Hal’s Woodworking Case Study
Complete the Case 2 (Hal’s Woodworking)at the end of Chapter 1 in the text. Include both the numbered questions at the end of the case studies and your answers in a neat professional submission.
Your report must include an executive summary (no longer than 100 words) in APA style with citations and a list of references.
C2. Hal’s Woodworking
Hal Donovan started an ordinary hardware store, named Hal’s Hardware in Sandusky, Ohio, in 1988. He had been working during his summer vacations from college for a long-established hardware store and decided he liked the business. Hal’s Hardware developed an excellent reputation as a friendly neighborhood store. The store managers are all active in the community and the store regularly sponsors youth sports teams and supports local charities. When hired, salespeople go through a comprehensive training program that includes skill training in the areas of the store in which they will work (plumbing, electrical, power tools, flooring, garden, and so on), and they are trained in customer service skills. As a result of this focus on service, Hal’s Hardware became a community gathering place.
Hal offers classes and workshops for the homeowner and hobbyist three evenings each month and regularly schedules seminars for professional customers on weekday mornings. Many of these workshops and seminars are underwritten and taught by manufacturers to promote their products, but an increasing number are being created by Hal’s Hardware staff members.
In recent years, Hal has become concerned that the business is no longer growing. The store is facing increasing competition from hardware chains such as Home Depot and Lowe’s. These national chains have opened many new stores, and they are larger, carry more items, and offer lower prices on some items. The competition is fierce; for example, Hal’s Hardware closed its lumber department because of this competition. The national chains buy lumber in such large quantities that they can offer far lower prices. Hal matched his larger competitors’ prices, but found he was unable to earn a profit on lumber sales and that department consumed a large amount of floor space in the store.
Hal was worried that this sort of problem could develop in other departments, so he began looking for ways to add value to the customer experience, especially in ways that the national chains were not willing or able to do. For example, Hal has found that many people want to try out a new power tool in person before they spend hundreds of dollars on a purchase. Thus, Hal’s Hardware created a tool demonstration area staffed with salespeople who are experts in power tool operation. For each major type of power tool (drills, power saws, joiners, grinding tools, and so on), Hal created a small booklet of hints for using that type of tool. Hal’s salespeople give these booklets to customers as free handouts. They also sell Hal’s own low-cost instructional DVDs.
Hal’s Hardware currently has a Web site that includes general information about the company, directions to the store, and hours of operation. Hal is thinking about expanding the Web site to include online shopping. He is hoping that customers might find the Web site to be a useful way to order items, see whether items are in stock at the store, and comparison shop among different brands of a particular item. Hal also hopes that the Web site might reach customers who are not located near the store, but he realizes that some of his products do not have ideal shipping profiles.
Hal has been talking with Sarah Johnson, his most senior store manager, about his idea for adding online sales to the Web site. Sarah has been with the company for 20 years and has organized a number of the classes held on Saturday afternoons in the tool demonstration area. After hearing Hal’s ideas, she expressed some concerns. Sarah explained that going online with their entire product line might not make any sense because the competition for common tools is likely to be just as fierce online as it is in the store now. She has noticed that there seems to be a solid core of customers who are interested in serious woodworking and who show up for a lot of the classes. These customers buy some of the best, and most expensive, tools that the store sells. Many times, she finds that she has to specially order tools for these customers when they are working on a specific project.
Sarah suggests to Hal that they might want to take the business in a different direction online and sell only the high-end specialty tools to dedicated woodworkers and cabinetmakers. These items yield much higher margins than the regular tools and the salespeople who Hal has hired are eager to develop videos and instruction sheets that would appeal to this more skilled and specialized audience. Sarah suggests that they call the new online business Hal’s Woodworking to distinguish it from the general hardware store business. She suggested that Hal take a look at Web sites such as Highland Woodworking and Woodworker’s Supply to get a better idea of the online store she has in mind.
REQUIRED:
- Conduct a SWOT analysis for the existing Hal’s Hardware store. You can use the information in the case narrative, your personal knowledge of the retail hardware and tool industry, and information you obtain by following the Web Links or doing independent searches of the Web as you conduct your analysis. Create a diagram similar to Figure 1-12 to summarize your SWOT analysis results.
- Conduct a SWOT analysis for Sarah’s proposed Hal’s Woodworking online business. You can use the information in the case narrative, your personal knowledge of the retail hardware and tool industry, and information you obtain by following the Web Links or doing independent searches of the Web as you conduct your analysis. Create a diagram similar to Figure 1-12 to summarize your SWOT analysis results.
