butler lumber case study solution

Brought to you by:

Butler Lumber Co.

By: Thomas R. Piper

The Butler Lumber Co. is faced with a need for increased bank financing due to its rapid sales growth and low profitability. Students must determine the reasons for the rising bank borrowing,…

• Length: 4 page(s)
• Publication Date: Oct 30, 1991
• Discipline: Finance
• Product #: 292013-PDF-ENG

What's included:

• Same page, Teaching Note
• Same page, Educator Copy
• Same page, Supplements

$4.95 per student

degree granting course

$8.95 per student

non-degree granting course

Get access to this material, plus much more with a free Educator Account:

• Access to world-famous HBS cases
• Up to 60% off materials for your students
• Resources for teaching online
• Tips and reviews from other Educators

Already registered? Sign in

• Student Registration
• Non-Academic Registration
• Included Materials

The Butler Lumber Co. is faced with a need for increased bank financing due to its rapid sales growth and low profitability. Students must determine the reasons for the rising bank borrowing, estimate the amount of borrowing needed, and assess the attractiveness of the loan to the bank. A rewritten version of an earlier case. Allows students to practice ratio analysis, financial forecasting, and evaluating financing alternatives.

Oct 30, 1991 (Revised: Jan 4, 2002)

Discipline:

Geographies:

United States

Industries:

Construction and engineering, Retail trade

Harvard Business School

292013-PDF-ENG

We use cookies to understand how you use our site and to improve your experience, including personalizing content. Learn More . By continuing to use our site, you accept our use of cookies and revised Privacy Policy .

The marketplace for case solutions.

Butler Lumber Co. – Case Solution

The Butler Lumber Co. is looking into taking out a bank loan for business expansion. This case study provides students the opportunity to look into the financial statements of a company and prepare financial forecasting and analyze the same.

​Thomas R. Piper Harvard Business Review ( 292013-PDF-ENG ) October 31, 1991

Case questions answered:

• Why does Mr. Butler have to borrow so much money to support this profitable business?
• Do you agree with his estimate of the company’s loan requirements? How much will he need to borrow to finance his expected expansion in sales (assume a 1991 sales volume of $3.6 million)?
• As Mr. Butler’s financial adviser, would you urge him to go ahead with or reconsider his anticipated expansion and his plans for additional debt financing?

Not the questions you were looking for? Submit your own questions & get answers .

Butler Lumber Co. Case Answers

This case solution includes an Excel file with calculations.

Financial Statements for Butler Lumber Co.

The following FINANCIAL STATEMENTS include our 1991 forecast for Butler Lumber Co.

Funds Flow Statement

Income Statement

Balance Sheet

1. Why does Mr. Butler have to borrow so much money to support this profitable business?

Mr. Buttler wants to expand his business. For the expansion of the company, he needs extra funding to support his business operation.

Current sources of funding are coming from Bank Borrowing (49%) and Note Payables (28%), but his cash is tied up in Inventories (38%) and Accounts Receivables (31%).

Furthermore, he bought out his partner, Mr. Stark. By doing this, he incurred an additional cash outflow of 105k (22%).

Besides the fact that he is expanding the business, we have to see whether he is running the business efficiently.

Regarding his inventory management, we see a decreasing inventory turnover since 1988, which means that his inventory for Butler Lumber Co. is piling up.

We know, however, that this might be partially due to the fact that he is taking advantage of discounts on bulk purchases. This implies that there is a…

Unlock Case Solution Now!

Get instant access to this case solution with a simple, one-time payment ($24.90).

After purchase:

• You'll be redirected to the full case solution.
• You will receive an access link to the solution via email.

Best decision to get my homework done faster! Michael MBA student, Boston

How do I get access?

Upon purchase, you are forwarded to the full solution and also receive access via email.

Is it safe to pay?

Yes! We use Paypal and Stripe as our secure payment providers of choice.

What is Casehero?

We are the marketplace for case solutions - created by students, for students.

