[Solved] Reflection

Assignment Prompt & Instructions

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Humanize and apa paper

**files (1)**

– ## Year13ReflectionandSWOT.docx

**## Year13ReflectionandSWOT.docx**

**Year 13 Reflection**

**Note:** This year we took a more aggressive approach to try to overtake Company A and B with the following decisions.

**1. Compensation and Training**

·
**Decision:** We raised base wages and supervisor pay 1% in NA and AP. Incentive pay is $0.50 NA and $0.25 AP. Fringe benefits are 2,500 NA and 1,250 AP. Best practices training is 800 in each plant, and supervisors are at 30:1.

·
**Results:** Workforce quality and productivity support the higher S/Q, at a modest labor-cost increase.

·
**Cause:** Better pay, training and supervision raise output and quality and cut rejects (NA 6.5%, AP 8.4%), which offsets the added cost.

**2. Branded Production**

·
**Decision:** We run 400 models, $22k styling, $3.50 TQM and about 70% (NA) and 80% (AP) superior materials. We produce 5,470 pairs in NA and 5,900 in AP.

·
**Results:** Projected S/Q is 6.9 NA and 7.0 AP, against rivals' assumed 5.5 to 5.6. Supply covers demand in all four regions.

·
**Cause:** We invested in quality, style and materials to justify premium prices and win share. Production is sized to forecast demand plus required inventory.

**3. Production Facilities**

·
**Decision:** We chose Option B improvements in NA and AP, and added 750 (NA) and 1,000 (AP) pairs of new equipment.

·
**Results:** Capacity, with overtime, covers the production plan with a small surplus.

·
**Cause:** The quality and ad push raised demand, and the extra capacity was needed to avoid a shortfall.

**4. Distribution and Warehouse**

·
**Decision:** The NA plant ships 2,941 to NA and 2,173 to EA. The AP plant ships 574 to EA, 2,186 to AP and 2,644 to LA.

·
**Results:** Every region is supplied, with 0 pairs unallocated.

·
**Cause:** Shipping from the nearest plant keeps freight and tariff costs down. Shipping to LA from AP is about 19% cheaper because of exchange rates.

**5. Internet Marketing**

·
**Decision:** Retail prices are NA 86, EA 88, AP 82 and LA 87. Search ads are 5,500 / 5,500 / 4,500 / 4,500, with no free shipping.

·
**Results:** Internet sales stay profitable at premium prices.

·
**Cause:** Our quality lead lets us price above rivals' assumed $71 to $79 while search ads keep us visible.

**6. Wholesale Marketing**

·
**Decision:** Wholesale prices are 63 / 66 / 63 / 65. Brand ads are 22,000 / 17,000 / 19,000 / 18,000. The rebate is $4 and delivery is 3 weeks. Retailer support is 4,500 / 4,000 / 3,500 / 4,000.

·
**Results:** Projected wholesale share is 28.1% NA, 28.4% EA, 27.5% AP and 32.5% LA, with image at 85.

·
**Cause:** Heavy advertising and retailer support, plus quality, outweigh our higher prices. They also push image above the 72 target.

**7. Private-Label**

·
**Decision:** We offered no private-label pairs.

·
**Results:** All capacity goes to higher-margin branded pairs.

·
**Cause:** Private-label margins are lower and would compete with our branded sales for the same pairs.

**8. Celebrity Endorsements**

·
**Decision:** We bid Billy 2,000 (priority 1), Chef Curry 1,000 (priority 2) and Taylor 1,300 (priority 3), with a 3,500 spending cap. (Confirm the Chef Curry bid is entered.)

·
**Results:** The outcome depends on whether we win; the effect on image and demand likely starts in Y14.

·
**Cause:** Billy has high appeal in NA, and Chef Curry is strongest in LA, where we already have our biggest share.

**9. Corporate Citizenship**

·
**Decision:** We spent about $4.3M, with no charitable contributions.

·
**Results:** It supports image at a controlled cost.

·
**Cause:** We focused spending on sales-driving image levers rather than donations.

**10. Finance and Cash Flow**

·
**Decision:** We took a $40M 5-year loan, set the dividend at $1.50 and repurchased 626 shares.

·
**Results:** EPS $8.27, ROE 57.9%, credit rating A, net profit $154.9M on $827.4M of revenue, and ending cash $25.8M.

·
**Cause:** The dividend and buybacks support the stock price and ROE. Operating profit comes from premium prices and quality. About $1.65 of EPS is a one-time exchange-rate gain in LA, and cash is only about $5.8M above the $20M floor.

