Aurora Glass Foundry

St. Vincent de Paul of Lane County

December 8, 2011

Ian OGorman
Jake Young
Jana Barnes
Jared Hendricks
Stephen Snow

Authors Contact Information:

Ian OGorman
Lundquist College of Business
ogorman@uoregon.edu
Jake Young
Lundquist College of Business
jacoby@uoregon.edu
Jana Barnes
Lundquist College of Business
jana@uoregon.edu
Jared Hendricks
Lundquist College of Business
jaredh@uoregon.edu
Stephen Snow
Lundquist College of Business
snow@uoregon.edu

TABLE OF CONTENTS
EXECUTIVE SUMMARY .............................................................................................. 4
INTRODUCTION............................................................................................................. 5
COMPETITIVE LANDSCAPE ...................................................................................... 5
Five Forces Analysis ............................................................................................ 5
Resource Analysis ................................................................................................ 7
SWOT Analysis .................................................................................................... 9
PRICING ......................................................................................................................... 10
FINANCIALS .................................................................................................................. 10
STRATEGIC OVERVIEW AND RECOMMENDATIONS ...................................... 10
Product ................................................................................................................ 11
Sales ..................................................................................................................... 15
Marketing ........................................................................................................... 18
IMPLEMENTATION PLAN & TIMELINE ............................................................... 20
FINANCIAL & MEASUREMENT IMPLICATIONS................................................ 21
RISKS & CONTINGENCIES ....................................................................................... 23
CONCLUSION ............................................................................................................... 23
APPENDICES ................................................................................................................. 24

EXECUTIVE SUMMARY
Aurora Glass Foundry, a division of St. Vincent de Paul, asked our team to explore growth opportunities
for its glass products manufacturing operation. The following report summarizes our findings, beginning
with a descriptive view of the current market for glass products and Aurora Glass operations. Although
the current competitive landscape is not ideal for growth, Aurora Glass has opportunities to increase
revenue, brand awareness, operational efficiencies, and ultimately, profits. Our recommendations will
spur growth in Aurora Glass online, retail and wholesale products by placing a large organizational
emphasis on generating disciplined business practices.
Recommendations
The recommendations are organized into three categories: product, sales and marketing.
Product
Reduce old inventory through liquidation; recycle remainder into raw materials measured
by the percentage decrease in old inventory
Simplify and prioritize product lines
Track production costs and adjust prices accordingly
Sales
Implement a sales checklist
Rebuild an effective e-commerce platform to simplify product presentation and user
experience
Collect web analytics for trend analysis
Hire a sales intern
Marketing
Develop a cohesive brand that communicates Aurora Glass mission and values
Partner with Groupon to spur sales and increase cash flow
Use Search Engine Marketing (SEM) and Search Engine Optimization (SEO) to drive
online sales direct to consumers
Hire a marketing intern
Financial Impact
We project that the financial impacts of the above recommendations will move Aurora Glass towards
profitability within two years. During the most recent year Aurora Glass reported a loss of $16,388.00. In
the first year of implementation we project a Net Income of ($7,938.00) and by year two achieving
profitability with a Net Income of $3,150.00. Over this period, continued financial support from St.
Vincent de Paul of $5,000.00 is required. Our projections assume that Aurora Glass makes significant
investments in marketing and advertising as well as capitalizes on free labor opportunities to realize cost
savings.
Conclusion
Our recommendations provide clear strategies for a disciplined approach to growing the business both in
the short and long term. With a disciplined and closely monitored operation, Aurora Glass can increase
sales through its e-commerce, retail and wholesale channels. An increase in profitability will allow
Aurora Glass to expand its operations, so that it can serve its mission on a larger scale, as well contribute
profits to fund St. Vincent de Pauls other functions.

INTRODUCTION
Aurora Glass Foundry has been operating within the custom glass industry for 12 years. Aurora Glass
states in its mission statement that it aims to reduce the amount of glass in the landfill, be a positive
example to our community and support the mission of St. Vincent de Paul. Aurora Glass diverts all
profits to support St. Vincent de Pauls over-arching mission:
We assist the poor and those in need of consolation, seeking out and utilizing every resource.
Being mindful of the sanctity and dignity of all, any charitable work that advances those goals is
within the mission of St. Vincent de Paul.
Over the past six years, revenue has decreased to the point that Aurora Glass is no longer self-sufficient.
St. Vincent de Paul has been assisting Aurora Glass financially in order for Aurora Glass to continue to
meet its other objectives, which include providing jobs, increasing sustainability and supporting
community development.
Ten weeks ago, Aurora Glass requested that we generate a strategic plan for expanding its business and
increasing sales volume, with the ultimate goal of helping Aurora Glass become profitable again. Through
tours of the foundry, discussions with the business and sales managers, and reviews of company financial
information, our team learned about the companys operations. From this knowledge, it is our belief that
prior to focusing on increasing sales, Aurora Glass must develop a strategic business structure and
optimize operations in order to sustain any future growth. In this report we outline our research,
recommendations for structural and operational improvement, and strategies to exploit growth
opportunities.
COMPETITIVE LANDSCAPE
To analyze the industry attractiveness we completed a Porters Five Forces analysis. This section
addresses the attractiveness of the custom glass products industry as a whole, with a focus on the recycled
glass products segment. We then provide a resource analysis of Aurora Glasss inputs. Finally, using the
background of the Five Forces and the context of the resource analysis, we identify possible strategic
options.
Five Forces Analysis
Aurora Glass is part of the custom glass industry. For the purposes of this report, we narrowed the focus
to the glass products market segment. A narrower focus improves relevance and applicability of the
industry analysis to the subsequent sections. Exhibit 1 on the following page presents an overview of the
industry analysis.
Threat of New Entrants
The threat of new entrants into the custom glass products market segment is fairly low and is
remaining steady. The custom glassware industry as a whole is in decline and is not a quality
target for new firms. The custom products segment is fragmented by product type with most firms
specializing in a specific group of related products (e.g. countertops). The capital requirements
are relatively low for small-scale foundries. However, costs increase exponentially as production
increases. Specialized knowledge plays a key role in determining what products a firm offers and
in some segments is a significant barrier to entry. Access to distribution channels may increase
barriers to entry for firms specializing in products sold primarily in fragmented and specialized
retailers. Distribution for large retailer and wholesaler chains is relatively easier due to their inhouse distribution systems. Although large retail and wholesale chains may help the manufacturer
5

take advantage of economies of scale, these producers face increased price competition, which
reduces profit margins.
Exhibit 1: Dynamics of the Custom Glass Industry
Threat of New Entrants
Low, Steady
Relatively low startup
costs for small scale
production
Unattractive industry,
decline stage
Small niches
fragmented
Very difficult to be a
high volume mover,
capital intensity

Bargaining Power of
Suppliers
Medium, Steady
Glass inputs relatively
available
Many suppliers of
material to make new
glass
Fewer suppliers of
recycled glass that
demand a premium
Utility inputs and
additives stable

Rivalry Among Firms

Low, Steady
For specialized and
custom products local
rivalry is low
Mostly independent
niche players
Large production
facilities serve large
clients, small facilities
serve small clients
Rivalry intensifies in
high demand segments
such as building
materials and
countertops

Bargaining Power of
Buyers
High, Steady
Many alternatives
Increased price
sensitivity, economic
conditions
Control order quantities,
economies of scale in
production
End user buyers
(medium to low power)
Small retailers (medium
power)
Large retailers/
wholesalers (high
power)

Threat of Substitutes
High, Increasing
Many substitutes:
plastic, metal, wood
Competition from
overseas
Bargaining Power of Suppliers
Bargaining power of suppliers has been historically medium and steady with no indication of
dramatic changes in the future. Glass is the primary input for most glass product manufacturers.
6

