Ncb Office Products Inc. Case Analysis

1828 words 8 pages

Executive Summery NCB is a manufacturer and distributer of a wide range of office products. In Canada, NCB uses several distributers in different regions. One of the major distributers is Harrison Stationary and Office Supply LTD. Harrison had distributed NCB’S products for over 50 years and NCB was the largest supplier of Harrison. In January 2003 Harrison was acquired by the president of the company and four senior officers. Most of the acquisition cost was financed by bank loans. Since the acquisition, Harrison had difficulties to pay NCB for the goods and the account receivable reached to unacceptable level. In September 2005 the Harrison account was 156 days old and amounted to $ 4.4 million. In addition,
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NCB Keep Doing Business with Harrison
If Harrison can recover from its financial problem, it is desirable to keep Harrison as a distributor. The average trading profit margin to Harrison was 22.3% and it was stable over time. The two companies had a longstanding friendly relationship and Harrison provided good service and has the best distribution coverage of the area. Cutting ties with Harrison may badly effect NCB’s reputation and may create very strong rival if Harrison managed to recover. A. Do Nothing
This option will probably be taken because: average profit margin of Harrison account was stable (22.3%), NCB was the largest supplier of Harrison, Harrison was responsible for 95% of sales in Atlantic Canada and Harrison had a very loyal customer base (over 500 customers). In addition, NCB was determined to maintain and grow their market share, so doing nothing will maintain high sales level. In this situation Harrison will probably get bankrupt and NCB probably will lose all the $ 4,400,000 of the account receivable, or lose part of the account receivable after liquidation process is over ($ 3,212,000 estimated). Then, NCB will have to find another way to distribute its products such as other distributor or even starts a new