Reference no: EM13987961 , Length:

Read the case: Mark Wheeler Craftsman, Inc.

Write a 5 page paper (1500 or more words) in APA format in response to the questions below.

a. Income for the firm depends on the number and size of contracts for the year. Knowing that the cash flow into the company may vary, how should employees be paid? Outline an employee payroll strategy using the information in the story.

b. The firm is subject to affordable credit and seasonal work contracts. What happens to the firm if their lines of credit suddenly become too expensive because of market panic or tough times in used home sales? How does a firm cope when the housing market becomes difficult?

c. What happens to the payroll strategy when home values drop? Why?

CASE STUDY: MARK WHEELER CRAFTSMAN, INC. 2008 Philip J. Adelman and Alan M. Marks

Mark Wheeler was born and raised in Brookfield, Connecticut, and graduated from Brookfield High School in 1979. As a teenager, he worked for his father's construction company and learned many skills associated with construction, such as electrical wiring, framing, and pouring concrete. Mark attended Rochester School of Technology, where he obtained an associate of applied sciences degree.While in college, he continued working as a craftsman, building the sets for the college theater company. He got married to Laurie and joined the Marine Corps in 1982, and spent 4 years as a logistics specialist.

After leaving the Marine Corps, he went to work for a construction company in Newtown, Connecticut, as a general craftsman, honing his construction skills. In 1988, with changes to the tax laws, the contractor had to lay off his full-time employees. At this point, Mark started a construction company with one of his co-workers. He borrowed $15,000 from his sister, talked the owner of a lot into allowing him to build a spec home on the property, and obtained a construction loan from Newtown Savings Bank. He built his first home, sold it prior to its completion, and paid his sister back with a 20 percent profit, paid the property owner for the lot, and paid the bank, all within 6 months. Mark and his partner then began building other homes and developed a relationship with the bank where his company would build homes on empty lots in subdivisions that the bank owned and then sell them for a fair profit. In the early 1990s, the housing market in Connecticut took a nosedive.

Mark had purchased a lot for $110,000 and built a spec house that he thought was sold for more than $300,000.The purchaser could not obtain financing, the lot value dropped to less than $60,000, and Mark had to move into the home himself. Shortly thereafter, the business folded as he and his partner could not get along. Mark went out on his own and began working on historic restorations and smaller projects. For example, he moved a house that had been built in 1647. He took the house apart, rebuilt it in the new location, and restored the home to its original finishes. The hardest thing that Mark had to do was obtaining the building permits to put the house back together, because none of the original construction met current building codes.

This project alone took Mark over a year. In December 1996, Mark and Laurie went to Phoenix to visit friends and the Wheelers fell in love with theValley of the Sun.They went home, put the house up for sale, and he and Laurie and their two children moved to Phoenix in July 1997. Mark took the general contractors license test and had his license by August. He went to work for a company building custom homes in September, and in January 1998, the Wheelers bought a home of their own.

In June 1998, Mark quit the company and formed Mark Wheeler Craftsman, Incorporated, and he and Laurie have been partners in the corporation since its inception. The company is run from their home, where Laurie keeps the books and does the payroll, taxes, and general paperwork. Mark takes a tremendous amount of pride in his work.At one time,he took on too many projects at once and had as many as 10 full-time employees. He learned that the quality of work suffered and there was too much hassle managing several projects at one time. Mark is a full-service contractor who now has six full-time employees. Mark has one general foreman, an electrician, and four general laborers.

He provides his foreman and electrician with a vehicle painted with the Mark Wheeler logo. He does no real advertising, because he finds that having his vehicle parked in front of areas where he is working and having satisfied customers who hand out his business cards provides him with as much work as he needs. During his 10 years in the Valley, he has located subcontractors who are extremely reliable and who perform their work on time and on budget. His contracts are all based on his cost of material and labor plus 20 percent. If someone wants a fixed price, it is usually higher, because Mark must include some contingencies.

On Mark quit the company and formed Mark Wheeler Craftsman, Incorporated, and he and Laurie have been partners in the corporation since its inception. The company is run from their home, where Laurie keeps the books and does the payroll, taxes, and general paperwork. Mark takes a tremendous amount of pride in his work.At one time,he took on too many projects at once and had as many as 10 full-time employees. He learned that the quality of work suffered and there was too much hassle managing several projects at one time. Mark is a full-service contractor who now has six full-time employees.

Mark has one general foreman, an electrician, and four general laborers. He provides his foreman and electrician with a vehicle painted with the Mark Wheeler logo. He does no real advertising, because he finds that having his vehicle parked in front of areas where he is working and having satisfied customers who hand out his business cards provides him with as much work as he needs.

During his 10 years in the Valley, he has located subcontractors who are extremely reliable and who perform their work on time and on budget. His contracts are all based on his cost of material and labor plus 20 percent. If someone wants a fixed price, it is usually higher, because Mark must include some contingencies. On average, Mark Wheeler Craftsman, Inc., handles about $1,500,000 worth of business a year. Based on a 20 percent profit margin, the business is quite successful.