Surface Systems

3 Pages Posted: 16 Sep 2019

See all articles by Marc L. Lipson

Marc L. Lipson

University of Virginia - Darden School of Business

Abstract

Despite the steady growth of tennis interest worldwide (in 2011, the Women's Tennis Association's top 10 players were all from different countries), the manufacture of acrylic surface materials for hard courts was not a growth industry. To achieve any reasonable growth, tennis-court-surface manufacturers had developed product lines that served related sports. During most of 2017, Surface Systems had taken a huge gamble and modernized most of its production facilities. In early 2019, financial statements for 2018 had just been made available, and an upcoming meeting of shareholders would be management's first opportunity to publicly evaluate the effects of the restructuring.

Excerpt

UVA-F-1747

Rev. Sept. 12, 2019

Surface Systems

In contrast to all the attention paid to the grass courts at Wimbledon and the clay courts at the French Open, little notice was given to the most common surface in tennis—the humble “hard courts” of the Australian Open, the US Open, and most professional tennis courts. These surfaces, typically made of acrylic layers over asphalt or concrete, were not quite as dampening as clay nor quite as fast as grass. Despite the steady growth of tennis interest worldwide, the manufacture of acrylic surface materials for hard courts was not a growth industry. Surface Systems (Surface) had been in business in Australia, considered by some as the country where tennis was most popular, for 23 years before it hit the AUD7 million sales level in 2017.

To achieve any reasonable growth, tennis-court-surface manufacturers had developed product lines that served related sports like outdoor running tracks or outdoor basketball courts. Some manufacturers had even developed materials used in swimming pools. But the biggest hurdle for companies was finding ways to lower costs. With globalization bringing distant competitors into local markets and new manufacturers entering on the merits of innovations related to color and durability, containing costs was necessary for survival.

During most of 2017, Surface had taken a huge gamble and modernized its production facilities. In early 2019, financial statements for 2018 had just been made available, and an upcoming meeting of shareholders would be management's first opportunity to publicly evaluate the effects of the restructuring. It fell to CFO Charles Goldfarb to prepare the appropriate analysis.

. . .

Keywords: operating costs, margins, restructuring analysis, cost containment

Suggested Citation

Lipson, Marc L., Surface Systems. Darden Case No. UVA-F-1747. Available at SSRN: https://ssrn.com/abstract=3453527

Marc L. Lipson (Contact Author)

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
0
Abstract Views
75
PlumX Metrics