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By definition, greeting cards means cards, sometimes folded cards, that convey special messages such as congratulation, caring, greeting, and other sentiment that commonly exchanged/sent during particular situation like holiday, Great days, and other special occasion. The industry also provides interesting facts as men and women have different attitude in using cards to express their feeling to their relatives, colleagues, or couple.

This condition highlights that the industry also shows different number of cards type by gender although further study needed to identify the exact data regarding the issues. Concerning the development of business for Friendly Cards, this paper will discuss three issues that Friendly Card Inc deals in order to remain competitive in the greeting card industry; the three issues are the decision of envelope-making equipment, the acquisition of Creative Designs Inc, and the option to go to the market in order to raise additional capital to strengthen their financial position.

2. Recommendations for Ms. Beaumont 2. 1. The Envelope Machine In the greeting cards industry, cards and the envelope just like the integrated system in which they all compliment one another through the designs, colors, and also the decorating figures. In order to maintain the harmony, Friendly Cards must carefully order to the third party to produce the envelopes that fit their cards. This envelope-purchasing scheme has demerits since the envelopes are design in common rather than personalized according to the card designs.

In this situation, it is reasonable to buy the envelope machines that enable Friendly Cards to design and produce their own envelopes. From the financial point of view, the purchase of envelope-making equipment that costs $500,000 with about eight-year lifespan, personnel costs about $91,000, and other expense still provide the benefits for Friendly Cards (See Figure 1). Based on this financial projection, we recommend that Friendly cards to purchase the envelope-making equipments that further will reduce the costs.

Figure 1 Estimated Annual Savings from Operation of Envelope Machine (in thousands dollar) 2. 2. Creative Designs Acquisitions Mergers and acquisition (M&A) are two interesting words in business. However, not all M&A end successfully; some of them later separate to take different way to reach their objectives. According to Loeb (20089), there are three factors that lead to multiple synergies in M&A as following: a. Focus on growth rather than only cost savings b. Stick to business integration to form the merged entity c. Create benefits that materialize over the long term.

Regarding the acquisition of Creative design, there are two perspectives that Ms. Beaumont can regard them as contributing factors: marketing and financial factors. • Marketing perspective From the marketing perspective, any acquisition will add the market share doubled. However, Friendly Cards must pay attention carefully about the branding in which we suggest once the acquisition is done, there are still two brands in the market: Friendly Cards and Creative Designs. This strategy is to serve each company’s customers so that the objective to have raised market share is reached.

• Financial Perspective From the financial perspective, the acquisition should fulfill the concerns that financial position of the combined company will be better than the separated one. And the acquisition should bear the financial benefits such as reduced costs, sharing the equipment and material in order to remain efficient and competitive in the market. From the case study revealed that the acquisition will bear the efficient performance by cutting the cost of goods sold by 5% and reduce other Creative Designs expense by 10%.

Based on this two underlying factors, we recommend that Friendly Cards continue efforts to acquire Creative Designs with the objective of becoming stronger greeting cards company. 2. 3. West Coast Investors and New Equity From the time constraints point of view, there are generally two types of financing activities, short term financing and long-term financing. Short-term financing is the type of finance that should be repaid in less than a year time. Concerning the two options we discussed earlier regarding the purchase of envelope-making and the acquisition of Creative Designs demand lots of fund.

Considering that Friendly Cards also experience hard time in their financial condition, the financing option is required to finance the company’s operation in the upcoming years. The only favorable option is to accept the proposal from the West Coast investors that intend to buy the 200,000 shares of Friendly Cards at $8 per share. It means, this option will provide additional $1,600,000 that Friendly cards can use to finance the purchase of envelope-making equipment ($500,000) and the acquisition of Creative Designs.

This kind of equity financing activities will gain importance as companies grow to be too large for the owner to handle him/herself. Despite the consequences of providing shareholders with portions of corporate ownership, this financing method could generate a significantly larger amount of fund for new companies. Furthermore, when using the equity financing sources, companies will not be burdened with the undisputable contract to repay the borrowed amounts within a certain period.

However, since the deal means the Friendly Cards will share the ownership of Friendly Cards to the West Coast investors, there is another option that Friendly Cards management could raise capital by debts. According to principles of corporate finance, the best capital structure is the one containing a good balance of debt and equity financing. Too little debt could limit corporate potential for growth, and too much debt could have negative effects on cash flow. A good balance between the two instruments will create the preferable leverage for growth and further financial commitments.

Reference: Answer Corporation. (2007). Greeting card. Retrieved May 3, 2009 from http://www. answers. com/topic/greeting-card? cat=technology President and Fellows of Harvard College. (1993). Friendly Cards. Harvard Business School. The Greeting Card Association. (2007). General facts. Retrieved May 3, 2009 from http://www. greetingcard. org/thegreetingcard_facts. html Top 10 Links. (2007). Greeting Cards. Retrieved May 3, 2009 from http://www. toptenlinks. com/cat. php/Shopping:Cards:Paper

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