• Order Status
• Testimonials
• What Makes Us Different

Butler Lumber Company Harvard Case Solution & Analysis

Home >> Business Case Studies >> Butler Lumber Company

PERFORMANCE OF BUTLER LUMBER :

The performance of the company is analyzed by calculating several different factors that is Ratio analysis, Common Size Analysis, Liquidity analysis from cash flows and ratios both, and Du Pont analysis.All the calculation has been provided in the given EXHIBIT. The first step in the ratio is to identify the:

Financial Strength:

The quick ratio of the company in the year 1988 is 1.5 as compare to the year 1989 having 1.2 quick ratios and the ratio of in 1989 and 1990 is equal to 1.2. The first quarter of 1991 shows further deterioration of the quick ratio to 0.9. The quick ratio identifies the situation of the company with respect to the payment of its liabilities against the cash which quickly convertible which means the inventory needs to be excluded from that. The quick ratio shows a downward position the industrial benchmark for this ratio is 1. So, in the year 1988 to 1990 Butler Lumber is meeting the standards for industry but adverse results in the 1 st qtr of 1991.The current ratio is also in a downward trend, declining from 1.8 in 1988 to 1.4 in the 1 st quarter of 1991. This describes the situation that company will be short of cash in the coming years if the problem remains unsolved.

The debt to total equity ratio is currently quite low 11% in 1988 and further declined to 4% in 1 st quarter of 1991. Company is more relying on equity which is also not positive because it will increase their risk due to increase in cost of capital. The optimal structure should include at least 40% debt. The interest cover            is also lowering down from 3.8 to 2.1 in the 1 st quarter of 1991. This means that despite of low debts its capability to pay the interest is in declining phase which means their profits are in declining phase.

Management Effectiveness:

The management effectiveness has been evaluated by using the return on asset and equity formula. The analysis of these figures shows that management is looking competent and is able to manage the company. The return on asset and equity both are inclining. The return on asset has been inclined from 8% in 1988 to 9%, while the return on equity is moved from 11% to 13%.

The above results doesn’t include their performance of 1 st quarter of 1991 as it is still in progress so evaluating these figure in terms of return might not be suitable.

Profitability:

The Gross Margin and operating of the company is looking stable that is good point for the company in terms of required rate of return from the shareholder’s perspective. However, steps need to be taken in order further grow their revenue as they heavily relying on the equity currently, then it may be possible shareholder’s will ask for the greater returns in the future. The operating margin is 3% in all 3 years and also in 1 st quarter of 1991 and gross profit margin around 28% in all 3 years. The only concern they should have is to increase the net profit percentage which is quite too low (3%) and this means their growth in sales as compare to the operational cost is lower.

Efficiency:

The efficiency ratios for the 3 years showing acceptable results except inventory turnover which is due the storing of excess inventory or either the demand of there is currently limited. The receivable turnover is increasing but the increase of payable turnover is greater than the receivable turnover which is a positive point as the company is delaying his payments more than the receipts of sales. The increase in both the turnover is also not very much positive. This must be stable so that both customers and vendors make satisfactory comments towards company’s performance. The industry average for the receivable turnover is net 30 days and 45 days for payable turnover. As per these figures both efficiency ratios shows negative results. Receivable turnover is in between 35 to 40 days while Payable turnover is in between 45 to 50 days. Buttler Lumber Company Case Solution

Overall Performance:

The overall performance of Butler Lumber with respect to stability and growth is not very much effective as the company is currently heavily relying on equity which has increased the overall risk and put pressure on the management which may result in the creative accounting by the management of the company. The net profit margin is also too low which has restricted their growth. The efficiency of inventory management is also very inefficient. Despite of their net credit 30 terms for sales the receivable turn shows greater value than this. The position of the regarding the current aspect is normal but from the future perspective, the management needs to be more efficient to provide company with sufficient growth opportunities..............................

This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.

Related Case Solutions & Analyses:

Hire us for Originally Written Case Solution/ Analysis

Like us and get updates:.

