Final Case: Friendly Cards, Inc. FINAN 4210 Lutz Jonathan Matsen 05/01/2013 Problem Identification Wendy Beaumont, president of Friendly Cards, is currently faced with 3 time sensitive issues that need to me dealt with immediately. As a relatively small company in the fiercely competitive greeting card industry, Ms. Beaumont must make some quick yet intelligent decisions to ensure the continued success of her company. To be more specific, she must decide upon:  The investment in equipment to enable the company to make rather than buy their own envelopes  The acquisition of Creative Designs Inc., a small Midwestern manufacturer of studio cards  The possibility of going to the market to raise additional equity capital in order to relieve pressure on its financial position Identification of Relevant Facts Friendly’s position in the industry As of early 1988, the main issues facing the greeting card industry were:  Continued industry consolidation (a decline of 15% per decade since 1954)  Cyclical revenues  The presence of high fixed costs Threat of Industry Consolidation Since its inception in 1978, Friendly Cards reacted to the looming threat of industry consolidation by rapidly expanding internally and through various acquisitions. These acquisitions allowed Friendly to access new markets and demographics that would have been previously unavailable to them. For example, through their acquisition of a California firm, the company gained West Coast distribution access and a more profitable form of distribution that cut out the middle-man/men (which ate away at profit margins), and a new branding opportunity through the creation of “Friendly Artists”. Friendly also diversified their product offerings with a full line of