Armour Garments Company

Armour Garments Company

Time Frame: July of 1975

Point of View: Third person / Consultant of AGC

Problem: Should the owners of AGC invest additional capital to the company and continue the business

Assumptions:

1. Competition will still be tight in the garments industry

2. Product sales consistently peaks during June and December

3. Cash flow of company will still be good

4. The company's popular brands is still well-known

Areas of Consideration:

1. Current Financial Condition of the company

- The company had piled up losses which eroded almost half of its equity. AGC invested to launch new products which didn't do well in the market and resulted to profit deterioration.

2. Company products' target market, market prices and competitions

- Divisoria, a place where price war is visible, was the target market of the company at that time. AGC has to go with the flow as far as price is concerned because this will set the tone of marketability and salability of the products. The competitors were willing to sell at lower costs and longer credit terms which encourage the middlemen to carry and promote their products.

3. Technology available for company's production

- The sewing machines that the company had were not flexible enough and could not be utilized to manufacture other types of garments such as polo shirts and jeans. By venturing to polo shirt line, jeans, and printed shirts the company infused additional funds.

4. Clothing Industry Trend as against traditional product lines of the company

- Undershirts were no longer fashionable to wear. The shift from undershirts to different clothing trends allowed the company to diversify and venture to these trends but failed because of the unfavorable response of the market.

5. Middlemen relations of the company

- The company didn't establish a close relationship to the middlemen. Being friends with them and having their loyalty will ensure the company's status to be the primary supplier of undershirts in Divisoria.

6. Product Sales and yearly demand of products

- Business usually peaks twice a year: in June, with the opening of classes and in December, with the Christmas rush.

Alternative Courses of Action:

1. Infuse capital to save the company's status quo and just focus on their traditional product lines

2. Infuse