Harvard Case Solutions

Search Case Solutions

• Accounting Case Solutions
• Auditing Case Studies
• Business Case Studies
• Economics Case Solutions
• Finance Case Studies Analysis
• Harvard Case Study Analysis Solutions
• Human Resource Cases
• Ivey Case Solutions
• Management Case Studies
• Marketing HBS Case Solutions
• Operations Management Case Studies
• Supply Chain Management Cases
• Taxation Case Studies

More From Business Case Studies

• O.M Scott and Son
• The Effects of Debt Equity Policy on Shareholder Return Requirements and Beta
• MIAN AMIR MEHMOOD: REAL HERO FOR NATION
• DEMAND FORECASTING OF MAJOR PETROLEUM PRODUCTS IN THE NORTH-EAST REGION OF INDIA FOR THE YEAR 2020-21 & 2025-26
• Caribbean Information and Credit Rating Services (A)
• The Heat is ON
• China: To Float or Not to Float? (E): ABB Investment in China

Contact us:

Check Order Status

How Does it Work?

Why TheCaseSolutions.com?

• Case Studies

Finance & Accounting

Butler Lumber Co.

Write a review, are you an educator.

Register as a Premium Educator at hbsp.harvard.edu , plan a course, and save your students up to 50% with your academic discount.

Product Description

Publication Date: October 30, 1991

Industry: Construction and engineering

Source: Harvard Business School

The Butler Lumber Co. is faced with a need for increased bank financing due to its rapid sales growth and low profitability. Students must determine the reasons for the rising bank borrowing, estimate the amount of borrowing needed, and assess the attractiveness of the loan to the bank. A rewritten version of an earlier case. Allows students to practice ratio analysis, financial forecasting, and evaluating financing alternatives.

This Product Also Appears In

Related products.

Clarkson Lumber Co.

Cartwright Lumber Co.

Wilson Lumber Co.

Copyright permissions.

To obtain copyright permission to share this PDF with your team, purchase one copy per user.

Order for your team and save!

• Harvard Business School →
• Faculty & Research →
• October 1991 (Revised January 2002)
• HBS Case Collection

Butler Lumber Company

• Format: Print

About The Author

Thomas R. Piper

Related work.

• September 1996 (Revised October 1996)
• Faculty Research

Clarkson Lumber Company

• February 2004 (Revised March 2004)

Cartwright Lumber Company

• Clarkson Lumber Company  By: Thomas R. Piper
• Cartwright Lumber Company  By: Thomas R. Piper
• Butler Lumber Company  By: Thomas R. Piper

• Predictive Analytics Workshops
• Corporate Strategy Workshops
• Advanced Excel for MBA
• Powerpoint Workshops
• Digital Transformation
• Competing on Business Analytics
• Aligning Analytics with Strategy
• Building & Sustaining Competitive Advantages
• Corporate Strategy
• Aligning Strategy & Sales
• Digital Marketing
• Hypothesis Testing
• Time Series Analysis
• Regression Analysis
• Machine Learning
• Marketing Strategy
• Branding & Advertising
• Risk Management
• Hedging Strategies
• Network Plotting
• Bar Charts & Time Series
• Technical Analysis of Stocks MACD
• NPV Worksheet
• ABC Analysis Worksheet
• WACC Worksheet
• Porter 5 Forces
• Porter Value Chain
• Amazing Charts
• Garnett Chart
• HBR Case Solution
• 4P Analysis
• 5C Analysis
• NPV Analysis
• SWOT Analysis
• PESTEL Analysis
• Cost Optimization

Butler Lumber Co.

• Finance & Accounting / MBA EMBA Resources

Next Case Study Solutions

• Anderson Street Case Study Solution
• Clarkson Lumber Co. Case Study Solution
• Revere Street Case Study Solution
• Turner Construction Company: Project Management Control Systems Case Study Solution
• Cartwright Lumber Co. Case Study Solution

Previous Case Solutions

• Gaz de France Case Study Solution
• Hudbay Minerals: Acquisition of Norsemont Mining Case Study Solution
• Huaneng Power International, Inc.: Raising Capital in Global Markets Case Study Solution
• Investing Sustainably at Ontario Teachers' Pension Plan Case Study Solution
• Water Funds: Financing Nature's Ability to Protect Water Supplies Case Study Solution

Predictive Analytics

November 10, 2024

Popular Tags

Case study solutions.

