Case Brief: JonesBlair Company

Mauhik Thakkar
2016HRLP011

History and Objective:

Here in this case study Jones Blair (J.B) Company manufactures and markets paints in US and other
countries. Also given that U.S paint industry is divided to three major categories:
1) Architectural coating,
2) Original Equipment manufacturing coating and
3) Special purpose coating.
Architectural coating consists of general purpose paints and other items that are purchased by
wholesaler and retailer, moreover that purchased by DIY (do-it-yourself) customer. Also given that the
market is highly competitive and there are very stringent law (like VOC) regarding paints, so lot of
research and development needs to be done for sustain the organisation. J.B does those research, so
because of this it increase their price of the product. At last Company is have a board meeting wherein
it is being discussed what should we do for corporate marketing efforts among various architectural
paint coating to increase its sales in the southern western region of U.S.
Analysis of the market and relevant industry:
Here in U.S paint industry, 43% of the total industry sales is Architectural coating paint, which is
higher than other 2 paint- OEM and Special purpose paint. Another information the market of
architecture coating paint is a saturated as it will have long term growth rate of 1 to 2 % per year.
Moreover, its demand is also reduce by:
(1) Introduce alternative material like steel, vinyl, wood etc.
(2) Introduce good quality paint with reduces the amount of paint required and frequency of painting.
Apart from these, the paint industry as a whole is a maturing industry with slightly over $16 billion in
2004 and the industry is losing market share about 2 to 3% per year because of heavy competition in
this sector and because of government tends to reduce VOC (volatile organic compound) from the
paint with step by step over a period of time, BIG FISHES in this industry especially in the
architectural sector are Sherwin Williams, Benjamin Moore and etc. who command more that 60% of
the share and this company J.B operate in other share of the market.
Evaluation of given alternatives:
The board of directors in the John Blair is discussion majorly on below mentioned alternatives in
order to increase sale in the architecture coating paint division.
1. V.P (Advertising) to increase awareness among the citizen by increasing ads and specially
television ads. This step would increase the fixed cost $ 3,060,000 by $350,000. This would
have implication on company Break Event margin by 1 % approx. which drift toward the
higher side. For that please see the calculation of exhibit (Advertising view)
2. V.P (Operation) Reducing the contribution by 20% but in that case after doing this BEM of
the company increase by 2.67 % more compare to original one. (Operation view)
3. V.P (sales) Increasing manpower in non DFW area would be good idea since non DFW is
an untapped market with only 16% coverage and by increasing manpower BEM remains
approximately the same. ( it does focus on create new retail account leads) ( sales view)
Conclusions and Recommendations:
According to me, decreasing price would not be good strategy as if tomorrow it will be increase
depends on other parameters. But I should say make some promotional offer (like extra 10% volume
or other scheme) would be better. Plus increasing manpower and target untapped market is the
another possible solution.

Case Brief: JonesBlair Company

Mauhik Thakkar
2016HRLP011

Exhibit 1
First of all
Fixed Cost needs to be calculated from the given data;
Contribution =35%,
Total Sales Volume = $12 Million (2004)
Profit before Tax = $1,140,000.
Now,
Profit = Contribution * Total Sales Fixed Cost
Fixed Cost = Contribution * Total Sales- Profit
= 0.35* $ 12 million - $1,140,000
= $3,060,000
Breakeven Point = Total Fixed cost / Contribution per sales
= 3060000/0.35
=$ 8,742,857.143
Breakeven Margin= Break even sales for J.B / total market share
= (8,742,857.143 / 80000000)*100
= 11% approx.
Now for the Operation view:
Contribution Margin = 20% down so now it is 80 %
New contribution margin = 0.35* 0.80
= 0.28
Fixed Cost = $3,060,000
Breakeven Point = total fixed cost / contribution per sales
=3060000 / 0.28
=$ 10,928,571.43
Breakeven Margin= Break even sales for J.B / total
market
= (10928571.43 / 80000000)*100
= 13.67 % which is 2.67 % higher
than original one.
Now for the finance view:
Fixed Cost = $3,060,000
Additional Manpower Expense = $60,000
Total Fixed Cost = $ 3,120,000
Breakeven Point =
total fixed cost /
contribution per sales
= 3120000 / 0.35
= $ 8,914,285.71
Breakeven Margin= Break even sales for J.B /
total market
=
(8914285.71 /
80000000) *100
= 11.14 % approx.

Now for the Advertisement view:

Fixed Cost = $3,060,000
Additional Advertisement Expense = $350,000
Total Fixed Cost = $ 3,410,000
Breakeven Point = total fixed cost / contribution
per sales
= 3410000
= $ 9,742,857.143
Breakeven Margin= Break even sales for J.B /
total market
=
(9,742,857.143 /
80000000)*100
= 12.17% approx.