Most types of glass, both new and recycled, are readily available depending on the volume
required. Some glass product manufacturers create glass from raw materials, but most purchase
inputs from companies that specialize in glass production. Additional inputs include labor,
additives for color and various treatments, which are also widely available. Specialized labor in
specific types of glass production can be difficult to find in some regions.
Threat of Substitutes
The threat of substitutes is highly dependent on product type. In general, substitutes are highly,
and becoming increasingly, more available. These substitutes include plastic, metal and wood
products. Substitutes are highly accessible and customizable to manufacturers needs. Substitutes
have also become increasingly available as overseas manufacturers have entered the United States
market, ultimately decreasing their relative prices.
Bargaining Power of Buyers
Buyers of custom glass products are typically builders, retailers, wholesalers and manufacturers.
Construction and automobile manufacturing make up the largest portions of the demand for
custom glass products. There is also high demand for more specialized products, such as glass
countertops. These buyers have fairly high and steady power over the custom glass product
industry. The sheer number of alternatives, both in rival firms and in substitutes, increases buyers
bargaining power. The recent economic recession has increased price sensitivity of buyers and
caused them to exert their power. Buyers control the order quantities, which are the lifeblood of
the capital-intensive process of custom glass products. End user buyers have considerably less
power; however, they purchase glass in a variety of locations including specialized shops, large
retailers and online stores. While they are not as price sensitive, end users are exposed to a wide
range of alternatives that are difficult to distinguish. Quality can be difficult for end users to
distinguish when shopping online. A high-quality shopping experience and a professional-looking
site will likely play the largest role in online purchase decisions.
Rivalry among Firms
Rivalry among firms remains relatively low and steady, although it varies by product type.
Typically, larger firms supply the large clients such as manufacturers and wholesalers. Smaller
firms supply smaller retailers and highly specialized custom work. Rivalry tends to be higher in
the high premium and high demand segments, such as building materials and automotive glass.
Demand typically comes from regional customers, for smaller scale productions, but the internet
has made products from small producers available across the globe. In addition, auction websites
such as Ebay and online retailers such as Amazon and Etsy have created new market
opportunities for glass product manufacturers of all sizes. Diversity of product mix and lead times
play key roles in the rivalry of companies that supply large retailers.
Overall, the custom glass products segment of the custom glass industry is not very attractive for a new
entrant. The industry is much more lucrative to an established player with a niche focus and long term
sales agreements with large clients. High capital requirements are required to take advantage of
economies of scale. While rivalry is low, a new firm may find it hard to acquire high return, long-term
contracts due to the differentiation of incumbent firms. The key to success in custom glass products is
navigating and controlling buyer power, which is not a simple task for new entrants.
Resource Analysis
We identified three key resources that Aurora Glass can leverage in its pursuit of competitive advantage.
These resources include competence in recycled glass product manufacturing, long-standing supplier
relationships, and a unique value proposition. We provide a brief explanation of each of the three
resources, followed by an analysis of their value to any future strategy at Aurora Glass.
7

Competence in Recycled Glass Product Manufacturing

Aurora Glass has always used recycled glass to create its custom products. The company derives
its competency from its experience recycling glass containers and single pane windows.

Is it Valuable?

Is it Rare?
Is it Inimitable
and/or Nonsubstitutable?
Is it Exploitable?

Yes, increased public concern over the sustainability of products and

manufacturing techniques, combined with regulatory intervention, has
increased the need for sustainable products of all types.
Yes, in a locational and artistic sense this competence is rare. Each firm
tends to specialize in a certain product niche with the most overlap in
high volume areas such as recycled glass countertops.
Yes, in the demand for recycled glass products, there is no substitute
for competence in producing recycled products. Increased demand for
recycled goods reinforces the necessity.
Yes, Aurora Glass can leverage its abilities to produce recycled
products, which a number of industries are seeking.

Long-Standing Supplier Relationships

Aurora Glass has long-standing supplier relationships with BRING Recycling, which supplies it
with single pane glass donations. Aurora Glass also receives glass donations from the community.

Is it Valuable?

Is it Rare?
Is it Inimitable
and/or Nonsubstitutable?
Is it Exploitable?

Yes, Aurora Glass relationship with recycled glass suppliers is its most
valuable resource. By obtaining free glass from key suppliers and
donation centers, Aurora Glass is able to avoid the most costly input in
recycled glass production process.
Yes, very rare. Aurora Glass is one of the only donation-based recycled
glass product manufacturers.
Yes, there is no substitute for supplier relationships, with the possible
exception of vertical integration. As a non-profit organization, Aurora
Glass has a nearly exclusive ability to gain free glass from suppliers.
Yes, Aurora Glass can exploit the lower cost structure based on free
supply of glass.

Unique Value Proposition

Aurora Glass unique value proposition is a result of its origin, mission and values. Its unique
combination of added value includes environmental sustainability and the mission and values of
St. Vincent de Paul.

Is it Valuable?

Is it Rare?
Is it Inimitable
and/or Nonsubstitutable?
Is it Exploitable?

Yes, Aurora Glass unique value comes from its environmentally

sustainable process, its affiliation with St. Vincent de Paul, and its
custom glass products. This creates a distinct value proposition Aurora
can pitch to potential customers.
Yes, none of the values that Aurora offers is unique in their own right,
but their combination is unique. Few firms offer the same or similar
value proposition.
Yes, if Aurora is identifying and serving the right niches that align with
its unique combination of values it will be difficult to imitate.
Yes, Aurora can exploit its unique value proposition to differentiate
itself from its competition.
8

These three resources - competence in recycled glass product manufacturing, longstanding supplier
relationships, and unique value proposition - were chosen because of their value and interrelatedness. By
leveraging key supplier relationships Aurora Glass can continue to exploit a low variable cost structure.
Using the competence in glass manufacturing, Aurora Glass can create products that incorporate its
unique value proposition.
One resource that Aurora does not have currently is a stable financial position. In the following section
the resources we have discussed in this section and many others will be combined with opportunities,
threats and weaknesses to formulate a set of strategic options that may work to grow Aurora Glass.
SWOT Analysis
Exhibit 2, located below, is a SWOT analysis for Aurora Glass. Outside of the two-by-two grid are lists of
internal strengths, internal weaknesses, external opportunities, and external threats. Using various
combinations of factors from the outside of the grid, we formulated potential strategies to look at further.
Exhibit 2: Strategic Options to Grow Aurora Glass
Strengths(S):
Weaknesses(W):
S1: SVDP support
W1: Strategic Planning
S2: Donated glass supplies/low- W2: Low inventory turnover
cost
W3: Lack of optimized product
S3: Custom work
mix
S4: Large on hand supply of
W4: Sales tracking and analysis
single-pane glass
W5: Website not user friendly
S5: Supports SVDP Mission
W6: Long lead times
S6: Volunteer Support
W7: Branding and advertising
W8: One furnace/ single color runs
Opportunities(O):
O1: Growing demand for green
products
O2: Wholesale
architectural/building
products
O3: Long term sales agreements
O4: Return to using container
glass
O5: Community involvement
O6: Using UO involvement
(clubs)
O7: Develop customer service
Threats(T):
T1: Finite supply of single pane
glass
T2: Low barriers to entry
T3: Decreasing profitability
T4: Poor economic conditions
T5: High cost of expansion
T6: High shipping costs

SO Strategies:
Provide custom green
building products to
builders and architecture
firms
Leverage relationships with
BRING and SVDP to
increase community
awareness of products
Differentiate custom work
by offering superior
customer service

WO Strategies:
Create a line of wholesale
products for volume sales
Have the UO e-Business club
redesign and simplify the
website
Have the UO AMA and UO
Allen Hall Advertising help
with branding/advertising
Develop a product focus that
appeals to the local sustainable
businesses

ST Strategies:
Forecast the need for glass
and create community
programs to keep the supply
healthy
Leverage supplier
relationships to keep other
firms from getting cheap
raw materials
Increase prices to reflect
market prices

WT Strategies:
Have liquidation sales of
remaining inventories
Create an incremental
expansion strategy with
scenario plans
Purchase additional machinery
to allow for multi-color runs

It is important to remember that SWOT is merely a tool, not an answer. The strengths, weaknesses,
opportunities and threats listed above are not exhaustive. Aurora Glass can benefit from using the SWOT
tool iteratively within an annual planning process.
PRICING
Pricing strategy is crucial to the survival of any company. Aurora Glass competes in a variety of product
segments, which means the financial success of the firm overall is based on volume, product mix and
pricing. To understand pricing we looked at Aurora Glass vis-a-vis key competitors. Aurora Glass
position on the competitor maps in Appendix A. suggests that its products are under-priced. The four
products analyzed are suncatchers, ornaments, draswer pulls and wind chimes. We selected competitors
using product resemblance and quality comparable to that of Aurora Glass products. Aurora Glass
products had either the lowest or second lowest price in each category. Underpricing can have a large
financial impact and is visible in the margins that a company commands.
STRATEGIC OVERVIEW AND RECOMMENDATIONS
To restore vitality to Aurora Glass, management needs to adopt a multifaceted growth strategy that builds
excellence and focus in employees, operations, processes, as well as marketing and customer
development. Cumulatively, these building blocks will map the financial success as shown in Exhibit 3
below.
Exhibit 3: Aurora Glass Strategy Map

Below we detail our recommendations for implementation of the initiatives outlined in the strategy map
above, as well as other recommended tasks that will benefit Aurora Glass in both the short and long term.
Our recommendations are broken into three major categories: product, sales and marketing.
10

