Dawson Lumber Company Limited Essay - 1516 Words

Objective National Bank of Canada (NBC or the Bank) is tasked with the decision to review Dawson Lumber Company Limiteds (Dawson) request for an increase in its line of credit up to the amount of $10.8mm. Dawson intends to finance inventory and receivables with the line of credit. NBC must remain cognizant of the competitive landscape of the lumber industry and assess whether a focus on the retail segment is beneficial to Dawsons strategic plan. Given that Dawson is one of the regions largest borrowers, NBC must be careful in how it manages this relationship. The Bank cannot afford to turn away NBCs business. However, extending Dawson additional credit may increase Dawsons default risk and jeopardize the potential for NBC†¦show more content†¦Canadian Retail Hardware and Home Improvement Industry Analysis This industry, although more attractive than the lumber industry, has its own inherent flaws . The Canadian retail hardware and home improvement industry can be characte rized by high degree of rivalry, mainly due to a large number of players competing over products of low differentiation and incurring high fixed costs. Furthermore, due to low switching costs, high information, and price sensitivity, buyers are not loyal and have high bargaining power relative to retailers. Additionally, the medium threat and power of large new entrants and suppliers adds to the industrys unattractiveness. Company Overview Dawson was founded in the 1870s and has remained a private business since inception. Located in Ontario, Canada, its operations have been focused on three regions: Ottawa, primarily an urban market, Cornwall, a rural market, and Kingston, partially a resort and partially an urban market. During the last 3 years Dawsons net sales have increased considerably (21% in 1997; and 38% in 1998) putting great pressure on the way the company finances its working capital (WK). This situation is intensified by seasonal sales, typical of the construction industry. In September of 1998, Dawson pursued a strategy of forward integrating into theShow MoreRelatedDawson Lumber Company Limited1550 Words   |  7 Pages(NBC or the Bank) is tasked with the decision to review Dawson Lumber Company Limited s (Dawson) request for an increase in its line of credit up to the amount of $10.8mm. Dawson intends to finance inventory and receivables with the line of credit. NBC must remain cogniz ant of the competitive landscape of the lumber industry and assess whether a focus on the retail segment is beneficial to Dawson s strategic plan. Given that Dawson is one of the region s largest borrowers, NBC must be carefulRead MoreDawson Lumber Company1182 Words   |  5 Pagesbusiness: Dawson Lumber Company Nature of the business: Wholesale Lumber Business Marketing Analysis: The Dawson Lumber Company was founded in the 1870s by the Dawson family to market the lumber on their land. 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