Rushway Brothers Lumber and Building Supplies Ltd. Essay

4596 Words Apr 24th, 2013 19 Pages
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RUSHWAY BROTHERS LUMBER AND BUILDING SUPPLIES LTD.

David C. Shaw prepared this case solely to provide material for class discussion. The author does not intend to illustrate either effective or ineffective handling of a managerial situation. The author may have disguised certain names and other identifying information to protect confidentiality. Ivey Management Services prohibits any form of reproduction, storage or transmittal without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Management Services, c/o Richard Ivey School of Business, The
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Inventories were way up, correspondingly, so were the bank loan and the interest costs. Salaries and wages were much higher than in previous years. The bank manager called Gordon to say that the company was approaching the upper bound of the bank loan and he was not prepared to extend more on the current terms. Profits to shareholders were down significantly. Douglas Rushway died in November 1989. Under the terms of a long-standing partnership agreement with his brother, Gordon purchased the shares in the company from the estate using the proceeds of an insurance policy on his brother’s life. Almost immediately, Gordon terminated Conway’s contract and assumed management responsibilities himself. At that time Gordon Rushway approached his daughter Charlotte and asked her to take over the operation of RLBS. “I will help you as much as I can,” he promised, “and work with you to reduce inventory and get the finances in shape.” He pointed out that Jack and Paul were capable managers and with the proper overall supervision and encouragement, they had the potential to bring their divisions back to good health. But someone had to take over the ordering, the credit granting, the general management and control of the business. Charlotte Bradley lived in Strathroy, a small town west of London, at the time. She was in her early forties, divorced, with two children a full time job as a secretary. The children

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