Case Study Solution | Assignment Help | Case Help

Butler lumber co. description.

The Butler Lumber Co. is faced with a need for increased bank financing due to its rapid sales growth and low profitability. Students must determine the reasons for the rising bank borrowing, estimate the amount of borrowing needed, and assess the attractiveness of the loan to the bank. A rewritten version of an earlier case. Allows students to practice ratio analysis, financial forecasting, and evaluating financing alternatives.

Case Description Butler Lumber Co.

Strategic managment tools used in case study analysis of butler lumber co., step 1. problem identification in butler lumber co. case study, step 2. external environment analysis - pestel / pest / step analysis of butler lumber co. case study, step 3. industry specific / porter five forces analysis of butler lumber co. case study, step 4. evaluating alternatives / swot analysis of butler lumber co. case study, step 5. porter value chain analysis / vrio / vrin analysis butler lumber co. case study, step 6. recommendations butler lumber co. case study, step 7. basis of recommendations for butler lumber co. case study, quality & on time delivery.

100% money back guarantee if the quality doesn't match the promise

100% Plagiarism Free

If the work we produce contain plagiarism then we payback 1000 USD

Paypal Secure

All your payments are secure with Paypal security.

300 Words per Page

We provide 300 words per page unlike competitors' 250 or 275

Free Title Page, Citation Page, References, Exhibits, Revision, Charts

Case study solutions are career defining. Order your custom solution now.

Case Analysis of Butler Lumber Co.

Butler Lumber Co. is a Harvard Business (HBR) Case Study on Finance & Accounting , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. Butler Lumber Co. is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. Butler Lumber Co. case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. Butler Lumber Co. will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

Butler Lumber Co. case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Finance & Accounting, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of Butler Lumber Co., is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The Butler Lumber Co. case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Finance & Accounting Solutions

In the Texas Business School, Butler Lumber Co. case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis. We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – Butler Lumber Co.

Step 1 – Problem Identification of Butler Lumber Co. - Harvard Business School Case Study

The first step to solve HBR Butler Lumber Co. case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Butler Lumber is facing right now. Even though the problem statement is essentially – “Finance & Accounting” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Butler Lumber, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the Butler Lumber Co.. The external environment analysis of Butler Lumber Co. will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in Butler Lumber Co. case study. PESTEL analysis of " Butler Lumber Co." can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with Butler Lumber Co. macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for Butler Lumber Co.

To do comprehensive PESTEL analysis of case study – Butler Lumber Co. , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact Butler Lumber Co.

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Government policies have significant impact on the business environment of any country. The firm in “ Butler Lumber Co. ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which Butler Lumber is operating, firms are required to store customer data within the premises of the country. Butler Lumber needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. Butler Lumber Co. has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, Butler Lumber in case study Butler Lumber Co." should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Butler Lumber in case study “ Butler Lumber Co. ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, Butler Lumber in case study “ Butler Lumber Co. ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ Butler Lumber Co. ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Butler Lumber can compete against other competitors.

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at Butler Lumber Co. case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – Butler Lumber needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact Butler Lumber Co.

Social factors that impact butler lumber co., technological factors that impact butler lumber co., environmental factors that impact butler lumber co., legal factors that impact butler lumber co., step 3 – industry specific analysis, what is porter five forces analysis, step 4 – swot analysis / internal environment analysis, step 5 – porter value chain / vrio / vrin analysis, step 6 – evaluating alternatives & recommendations, step 7 – basis for recommendations, references :: butler lumber co. case study solution.

• sales & marketing ,
• leadership ,
• corporate governance ,
• Advertising & Branding ,
• Corporate Social Responsibility (CSR) ,

Amanda Watson

Leave your thought here

© 2019 Texas Business School. All Rights Reserved

USEFUL LINKS

Follow us on.

Subscribe to our newsletter to receive news on update.

