But in the meanwhile smaller competitors started to quickly erode market share with prices cut. In 1997, instead of cutting prices, UST reacted to the growth of this value players with the introduction of premiumRed Seal but it was late considering that other brands were already successful in this segment. Moreover, UST is over dependent on smokeless tobacco business that contributed in 1998 for about 97% of
Poor sales performance and relatively high cost of sales have contributed to the profit margins to slip to one third of other hand tool manufacturers. It also comes clear that Robertson’s effort to provide products to every market segment lowers the overall efficiency of the company. By cutting non-marginal products from the company’s range of products, cost of sales has a potential of being reduced from 69% to 65% of sales. Further on, in case of an acquisition with Robertson, Monmouth Inc. could reduce Robertson’s sales force by implementing all sales functions into the existing hand tool lines. Sales and administrative expenses are expected to be lowered by 3 per cent (from 22% to 19%) if any duplications were removed.
Case Study Report The Wilkerson Company is a manufacture of pumps, flow controllers and high quality valves. Products supplied to manufacturers of water purification equipment. Wilkerson started with a unique valves design and then produces pumps and flow controllers by using the existing labour and machinery. Wilkerson Company has declined the pre-tax profit from 10% to 3% due to several prices cutting in pumps by matching competitor price. The decision of cutting price was considered by the main members of the company.
Strategic Management Laura Ashley case study 1) Looking at the last years’ financial data, we observe a deteriorating trend in Laura Ashley’s overall performance, as evident especially from the consistent retained losses in 1998 and 1999 (respectively 49,3 and 33 millions), despite the 43.5 million additional capital raised in 1999. Specifically, particular concern arises over the negative operating cash flow, which registered an 11.4 million outflow in 1999, indicating the company’s inability to generate cash through its core activities. Evidence of this is also provided by the negative operating margin, -5.8%, and net profit margin, -11.5%. Moreover, after performing external analysis, it appears that LA’s ROE is the only one negative among comparable companies, with a value of (108.6): this suggests that it is not the industry suffering from a general crisis, but rather our specific company facing internal difficulties connected with its operations. Furthermore, LA’s inventory turnover (5.1) is the lowest one within the industry, indicating inability to successfully manage inventory.
Problems The first actionable problem is the increase in pricing for the service that we provide here at Netflix. Netflix has dropped 15% in heavy trading stock and has also lost over 2.5 million subscribers and projected to lose another 6.5 million due to the immense price jump. As you can see by reading the symptoms the problem in pricing is the major reason why revenue has dropped in the last year and is continue to fall. The price increase has caused customers to rethink their subscription to the company as most customers believe that watching movies is a pass time and not a necessity. Another problem the company is facing is the decline in market share.
FINANCIAL ANALYSIS FOR ALAMO GROUP Company Overview Alamo Group is profitable company this is per its net profit for each year and from its earnings per share. Also its earnings growth rate is relatively high {11%}. The company is stable as it has consistency in the growth of its earnings and assets and a consistent reduction of its expenses and liabilities. The gross profit margins each year are above 20%, this shows that the company is in a highly competitive industry. From its balance sheet it’s clear that the company is able to put its liabilities in check hence it has no gearing and liquidity problems.
Procter & Gamble Case Analysis Financial Stagnation: In this case study, Procter & Gamble (P&G) has experienced disappointing financial reports for the year 1999-2000. Profits, excluding reorganisation costs, grew by only 2 %, to $4.23bn, and it’s flagship brands endured disappointing growth, causing the company to scale back its growth forecasts. (Jones, 2001) P&G has responded in two ways. Firstly, it has acquired Clairol, the shampoo and hair-colouring business, for $4.95bn. This led to a 4% drop in share prices.
The main problem in a declining industry is that falling demand for products lead to the emergence of excess capacity. In trying to use this capacity, GE began to cut prices, thus sparking a price war and diminishing the profit. GE was also suffering from low productivity growth (1%-2%) as well as a lack of new innovations. Another issue facing Welch as he took control was that the company was still organized as it had been when GE was founded near the turn of the century. GE was suffering from a lack of strong leadership and the existence of to much bureaucracy.
In 2002, tariffs on imported steel intended to aid the ailing steel industry raised the price of steel within the United States to between 35% and 60% above pre-tariff prices. As a result, customers of steel companies struggled to stay in business and overall demand for steel dropped sharply. Tariffs are not the
The policy of reducing debt made MC leave the company with just $36 million cash which was well under the number of 1990 ($283 million cash ). MC’s stock prices fell more than two-thirds from $33.38 in 1989 to $10.50 in 1990, resulting in a drop of $2 billion in market capitalization; even if in 1991 it went up to $16.50. Another consequence was an important decrease of Times interest earned from 2.6 in 1989 to 1.4 in 1990 and 1.5 in 1991 which triggered a depreciation of bond rating from A3 in 1989 to Baa3 in 1991 quite close to junk bonds. For the future this is a strong signal of the MC financial crisis situation. Most liquidity and solvency indicators show that the group would have not been unable to cover its current obligations/liabilities and was close to bankruptcy.