Bki: Capital Structure

Blaine Kitchenw atomic number 18, Inc (BKI) has 80 year history and operates in sm tout ensemble kinsperson restroom exertion. Its tax generating streams include the bargain from food prep, change from cooking appliance and a low-toned portion of sale from beverage preparation appliances. In the mid of 2007, BKIs chief operating policeman Victor Dubinski faces the decision whether to proceed a leveraged shargon repurchase. He needs to think ab bring out the advantages and disadvantages of this computer programme and figure out what is best for the company. INDUSTRY ANALYSIS: The small kitchen appliance labor has strong seasonality and is cyclical with the macroeconomic. Holidays, housing acquire and renovating peaks argon the martplace driven factors. The net margin of industry just is 9.71% and development in dollar sales from 2003 to 2006 is only 3.5% scorn a strong economic environment. Historically fragmented, the industry is experiencing consolidations the camp aign for cling be continued. The following five force summary reveals the intermediate to low industry attractiveness. The threat of Entry in that location is no effective entry barrier in this industry, so the menace of new-made entry will be kind of high. thither is no technology proprietary and the learning turn out as a barrier of entry alike has stripped effect.

Its true that firms operate over long season tail reduce the cost by increasing qualification, only efficiency is not the only cost driver in this industry and will not significantly concern the new comers. The Threat of Rivalry The threat of rivalry is very high. There are high competitions in low-end se gments among mass merchandisers and white-bo! x returns. The high-end market competitions are also rigorous, especially with the Asian imports and private label products. Whats worsened is the price war initiated from aggressive rivals with the intention of get market share and sales growth. There are gap for product differentiation such as designs, functions and materials, but these attributes are all easy to be imitated by competitors....If you want to get a full essay, order it on our website: OrderEssay.net

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