Question

1. Khalil Mahmoud and his 4 brothers decided to open a furniture factory which they called Mahmoudco Furnishings. Their idea was to purchase cheap wood, cut it, and assemble cheap furniture for sale in the market. Their goal was to become the cheap furniture provider in the region. They decided to open 10 more branches in the major cities in the Kingdom within 3 years. Since Khalil was the older brother, he was made CEO of the company.
2. Mahmoudco Furnishings needed to expand due to increasing business. In order to fulfill their delivery orders, the company decided to buy 3 medium-to-large trucks for pickup and delivery for the major branch

Q1 THIS IS MORE LIKE MARKITING

1. Important question: Go to the Internet.   Search the national AND international market for trucks that Mahmoudco Furnishings would buy. To shorten your search, choose among Honda, Toyota, Hyundai/Kia, Nissan, Mitsubishi, OR ANY 3 BRANDS YOU WANT. Go through the 8 steps for business purchase, as it applies to this case. REFER TO THE BOOK FOR MORE DETAILS.   Listing the steps gets you a ZERO. You must explain each step as it applies to the case. List criteria you would choose to compare them on, and do it. In the end, tell me which vehicles YOU would choose.

Answer 1

Case Summary:

Mahmoudco Furnishings is a furniture company with stores catering to cost conscious segments of the furniture market. Since the company is expanding, it needs to buy 3 medium to large trucks for pick up and delivery for the major branches. Since the purchase is to be done for the business, the purchase of the trucks will have to be done keeping in mind the business purchase process. Let us look at it in detail.

1. Identifying the business need: The first step of any business purchase decision is to identify the need for the planned purchase. The need is to be identified in terms of the value add the purchase is going to the product or service of the company. In case of Mahmoudco Furnishings the need has arisen out of expanding business. Therefore the company needs to purchase new trucks to maintain the supply of products to stores and customers’ place.

2. Determining the budget: the next step of the purchase process is determining the budget for the purchase. In case of Mahmoudco Furnishings the company needs to decide on how much in total it wants to spend on the trucks. This budget will help the purchasing team in selecting or eliminating the brand based on cost. Whether the trucks have to be new or second hand will also depend on the budget.

3. Select a purchasing team: the third step in the business purchase process is to identify a team that will do the research for the purchase. In our case, the research should be done by the transport manager, if any, or the delivery manager. This will help in getting their expertise in motion and make the right decision.

4. Define Specifications: the step after deciding on a purchasing team is to define the specifications or details. Eg: in our case we will define specifications as size of the truck, mileage, the space it has to carry load etc. all the parameters that are eminent to carry furniture should be taken into account.

5. Searching for options: once the purchasing team is set and the specifications are defined, the team should look for options. In our case there are a vast range of options to select from like Toyota, Honda, Nissan etc. Which company is giving discounts and which one is ready to give good service? All these need to be looked into while looking for options.

6. Evaluating the options: in this step we analyze the pros and cons of all the options. Eg: one of the pros about Toyota is quality, but cons could be cost or availability of spare parts. Also, we will compare on the size of the trucks, their mileage, their horsepower and what other fringe benefits the company is giving.

7. Making the purchase: once the evaluation of options is done, we will select the best option suited to our business need. For Mahmoudco, since it is a growing business and the demand is already high, medium size trucks could be bought from Toyota and the larger trucks from Nissan.

8. Reevaluate the purchase: once the purchase is done it is necessary to evaluate how the purchase is helping your business. In our case we will ask the delivery managers and the drivers how the truck is faring in terms of speed, and performance. If the feedback is good then the purchase has served the business purpose, if not we will document the improvements and may be carry them out gradually over a period of time and ensure that similar mistake is not repeated in the future.