Business case study of loewen group inc

Shanto-Mariam University of Creative Technology

Project Management & Appraisal

Presentation on:

Business Case: Loewen Group Inc.

Group: 05Sohan Bepary, Mashudul Hasan Chowdhury, Martein Joy Sikder, Muntasir Bin Mostafa, Pavel Karapiat

Loewen Group Inc.the expectations of the families we serve

Group Members• Sohan Bepary 122-401-064• Mashudul Hasan Chowdhury 122-401-043• Martein Joy Sikder 122-401-026• Muntasir Bin Mostafa 122-401-048• Pavel Karapiat 112-401-118

Contents• Introduction• Histories• Company’s Chronology• Problem Statement• Subjective Analysis

SWOT• Objective Analysis

Ratio Analysis• Recommendation • Conclusion • Company at present

Introduction

• Funeral industry has been one of tradition, representing a mixture of religion and business.

• Most people a funeral has a religious dimension.

• Stability to the industry by faith’s final rite can be administered .

Histories

• The Loewen Group Inc. is a funeral service corporation located in British Columbia, Canada.

• The largest funeral service corporation in Canada and the second largest such firm in North America

Company’s Chronology Key Dates:• 1961: A.T. Loewen opens funeral home in Steinbach,

Manitoba.• 1985: Ray Loewen forms Loewen Group, Inc.• 1991: Loewen Group moves headquarters to Burnaby,

British Columbia.• 1996: Loewen Group settles lawsuit with Jerry O'Keefe,

a Mississippi funeral home operator; Loewen acquires Prime Succession Inc., the largest private funeral home business in North America, for $295 million.

• 1999: Loewen Group files for Chapter 11 bankruptcy protection in June.

• 2000: Company announces plans to shift its headquarters to Toronto.

Problem Statement

• Weak Management system• Financial Distress• Company Debt• Aggressive Company acquisition

Subjective AnalysisSWOT ANALYSIS

Strength

Opportunity

Weakness Threats

Subjective AnalysisSWOT ANALYSIS

Strength:

• Innovative business• Geographic area• Technology• Available resources

Subjective AnalysisSWOT ANALYSIS

Weakness: • They followed the industry trends• Had no global strategy for long run

business• Didn’t offer competitive pricing

Subjective Analysis

SWOT ANALYSIS

Opportunity: • Life insurance for customer• New Service to customer• Market Diversification

Subjective AnalysisSWOT ANALYSIS

Threats:• High fixed operating cost• Limited profit margin• Number of services are low• Strong competitor like SCI• Government regulation

Objective Analysis

RATIO ANALYSIS 1997 1998

LiquidityCurrent Ratio 1.64:1 0.32:1Quick Ratio 1.47:1 0.29:1

AssetFixed Asset Turnover 0.27 0.26Inventory Turnover 21.44 24.48

Objective AnalysisRATIO ANALYSIS 1997 1998Debt Debt Ratio 0.73 0.81

Debt-to-Equity 2.12 4.16

Interest coverage 0.22 -4.22Profitability

Gross Profit Margin 32.64% 25.67%

Operating Profit Margin 22.58% 13.64%

Net Profit Margin 3.73% -52.72%

Recommendation

• Preplanning: Preplanning allows survivors to

avoid the stress and uncertainty of fulfilling the

wishes of the deceased after their death

• Clustering the funeral homes and cemeteries

service together for increasing demands

• Acquisition strategy is not suggested.

Conclusion• In early of 1999, the Loewen’s stock price went

from $35.75 to $5.125 per share.• On June 1, 1999, the company filed for Chapter

11 bankruptcy protection in the U.S. and creditor protection in Canada.

• On August 10, 1999, the company was notified by New York Stock Exchange that its stock had failed to attain a minimum share price of $1 over a 30-day trading period.

• Finally to save the company, Paul Houston was selected by BOD to replace Lundgren as President and CEO.

Company at Present

Thanks for Your Attentions.

When you are born, you cry, and the world rejoices. When you die, you rejoice, and the world cries.-Buddhist Saying