Product
Costing
Determining each products exact cost will give Aurora Glass the ability to determine its true
profit margin. Costing needs to be evaluated at the custom products and stock products levels.
When customers place custom orders, Aurora Glass can create a job ticket to see the exact
amount it is costing them and charge the buyer an appropriate price to make a decent profit.
These tickets will include labor, overhead and materials costs. In product costing for stock items,
accuracy in costing is less important than the custom business, but Aurora Glass still needs to set
standards to compare to actual cost values. Exhibit 4 on the next page is an example that
demonstrates the cost of producing a variety of Aurora Glass products.
Once total costs of individual products have been determined, Aurora Glass will be able to price
accordingly and have the ability to make a solid profit. This chart establishes standards for Aurora
Glass and in the long term will be very beneficial in stabilizing the business.
Pricing
Aurora Glass should elevate its prices to increase profit margin and come closer to average prices
in the industry. A $3-$4 increase in the price of each product would increase revenues while still
keeping prices below the industry average. If it is determined that increased prices do not
negatively affect sales, management can look at raising prices further in the future. In particular,
management has priced suncatchers and ornaments well below the industry average and have the
potential for greater profit margins going forward. For our purposes, we are assuming that end
user prices and wholesale prices are the same.
Reduce Inventory
Aurora Glass currently has a large amount of old inventory, approximately $300,000.00 or ten
months of sales. Management should be proactive in eliminating this inventory through one of the
methods suggested below as soon as possible. Keeping old inventory limits cash flow, constrains
working capital, reduces available storage space, and results in poor asset efficiency. The three
ways in which management should consider eliminating old inventory are selling the inventory at
reduced rates, creating tumbled glass from the inventory, and re-firing the glass for use in more
popular products.

11

Exhibit 4: Product Costing Template

12

Selling Inventory
Aurora Glass already has a seconds sale once per year that attracts local individual
purchases. Aurora Glass should still sell old inventory at this event but is unlikely to be
sufficient to clear the account. A second possibility is selling the inventory through Etsy
or Ebay. Creating an account with either of these online stores is free, though there are
fees associated with selling items, as outlined below.

Ebay
Etsy

Cost per
Item
$0
$0.20

Percentage
of Price
11%
3.5%

Buy It Now
Fee
$0.10
None

Fees Paid

Paid Via

End of Sale
Monthly

Paypal
Paypal or Credit

An additional advantage of creating accounts with Etsy and Ebay is that these platforms
could be viable channels for selling Aurora Glass merchandise in the long term. These
platforms are well known and have large, established customer bases, and could
supplement sales through its website. Customers who discover Aurora Glass through Etsy
or Ebay might also visit its website to explore its other offerings. Etsy in particular is well
suited to Aurora Glass products, as its customers are specifically searching for
handmade products.
Registering with Paypal, Etsy, and Ebay is easy. For example, on Etsy one simply clicks
the Register link on the home page, enters their name and e-mail address, and then
follows the confirmation instructions that Etsy sends via e-mail. After confirming the
account, one follows the Sell link from the main page, enters an address and billing
information, and then begins to upload products, including a price, description, and
picture. When a product sells, Etsy sends an e-mail to the seller with quantity and
shipping information, and the buyers payment posts to the sellers Paypal account. The
seller transfers their Paypal balance directly to their bank account. The process for setting
up a seller account on Ebay is very similar.
Appendix B contains examples of products similar to those that Aurora Glass sells, as
posted by other sellers on Ebay and Etsy.
Create Tumbled Glass
A second option for decreasing old inventory is to turn it into tumbled glass. The market
for tumbled glass is growing, with new uses surfacing regularly. Liquidating old
inventory is an ideal opportunity for Aurora Glass to test this market. Below are ideas for
marketing and selling tumbled glass:
Sell tumbled glass on Ebay and Etsy, as outlined above, for $5-$8 per pound
Contact local pet stores, which stock tumbled glass for fish tanks and terrariums
Contact Green Dog Pet Supply, a pet products retail store in Portland, OR
Collaborate with Rexius, a local landscaping company, to provide tumbled glass
for decorative landscaping
Consider developing new products with tumbled glass such as tumbled glass
coasters or fill for gas fire pits, landscaping and water features.

13

Of these options, collaborating with Rexius is particularly attractive. Rexius slogan is

Sustainable Solutions, which indicates that it fits nicely with Aurora Glass goal of
having a low environmental impact. Because Rexius does not currently offer tumbled
glass for decorative landscaping, a partnership with Aurora Glass could increase its
offerings. Rexius office is just over a mile from Aurora Glass, which will keep delivery
costs down.
We recommend that Aurora Glass initially contract with Rexius on a trial basis in order
to gauge interest among end-users. If response is positive and both companies benefit
from the relationship, Aurora Glass should consider landscaping decoration as a
permanent source of revenue.
Re-firing Old Inventory
If Aurora Glass is unable to liquidate old inventory through any of the above methods, it
should re-fire the glass for use in products that are currently selling.
Establishing New Inventory Policies
The beauty of Aurora Glass business is that finished goods can act as raw materials.
Regardless of the liquidation method chosen, management should develop new inventory
processes and review them with St. Vincent de Pauls accountants. Aurora Glass should
establish a maximum period of time a product sits in inventory. Outdated inventory
should not become a problem in the future.
Working to liquidate old inventory gives Aurora Glass management team an opportunity
to try new sales channels. If selling on Ebay and Etsy proves to be successful,
management can begin selling other products through those channels. If Aurora Glass can
sell tumbled glass in local pet stores, it can consider extending its product line to include
other pet-related glass items, such as aquariums. Producing large quantities of tumbled
glass for Rexius will give management an indication if tumbled glass could become a
major driver of profits in the future.
Product Lines
Aurora Glass offers a wide variety of products from field tiles in a variety of sizes to wind
chimes and napkin rings. This wide variety of products can help or hinder a company depending
on the level of sales information. The piece-sales data provided to our team lacks specific sales
information. As a result, we did not do a detailed profitability or sales analysis by product. Yet
having this information is essential to making sound product portfolio investments. The following
section outlines considerations for Auroras management as it obtains this information.
Optimizing Product Mix
We recommend Aurora Glass begin gathering specific sales information (including
product type, size and color) using the product sales tracking template included in
Appendix C. Our understanding of the Microsoft Dynamics software used by Aurora
Glass is that it supports this functionality, but this can also be done by tracking sales
manually for the interim and inputting data into the example Excel template.
Within this template, management should note the total number of each color sold of
each product at the end of each month in the template. The template has been formatted
to calculate the total sold in each color, total sold in each design and total sold in each
product line. After a period of two, four, and then six months, management can analyze
14

the data in order to prioritize products and discontinue less popular items.
Color
Amber
Amethyst
Aqua Blue
Classic Clear
Cobalt

Number of products
using color
34
112
112
112
112

Color
Emerald
Purple
Red
Teal

Number of products
using color
112
27
10
69

Time spent making an undesired product is not only a waste of money, but it also limits
the companys production of more popular products. Implementation of product sales
tracking should begin with Decembers sales. In February, April and June 2012, Aurora
Glass should analyze the data and continue to analyze sales data every six months
thereafter.
Important questions to ask concerning continuing to offer a product include:
Do the products sales (in dollars) cover the fixed and variable costs of
production?
Which colors within a product line generate the most sales?
What is the opportunity cost of making this product?
Understanding demand will assist in every aspect of the business. In terms of production
schedule, we reviewed the product listings and determined how many different products
are offered in each color. This will assist in determining the length of a color rotation and
prioritizing product creation.
Sales
Revenue increases are an integral part of Aurora Glass goal of increasing its profitability. Below are our
recommendations to refine the sales process driving revenue and profitability. Sales tracking is a key
component of this recommendation section. Tracking functions will determine the scale of continual
learning and ultimately return on the initiatives outlined throughout this section.
Sales Checklist
Aurora Glass has a fantastic opportunity to research how its customers discover Aurora Glass. In
order to exploit this opportunity, we recommend re-incorporating a sales checklist into the order
receiving process.
In this checklist, there will be two main goals. The first is to determine the medium through
which customers heard about Aurora. The second is to encourage return customers. The latter will
be done by implementing a mailing list. Mailing lists are a simple, cheap and nonintrusive means
of keeping customers up to date on company developments, new product offerings, and offer
customers a discount.
The checklist will be implemented during the order process. We identified three main methods of
receiving an order: over the phone, online, and in person. For each of these we have adjusted the
sales checklist to fit the appropriate medium. Please see Appendix D for examples.

