Beaverton Manufacturing is a relatively new customer of Haxton Enterprises. In the short period that the two companies have done business with each other, Haxton has found Beaverton to be, in management's words, "an expensive proposition." Numerous sales visits are typically required to "close a deal," with selling prices and discounts offered being among the most attractive in the industry. Complicating matters, Beaverton is slow to settle its account, orders in small quantities, and often has numerous specialized shipping and handling needs.
A recent customer profitability analysis has painted a very negative picture of Beaverton Manufacturing, and Haxton's managers are questioning whether an on-going relationship with the firm is warranted.
Required:A. Briefly explain why the customer profitability analysis painted a negative picture of Beaverton Manufacturing.B. What actions are available to Haxton Enterprises to improve Beaverton profitability?