HUNTER STEEL: HUNTING FOR LABOUR
CASE STUDY SOLUTION
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pl
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SYNOPSIS
Sa
In May of 2020 Mark Hunter, owner and general manager of Hunter Steel in Ontario Canada, was dealing
with a labour shortage crisis. COVID-19 and CERB had resulted in a lack of general labourers available
for hire. With all 5 of Hunters steel warehouses producing at full capacity, Hunter needed to make a strategic
decision fast about how to solve the labour shortage before it began negatively impacting his reputation
within the industry.
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tio
OBJECTIVES
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• Understand the decision-making process of a company within the steel cutting sector.
So
• Analyze a company’s internal strengths and limitations, as well as the political, economic, social and
technological trends that impact it.
• Qualitatively and quantitatively evaluate strategic alternatives as a general manager that support the
company’s financial future.
• Perform a company valuation.
• Decide as a general manager, and use quantitative and qualitative proof to support their choice based
on their analysis.
The Case Solution Starts From page 6
,ASSIGNMENT QUESTIONS
1. What are Mark Hunters personal goals? What goals does he have for Hunter Steel? What is Hunter’s
level of risk tolerance?
2. Evaluate the external environment. What are the key success factors (KSFs)? What is Hunter Steels
competitive advantage? What implications can be drawn that will affect Hunter’s decisions?
3. Perform an internal analysis of Hunter Steel. How will the business’s internal strengths and weaknesses
e
affect your recommendations?
4. Analyze each of the strategic alternatives qualitatively and quantitatively.
pl
5. Should Hunter sell the business to his daughter? A competitor? What price should he offer?
6. As Hunter, what would you do? Defend your decision(s) with qualitative and quantitative support from
m
your analysis.
Sa
OR
As Hunter, perform whatever analysis you deem necessary to make a decision. Fully support and justify
your decision(s).
n
tio
lu
So
The Case Solution Starts From page 6
,ANALYSIS
1. What are Mark Hunters personal goals? What goals does he have for Hunter Steel? What is
Hunters level of risk tolerance?
Professionally, it is clear that Hunter values a customer service-based business model. He prides himself on
being able to employ family-oriented staff that are skilled when it comes to consumers and making life-lasting
connections. This professional goal goes against the option of partial automation from either supplier.
Automation requires laying off employees, which are a key part of Hunter Steels current success with
consumers. Hunter also prides himself on hiring un-skilled labour and giving them livable working wages,
benefits and conditions. This professional goal pairs best with the government labour assistance program. This
would help Hunter find labour to fulfill demand and would not require laying off any current employees.
Hunter has no desire or plans to retire anytime soon. He loves his job, and actually considers it more of a
hobby. Selling the business right now, when his health is still in-tact, is not preferable for Hunter. His work
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Sa
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tio
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So
The Case Solution Starts From page 6
, EXHIBIT -1: PROJECTED INCOME STATEMENT
Assumptions 2021
REVENUE
Total sales increase by 5% $ 21,503,347
Total cost of goods sold decrease to 65% 13,977,175
Gross Profit 7,526,171
Operating Expenses
Advertising and promotion increase to 2% of sales 430,067
Amortization same $ 289,002
Bad debt expense (recovery) same $ 109,787
Insurance same %; 0.3 64,510
Interest same $ 160,073
Management fees same $ 53,938
Office & computer supplies same %; 0.6% 129,020
Professional fees same %; 0.1%
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21,503
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Sa
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So
The Case Solution Starts From page 6
, EXHIBIT -4: BREAKEVEN ANALYSIS FOR GOVERNMENT LABOUR ASSISTANCE PROGRAM
Selling price derived from WASP exhibit $ 1.65
Variable costs COGS; 65% from status quo option $ 1.07
Unit contribution $ 0.58
Fixed Costs:
Application fee given $ 1,000
Hiring agent given $ 5,000
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pl
m
Sa
n
tio
lu
So
The Case Solution Starts From page 6
CASE STUDY SOLUTION
e
pl
m
SYNOPSIS
Sa
In May of 2020 Mark Hunter, owner and general manager of Hunter Steel in Ontario Canada, was dealing
with a labour shortage crisis. COVID-19 and CERB had resulted in a lack of general labourers available
for hire. With all 5 of Hunters steel warehouses producing at full capacity, Hunter needed to make a strategic
decision fast about how to solve the labour shortage before it began negatively impacting his reputation
within the industry.
n
tio
OBJECTIVES
lu
• Understand the decision-making process of a company within the steel cutting sector.
