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Falcon Products Emerge From Bankruptcy. Essay

832 words - 3 pages

Falcon Products Turn Around.What exactly is a retrenchment strategy? This is strategy commonly used by companies to help solve their problems or try to turn the business around and increase output and profit. Falcon Products is a business dealing with furniture for businesses as well as the common consumers. Recently they employed a retrenchment strategy and this strategy composed of cutting costs, closing down certain buildings or complexes, using lenders involved in a debt-for-equity swap, using recovery businesses, and by outsourcing and laying off workers. Evidence shows that Falcon Products went bankrupt on October 29th 2005. Nevertheless, less than a month later, they have managed to emerge from their dark hole of failure and into the white light of success. They have been officially moved out of bankruptcy.The Falcon product furniture company has changed their name from Falcon Product Co. to Commercial Furniture Group Inc. or CFG Group. They did this after coming out of their bankruptcy period. After leaving the contractionary phase of their business, they decided to create a new identity, which would attract more customers. To make it more user friendly to the consumer, CFG Group chose not to change the brand name of the products.On November 17th, 2005, Falcon Products recovered from bankruptcy with flying colors. As of September 24th, Falcon Products won the approval to trim back incentive pay, end a pension plan, and make other changes to an existing labor agreement with unionized workers at its complex in Tennessee. These changes will affect about 465 workers. Many workers opposed these changes but Falcon reassured them that it was inevitable if they want to emerge from bankruptcy. The company also wants to terminate the company's three pension plans, saving the company about 18.9 million dollars! This is just some of how Falcon Products expects to cut costs to save money as part of its retrenchment strategy.Falcon is also closing down some of its buildings and resources in order to conserve as much money as possible to relieve itself from its 68.5 million dollars of debt. The bankruptcy court in St. Louis recently granted Falcon Products permission to sell one of its numerous factories, which is located in the Czech Republic. Falcon Products is planning to transfer 87.4 percent of its stake and in return, a Slovak company that made this deal with Falcon Products agreed to assume all bank debt that his held by Falcon Product's factory. The reason for getting rid of this factory is that...

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