**Year 13 SWOT Analysis**

**Strengths**

·
**Profitability:** Projected EPS $8.27 and ROE 57.9%, far above the 3.50 and 23% targets.

·
**Quality:** Projected S/Q of 6.9 (NA) and 7.0 (AP), against rivals' assumed 5.5 to 5.6.

·
**Brand:** Image of 85 versus a target of 72, backed by the heaviest brand advertising and retailer support in the industry.

·
**Balance sheet:** Credit rating A, debt-to-assets 0.31 and interest coverage 27.8.

·
**Supply:** All four regions are supplied, with 0 pairs left unallocated.

·
**Workforce:** Higher pay, incentives and best practices training raise productivity and cut rejects.

**Weaknesses**

·
**Thin cash:** Ending cash of $25.8M is only about $5.8M above the $20M floor, so a sales shortfall could force borrowing.

·
**One-time earnings:** About $1.65 of EPS comes from LA exchange-rate gains, which are not operational.

·
**High costs:** Heavy advertising, premium materials and TQM spending squeeze margins.

·
**Reject rates:** AP at 8.4% and NA at 6.5% add waste.

·
**Image gap:** Our 85 trails the best rival's 87 by about 2 points.

·
**Leverage:** The $40M loan and buybacks inflate ROE and add interest cost.

**Opportunities**

·
**Celebrities:** Chef Curry is strong in LA (appeal 100) and Billy in NA (100), and the effects likely start in Y14.

·
**Credit:** Moving from A to A+ would add about 1 point of score.

·
**Share gains:** We can take more share in regions where rivals cut ads or quality.

·
**Quality lead:** It lets us hold premium prices even if rivals cut theirs.

·
**Capacity:** The new equipment gives room to meet higher demand in Y14.

**Threats**

·
**Rival improvement:** Blueprint Athletics (G-T-D 108) and AKinetix Footwear (105) are expected to improve in Y13.

·
**Exchange rates:** The LA gain may reverse when rates reset in Y14.

·
**Price and ad wars:** Rivals could cut wholesale prices, raise rebates or boost brand advertising.

·
**Weaker sales:** Sales 5% below plan would squeeze cash, and surplus inventory would add carrying costs.

·
**Celebrity risk:** A rival could win Billy, and Taylor and Chef Curry bids may fail.

·
**Stock price cap:** The BSG simulation credit for stock price stops at $91, so extra price gains add nothing.

**## Year13ReflectionandSWOT.docx**

**Year 13 Reflection**

**Note:** This year we took a more aggressive approach to try to overtake Company A and B with the following decisions.

**1. Compensation and Training**

·
**Decision:** We raised base wages and supervisor pay 1% in NA and AP. Incentive pay is $0.50 NA and $0.25 AP. Fringe benefits are 2,500 NA and 1,250 AP. Best practices training is 800 in each plant, and supervisors are at 30:1.

·
**Results:** Workforce quality and productivity support the higher S/Q, at a modest labor-cost increase.

·
**Cause:** Better pay, training and supervision raise output and quality and cut rejects (NA 6.5%, AP 8.4%), which offsets the added cost.

**2. Branded Production**

·
**Decision:** We run 400 models, $22k styling, $3.50 TQM and about 70% (NA) and 80% (AP) superior materials. We produce 5,470 pairs in NA and 5,900 in AP.

·
**Results:** Projected S/Q is 6.9 NA and 7.0 AP, against rivals' assumed 5.5 to 5.6. Supply covers demand in all four regions.

·
**Cause:** We invested in quality, style and materials to justify premium prices and win share. Production is sized to forecast demand plus required inventory.

**3. Production Facilities**

·
**Decision:** We chose Option B improvements in NA and AP, and added 750 (NA) and 1,000 (AP) pairs of new equipment.

·
**Results:** Capacity, with overtime, covers the production plan with a small surplus.

·
**Cause:** The quality and ad push raised demand, and the extra capacity was needed to avoid a shortfall.

**4. Distribution and Warehouse**

·
**Decision:** The NA plant ships 2,941 to NA and 2,173 to EA. The AP plant ships 574 to EA, 2,186 to AP and 2,644 to LA.

·
**Results:** Every region is supplied, with 0 pairs unallocated.

·
**Cause:** Shipping from the nearest plant keeps freight and tariff costs down. Shipping to LA from AP is about 19% cheaper because of exchange rates.

**5. Internet Marketing**

·
**Decision:** Retail prices are NA 86, EA 88, AP 82 and LA 87. Search ads are 5,500 / 5,500 / 4,500 / 4,500, with no free shipping.