15

E-Commerce
Website Redundancy
Currently Aurora Glass has two websites, one for custom awards and one for other glass
products. Generally it is better to reduce redundancy of information by keeping all
operations in one location. A single site also promotes easier cross-selling. With the
product listings sufficiently simplified on the main site, the award site could be absorbed
and discontinued.
Simplify the Website
Aid the buyer by simplifying how to navigate through the product line online. This will
eliminate unnecessary clutter on the website and reduce the probability of decision
paralysis. The products should follow a strong schema that transitions from broad
categories to specific product, color and finishing. Because it is possible consumers know
what they want (e.g. a square knob in green), sorting criteria (+/-) should be provided for
each area. An example schema is shown in Exhibit 5, below.
A strong product schema will aid the consumer in traversing products while minimizing
the strain based on the diversified product line. If the product organization is strong,
Aurora Glass can stock more products without making the buying experience confusing
for the shopper.
Exhibit 5: Example Product Schema for Aurora Glass

16

Management can use the product schema to express the range of products that Aurora
Glass offers while maintaining a visually appealing and easy to use interface. Aurora
Glass, like most online businesses, has more information on its website than can be
digested by a user in a single session. Reducing the amount of text can simplify the user
experience while communicating the core messages. We have annotated examples in
Appendix E to highlight elements of a more aesthetically pleasing, highly functional
website. Aurora Glass should peruse websites of comparable online retailers to determine
what features promote ease of use and adjust its website accordingly.
Aurora Glass home page is too text heavy for the majority of consumers. Readers are
easily overwhelmed with excessive text and, in most cases, will not scroll down to read
additional information. Utilizing non-text content to convey messages will help hold the
consumers interest. Therefore it is encouraged to use videos and pictures to assist in
conveying information. Through this process, some information will need to be
eliminated and condensed. Aurora Glass should also consider incorporating a More
link, that, when clicked, would expand to supply information beyond basic descriptions.
Keeping the website topical and easy to digest should be a top priority.
Strengthen Ease of Purchase
Aurora Glass should minimize the number of clicks it takes for a customer to locate and
purchase an item. The easier the process is, the higher conversion rates Aurora Glass will
enjoy. In particular, there is room for improvement in the checkout process. There is
unnecessary redundancy that Aurora Glass could eliminate on the checkout page. A Buy
Now button should be offered along with other standard options, including Recalculate
Shipping and Continue Shopping. All of the various payment options can be
collapsed and shown only at the time of checkout.
Web Analytics
Aurora Glass should contact its web host, Adept Computer Services, and ask what
analytics support it offers. Aurora Glass needs to collect analytics to get a better
understanding of how users traverse its website. Following the traffic closely can help
Aurora Glass determine the success of its marketing initiatives, as well as determine the
drivers of profitability for the online store. Generally, hosting companies can offer
analytics for a fee. For relatively low traffic websites there are free options available.
Google Analytics, for example, is a free, user friendly option that is full of valuable
information.
By collecting analytics on website usage, Aurora Glass can drill down to the key drivers
of revenue. Understanding how users traverse the website and, more importantly, where
dropout occurs is a necessity for any business engaging in e-commerce. Analytics is the
simplest way to determine what drives traffic to the site. Most analytics programs allow
traffic to be viewed by the referring web page, which would allow Aurora Glass to
understand where its marketing efforts should be focused.
Positioning
Outlets
Aurora Glass should find new channels in the local market where it can sell its
products. Selling through new channels will lead to increased awareness of the
Aurora Glass brand and increased sales. Aurora Glass can determine through
which channel(s) demand is greatest, helping it to focus its retail efforts in the
future. There are many hardware, craft and decoration stores in the Eugene
17

community that Aurora Glass should consider contacting, including Jerrys,

Jambo, The Green Store, Down to Earth, and Oregon Art Supply.
Community Involvement
Aurora Glass can reach an even broader local audience by selling its products at
the many community events that take place in Eugene throughout each year. These
events include the Saturday Market in downtown Eugene; Art in the Vineyard; the
Street Fair on campus; Country Fair; the Holiday Fair, the Lane County Home
Show, the Green Home Show and other events at the Lane County Fairgrounds.
These are a handful of opportunities to introduce the Aurora Glass brand and
mission.
Offer Sales Internship
With only two employees working in sales, and neither working full time, Aurora Glass
has been missing many opportunities to increase wholesale accounts. We recognize that
Aurora Glass does not have funds to hire employees. Therefore, it is recommended that
Aurora Glass hire a sales intern.
The sales intern will work closely with management to effectively balance increasing
sales with production levels and capabilities. The ideal sales intern will be a business
student at the University of Oregon. Interns are often willing to work for no pay,
especially for a non-profit organization, in order to gain work experience.
In order to target these students, Aurora Glass should contact Sabrina Black at the
Lundquist College of Business. Sabrina Blacks contact information is included in
Appendix M. She sends a weekly Job & Internship Digest to all business students,
making this an effective means of contacting students. We have created a job description
for the Sales Intern position, which is located in Appendix F.
Marketing
The sales checklist described in the above section is a good first step in gathering information that will
help improve Aurora Glass marketing efforts. Below, we outline additional marketing tasks that Aurora
Glass can implement to further increase awareness of the company and promote sales.
Branding
In order to grow, Aurora Glass needs to develop a brand that will capture the attention of the
target market. Eugene has a unique culture that fosters an appreciation for local companies.
Aurora Glass could capitalize on the culture of Eugene and become a well-recognized brand
beyond the local area. The Internet has opened new opportunities for Aurora Glass to expand
from local markets to national customers, both direct consumers and retailers. To succeed in sales
through any avenue, Aurora Glass must develop a strong value proposition that leverages its
sustainable, community, and cause related ideals.
Establishing a positive brand image starts with quality of the work, and Aurora Glass makes highquality products. The next step is developing a way for Aurora Glass products to stand out
against competitors. Aurora Glass can strengthen its brand by re-branding materials including
logos, letterheads, and promotional materials. Aurora Glass cannot afford to hire a marketing firm
to update its logo. One potential source of inexpensive concentrations of students that would be
interested in designing logos and promotional material can be accessed through the University of
Oregon Department Art, American Marketing Association, and Allen Hall PR. The contact
information for these organizations and programs can be found in Appendix M. The branding
18

process should start with a logo that will help distinguish Aurora Glass products from its
competitors. A logo design competition would provide Aurora Glass with access to talented
designers for only the cost of the contests prize. Once a logo is chosen, the new design should be
implemented throughout Aurora Glass company. The website, stationary, signage and business
cards should all reflect the changes to the logo.
Search Engine Optimization and Search Engine Marketing
The development of a Search Engine Marketing campaign to drive traffic to the Aurora Glass
website will increase sales and traffic, but will not come without costs. Aurora Glass already has
a strong page ranking within specific categories. Aurora Glass can build page ranks in new
markets and categories using search engine keyword optimization. Capitalizing on undervalued
keywords can build traffic at minimal costs. A visualization of Aurora Glass current keyword
optimization from its website can be found in Appendix G.
We recommend that Aurora Glass set aside a marketing budget of $420.00/month to purchase
targeted Ad Words. Included in Appendix H is a list of the common Google searches that could
lead potential customers to Aurora Glass website. The blue highlighted searches are ones that
Aurora Glass should consider purchasing to drive more activity to the website. The choices
highlighted represent the main products and were chosen because they are a solid mix of high
search levels and lower competition. The closer the competition number is to 1, the higher the
price of purchasing the keyword. Therefore, choosing these keywords will be the lowest cost
options.
Local Marketing - Groupon
One major marketing tactic Aurora should implement is using Groupon to create a coupon
redeemable online for Aurora Glass products. Common Groupons involve purchasing $30.00
worth of product for only $15.00, which would be perfect for Aurora. Other similar local options
are available through The Register Guard. This tactic would introduce many local Eugenians to
the Aurora brand and is a highly measurable marketing tool. The Aurora Glass sales manager
should oversee these efforts.
Targeting the Green Consumers
Another St. Vincent de Paul team working on the Dogma Pet Beds project spent substantial time
researching strategies to target green customers. Their work on Green Guides is applicable to
Aurora Glass green message. The strategies generated by the Dogma Pet Beds team may provide
meaningful guidance for our general recommendation that Aurora Glass branding involve a
strong green component.
Offer Marketing Internship
In addition to a sales intern, Aurora Glass would benefit by hiring a marketing intern. The
marketing intern would collaborate with the sales intern and management to create compelling
marketing, advertising campaigns and campaign materials, as well as manage the organization's
social media campaigns. Ideally, the student would be a potential marketing, advertising or public
relations student.
In order to find a student for this intern position, Aurora Glass should contact both Sabrina Black
at the Lundquist College of Business and the University of Oregons Career Services department.
Contact information can be found in Appendix M and a sample job description can be found in
Appendix I.

