What helped more is the higher entry barriers to this business, due to high fixed costs and high capital requirements during the startup, and lack of social attachment to the society they live in due to lack of history in the local community surrounding them, which is considered a big factor driving the choice of families to do business with one funeral services company rather than another.
For the analysis we have used the historical financial data of the company, the history of the company and its financing policy, and the financial data of its competitors.
No matter where one lives, how they live, what income level they possess, or their heritage, everybody dies and presents possible revenue for Loewen Group. Besides acquiring small businesses, a lot of factors helped Loewen grow in such a manner. There are not many technological advantages for a company that relies on tradition.
The threat of being Loewen group essay out by SCI is very intense and the price they were offering shows how greatly they wanted to incorporate Loewen Group into SCI. They are legally investing their money from the accrued pre-need revenues. And since the funeral services have almost fixed expenses between today and the future, whatever money Loewen got from this option would be invested in securities and in insurance contracts, thus creating more value, or used as additional cash for day to day operations and investment in the company.
Threats Not a great threat due to high barriers of entry into the market. This shows us that Loewen was too aggressive in its acquistion strategy and in its zeal to compete, it ended up paying far too high a price for these two acquisitions. The disadvantage of filing for Chapter 11 bankruptcy is that it would trigger a domino effect and force them to file in Canada as well.
They also financed those businesses for capital improvement and merchandise. Continued Acquisitions in The Loewen group started as a family business in the s, and had grown explosively in the late s and early 90s mainly by acquiring small independent funeral homes and cemeteries in densely populated urban markets, and acquired several large established funeral chains.
Because of this funeral homes cannot mark-up their costs the way they used to. The fact that they are allowed to invest these revenues allows them to create more money. Another factor that helped is weak substitutes. Shareholders would lose everything, as creditors have first right over the company, post chapter Because of the Internet, suppliers can now sell their products online directly to the consumer virtually eliminating the funeral home from the bereavement process.
Finance This report provides a qualitative analysis of the Loewen case study, starting from the excessive debt policy used in its expansion and ending with huge debt ratios and bankruptcy. Debt financing is considered the fastest and cheapest method of financing growth of a company, however using debt to finance accelerated and explosive growth can have his drawbacks.
This would be detrimental since Canadian laws were more strict than US laws and this would lead to potential conflicts. What they did that differentiated them from other big players in the market is that they acquired the bigger share of small cemeteries and funeral homes but retained some of their managers if possible because they thought they would know better about the community they lived in, and they are already known in their areas, which would provide a smoother transition of the business from a family one to a corporate level one.
This option allows for a new corporate structure which could be successful in turning around the company, and making it profitable once again. Buyers are becoming a lot more educated in the costs of funeral homes and itemized expenses.
Being a consolidated funeral home they can offer cheaper services for those without a great deal of income, but they can also provide the top-of -the-line funeral service for those who want to pay for it.
They can use the casket as a coffee table until it needs to be used for its other purpose. Today there are companies that offer caskets that one can make by themselves.
How was Loewen group able to grow explosively for the first half of the s?
What were the advantages of debt financing enjoyed by the company in this phase? At this point SCI realized that Loewen was overvalued and dropped its bid for acquisition. This also allows more jobs to saved, than by selling off individual assets.
We found out 2 options that Loewen could undertake. Chapter 11 would protect the company from its debtors by allowing them to reorganize their debt structure.
Despite clear indications of a crisis, the management at Loewen continued their acquisitions, albeit at a slower pace. File for Chapter 11 bankruptcy This is the only feasible option available to Loewen group in its present condition.
The company is worth more under operation, than by individually selling off its assets.The Loewen Group Inc. was founded in The company has two major headquarters in North America, one in Burnaby, British Colombia and a second in Cincinnati, Ohio.
Loewen Group Inc.
(L.G.I.) is the largest funeral services enterprise in Canada and is the second largest company in the North American Funeral Services Industry. CASE – LOEWEN GROUP, INC. Case: LOEWEN GROUP, INC.
MAKE SURE YOU HAVE THE CORRECT VERSION OF THE CASE: MARCH 4, THE LOEWEN GROUP, INC (ABRIDGED) Learning Objectives Understanding how rapid growth financed by debt can lead to bankruptcy, understanding basics of bankruptcy.
The Loewen group started as a family business in the s, and had grown explosively in the late s and early 90s mainly by acquiring small independent funeral homes and cemeteries in densely populated urban markets, and.
The Loewen Group This Essay The Loewen Group and other 64,+ term papers, college essay examples and free essays are available now on ultimedescente.com Autor: review • March 10, • Essay • 1, Words (8 Pages) • Views.
The Loewen Group Inc. Case Report – Session 3 Group 6 Executive Summary This report provides a qualitative analysis of the Loewen case study, starting from the excessive debt policy used in its expansion and ending with.
Financial Report of Loewen Group Inc. The Loewen Group Inc. was founded in The company has two major headquarters in North America, one in Burnaby, British Colombia and a second in Cincinnati, Ohio. Loewen Group Inc. (L.G.I.) is the largest funeral services enterprise in Canada and is the.Download