So
• Analyze a company’s internal strengths and limitations, as well as the political, economic, social and
technological trends that impact it.
• Qualitatively and quantitatively evaluate strategic alternatives as a general manager that support the
company’s financial future.
• Perform a company valuation.
• Decide as a general manager, and use quantitative and qualitative proof to support their choice based
on their analysis.
The Case Solution Starts From page 6
,ASSIGNMENT QUESTIONS
1. What are Mark Hunters personal goals? What goals does he have for Hunter Steel? What is Hunter’s
level of risk tolerance?
2. Evaluate the external environment. What are the key success factors (KSFs)? What is Hunter Steels
competitive advantage? What implications can be drawn that will affect Hunter’s decisions?
3. Perform an internal analysis of Hunter Steel. How will the business’s internal strengths and weaknesses
e
affect your recommendations?
4. Analyze each of the strategic alternatives qualitatively and quantitatively.
pl
5. Should Hunter sell the business to his daughter? A competitor? What price should he offer?
6. As Hunter, what would you do? Defend your decision(s) with qualitative and quantitative support from
m
your analysis.
Sa
OR
As Hunter, perform whatever analysis you deem necessary to make a decision. Fully support and justify
your decision(s).
n
tio
lu
So
The Case Solution Starts From page 6
,ANALYSIS
1. What are Mark Hunters personal goals? What goals does he have for Hunter Steel? What is
Hunters level of risk tolerance?
Professionally, it is clear that Hunter values a customer service-based business model. He prides himself on
being able to employ family-oriented staff that are skilled when it comes to consumers and making life-lasting
connections. This professional goal goes against the option of partial automation from either supplier.
Automation requires laying off employees, which are a key part of Hunter Steels current success with
consumers. Hunter also prides himself on hiring un-skilled labour and giving them livable working wages,
benefits and conditions. This professional goal pairs best with the government labour assistance program. This
would help Hunter find labour to fulfill demand and would not require laying off any current employees.
Hunter has no desire or plans to retire anytime soon. He loves his job, and actually considers it more of a
hobby. Selling the business right now, when his health is still in-tact, is not preferable for Hunter. His work
e
pl
m
Sa
n
tio
lu
So
The Case Solution Starts From page 6
, EXHIBIT -1: PROJECTED INCOME STATEMENT
Assumptions 2021
REVENUE
Total sales increase by 5% $ 21,503,347
Total cost of goods sold decrease to 65% 13,977,175
Gross Profit 7,526,171
Operating Expenses
Advertising and promotion increase to 2% of sales 430,067
Amortization same $ 289,002
Bad debt expense (recovery) same $ 109,787
Insurance same %; 0.3 64,510
Interest same $ 160,073
Management fees same $ 53,938
Office & computer supplies same %; 0.6% 129,020
Professional fees same %; 0.1%
e
21,503
pl
m
Sa
n
tio
lu
So
The Case Solution Starts From page 6
, EXHIBIT -4: BREAKEVEN ANALYSIS FOR GOVERNMENT LABOUR ASSISTANCE PROGRAM
Selling price derived from WASP exhibit $ 1.65
Variable costs COGS; 65% from status quo option $ 1.07
Unit contribution $ 0.58
Fixed Costs:
Application fee given $ 1,000
Hiring agent given $ 5,000
e
pl
m
Sa
n
tio
lu
So
The Case Solution Starts From page 6