19

IMPLEMENTATION PLAN & TIMELINE

Aurora Glass should implement the above recommendations in a timely, yet realistic manner. Our
recommendation implementation timeline can be seen below. A review and brief explanations of the
recommended tasks and the period during which Aurora Glass should implement them follows.

* Occurs at regularly specified intervals

Using any combination of the methods described to reduce inventory levels, Aurora Glass should
immediately begin eliminating back stock to increase cash flow. Increasing cash flow will help Aurora
Glass pursue other tasks going forward. We recommend that management spend the first three months
attempting to liquidate inventory on an Ebay platform and through its liquidation sale before beginning to
re-fire products it is unable to sell. Re-firing should be done with guidance by management on any
accounting write-downs. If the write-down is significant, more traditional liquidation sales can contribute.
Aurora Glass should also begin planning for the proposed website update within the first month. No more
than two months should be spent determining what changes will be made and which company it will hire
to conduct those changes. At month three, Aurora Glass should implement the update and begin both the
search engine optimization and Google Ad Words campaigns.
Aurora Glass should immediately begin tracking sales data and begin building a tracking process in
Dynamics. At months two, four and six, Aurora Glass should study this data and finalize the product
portfolio that management will incorporate into the new website design.
It is important that Aurora Glass also begin determining the specific costs for each of its products as soon
as possible. After determining costs, around month three, Aurora Glass should research prices of
20

competitors products that are similar to its own. Combining that information with cost data will allow
Aurora Glass to update its prices effectively. Management should conduct pricing audits regularly.
Within the first month, management should review the sales checklists included in Appendix D, and
update them as management sees fit. Beginning in month two, management and other sales staff should
begin using the checklists.
Aurora Glass should implement the logo competition during winter term at the University of Oregon, so
that the winning logo is incorporated in the website update in month three.
Aurora Glass should begin the process of hiring interns in April 2012, in order to have them begin
working in June 2012. With the help of these interns, Aurora Glass should be ready to implement its
Groupon campaign in September 2012.
FINANCIAL AND MEASUREMENT IMPLICATIONS
The overall objective of this project is to build a trajectory to restore Aurora Glass to profitability and
generate positive cash flows for St. Vincent de Paul.
Aurora Glass' financial situation is concerning, due in large part to negative net income. Aurora Glass is
experiencing yearly losses because its costs are high relative to revenues. When analyzing the last years
financial statements (Appendix J), it is evident that the salary and wage expense make up a majority of
Aurora Glass' expenses. For 2011, this expense constitutes 51% of total revenues, not including fringe
benefits, which represent an additional 12%. Overhead costs, at 19% of revenues in 2011, are also
concerning. These three expenses comprise 83% of revenues, making profitability in any industry
difficult. Significant negative income in 2011 directly translates to cash flows that are barely positive,
even after a $5,000.00 contribution from St. Vincent de Paul. This is concerning, because cash is a
company's most liquid asset and necessary for day-to-day operations.
In the projected statements in Appendix K, we project significant improvements in cash flow, due to the
strong sales growth and reduced expenses relative to revenues. By 2013, our projections indicate a
positive net income, resulting in a positive contribution to retained earnings and cash flows. Returning
Aurora Glass to a positive cash flow position as well as building strong margins and revenue streams is
essential.
Financial Highlights Without Liquidation
Revenue growth is expected due to focused attention to drive sales of high demand products.
Based on our recommendations and limited historical financials, we project an estimated 10%
sales growth over the next two years. Some highlights of the financials are as follows.

* Detailed assumptions for each of the projected statements are provided in Appendix L.
21

By using core financial metrics we have also evaluated how these projections will improve
Aurora Glass overall liquidity, asset efficiency, and profitability. These are included also on the
financial statements with highlights below.

In 2011, the profit margin ratio shows Aurora Glass negative net income. However, by the end
of 2012, Aurora Glass is just below breakeven and, by the end of 2013, has a positive ratio.
As Aurora Glass profitability increases the return on its assets increases accordingly, showing
improved asset management. Aurora Glass inventory turnover ratio increases each year, which
indicates that the time it takes Aurora Glass to cycle through the inventory will become shorter.
Going forward, inventory turnover should reflect the actual cost of goods sold related to its
finished goods subaccount.
Inventory Liquidation Impacts
The projected financial statements over the next two years do not incorporate the effects from the
recommendation to liquidate inventory. Therefore, these projections of income and cash flows
should be considered undervalued pending future inventory liquidation efforts. Accordingly,
some projected fees and expenses will also be affected. Below is a table outlining the overall
expected impacts from inventory liquidation on the income statement and balance sheet.

Financial results are not the only barometer of successful implementation of our recommendations. The
financials may not, in fact, show improvement for some time as they are lagging indicators. For Aurora
Glass to proactively manage the plan, it should track the success of the recommended plan via a balanced
scorecard. This scorecard links together the expected improvements in process, innovation and

22

customer/market programs, which will in turn drive sustained financial improvement. The recommended
balanced scorecard for Aurora Glass is shown in Appendix M.
RISKS AND CONTINGENCIES
Some of the tasks we recommend come with a degree of risk. Hiring a sales intern comes with the risk of
agency. Aurora Glass will be giving the intern the authority to enter into legally binding contracts with
retailers. There is the potential for the intern to create obligations, such as a particular product order
quantity, that Aurora Glass cannot meet in the time specified. Management should thoroughly train the
intern in determining available inventory and the time it will take to fulfill orders. Aurora Glass will need
to ensure that the intern is covered under its insurance policy in case of injury at the workplace.
There is always risk involved with updating brand image. It is possible that retailers and end-users will
not respond positively to the new image, which could hurt sales. In order to mitigate this risk,
management should consider creating a focus group after the logo competition to gauge acceptance of the
new brand image.
As mentioned above, the market and number of uses for tumbled glass is growing. It is possible, however,
that tumbled glass use is fad rather than a trend, and interest could wane in the long-term. Tracking and
analyzing sales data, as described in the Product section above, will allow Aurora Glass respond to
changes in trends accordingly.
Raising prices is also risky, as negative customer reaction could hurt sales. It is for this reason that pricing
audits should take place at regular intervals.
The greatest risk Aurora Glass faces is continuing to do business as it has for the past few years. Whether
or not it is through some, or all, of our recommendations, management needs to make changes to keep
Aurora Glass from operating at a loss going forward.
CONCLUSION
Through the initiation of these recommendations into Aurora Glass business strategy, future growth
opportunities will be sustainable and profitability will increase. St. Vincent de Pauls continued financial
support will be necessary over the course of two years in order to implement these strategies. However,
we expect Aurora Glass to achieve its goal of profitability by the end of 2013. Management can then
determine if it will reinvest profits in the business or contribute them to St. Vincent de Paul.

23

Appendix A: Pricing Aurora Glass Products to Competitor Maps

Suncatchers
$50.00
$45.00

Suncatchers
$40.00
Accent on Glass

$40.00
$35.00

$32.00
Terry Brown

$30.00
$24.95
Shaw Creek

$25.00

$30.00
SunShine

$20.00
$15.00
$10.00

$12.00
Aurora

$5.00
$-

Ornaments
$45.00
$40.00

Ornaments

$35.00

$38.00
Artful Home

$35.00
J&J Glass

$30.00
$25.00
White Elk's

$25.00

$19.00
Red Elephant

$20.00
$15.00
$10.00

$10.00
Aurora

$5.00
$-

24

Drawer Pulls
$25.00

Drawer Pulls
$20.00
Artdefleur

$20.00
$15.00
Creative Glass

$15.00

$10.00

$12.00
Aurora

$12.00
$11.00 Aspen Hot
Beachy Rustica

$5.00

$-

Wind Chimes
$60.00

Windchimes
$50.00
$42.99
Glass of Many
Colors

$40.00
$30.00
$20.00

$25.00
Windchimes
$24.00
and
Aurora
What Not

$34.00
Virtuly
$22.00
Lifting Up
Spirits

$10.00
$-

25

Appendix B: Similar Products on Ebay or Etsy

26

27

Appendix C: Product Sales Tracking Template

Color
Style
Suncatcher
Heart w/ sunburst
Sun
Moon
Dragonfly
Butterfly
Rose
Lighthouse
Hummingbird
Dragon
Mystic
Goddess
Serpentine Knot
Dove
Sandollar
Starfish
Nautilus
Scallop
Whale
Turtle
Gecko
Om
Angel
Mermaid
Labyrinth
Paw
Cross
Honey Bee
Aries
Taurus
Gemini
Cancer
Leo
Virgo
Libra
Scorpio
Sagittarius
Capricorn
Aquarius
Pisces
Pendants (aka Glasswear)
Turtle
Lizard
Frog
Bear
Celtic Knot
Celtic Knot Trefoil
Lightning
Sun
Goddess
Kokopelli
Deer
Yin-Yang
Heart
Dolphin
Fairy
Moon & Stars
Dragonfly
Paw