Dark Brown Leather Watch

$200.00 $180.00

Dining Chair

$300.00 $220.00

Creative Wooden Stand

$100.00 $80.00

2 x $180.00

2 x $220.00

Subtotal: $200.00

Free Shipping on All Orders Over $100!

Wooden round table

$360.00 $300.00

Hurley Dry-Fit Chino Short. Men's chino short. Outseam Length: 19 Dri-FIT Technology helps keep you dry and comfortable. Made with sweat-wicking fabric. Fitted waist with belt loops. Button waist with zip fly provides a classic look and feel .

Marketing Process Analysis

Segmentation, targeting, positioning, marketing strategic planning, marketing 5 concepts analysis, swot analysis & matrix, porter five forces analysis, pestel / pest / step analysis, cage distance analysis international marketing analysis leadership, organizational resilience analysis, bcg matrix / growth share matrix analysis, block chain supply chain management, paei management roles, leadership with empathy & compassion, triple bottom line analysis, mckinsey 7s analysis, smart analysis, vuca analysis ai ethics analysis analytics, butler lumber co. case study solution & analysis / mba resources.

• Butler Lumber Co.
• Finance & Accounting / MBA Resources

Introduction to case study solution

EMBA Pro case study solution for Butler Lumber Co. case study

At EMBA PRO , we provide corporate level professional case study solution. Butler Lumber Co. case study is a Harvard Business School (HBR) case study written by Thomas R. Piper. The Butler Lumber Co. (referred as “Butler Lumber” from here on) case study provides evaluation & decision scenario in field of Finance & Accounting. It also touches upon business topics such as - Value proposition, Forecasting, Recession. Our immersive learning methodology from – case study discussions to simulations tools help MBA and EMBA professionals to - gain new insight, deepen their knowledge of the Finance & Accounting field, and broaden their skill set.

Urgent - 12Hr

• 100% Plagiarism Free
• On Time Delivery | 27x7
• PayPal Secure
• 300 Words / Page

Case Description of Butler Lumber Co. Case Study

The Butler Lumber Co. is faced with a need for increased bank financing due to its rapid sales growth and low profitability. Students must determine the reasons for the rising bank borrowing, estimate the amount of borrowing needed, and assess the attractiveness of the loan to the bank. A rewritten version of an earlier case. Allows students to practice ratio analysis, financial forecasting, and evaluating financing alternatives.

Case Authors : Thomas R. Piper

Topic : finance & accounting, related areas : forecasting, recession, what is the case study method how can you use it to write case solution for butler lumber co. case study.

Almost all of the case studies contain well defined situations. MBA and EMBA professional can take advantage of these situations to - apply theoretical framework, recommend new processes, and use quantitative methods to suggest course of action. Awareness of the common situations can help MBA & EMBA professionals read the case study more efficiently, discuss it more effectively among the team members, narrow down the options, and write cogently.

Case Study Solution Approaches

Three Step Approach to Butler Lumber Co. Case Study Solution

The three step case study solution approach comprises – Conclusions – MBA & EMBA professionals should state their conclusions at the very start. It helps in communicating the points directly and the direction one took. Reasons – At the second stage provide the reasons for the conclusions. Why you choose one course of action over the other. For example why the change effort failed in the case and what can be done to rectify it. Or how the marketing budget can be better spent using social media rather than traditional media. Evidences – Finally you should provide evidences to support your reasons. It has to come from the data provided within the case study rather than data from outside world. Evidences should be both compelling and consistent. In case study method there is ‘no right’ answer, just how effectively you analyzed the situation based on incomplete information and multiple scenarios.

Case Study Solution of Butler Lumber Co.

We write Butler Lumber Co. case study solution using Harvard Business Review case writing framework & HBR Finance & Accounting learning notes. We try to cover all the bases in the field of Finance & Accounting, Forecasting, Recession and other related areas.

