The Cardbox Co. Case Study - The Severity of the Economic Crisis - Economics Assignment Help

Assignment Task:

In December 2008, Alberto Puig, CEO of The Cardbox Co. was concerned by the severity of the economic crisis that was damaging the sales of the company. “It is imperative that we come up with a different business model if we want to survive this big crisis,” thought Alberto, while at his desk.

Cardbox was a family business, selling paper and cardboard. The business was located in Barcelona, in one of its industrial suburban areas. The distribution channels were two: wholesalers’ distributors and its own webpage. One of the advantages of Cardbox was the immediate availability of a large number of products offered in its catalogue. These products could be dispatched in 24 hours thanks to the size of the inventory.

The first year in its history that the company saw a reduction in sales was in 2007, when sales had gone down an 8% to 45.8 million euros. In 2008, sales were 42.3 million euros and the prospect was a decrease of 15% in sales in 2009.

Besides the sales reduction there were more problems. The price of materials had gone up, and customers were looking for extended payment periods. The company had also had an increase in bad debts. In 2008, 1% of the sales would never be paid back (Bad Debts). The company accounted this loss in the P&L as a cost.

As a result of the condition of the Spanish economy, the banks were cutting down credit lines for most of the customers. In the case of Cardbox this measure would mean a reduction of short term credit lines in 2009 to 15 million euros, but Alberto did not know if he would be able to do it.

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