Amber

Amethyst

no choice given online

no choice given online

no choice given online

no choice given online

Cobalt

Classic
Clear

Teal

Emerald

Aqua
Blue

Purple

Red

Confetti

Clear

Bottle
Green

Bottle
Brown Total

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

28

Color
Style
Coasters
Lace Coaster
Ornaments
Four Leaf Clover
Celtic Cross
Holly
Christmas
Epiphany Star
Star of David
Small Heart
North Star
Snowman
Peace Dove
Pirate
Holy Family
Holiday Wreath
Napkin Rings
Fish Napkin Ring
Candle Holders
Votive Holder
Small Stand
Large Holder
Tumbled Glass (sold in lbs)
Tumbled Glass
Windchimes
Dragon
Sun
Heart
Moon
Dragonfly
Lighthouse
Hummingbird
O Mobile
O Vertical
Spiral
Drawer Pulls
1 inch square
1 inch round
star
2 inch fish
4 inch fish
diamond
1 inch dome
Bowls
Small Lace
Centerpiece
Plate
Vases
Wall Vase
Standing Vase
Accent Tile
2.5 inch Rosette Block
3.5 Inch Rosette Block
4.5 Inch Rosette Block
1 x 6 Inch Liner
1 x 6 inch Celtic Liner
Stepped Fret Liner Bar
4 x 4 inch Spiral Tile
Teardrop

Amber

Amethyst

no choice given online

no choice given online

Cobalt

Classic
Clear

Teal

Emerald

Aqua
Blue

Purple

Red

Confetti

Clear

Bottle
Green

Bottle
Brown Total

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

29

Color
Style
Field Tile
1 inch
2 inch
3 inch
4 inch
5 inch
6 inch
Total Products Sold

Amber

Amethyst

Classic
Clear

Cobalt

Teal

Aqua
Blue

Emerald

Purple

Red

Confetti

Bottle
Green

Clear

Bottle
Brown Total

0
0
0
0
0
0
0
0

Please note: Gray cells note that the product is not available in that color.

30

Appendix D: Sales Checklist

customerservice@svdp.us

31

* Would you like to join our mailing list (newsletter,

coupons, sales, community involvement)?

*How did you hear about Aurora Glass?

32

Appendix E: Aurora Glass website simplification

33

Appendix E: Examples of functional websites

34

35

Appendix F: Sales Intern Job Description

The Aurora Glass Foundry is part of St. Vincent de Pauls strategic recycling initiative for a healthier
community. It makes glass products from donated recycled glass and sells them through its online store
and few retailers around Eugene. All profits from Aurora Glass assist homeless and low-income people
through emergency services, housing, jobs, training and other charitable endeavors. Aurora Glass recycles
old windows and other waste glass previously without a recycling avenue. The sales intern reports to
Auroras sales manager. The intern will work 10-20 hours per week while being flexible with their school
schedule.
Duties & Responsibilities:
- Help manage sales data and records including product line sales and inventory levels
- Research prospective wholesale accounts
- Maintain client contact list
- Write and send monthly newsletter to mailing list
- Work alongside a marketing intern to increase brand awareness and reach
- Develop sales materials for Auroras participation in artisan fairs and shows
Minimum Requirements:
- Currently pursuing a degree in business administration or journalism
- Excellent verbal and written communication skills
- Exceptional organizational skills
- Hardworking and willing to begin at the grassroots level if required
- Proficient in Microsoft Office
- Prefer access to reliable car
To apply for the Sales Internship position, contact Mary Sharkey by phone at 541-681-3260 or by email
at mskarkey@svdp.us. Check out our website at auroraglass.org

36

Appendix G: Aurora Glass Current Search Engine Optimization

37

Appendix H: Google Ad Words

Local Monthly
Searches (United
States)

Keyword

Competition

Global Monthly
Searches

glass drawer pulls

5400

4400

suncatchers

0.66

40500

22200

glass suncatchers

0.85

5400

3600

glass drawer pull

4400

3600

glass pulls

14800

9900

custom glass tile

0.86

480

390

glass tile

0.87

246000

201000

drawer pulls

165000

135000

drawer pulls glass

5400

4400

glass pulls knobs

6600

3600

glass knobs and pulls

6600

3600

drawer knobs

0.99

40500

27100

drawer handles and pulls

60500

49500

glass mosaic tile

0.93

33100

22200

glass drawer knobs

2900

1900

sun catcher

0.51

33100

18100

drawer handles

90500

60500

glass suncatcher

0.81

5400

3600

suncatcher
glass drawer pulls and
knobs

0.57

49500

27100

1000

720

glass tiles

0.9

246000

165000

window suncatcher

0.74

480

390

recycled glassware

0.91

3600

1900

glass knobs pulls

6600

3600

suncatchers glass

0.85

5400

3600

glass tile accent

0.8

1000

880

glass tile mosaics

0.92

165000

135000

sun catchers

0.63

40500

27100

glass sun catcher

0.7

2400

1600

38

glass sun catchers

0.86

4400

3600

custom glass tiles

0.92

390

320

glass mosiac tile

0.93

1000

880

glass mosaic tiles

0.96

33100

22200

mosaic glass tile

0.93

33100

22200

39

Appendix I: Marketing Intern Job Description

The Aurora Glass Foundry is part of St. Vincent de Pauls strategic recycling initiative for a healthier
community. It makes glass products from donated recycled glass and sells them through its online store
and few retailers around Eugene. All profits from Aurora Glass assist homeless and low-income people
through emergency services, housing, jobs, training and other charitable endeavors. The marketing intern
reports to Auroras sales manager. The intern will work 10-20 hours per week while being flexible with
their school schedule.
Duties & Responsibilities:
- Manage Aurora Glass social media campaigns (Twitter, Facebook)
- Develop and implement compelling marketing strategies that forward the mission of Aurora Glass and
St. Vincent de Paul
- Work alongside a sales intern to increase brand awareness and reach
- Develop sales and promotional materials
- Track Google Ad Words effectiveness and use Google Analytics
Qualifications:
- Currently pursuing a degree in marketing, Business Administration, Public Relations, or Advertising
- Ability to complete tasks within specified time frames
- Excellent written and verbal communication skills
- Exceptional organizational skills
- Proficient with Microsoft Office
- Self-motivated
- Hardworking and willing to begin at the grassroots level if required
Preferred
- Social media and/or marketing experience
- Passion for sustainable products and the St. Vincent de Pauls mission
To apply for the Marketing Internship position, contact Mary Sharkey by phone at 541-681-3260 or by
email at mskarkey@svdp.us. Check out our website at auroraglass.org.

40

Net Income

Other (income)/expense

Income From Operations

Overhead

Total Operating Expenses

Salaries and wages

Fringe benefits
Rent
Utilities
Supplies
Telecommunications
Bldg. & vehicle repair & maint.
Travel, mileage, meetings,
Professional services
Commission
Advertising
Fees, licenses, and taxes
Other
Bad Debt
Depreciation

Operating Expenses

Gross Margin

Total Cost of Goods Sold

Total Revenue
Purchases and freight
Inventory adjustment

Sales, net
Miscellaneous income

Revenue

90
0
199
611
27

70
283
197
497
54

60
0
250
244
14

11,498
2,301
542
1,316
94
198
0

372
474
21

60

9,747
2,339
542
1,388
390
189
35
95
395
904
255
27

12,214
2,931
542
1,324
321
193
10

Apr-11

May-11

Jun-11

(2,151) 1,185 (156) (5,811) (7,459)

(2,302)

10,045
2,411
542
1,138
19
194
0

6,606

9,879
2,371
542
1,134
168
230
0

$10,754
295
-------------11,049
507
(5,169)
-------------(4,662)
-------------15,711
--------------

Jul-11
$18,256
358
-------------18,614
1,051
(2,796)
-------------(1,745)
-------------20,359
--------------

Aug-11
$225,382
$4,902
------------------$230,284
$14,303
($9,323)
------------------$4,980
------------------$225,304
-------------------

YTD

1,389 (1,241) (4,374)

(14,586)