- Based on your SWOT analysis of the proposed online business, write a report of about 400 words that includes a summary of your assumptions and a list of specific recommendations for Hal’s Woodworking. These recommendations should specify the types of content that should appear on the Web site, the features that Hal should make available on the site, and how the site might overcome any of the weaknesses or threats you identified in the SWOT analysis.
- In about 100 words, outline any costs or benefits that the company might experience by operating both businesses at the same time.
Executive Summary
Hal’s Woodworking is a company owned by Hal Donovan in Sandusky. The report conducts a SWOT analysis of the existing Hal’s Hardware store, including a summary in table form. The report also features Sarah’s (company’s manager) suggestions when conducted by Hal concerning the idea to open an online business. The SWOT analysis for the business proposal by Sarah is also included in the report.
Further, the report contains my assumptions and recommendations for Hal’s Woodworking. The report includes some of the contents and features needed for the proposed website. Stiff competition is identified as a common threat in the SWOT analysis of the two kinds of businesses.
SWOT analysis for the existing Hal’s Hardware store.
Strengths
- Excellent reputation as a friendly neighbourhood store.
- The company is a Community gathering place
- Excellent customer service
- Website for the distribution of information to customers
Weaknesses
- Less purchasing power
- Lack of national brand reputation
- Closure of lumber department
Opportunities
- Expanding the website to provide online shopping
- Establishing a partnership with websites of other national organizations
- Power tool expertise
Threats
- Competition from larger stores.
- Less purchasing power
Conduct a SWOT analysis for Sarah’s proposed Hal’s Woodworking online business.
Strengths
- Availability of customers interested in serious woodworking and attending classes
- Sales of the best and most expensive tools which yields back higher profit margin
Weaknesses
- Stiff competition
Opportunities
- Selling only the high-end specialty tools to dedicated woodworkers and cabinetmakers
- Distinguishing brand names for the businesses
- Developing videos and instruction sheets to appeal to potential customers
Threats
- Competition for common tools
Based on your SWOT analysis of the proposed online business, write a report
Summary of my Assumptions
The company has experience in tool production for over 20 years, which enables the managers to identify the strengths, weaknesses, opportunities, and threats for better performance. Some of the strengths include access to customers for woodworking and the ability to sell the expensive tools and hence earning huge profits. The company faces stiff completion from large firms for common tools which is the greatest weakness and threat. However, the company should consider distinguishing the brand names for both offline and online business operations for better understanding by potential clients (Hajizadeh, 2019). Sarah has worked in the company for 20 years as a manager, and Hal should consider her ideas and discuss together what might work better. Hal suggests taking the business to online marketing. However, taking the entire business online may pose a great challenge which may stagnate it or lead to its closure if proper strategies are not employed. Considering that most customers show up for classes, it is an indication that the range of potential customers is growing.
List of Recommendations for Hal’s Woodworking
- Considering the uncertainties associated with venturing into new business operations, I suggest that Hal declines the idea of online business
- The solid core of customers interested in woodworking should be considered as a potential business opportunity to invest more in the business.
- Apart from selling the high-end tools, Hal should also continue selling the regular tools to ensure that the customers for such tools are cared for and maintain a relationship with them.
- Being a new business idea, I suggest that Hal consults the owners of the big websites and get some ideas of how online store operates, the challenges faced, and how to handle them.
- I suggest that Hal includes essential features such as reliable contact persons and the methods to purchase the products online on the website.
- The competition for the common tools can be reduced by identifying areas of improvement, such as offering services that the competitors do not offer.
Costs or benefits that the company might experience by operating both businesses at the same time
Operating both businesses may have some benefits as well as costs to be incurred. The costs may include extra expenses required to develop the website and hiring experts to promote products on the website. With the current competition from established organizations, the business may have to spend more to win customer interests and matching the market demand (Hajizadeh, 2019). Some other costs include the expenses for training personnel to operate the online business. As the business owners conduct more research to get ideas on the new business, including the fee for consulting the experts poses extra costs. Nonetheless, operating both companies poses as an opportunity to increase profit margin.
References
Hajizadeh, Y. (2019). Machine learning in oil and gas; a SWOT analysis approach. Journal of
Petroleum Science and Engineering, 176, 661-663.