Hanson Private Label Essay

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A Case Study on Hansson Private Label Financial Management Prof. Mine Ertugrul By: Paul Ventresca Radhika Shah Wenqi (Iris) Zuo You Zhou 1. How would you describe Hansson Private Label (HPL) and its position within the private label personal care industry? Compare HPL’s size, profitability, growth rate, and leverage with its peers. Hansson Private Label is a manufacturing company that manufactures a series of personal care products, which include soap, shampoo, mouthwash, shaving cream, sunscreen, and the like- all solid under the brand label of its retail partners. Its strategy has always been to focus on efficiency, cost control, and customer relation to guarantee solid revenue until 2007. Recently HPL’s largest retail partner offered them a proposal for a “significant” increase in the share of their private label manufacturing. This calls for an initial investment of $50,000 to expand production capacity, plus a $12,817 increase in working capital at Hansson Private Label. Expansion has always been carefully analyzed and the company has never worked below 60% capacity utilization (Exhibit 5). On the …show more content…

We know that the firm faces increased internal and external pressures, and competitors loom in the shadows, waiting for an opportune moment to snap at HPL’s revenues. The ten-year cash projections are ambitious, especially when considering that the initial contract only considers a three-year term, and much uncertainty lies beyond this three-year threshold. With that said, HPL should continue to diversify its offerings and consider the impact of this investment on other product lines as well and to minimize “cannibalism” and reduce the risk exposure of this single