Giberson's Glass Studio

6 Pages Posted: 21 Oct 2008 Last revised: 4 Jan 2019

See all articles by Richard Brownlee

Richard Brownlee

University of Virginia - Darden School of Business

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Abstract

Edward Englehardt Giberson, the proprietor, is a skilled glassblower whose business is on the verge of bankruptcy. He works in his studio almost every day, and his products sell reasonably well. On average, he has at least a two-week backlog of orders. He realizes his prices are too low, yet the artistic nature of his products makes it difficult to set prices based on any systematic assessment of demand or comparison with similar products. In desperation, he turns to the consulting club of a nearby graduate business school for help in establishing both a pricing policy and a production policy that he hopes will lead to profitable operations and a positive cash flow. Clearly, continuing “business as usual” is not an option for Giberson.

Excerpt

UVA-C-2205

Rev. Dec. 18, 2018

Giberson's Glass Studio

When Felicia Coates, a first-year MBA student at the University of Virginia's Darden Graduate School of Business, first visited Giberson's Glass Studio in April 2007, she found the business files in disarray and the proprietor wondering how much longer he could stay in business. Records of production and data on product costs were nonexistent, and the only financial records were a checkbook, unreconciled bank statements, and several tax returns. Edward Engelhardt Giberson, the proprietor, was a skilled glassblower who had recently moved his studio from Charlotte, North Carolina, to Charlottesville, Virginia. Giberson's wife had always taken care of the books and other records, but the bookkeeping had been neglected since their divorce the previous year. Even though his glasswork sold well during his first year in Charlottesville, Giberson was quickly draining his limited financial resources. He did not expect a big salary, but estimated that he would need a minimum of $ 25,000 a year in wages and benefits. Notwithstanding his lack of organized financial information, he knew something needed to change if he were to avoid bankruptcy. In desperation, he contacted the student consulting group at the Darden School, and Felicia Coates volunteered to assist him.

Production Process

Giberson produced fine handblown glassware in the form of tumblers, paperweights, patterned glasses, and vases. In a refurbished shed behind the McGuffey Art Center in historic downtown Charlottesville, Giberson fashioned handblown items from molten glass gathered on a long metal blowpipe. Using his own breath to shape the object, Giberson formed each vessel by a process analogous to blowing honey on the end of a straw. Once the bottom was formed, a metal punty was attached, and the vessel was broken from the pipe. After reheating, the lip was trimmed, fire-polished, and formed. When the object was broken off from the punty, the characteristic “punty mark” was left. The glass was first annealed (a slowed process of cooling) for several hours in an oven to relieve the stress and was later ground, sanded, and polished before shipping.

. . .

Keywords: pricing, production processes, cost allocation, relevant costing, bottlenecks

Suggested Citation

Brownlee, Richard, Giberson's Glass Studio. Darden Case No. UVA-C-2205, Available at SSRN: https://ssrn.com/abstract=908095

Richard Brownlee (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4800 (Phone)

HOME PAGE: http://www.darden.edu/faculty/Brownlee.htm

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