For the current, the company has a total market share of 21.2% in the UK market for timber, second to London Counties.
The company has grown significantly over the years because of the marriage of the managing director, who was a sawmill owner to a wealthy forestry owner in the north of England. Being second in the total UK market, the company is poised for a position of growth as its prospects for the future.
Wooden Posts Ltd is poised for growth in the future. However, because of changes in the UK timber market the company is presented with three alternatives by an international business consultancy firm. According to the firm, because the market for the companys products may face a slow down in terms of growth, the company has two options to expand, and one option to withdraw or contract.
As the timber market in the UK is forecast to face a slow down in terms of growth, the rivalry in the current competition is expected to become more intense. In order to address this, the first option Wooden Posts Ltd has is to acquire a competitor, London Counties, the player with the largest market share in the UK market. This will increase the companys total market share. This is also significant to the company, as Wooden Posts Ltd has faced challenges in terms of increasing costs in the companys production and distribution systems. The logistical problems that give rise to increasing costs can be addressed by expanding the companys facilities in the form of facilities that are owned by one of its competitors. Although this option presents some potential gains to the company in the form of industry consolidation and economies of scale, this option is considered very risk--one, because of the potential failure of mergers, and two, even the merger proves to be successful, it does not guarantee that gains from acquisition are huge enough to contribute to the increase in shareholders wealth.
The second option to Wooden Posts Ltd is to improve the