Industry Characteristics

1 industry characteristics and competitive environment

Giberson's worked in his studio almost every day. He spent considerable time producing glassware by process. As a skilled glassblower, he often received orders from customers by phone or by mail. Quality control was important. Firsts and seconds were sold to different people.

2 products and the production process

Giberson produced fine handblown glassware in the form of tumblers, paperweights, patterned glasses and vases. He fashioned handblown items from molten glass gathered on a long metal blowpipe. He uses his own breath to shape the object. Once the bottom was formed, a metal punty was attached, and the vessel was broken from the pipe. After reheating, the lip was trimmed, fire-polished, and formed. When the object was broken off from the punty, punty mark was left. The glass was first annealed (cooling process) for several hours in an oven to relieve the stress and was later ground, sanded, and polished before shipping.

3 costing and pricing of the products

Costs contain raw materials, gas and operating costs. Production began every week by melting a 200-pound batch of glass in the furnace. Each batch contained about 80% new raw materials and chemicals and no more than 20% cullet. The cost for each batch was $21.43. Total gas used (one of his biggest cost items) was a predictable $1,000 per month. Beside office supplies, hand tools, manufacturing supplies and part-time labor, most operating costs were incurred every month regardless of whether production occurred. The average monthly operating costs were $915. He knew the prices of his products were low. The prices of four items varied. The prices of paperweights and vases were relative high, which were $15 and $25 respectively. And patterned glasses and wrapped tumblers were relative low, which were $9 and $8 respectively. In addition, firsts and seconds were sold for the same price.

4 Issues facing the business

The most critical issue was rapidly deteriorating financial position. He had only a few thousand dollars of savings left and he doubted that either the banks or his former wife would be receptive to providing extra financing. Secondly, his need for additional resources was related to the lack of profitability of his business. He was also troubled that he didn't know what each of products cost or which items were most profitable. He knew his prices were too low, but he didn't know how to have a new pricing strategy. In addition, he had not fulfilled any requests about producing made-to-order products, since he was not able to calculate the costs and price them.

5 Possible opportunities for change

The main one is that he should record organized manufacturing and financial information about his business with

...