9,775
9,175 10,029
116,009
2,345
1,800
2,407
26,981
542
542
542
5,962
1,147
1,182
1,133
13,415
581
56
4,317
7,490
59
103
105
1,837
34
0
17
2,276
203
0
203
59
70
80
60
60
210
914
0
352
0
128
134
1,292
74
372
423
372
74
669
3,906
313
606
500
431
541
374
4,846
53
8
14
0
20
33
271
106
0
0
0
0
106
1,003
1,003
1,003
1,003
1,003
1,003
11,033
------------------------------------------------------------------------------------------------- ------------------20,266
16,760 16,344 16,680 14,690 20,839
196,541
------------------------------------------------------------------ ------------------------------ ------------------639
4,151
7,927
4,683
1,021
(480)
28,763
8,098
6,453
1,321
3,294
2,262
3,894
43,349
------------------------------------------------------------------ ------------------------------ ------------------8,098
6,453
1,321
3,294
2,262
3,894
43,349
------------------------------------------------------------------ ------------------------------ -------------------

11,173
2,682
542
1,272
653
194
2,142

$23,337
$20,121 $26,724 $19,478
442
459
486
420
-----------------------------------------------------------------23,779
20,580 27,210 19,898
1,901
1,835
1,247
1,050
973
(2,166)
1,692 (2,515)
-----------------------------------------------------------------2,874
(331)
2,939 (1,465)
-----------------------------------------------------------------20,905
20,911 24,271 21,363
------------------------------------------------------------------

Mar-11

====== ======== ============= ======= ================================= =============== =========

(272)

Feb-11

1,003
1,003 1,003
1,003
----------------- --------------------------- -------------17,940 17,520 16,560 20,214
----------------- --------------------------- -------------1,711
4,685 3,388 (3,347)
3,862
3,500 3,544
2,464
----------------- --------------------------- -------------3,862
3,500 3,544
2,464
----------------- --------------------------- --------------

11,117
2,668
542
1,189
291
187
16

1,003
------------18,728
------------4,385
4,657
------------4,657
-------------

Dec-10 Jan-11

$28,073 $20,349 $17,055 $11,239

1,059
220
226
175
----------------- --------------------------- -------------29,132 20,569 17,281 11,414
1,408
1,818 1,119
442
8,073 (3,454) (3,786) (5,895)
----------------- --------------------------- -------------9,481 (1,636) (2,667) (5,453)
----------------- --------------------------- -------------19,651 22,205 19,948 16,867
----------------- --------------------------- --------------

Nov-10

11,357
2,726
542
1,192
600
185
22

$29,996
762
------------30,758
1,925
5,720
------------7,645
------------23,113
-------------

Oct-10

Aurora Glass Factory

10/01/2010-09/30/2011

St. Vincent de Paul

($13,348)

$31,330

$17,982
$31,330

$142,353

$82,037
$19,286
$4,336
$9,718
$6,505
$1,267
$2,238
$203
$694
$1,009
$3,260
$3,494
$176
$106
$8,024

$160,335

($10,510)

$149,825
$9,152
($19,662)

$146,964
$2,861

Total 2011
$18,371 $243,753
$358 $5,260

Sept

$3,916

$2,122
$3,916

$47,265

$30,885
$47,265

$17,920 $214,461

$10,255 $126,264
$2,411 $29,392
$542 $6,504
$1,215 $14,630
$813 $8,303
$158 $1,995
$280 $2,556
$102
$305
$87 $1,001
$168 $1,460
$408 $4,314
$437 $5,283
$22
$293
$21
$127
$1,003 $12,036

$20,042 $245,346

$3,666

($1,238) ($1,795) ($16,381)

$12,019

$10,781
$12,019

$54,188

$33,972
$7,695
$1,626
$3,697
$985
$570
$38
$0
$220
$283
$646
$1,352
$95
$0
$3,009

$64,969

$15,490 ($1,314)

$80,459 $18,728 $249,012

$5,151 $1,144 $15,447
$10,339 ($2,458) ($11,781)

$78,418
$2,041

Jan-Aug 2011 Oct-Dec 2010

Appendix J: Previous Years financial statements

41

Appendix K: Projected Statements

St. Vincent de Paul

Aurora Glass Factory
Pro-forma Income Statement
2011

2012

2013

$243,753 98%
5,260
2%
249,012 100%

$268,128 98%
5,260
2%
273,387 100%

$294,941 98%
5,260
2%
300,200 100%

Revenue
A Sales, net
B Miscellaneous income
Total Revenue
Materials *
C Purchases and freight **
D Inventory adjustment
Total Cost of Goods Sold
Gross Margin

TBD
15,447
(11,781)
3,666

6%
-5%
1%

TBD
10,935
0
10,935

4%
0%
4%

TBD
12,008
0
12,008

4%
0%
4%

245,346

99%

262,452

96%

288,192

96%

126,264
29,392
6,504
14,630
8,303
1,995
2,556
305
1,001
1,460
4,314
5,283
300
127
12,036
214,468

51%
12%
3%
6%
3%
1%
1%
0%
0%
1%
2%
2%
0%
0%
5%
86%

123,024
28,296
6,504
14,630
10,935
1,995
2,556
305
3,001
1,603
12,000
5,800
300
140
12,036
223,124

45%
10%
2%
5%
4%
1%
1%
0%
1%
1%
4%
2%
0%
0%
4%
82%

135,090
31,071
6,504
14,630
12,008
1,995
2,556
305
1,001
1,760
12,000
6,369
300
153
12,036
237,777

45%
10%
2%
5%
4%
1%
1%
0%
0%
1%
4%
2%
0%
0%
4%
79%

30,878

12%

39,328

14%

50,415

17%

47,265

19%

47,265

17%

47,265

16%

($16,388)

-7%

($7,938)

-3%

$3,150

1%

Operating Expenses
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S

Salaries and wages

Fringe benefits
Rent
Utilities
Supplies
Telecommunications
Bldg. & vehicle repair & maint.
Travel, mileage, meetings,
Professional services
Commission
Advertising and Marketing
Fees, licenses, and taxes
Ecommerce Fees
Bad Debt
Depreciation
Total Operating Expenses
Income From Operations

Other (income)/expense
T Overhead

Net Income
Profit Margin Ratio
ROA

-6.7%
-20.8%

-3.0%
-10.6%

1.1%
4.3%

* Materials should be implemented into future financials and included in costs of goods sold
after costing methods of products are established
** Purchases and Freight should not be included in future Income Statements once the
appropriate costing methods of products are established, these costs will then be included in
the cost of goods sold for each product.

42

St. Vincent de Paul

Aurora Glass Factory
Pro-forma Balance Sheet
2011

2012

2013

Assets
Z Cash
U Inventories *
Total current assets

$648
30,000

30,648

V Property, plant & equipment

W Less: Accumulated depreciation
Net property, plant & equipment

60,180
12,036

48,144

Total assets

1%
38%
39%

$4,747
30,000

34,747

76%
15%
61%

60,180
24,072

36,108

7%
42%
49%

$19,932
30,000

85%
34%
51%

60,180
36,108

49,932

24,072

27%
41%
67%
81%
49%
33%

$78,792 100%

$70,855 100%

$74,004 100%

X Notes Payable

$60,180

76%

$60,180 85%

$60,180 81%

Y Retained earnings
Total owners' equity

18,612

24%
24%

10,675

13,824

Liabilities and Owners' Equity

18,612

Total liabilities & shareholders'

equity

10,675

$78,792 100%

Current Ratio
Inventory Turnover
Days Sales in Inventory

15%
15%

$70,855 100%

0.51
0.12
2986.7

0.58
0.36
1001.3

13,824

19%
19%

$74,004 100%
0.83
0.40
911.9

* Kept constant, however once liquidation takes place and the recommended inventory subaccounts are created,
Aurora should reassess target inventory balances. This should cause the total inventory dollar amount to
decrease and the work in progress subaccount to increase relative to finished goods.

St. Vincent de Paul

Aurora Glass Factory
Statement of Retained Earnings
2011

2012

2013

Retained Earnings, Beg

Plus: Net Income

$0 $18,612 $10,675
(16,388)
(7,938)
3,150
(16,388)
10,675
13,824

Contributed Capital
Less: Paid out to SVDP

35,000
0
$18,612

Retained Earnings

0
0
$10,675

0
0
$13,824

43

St. Vincent de Paul

Aurora Glass Factory
Statement of Cash Flows
2011

2012

2013

Cash flows from operating activities:

Net Income
Add: Depreciation
Total Cash Flow From Operations

($16,388)
12,036
(4,352)

($7,938)
12,036
4,098

$3,150
12,036
15,186

Cash flows from investing activities:

Purchase of Inventory *
Purchase of Equipment *
Total Cash Flow from Investing

(30,000)
(60,180)
(90,180)

0
0

0
0

35,000
60,180
95,180

648
0
$648

4,098
648
$4,747

15,186
4,747
$19,932

Cash flows from financing activities:

Contributed Capital from SVDP **
Note Payable to SVDP *
Total Cash Flow from Financing
Net increase/(decrease) in cash
Cash balance, beginning

Cash balance

* Purchase of inventory and equipment in 2011 is necessary due to forecast assumptions

that 2011 was Aurora's first year of production. To avoid affecting net income and cash
flows we assumed funding from SVDP through a note payable and contribution of capital.
** Contributed capital balance of $35,000 reflects $30,000 from purchase of inventory and
$5,000 to give Aurora positive cash flows in 2011. The $30,000 contribution for purchase
of inventory is to show already existing and previously funded inventory purchases.

