Swisher Mower and Machine Company

The Industry

 Riding lawn mowers are classified as lawn and garden equipment.

 The category "lawn and garden equipment" is composed of many products such as, walk-behind rotary mowers, riding mowers, tractors, garden tillers, snow throwers, and other outdoor power equipment designed for the consumer market

 The lawn and garden equipment is estimated to have produced sales of $5.5 billion in 1995 at manufactures' prices.

 Out of the $5.5 billion; 74% was for finished goods, 25% was for engines, and components and parts are accounted for the rest of the industry sales.

 This industry has proven to be seasonal, about one-third of riding lawn mower retail sales occur in March, April, and May.

 Over half of manufacturer shipments of these products occur from January to April.

 The most popular design in the industry is the Front Engine lawn tractors, due to the perception that front engine are more powerful than rear engine designs.

 In 1995 the riding mower market had 10 manufacturers' that made up the major competitors. All the competitors manufactured riding mowers under national branded names and participate in private labeling for mass merchandisers.

 Private labeling riding mowers have obtained an increasing percentage of unit sales in the industry

 National and private labeling riding mowers typically range from $800 to $5000

 Outdoor Power Equipment (OPE) including riding mowers is distributed throughout various retail outlets and make up about 22% of sales.

The Company

 Swisher Mower and Machine Company was founded in 1945 by Max Swisher.

 He began selling self-made mowers to neighbors after converting his parents' garage into small manufacturer operation.

 In 1966, unit volumes for SMC riding mowers peaked at 10,000 units with sales of $2 million.

 Sales volume plummeted in 1970 due to the poor economy.

 From 1975 to 1989, unit volume remained relatively constant.

 Sales improved in the 1990's with an average unit volume of 4,250 riding mowers.

 In 1995 the company sold 4,200 riding mowers and recorded company sales of $4.3 million.

 Swisher Mower and Machine Company share of market is 7.8% see (appendix A)

 The company manufactures mowers at its plant in Warrensburg, Missouri, but utilizes outside suppliers for machine, tool work and subassembly.

 Their facility has an annual production capacity of 10,000 riding mower units on a single 40 hour per week shift.

 Max Swisher insist that his company will be customer oriented, recognizing and providing both dealer and end user benefits.

 He also wanted to maintain a small company image.

 Max Swisher business philosophy has made the company great contacts and relationships.

 SMC produces high quality riding mowers that typically last 25 years.

 Riding mowers accounted for 63.6% of SMC's total sales and 57.8% of total gross profit 1995. There were 3 types of lawn mowers constructed in 1996

1. Swisher zero turning radius mower that's for quick, clear cutting around trees, shrubs, and lawn ornaments.

2. Swisher T-44 Trail mower that's for quick, versatile mowing.

3. Swisher 22" Trim-Max A trimmer, edger, and mower; all in one.

 SMC has remained a profitable company since its founding.

 Distribution: Big Mow private labeling are produced for two buying networks Minneapolis, Minnesota and Kansas City, Missouri.

 Ride King in the past years have been SMC cash cow

 The company has consistently generated a net profit return on sales of 10% or more annually.

 Wholesalers account for 30% of riding mower sales

 Direct to dealer sales account for 25% of sales.

 Private label riding mower sales account for 40% of SMC sales.

 SMC uses 3 different channels to execute their advertising plans; television, newspaper, and radio.

 The company's cash flow is large enough to minimize the need for major short term or long term financing.

Trends

 Statistics show that riding mower unit volume is cyclical.

 Unit sales grew in early 70's, but dropped dramatically in 1975 following the decline in the U.S economy.

 That same cycled happened again for the next decade.

 The riding lawn mower industry is seasonal. Due to people cutting their lawns in the spring and summer months.

 Front engine lawn mowers are perceived to be better than back engine lawn mowers.

 Private label riding mowers have captured a percentage of unit sales in the industry.

Problem Definition

The problem Wayne Swisher, the CEO of Swisher Mower Company is facing is one that deals with the plateau of their