Objectives of using various frameworks in Butler Lumber Co. case study solution

By using the above frameworks for Butler Lumber Co. case study solutions, you can clearly draw conclusions on the following areas – What are the strength and weaknesses of Butler Lumber (SWOT Analysis) What are external factors that are impacting the business environment (PESTEL Analysis) Should Butler Lumber enter new market or launch new product (Opportunities & Threats from SWOT Analysis) What will be the expected profitability of the new products or services (Porter Five Forces Analysis) How it can improve the profitability in a given industry (Porter Value Chain Analysis) What are the resources needed to increase profitability (VRIO Analysis) Finally which business to continue, where to invest further and from which to get out (BCG Growth Share Analysis)

SWOT Analysis of Butler Lumber Co.

SWOT analysis stands for – Strengths, Weaknesses, Opportunities and Threats. Strengths and Weaknesses are result of Butler Lumber internal factors, while opportunities and threats arise from developments in external environment in which Butler Lumber operates. SWOT analysis will help us in not only getting a better insight into Butler Lumber present competitive advantage but also help us in how things have to evolve to maintain and consolidate the competitive advantage.

- Strong Balance Sheet – The financial statement of Butler Lumber looks strong and will help the company going forward.

- Streamlined processes and efficient operation management – Butler Lumber is one of the most efficient firms in its segment. The credit for the performance goes to successful execution and efficient operations management.

- Little experience of international market – Even though it is a major player in local market, Butler Lumber has little experience in international market. According to Thomas R. Piper , Butler Lumber needs international talent to penetrate into developing markets.

- Butler Lumber business model can be easily replicated by competitors – According to Thomas R. Piper , the business model of Butler Lumber can be easily replicated by players in the industry.

Opportunities

- E-Commerce and Social Media Oriented Business Models – E-commerce business model can help Butler Lumber to tie up with local suppliers and logistics provider in international market. Social media growth can help Butler Lumber to reduce the cost of entering new market and reaching to customers at a significantly lower marketing budget.

- Lucrative Opportunities in International Markets – Globalization has led to opportunities in the international market. Butler Lumber is in prime position to tap on those opportunities and grow the market share.

- Age and life-cycle segmentation of Butler Lumber shows that the company still hasn’t able to penetrate the millennial market.

- Growing dominance of digital players such as Amazon, Google, Microsoft etc can reduce the manoeuvring space for Butler Lumber and put upward pressure on marketing budget.

Once all the factors mentioned in the Butler Lumber Co. case study are organized based on SWOT analysis, just remove the non essential factors. This will help you in building a weighted SWOT analysis which reflects the real importance of factors rather than just tabulation of all the factors mentioned in the case.

What is PESTEL Analysis

PESTEL /PEST / STEP Analysis of Butler Lumber Co. Case Study

PESTEL stands for – Political, Economic, Social, Technological, Environmental, and Legal factors that impact the macro environment in which Butler Lumber operates in. Thomas R. Piper provides extensive information about PESTEL factors in Butler Lumber Co. case study.

Political Factors

- Little dangers of armed conflict – Based on the research done by international foreign policy institutions, it is safe to conclude that there is very little probability of country entering into an armed conflict with another state.

- Political and Legal Structure – The political system seems stable and there is consistency in both economic policies and foreign policies.

Economic Factors

- Foreign Exchange movement is also an indicator of economic stability. Butler Lumber should closely consider the forex inflow and outflow. A number of Butler Lumber competitors have lost money in countries such as Brazil, Argentina, and Venezuela due to volatile forex market.

- Inflation rate is one of the key criteria to consider for Butler Lumber before entering into a new market.

Social Factors

- Demographic shifts in the economy are also a good social indicator for Butler Lumber to predict not only overall trend in market but also demand for Butler Lumber product among its core customer segments.

- Consumer buying behavior and consumer buying process – Butler Lumber should closely follow the dynamics of why and how the consumers are buying the products both in existing categories and in segments that Butler Lumber wants to enter.

Technological Factors

- Proliferation of mobile phones has created a generation whose primary tool of entertainment and information consumption is mobile phone. Butler Lumber needs to adjust its marketing strategy accordingly.

- Artificial intelligence and machine learning will give rise to importance of speed over planning. Butler Lumber needs to build strategies to operate in such an environment.

