Helping Jewelry Manufacturing to Overcome Crisis: Reduction or Expansion?

Abstract

This case is based on the development history of the largest Russian bijouterie producer - Etalon-Jenavi, a company founded in the early 1990s. For a long time the company worked under conditions of virtually no competition. However, the active expansion of foreign bijouterie producers into the Russian market that commenced in 2004, and the considerable reduction of the volume of sales during the 2008-2009 financial crisis period have made the company face a difficult choice. The Etalon-Jenavi management must decide whether to reduce production capacities or to continue investment in the development of production, counting on a rapid recovery of the market and an increase in demand. The no-easy solution must be economically substantiated; however, presentation of such substantiation turns to be a hard task for the financial director.