harrington Collection Case Solution
Company should enter in the Active wear segment in Vigor division
under “Better” product classification for the following reasons.
Profit margin in Active wear segment is estimated to 18.307% in
2009 while the profits in 2005, 2006, and 2007 were 11.07%,
9.98%, and 8.77% respectively. So this active wear segment will
provide double profit to the company.
Break-even point will arise at 269,202 units. Company will sell
this much of units in the 3rd quarter of the first year. Because
company is estimated to sell 420000 units in the first year under
“Better” category.
Since Company deals with high end customers and quality is
one of their core strength. So I would suggest the company to
launch active wears only in “Better” segment, not in
“Moderate” or “Budget” segment.
Since company’s revenues and profits are decreasing for the last
3 years, so company does not have enough amount for new
investment in new division. Company is better to launch the
active wears in “Vigor” Division only, not in any new division.
Even surveys done by the company itself also supporting
substantially the launch of active wear segment in the market.