Despite overall stability in profit margins, due to the intense competition, earnings of individual firms can be volatile. Consequently, the market for athletic and casual shoes remains fragmented. Companies competed on the basis of style, price and quality in the Casual segment of the industry; while brand image, specialized engineering and performance and price were the major bench marks for the Athletic segment. Owing to the cyclical and varying nature of trends and taste, inventory management and the optimization of production lead times, which were between (12-16) months, are key aspects that company’s must have effective control over. Most companies used independent contract manufacturers in China and other parts of Asia, due to their much cheaper cost of production.
Additionally, Costco has a goal of 3) maintaining its employee workforce, as high employee job satisfaction has translated into exceptional customer service and low employee turnover (Costco, 2012). The three standards to be chosen would be inventory turnover, store profitability and employee satisfaction. As I noted prior, the key to Costco’s success has been its ability to acquire popular goods and sell them quickly at minimal operative cost. A measure of inventory would be able to evaluate any significant trends in goods. If the inventory were to rise significantly for any particular item, it would indicate either the item is not popular, viewed as too expensive, or may be held up, off-site warehouses (depots) However, the turnover of goods is maximized by a seven day, 69 hour work, which includes weekends.
CRITICAL ISSUES * lack of smart and strong decision making because of owner and CEO’s different perspectives/priorities * sales have increased, but profitability have decreased * ineffective management of A/P and A/R have made the company insolvent * may lose loans because bank requires current ratio of 1.25 SITUATION ANALYSIS The major decisions for the company are taken by the owner rather than the CEO. The owner lacks business sense and his decisions are based on emotional feelings, not for the benefit of the company. The owner is not willing to outsource operations and wages are above industry average. From 2001 to 2005 sales have increased by 186%; whereas, COGS and selling and admin has increased by 199% and 166% respectively. High operating expenses and ineffective management of A/R have led the company to insolvency by demonstrating a quick ratio of 0.38.
A.C. Gilbert company has suffered a big loss in sales and profit. A lot of money was spent on expanding their business. There was a high demand for new “hot” products, and also the company started offering toy for boys and girls, instead of only making erector sets, and toys for boys. 4. Discuss how the economic environment in the US culture was changing.
Although market prices for precious metals fluctuated wildly for JM's competitors, JM's costs were tied mainly to mining and production costs which were stable and significantly lower. The company misrepresented the accuracy their production processes to their largest customer, GM. While the actual accuracy of the process attaching precious metal to the catalytic converter was close to 0.3%, JM said the accuracy was 3%. This allowed JM to safely put 97.5g instead of 100g of platinum on a set volume of catalytic converters and still meets the contract. At that time, platinum was $400 per ounce.
The major quality that Wal-Mart possesses is its ability to adapt and change according to the needs of its customers while striving to keep prices of goods and services low. With annual sales of about $300 billion, around 68% of the sales come from Wal-Mart Stores, 19% from its international operations, and 13% from its Sam’s Club. Wal-Mart’s annual profits are about $10 billion and they have a market value of over $250 with assets worth over $105 billion (Mujtaba & Maxwell, 2011). This success has hurt many competitors in the process but their success is an example that many manufacturers and businesses should use as a case study to perfect their own inventorial
Nevertheless, Goldman received unfavourable feedback from the company’s wholesaler who did not agree with the proposal. INDUSTRY BACKGROUND Wholesale and retail distribution in the U.S. carpet and rug industry has gone through a lot of instabilities since the 1980’s. There have been three major competitive trends that occurred within the industry. The first trend to occur happened in the mid 1980’s when the larger carpet and rug manufacturers began to eliminate the margins paid to wholesalers by bypassing them and selling directly to retailers. Similar manufacturers continued their use of wholesalers due to their lack of capital.
CASE STUDY #3 GAP, INC.’S TURNAROUND STRATEGY What does a five-forces analysis reveal about the strength of competition in the U.S. family clothing stores industry? The competition of rivals in the U.S. family industry is strong because the competitors are numerous, buyer demand is growing slowly, and the rivals face high exit barriers. The threat of new entrants is weak because the entry barriers are high and the industry outlook is risky and uncertain. The threat of substitute products is strong because good substitutes are readily available, substitutes have comparable or better performance features, and buyers have low costs in switching to substitutes. The bargaining power of suppliers is weak because good substitutes for supplier products/services exist and the number of suppliers is large relative to the number of industry members and there are no suppliers with large market share.
The other issue that is happening is the market share. The company had a market share of roughly 70%, but is being reduced on a significant level. Also, many other companies have emerged and started to manufacture the same products that Covington does. The company has started losing several industries in the United States because of the bad economy and increased competition. The concepts to be used in doing the analysis of the case: The concept that could be used to help do an analysis for this case would possibly be using the Four Approaches to Effectiveness Values.
CHAN & BAAZ The reporting objectives of Chan and Baaz present serious conflicts of interests. Theses arise because Chan has found a reason not to make the business as profitable as it could be simply because Baaz would get half the profits his book value at year end. Because Baaz doesn’t get paid fully until the fifth year, he needs for the company to be in good standing long enough for him to receive his fair share. The main issues up for discussion are the change in policies for the allowance for doubtful accounts, equipment depreciation, and the questionable write off of inventory. Under GAAP, an allowance must be setup.