Wald Press

Individual Assignment I: Case Analysis

Case: WALD PRESS

Executive Summary

Wald Press, a large New York based printing firm for many years had close association with Campbell brothers, a Manhattan based publishing house, which supplied it with the major portion of its work. Campbell Brothers couldn't supply Wald Press with enough work to keep it operating at reasonable output level during depression of thirties. Thus Wald Press obtained contracts from other publishing firms. When Campbell brothers' sales increased again, they wanted Wald Press to drop outside contracts as they would supply them with enough of work. Wald Press is in dilemma as to drop or not to drop outside contracts.

Word Count: 100

Situation Analysis

Wald Press, a large New York based printing firm for many years had close association with Campbell brothers, a Manhattan based publishing house, which supplied it with the major portion of its work. During the depression of the thirties, the publishing house had drop in its sales and could not supply Wald Press with enough work to keep it operating at a reasonable level of output. Wald Press obtained outside contracts to cure that. Wald Press told them that their work was being taken for an indefinite period of time and that they would not abandon it when business condition improved. In 1946 Campbell Brothers' sales increased and they wanted Wald Press to drop outside contracts and take all their remaining work. Outside contracts were not so profitable and would also have more finished goods inventory but were less exacting and an average outside book took 15% less time to produce than the average Campbell Brothers' book.

Billing on outside contracts amounted to $277,625.09 in 1944 and $242,348.55 in 1945. In the same years, production costs on these contracts were $324,625.55 and $232,698.49. In 1944, billings to Campbell Brothers totaled $1,172,862.06 and in 1945 they were $1,555,944.25. The Wald Press as a whole was making money, and therefore it seemed obvious that the profits came from work done for Campbell Brothers only.

But there was a risk of other bad time for Campbell Brothers and so diversification in form of outside contracts contributed to avoid the risk of operating Wald Press below the reasonable level of output. Also image of Wald Press was at stake if it drops outside contracts. Though Campbell Brothers reassured Wald Press that their sales were high and as seen from the data provide is that the inventory turnover for Campbell Brothers is also very high which is a positive sign, and it will provide Wald Press enough work to keep it operating at near capacity for at least two and half years after such drop in sales as comparable to in thirties.

Problem Definition

* How to rest assure that Wald Press always received enough work to keep it operating at reasonable level of output, while being profitable and sustain this profitability and grow.

Decision Criteria

* Profitability and its long term sustainability and growth of the firm.

* Image of Wald press

* Relationship with Campbell Brothers.

Alternatives

There are mainly two alternatives worth considering. They are either to drop or not to drop outside contracts so as to accommodate Campbell Brothers' work supplies or not.

 For dropping the outside contracts we have following advantages and disadvantages:

* Advantages:

1. More Profits for Wald Press from Campbell Brothers as outside contracts had earned them little or no profit.

2. Company could improve its skills and grow faster with the quality work given by Campbell Brothers.

3. No finished goods inventory for Wald Press as inventory turnover is very high for Campbell Brothers

4. No complexities in accounting for the overhead costs.

* Disadvantages:

1. Risk of not being diversified firm, which could be a risk of putting all your eggs in one basket.

2. Most importantly