Environmental Factors

- Environmental regulations can impact the cost structure of Butler Lumber. It can further impact the cost of doing business in certain markets.

- Consumer activism is significantly impacting Butler Lumber branding, marketing and corporate social responsibility (CSR) initiatives.

Legal Factors

- Intellectual property rights are one area where Butler Lumber can face legal threats in some of the markets it is operating in.

- Property rights are also an area of concern for Butler Lumber as it needs to make significant Forecasting, Recession infrastructure investment just to enter new market.

What are Porter Five Forces

Porter Five Forces Analysis of Butler Lumber Co.

Competition among existing players, bargaining power of suppliers, bargaining power of buyers, threat of new entrants, and threat of substitutes.

What is VRIO Analysis

VRIO Analysis of Butler Lumber Co.

VRIO stands for – Value of the resource that Butler Lumber possess, Rareness of those resource, Imitation Risk that competitors pose, and Organizational Competence of Butler Lumber. VRIO and VRIN analysis can help the firm.

What is Porter Value Chain

Porter Value Chain Analysis of Butler Lumber Co.

As the name suggests Value Chain framework is developed by Michael Porter in 1980’s and it is primarily used for analyzing Butler Lumber relative cost and value structure. Managers can use Porter Value Chain framework to disaggregate various processes and their relative costs in the Butler Lumber. This will help in answering – the related costs and various sources of competitive advantages of Butler Lumber in the markets it operates in. The process can also be done to competitors to understand their competitive advantages and competitive strategies. According to Michael Porter – Competitive Advantage is a relative term and has to be understood in the context of rivalry within an industry. So Value Chain competitive benchmarking should be done based on industry structure and bottlenecks.

What is BCG Growth Share Matrix

BCG Growth Share Matrix of Butler Lumber Co.

BCG Growth Share Matrix is very valuable tool to analyze Butler Lumber strategic positioning in various sectors that it operates in and strategic options that are available to it. Product Market segmentation in BCG Growth Share matrix should be done with great care as there can be a scenario where Butler Lumber can be market leader in the industry without being a dominant player or segment leader in any of the segment. BCG analysis should comprise not only growth share of industry & Butler Lumber business unit but also Butler Lumber - overall profitability, level of debt, debt paying capacity, growth potential, expansion expertise, dividend requirements from shareholders, and overall competitive strength. Two key considerations while using BCG Growth Share Matrix for Butler Lumber Co. case study solution - How to calculate Weighted Average Market Share using BCG Growth Share Matrix Relative Weighted Average Market Share Vs Largest Competitor

5C Marketing Analysis of Butler Lumber Co.

4p marketing analysis of butler lumber co., porter five forces analysis and solution of butler lumber co., porter value chain analysis and solution of butler lumber co., case memo & recommendation memo of butler lumber co., blue ocean analysis and solution of butler lumber co., marketing strategy and analysis butler lumber co., vrio /vrin analysis & solution of butler lumber co., pestel / step / pest analysis of butler lumber co., swot analysis and solution of butler lumber co., references & further readings.

Thomas R. Piper (2018) , "Butler Lumber Co. Harvard Business Review Case Study. Published by HBR Publications.

Case Study Solution & Analysis

• Anderson Street Case Study Solution & Analysis
• Clarkson Lumber Co. Case Study Solution & Analysis
• Revere Street Case Study Solution & Analysis
• Turner Construction Company: Project Management Control Systems Case Study Solution & Analysis
• Cartwright Lumber Co. Case Study Solution & Analysis
• Gaz de France Case Study Solution & Analysis
• Hudbay Minerals: Acquisition of Norsemont Mining Case Study Solution & Analysis
• Huaneng Power International, Inc.: Raising Capital in Global Markets Case Study Solution & Analysis
• Investing Sustainably at Ontario Teachers' Pension Plan Case Study Solution & Analysis
• Water Funds: Financing Nature's Ability to Protect Water Supplies Case Study Solution & Analysis

Explore More

Feel free to connect with us if you need business research.

You can download Excel Template of Case Study Solution & Analysis of Butler Lumber Co.