Maribeth Hite, Costume Director at the Guthrie Theater Foundation (GTF), sat in her office in the summer of 2003 preparing for the next advisory board meeting of CostumeRentals (CR). A joint venture between two Minneapolis/St. Paul area professional theaters, GTF and the Children’s Theatre Company (CTC), CR drew on the combined costume inventories of the two companies to allow for a nationwide rental business.
A year after the partnership was established, rental volume was growing steadily, but the venture was still running a deficit. Hite knew that the directors of the two partnering theaters were concerned about continuing to fund the venture’s losses, and that they would have to review the benefits that the theaters stood to gain after making it through the startup phase. Hite was proud of the high quality product and personalized service that CR was offering its customers, but was concerned that the deficit was a sign of a flaw in their operations that might be magnified as CR grew. In addition, tight staffing and aging inventory were nagging worries.
The September meeting would be dedicated to discussing CR’s overall strategy going forward. Rolfe Larson, a new board member and seasoned nonprofit consultant, was helping the CR team to define their options for growth, and Hite was confident that he would help CR’s board weigh the pros and cons of all their options. Hite mentally reviewed the recent progress CR had made. Over the past three months, CR’s team had re-evaluated its staffing requirements, created a marketing plan, implemented an inventory control system, and was in the process of setting a new pricing structure. The analysis they conducted for these efforts would help the advisory board plan its strategy to pull CR into the black and increase the benefits flowing back to the parent organizations.
A phone ring interrupted Hite’s musings. It was Nancy Jackson, Costume Director at the Pioneer Shakespeare Theater, an out-of-state company that Hite knew to have high quality costumes. Jackson was searching for a new storage space, and was interested in exploring the option of joining forces with CR. Hite immediately recognized that adding Pioneer’s costumes to CR’s inventory would help CR fill gaps in its selection of popular Elizabethan costumes. Unfortunately, there was very little time to analyze this opportunity as Pioneer needed a warehouse within the next three months. After she got off the phone, Hite turned back to her preparations with renewed urgency. CR’s board would have to make some big decisions at the September meeting.
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Sharon Oster, Stanley Garstka, and Laura Kunkemueller,“ CostumeRentals, LLC,” Yale SOM Case 00-012, September 1, 2003
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