44

Appendix L: Projected Statements Assumptions

Due to limited historical financials for Auroras business, forecasted statements assume 2011 as the first
year of production and all sales are considered on a cash basis. Additionally, the missing sales from
September thru December 2011 were projected by holding October-December sales of last year constant.
Adding to this the September 2011 sales were estimated by the average sales from January-August of
2011. The financials are designed to reflect ongoing operations for Aurora after the impact of our
recommendations.
A) Sales: Growth in sales of 10% from 2011-2012 and 10% from 2012-2013. Sales are projected to
come from direct aurora web sales, wholesale, and online platform liquidation sales via Ebay.
The 10% growth rate was projected through increased brand awareness from increase in
advertising and increase in sales volume through the liquidation sales of old inventory.
B) Misc. Income: Assumed constant, as it doesnt relate to products.
C) Purchases and Freight: Reduced to 4% of sales for 2012 and 2013 from 6% in 2011 due to
efficiencies that should result from a refined product line.
D) Inventory Adjustments: Reduced to zero for 2012 and 2013 because inventory balances will be
managed to avoid adjustments on the financials in the future. The treatment of existing inventory
balances is discussed in item U below.
E) Salaries and Wages: Reduced to 45% of sales in 2012 and 2013 from 51% in 2011 due to the
recommendations of implementing a new cost and pricing model, increased management of labor
efficiencies, and focusing the product line. Existing staff and volunteers will handle new product
costing and pricing methods as well as fulfillment of e-commerce and liquidation activities.
Therefore, no additional labor expenses are expected in the future.
F) Fringe Benefits: Assumed as a function of salaries and wages expense so kept constant at 2011s
rate of 23% of salaries.
G) Rent: Kept constant with no plans to expand
H) Utilities: Kept constant because the major utility, furnace, is always running and increased use
doesnt change costs. A new costing process should incorporate some of these costs into a
standard unit cost per product.
I) Supplies: Increase to 4% of total sales to incorporate increased packaging from liquidation sales
via Ebay.
J) Telecommunications: Kept constant as increased sales is not a factor because modern cell phone
bills are usually unlimited and increased e-commerce should not impact these costs either.
K) Building & Vehicle Maintenance: Kept constant from 2011 figures.
L) Travel, Mileage, and Meetings: Kept constant from 2011 figures.
M) Professional Services: Increased $2,000 in year 1 to account for website redesign fees. However,
returned to 2011 figures for year 2 to incorporate upkeep and maintenance of website.

45

N) Commission: Remained as 1% of total sales assuming commission rates for employees stay the
same over next two years. Looking forward these projections are likely overstated due to
emphasis in online sales in near terms.
O) Advertising: Increased advertising budget to $12,000 per year for two-year plan. These increases
in our advertising budget come from the increased Ad Word budget to $420/month as well as
increased budget for various events and advertisements of $580/month.
P) Fees, Licenses, and Taxes: Remained as 2% of sales assuming tax rate is constant
Q) E-commerce Fees: Includes Ebay platform fees and PayPal fees. It also includes the costs from
Groupon sales commissions.
R) Bad debt: Remained as .1% of sales
S) Depreciation: Kept constant from 2011 figures, assuming straight-line depreciation and no new
purchases of PP&E
T) Overhead: Kept constant from 2011 figures. While Aurora has no control over this allocation we
would recommend that management work with St. Vincent de Paul to ensure that the allocation
method is consistently applied. Moreover, some elements of overhead could potentially be
incorporated into the new product costing process, so understanding what is included in overhead
costs is essential.
U) Inventories: Shown as 10% of actual inventories or $30,000. This is due to limited information
when making these forecasts. If total inventory was included on the balance sheet a
corresponding purchase of this inventory would also need to be included via cash or on account.
However, in this plan the focus is to reduce inventories so $30,000 (10% of existing) in ending
inventory, making up approximately 2 months of current sales, is a realistic and optimal target. In
the future inventory levels should distinguish raw materials such as recycled glass and color dyes
from finished products.
V) PP&E: On January 2011, installed value of equipment at $60,180 is calculated to justify
depreciation expense of 12,036 with (assumed) 5 yr. straight-line depreciation.
W) Accumulated Depreciation: With assumed value of equipment added January 2011 and a useful
life of 5 years. Annual deprecation accumulated is $60,180/5 years = $12,036. Since equipments
value was assumed January 2011 the first years depreciation expense of $12,036 would be
accumulated on the 2011 Balance Sheet of $12,036. With no new purchases, $12,036 is the
additional depreciation accumulated each year for its estimated 5 year useful life.
X) Notes Payable: To keep financials in balance the assumed value of equipment in January 2011
was paid for by a non-interest bearing loan from St. Vincent de Paul of $60,180.
Y) Retained Earnings: Assumed that 2011 was the beginning year for Aurora and there was a
contribution of $35,000 from St. Vincent de Paul to keep business afloat. No withdrawals or
money paid out to St. Vincent de Paul during the plan period through 2013.
Z) Cash: Cash balances are retained during plan period through 2013 to help with costs from
unexpected increases in sales volume.
46

Number of Employees Trained in Cost Recording

2
12%

300
100%

70%

80

Collect Web Analytics

Hire Interns

Train Employees in costing

Develop Costing Structure

Sales Checklist
Liquidate Old Inventory

Price Increase

Simplify product line

Website Update

Consumer Experience
Develop SEO/SEM campaign
Groupon & LivingSocial deals
Rebranding

Action Plan
Initiative

* Indicates a measure that is dependent on the previous line item to be calculated or utilized
** Cannot be calculated or targeted with the information we have. We strongly recommend that a target is
produced after inventories have been adjusted.

2
Yes
8%

Yes

Product Standard Costs Developed

30%

100

20.00%

Yes
15.00%

15%
20%
2
-

6,000
300,200
18,233
**
6%

10%
10%
1
Yes

(2,000) $
273,387 $
9,946 $
**
4%

100
50%

$
$
$

Target Year 1 Target Year 2

Percent of Products Sold at +/- 10% of Market

Value
Number of Groupon's Redeemed
Percent Decrease in Old Inventory

Percent Increase in Online Sales

Percent Increase in Web Traffic*
Number of Local Deals Per Year
Rebranding Project Completed
Redesign Online Checkout Process Project
Completed
Percent Decrease in People Who Partially
Complete Ordering Process*
Number of Products Offered Online

Net Income
Revenue
Cash Flow From Operations
Inventory Turnover Ratio
Increase Percent Increase in Profit Margin

Balanced Scorecard
Measures

Number of Interns Per Year

Obtain Web Analytic Reports
Increase Knowledge of Website Performance
Percent Increase in Unique Users*

Supplement Sales & Marketing Workforce

Track & Understand Product Costs

Improve marketing effectiveness

Reduce Inventory
Learning and Growth Perspective

Develop Product Focus

Process Perspective
Become Price Competitive

Improve Customer Experience

Increase Brand Awareness

Objectives
Financial Perspective
Increase Profitability
Increase Revenue
Increase Cash Flow
Increase Inventory Turnover
Increase Profit Margin
Customer Perspective
Improve Customer Web Experience

Appendix M: Balanced Scorecard

47

Appendix N: Contact Information

Sales & Marketing Internship Job Postings:
Sabrina Black
Communications & Recruiting Coordinator
Lundquist College of Business
Office: 541-346-1589
Email: sblack2@uoregon.edu
University of Oregon Career Services
Email: career@uoregon.edu
Phone: (541) 346-3235
Fax: (541) 346-6038
Marketing/Advertising Resources
Allen Hall PR
Firm Director, Paige Landsem
(503) 816-9412
paige.landsem@gmail.com
American Marketing Association(AMA)
ama@uoregon.edu
E-Commerce Resource
E-Business Club
uoebusinessclub@gmail.com
Materials Resource
Materials Resource Center (MRC)
Materials Resource Center, 1206 University of Oregon, Eugene, OR 97403
mrc@uoregon.edu

48