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MINI CASE: SCANDI HOME FURNISHINGS, INC.
 
Kaj Rasmussen founded Scandi Home Furnishings as a
corporation during mid-2002.  Sales during the first full year
(2003) of operation reached $1.3 million.  Sales increased by
15 percent in 2004 and another 20 percent in 2005.  However,
profits after increasing in 2004 over 2003 fell sharply in 2005
causing Kaj to wonder what was happening to his “pride and joy”
business venture.  After all, Kaj has continued to work as
close as possible to a 24/7 pace beginning with the startup of
Scandi and through the first three full years of
operation.

           
Scandi Home Furnishings, located in eastern North Carolina,
designs, manufactures, and sells to home furnishings retailers
Scandinavian-designed furniture and accessories.  The modern
Scandinavian design has a streamlined and uncluttered look. 
While this furniture style is primarily associated with Denmark,
both Norway and Sweden designers have contributed to the allure of
Scandinavian home furnishings.  Some say that the inspiration
for the Scandinavian design can be traced to the “elegant curves”
of art nouveau from which designers were able to produce
aesthetically pleasing, structurally strong modern furniture. 
Danish, and the home furnishings produced by the other Scandinavian
countries—Sweden, Norway, and Finland, are made using wood
(primarily oak, maple, and ash), aluminum, steel, and high-grade
plastics.

           
Kaj grew up in Copenhagen, Denmark and received a college degree
from a technical university in Sweden.  As is typically in
Europe, Kaj began his business career as an apprentice at a major
home furnishings manufacturer in Copenhagen.  After “learning
the trade,” he quickly moved into a management position in the
firm.   However, after a few years, Kaj realized that
what he really wanted to do was to start and operate his own
Scandinavian home furnishings business.  At the same time,
after traveling throughout the world including the U.S., he was
sure that he wanted to be an entrepreneur in the United
States.  Thus, while it was hard to give up the Tivoli Gardens
with its many entertainment and dining activities, as well as the
other attractions in Copenhagen, Kaj moved to the U.S. in early
2002.  With $140,000 of his personal assets, and $210,000 from
venture investors, he began operations in mid-2002.  Kaj, with
a 40 percent ownership interest and industry-related management
expertise, was allowed to operate the venture in a way that he
thought was best for Scandi.  Four years later, Kaj is sure he
did the right thing.

           
Following are the three years of income statements and balance
sheets for the Scandi Home Furnishings Corporation.  Kaj has
felt that in order to maintain a competitive advantage that he
would need to continue to expand sales.  After first
concentrating on selling Scandinavian home furnishings in the
northeast in 2003 and 2004, he decided to enter the west coast
market.  An increase in expenses associated with identifying,
contacting, and selling to home furnishings retailers in
California, Oregon, and Washington.  Kaj Rasmussen was hoping
that you could help him better understand what has been happening
to Scandi Home Furnishings both from operating and financial
standpoints.

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