Reference no: EM131461748

Question: Jordan's Furniture is a unique retail chain. In fact, every one of its stores in New England is unique-and highly profitable. And that's what caught the eye of Warren Buffett, the head of conglomerate Berkshire Hathaway, who is famous for his astute investments. Buffet bought Jordan's Furniture in 1999 and has left the founding family in charge to continue the retailer's winning ways. The company's history stretches back to 1918, when Samuel Tatelman opened a small furniture store in Waltham, Massachusetts. His son Edward became involved in the family business during the 1930s. By the 1950s, Edward's children, Barry and Eliot, were learning about furniture retailing first-hand as they helped out during busy periods. In the early 1970s, the two brothers jointly assumed responsibility for running the store, which then had eight employees. The brothers then made two key decisions that dramatically altered the future course of the business. First, they decided to gear their merchandise and store decor to 18- to-34-year-olds because people in this age group need furniture when they settle down and start families. Second, they resolved to make the business fun for themselves, their customers, and their employees by adding a large element of entertainment to the shopping experience. For example, the 110,000-square-foot store in Natick, Massachusetts, evokes the spirit of Bourbon Street in New Orleans, complete with steamboat and Mardi Gras festivities. One section of the store holds a 262-seat IMAX 3D theater, popcorn and all.

The Reading, Massachusetts, store is home to Beantown, a series of jelly-bean creations depicting Boston landmarks, such as the leftfield wall in Fenway Park, home of the Red Sox. Just as the Reading store is more than twice as large as the Natick store, its IMAX theater is also larger, roomy enough for an audience of 500 people. The two-story Avon, Massachusetts, branch is home to the twenty-minute M.O.M., better known as the Motion Odyssey 3D Movie Ride, which draws children of all ages. Continuing the fun theme, visitors to the Nashua, New Hampshire, store are invited to munch on free fresh-baked chocolate chip cookies and sip coffee in the snack bar. And by the way, every one of the four stores also features a huge inventory of furniture for all tastes. Ordinarily, customers shop for furniture only to fill a particular need. By making its stores exciting destinations for the entire family, Jordan's Furniture is out to change that behavior. When their children ask to visit the in-store IMAX theater, for instance, the parents may spot an entertainment unit or a chair they want to buy. "People come in here for fun," observes Eliot Tatelman. "

They wind up having fun but also buying." After Warren Buffett bought Jordan's Furniture, the brothers remained in charge to direct the chain's expansion. They also added a spiffy website and continued writing the funny television commercials for which the company was known throughout the Boston area. Eventually, they closed the original Waltham site to concentrate on the four stores built with entertainment in mind. By the time Barry left in 2006 to pursue a career as a Broadway producer, Eliot's two sons had followed family tradition and joined the company. And that's how a small business founded as a sole proprietorship wound up as a corporation merged into a large conglomerate. Today, Jordan's Furniture is an established, profitable retail operation employing more than 1,200 people. It serves thousands of shoppers every day, and its sales average of $950 per square foot is considerably higher than that of the typical furniture store. But then, Jordan's Furniture is hardly a typical store, as its slogan suggests: "Not just a store, an experience!"15 For more information about this company, go to www.jordans .com.

1. Warren Buffett's Berkshire Hathaway owns three other furniture retailers in addition to Jordan's. Why do you think the conglomerate left the Tatelman family in charge of Jordan's after the merger?

2. What do you think Berkshire Hathaway and Jordan's have each gained from the merger?

3. How much influence are Berkshire Hathaway's stockholders likely to have (or want) over Jordan's management? Explain your answer.