·
**Results:** Internet sales stay profitable at premium prices.

·
**Cause:** Our quality lead lets us price above rivals' assumed $71 to $79 while search ads keep us visible.

**6. Wholesale Marketing**

·
**Decision:** Wholesale prices are 63 / 66 / 63 / 65. Brand ads are 22,000 / 17,000 / 19,000 / 18,000. The rebate is $4 and delivery is 3 weeks. Retailer support is 4,500 / 4,000 / 3,500 / 4,000.

·
**Results:** Projected wholesale share is 28.1% NA, 28.4% EA, 27.5% AP and 32.5% LA, with image at 85.

·
**Cause:** Heavy advertising and retailer support, plus quality, outweigh our higher prices. They also push image above the 72 target.

**7. Private-Label**

·
**Decision:** We offered no private-label pairs.

·
**Results:** All capacity goes to higher-margin branded pairs.

·
**Cause:** Private-label margins are lower and would compete with our branded sales for the same pairs.

**8. Celebrity Endorsements**

·
**Decision:** We bid Billy 2,000 (priority 1), Chef Curry 1,000 (priority 2) and Taylor 1,300 (priority 3), with a 3,500 spending cap. (Confirm the Chef Curry bid is entered.)

·
**Results:** The outcome depends on whether we win; the effect on image and demand likely starts in Y14.

·
**Cause:** Billy has high appeal in NA, and Chef Curry is strongest in LA, where we already have our biggest share.

**9. Corporate Citizenship**

·
**Decision:** We spent about $4.3M, with no charitable contributions.

·
**Results:** It supports image at a controlled cost.

·
**Cause:** We focused spending on sales-driving image levers rather than donations.

**10. Finance and Cash Flow**

·
**Decision:** We took a $40M 5-year loan, set the dividend at $1.50 and repurchased 626 shares.

·
**Results:** EPS $8.27, ROE 57.9%, credit rating A, net profit $154.9M on $827.4M of revenue, and ending cash $25.8M.

·
**Cause:** The dividend and buybacks support the stock price and ROE. Operating profit comes from premium prices and quality. About $1.65 of EPS is a one-time exchange-rate gain in LA, and cash is only about $5.8M above the $20M floor.

**Year 13 SWOT Analysis**

**Strengths**

·
**Profitability:** Projected EPS $8.27 and ROE 57.9%, far above the 3.50 and 23% targets.

·
**Quality:** Projected S/Q of 6.9 (NA) and 7.0 (AP), against rivals' assumed 5.5 to 5.6.

·
**Brand:** Image of 85 versus a target of 72, backed by the heaviest brand advertising and retailer support in the industry.

·
**Balance sheet:** Credit rating A, debt-to-assets 0.31 and interest coverage 27.8.

·
**Supply:** All four regions are supplied, with 0 pairs left unallocated.

·
**Workforce:** Higher pay, incentives and best practices training raise productivity and cut rejects.

**Weaknesses**

·
**Thin cash:** Ending cash of $25.8M is only about $5.8M above the $20M floor, so a sales shortfall could force borrowing.

·
**One-time earnings:** About $1.65 of EPS comes from LA exchange-rate gains, which are not operational.

·
**High costs:** Heavy advertising, premium materials and TQM spending squeeze margins.

·
**Reject rates:** AP at 8.4% and NA at 6.5% add waste.

·
**Image gap:** Our 85 trails the best rival's 87 by about 2 points.

·
**Leverage:** The $40M loan and buybacks inflate ROE and add interest cost.

**Opportunities**

·
**Celebrities:** Chef Curry is strong in LA (appeal 100) and Billy in NA (100), and the effects likely start in Y14.

·
**Credit:** Moving from A to A+ would add about 1 point of score.

·
**Share gains:** We can take more share in regions where rivals cut ads or quality.

·
**Quality lead:** It lets us hold premium prices even if rivals cut theirs.

·
**Capacity:** The new equipment gives room to meet higher demand in Y14.

**Threats**

·
**Rival improvement:** Blueprint Athletics (G-T-D 108) and AKinetix Footwear (105) are expected to improve in Y13.

·
**Exchange rates:** The LA gain may reverse when rates reset in Y14.

·
**Price and ad wars:** Rivals could cut wholesale prices, raise rebates or boost brand advertising.

·
**Weaker sales:** Sales 5% below plan would squeeze cash, and surplus inventory would add carrying costs.

·
**Celebrity risk:** A rival could win Billy, and Taylor and Chef Curry bids may fail.

·
**Stock price cap:** The BSG simulation credit for stock price stops at $91, so extra price gains add nothing.