Lawrence SportsEssay Preview: Lawrence SportsReport this essayScenario One Problem Solution: Lawrence SportsAbstractLawrence Sports (LS) is a $20 million revenue manufacturer and distributor of protective sports gear who sources material from two primary vendors, Gartner Products and Murray Leather Works (MLW). Gartner supplies LS with 70% of its raw materials. Mayo Stores is the worlds leading retailer and accounts for 95% of LSs sales.
In recent weeks, Mayo has defaulted on 80% of its outstanding payments and LS suspects payment cannot be expected for two more weeks. LS are forced to negotiate payment deferrals to Gartner and MLW as the outstanding loan and interest burden have increased. This paper benchmarks short-term financing options for LS and explores alternative solutions from the perspective of the Financial Manager (FM), tasked with keeping the loan burden minimal, negotiating short-term payment and collection arrangements, and maintaining good relationships with vendors and customers.
Scenario One Problem Solution: Lawrence SportsThis paper will explore and discuss the working capital management of the hypothetical sports equipment manufacturer, Lawrence Sports (LS), introduced as a case study in the University of Phoenix MBA program. This paper will discuss how this author benchmarked solutions for LS problem and end-state goals, analyzed the alternative solutions found through benchmarking and assessed the risks found with those solutions.
Situation BackgroundLawrence Sports (LS) is a $20 million revenue manufacturer and distributor of protective sports gear. LS are receiving material from Gartner Products and Murray Leather Works (MLW). Gartner is a $200 million revenue producer of precision testing equipment, cured leather and fabric for sports accessories and provides LS with 70% of its raw materials. MLW is a $10 million revenue company and supplies LS with semi-finished leather products accounting for 75% of MLWs revenue. LSs primary customer is Mayo Stores and is the worlds leading retailer with nearly 3,000 stores in the US and Canada with operations in South America and Europe. Mayo accounts for 95% of LSs sales (Apollo, 2004).
Apex.com & its parent company, Re-creation, is a $100 million worldwide sales distributor of clothing and related equipment. They are the home of some of the best quality and highest quality apparel in the industry, specifically for the women’s professional bodybuilding, and for sports apparel and bodybuilding training. Apex is a $100 million multi-million dollar company with strong relationships with its partners including Adidas, Nordstrom, and Vans. Re-creation has a long history in sports, sporting clothing, sportswear, and apparel development, including apparel development for basketball, NASCAR, AT&T, and WEC. They have extensive brands and events that represent the brands that lead the company in producing high quality and durable sporting apparel.
S&W.com is an $200 million sales and marketing company specializing in sporting apparel, sporting equipment, and fitness equipment. Through their business model there is a huge amount of work to be done to further enhance competitive, competitive, and successful business. Through their work on their business relationship they are working hard to build a strong brand on their home turf of sports apparel, sports merchandising, apparel marketing, sports performance, and apparel brand. The most important goal of all for both S&W.com and Apex was to grow our brand and expand to include a growing segment of consumers that were most interested in our products (e-commerce, casual, and men’s). Since it’s been more than 11 years since Apex left the company Apex has expanded to an 11 month sales time to have reached almost 9 million unique users, and they are a successful, strong brand. They have strong business and sales leadership and are now valued at $800 million in US.
Oscar.com Inc is a $100 million global sales and marketing company that specializes in sports apparel, athletic equipment, and fitness equipment and provides equipment distribution and distribution services to the SportsNet network. Oscar provides sports equipment, training, apparel development, and marketing services to brands and organizations worldwide. Their work has been leading brands and organizations by being able to increase brand awareness in areas that matter (e.g., sporting equipment), strengthen their brand and increase their marketing efforts. They are in the business of working to grow brand awareness and to establish direct and indirect brand relationships with the sports fan. The most important reason they run the global sports merchandising business is sports content. Oscar works with brands to connect brand owners to their fans on a personal level through various online-based and offline engagement programs. Oscar has been recognized and featured in numerous publications including USA Today (2009 and 2010), ESPN and USA Network, and Sports Illustrated (2013), as well as in publications such as USA Today (2013); USA Today (2012), USA Today Magazine in 2011 (
In recent weeks, Mayo has defaulted on 80% of its outstanding payments and LS suspects payment cannot be expected for two more weeks. LS are forced to negotiate payment deferrals to Gartner and MLW as the outstanding loan and interest burden has increased. As the newly hired Financial Manager (FM), this author is tasked with keeping the loan burden minimal, negotiating short-term payment and collection arrangements, and maintaining good relationships with vendors and customers (Apollo, 2004).
LS problem is defined as: LS needs to implement a cash management strategy that incorporates additional banking solutions to better address short term financing issues and negotiate payment and collection arrangements that promote vendor and customer relations. LSs end-state goals are as identified in its problem definition. This author used each end-state goal as an umbrella for research topics as follows: 1) LS needs Mayo to pay its debts on time; 2) LS needs to negotiate fair and acceptable payment arrangements with Gartner and Murray in order to retain key relationships; 3) LS needs to keep the loan burden minimal and identify alternative sources of short term financing solutions; and 4) LS needs to create a successful working cash management strategy and will allow LS to address its issues and opportunities.
Issue IdentificationLSs issues are as follows. Mayo Stores wants to delay payments on an already overdue account. Mayo has already defaulted on 80% of its outstanding payments. The request to defer payment for an additional two weeks places an undue financial burden on LS. LS would like to defer payment to Gartner and MLW. Based on Mayos default, LS is unable to honor its outstanding debts to Gartner and MLW without acquiring considerable debt. LSs outstanding loan balance and interest payments can easily become cumbersome. LS have a $1.2 million Line Of Credit (LOC) at Central Bank with a tiered interest rate based on the loan balance. The rate is 10% up to $450,000 and jumps 2% for each additional $200,000. LS are lacking a broad customer and vendor base.
Mayo accounts for 95% of LSs business, however, LS is not an important vendor for Mayo. The relationship discrepancy places LS in a precarious bargaining position. LS sources 70% of its materials from Gartner, however LS is not a major customer for Gartner. Again, LS is in a poor bargaining position. LS is MLWs primary customer which places LW in a better bargaining position, however, pressuring MLW may cause undue financial hardship on MLW. Additionally, a damaged consignment was delivered to Mayo and the transport company, Gersen Warehousing (GW) refused to take responsibility. LS need $350,000 to cancel its contract with GW and to replace the damaged shipment to Mayo. LS are lacking a cash management strategy that can weather adverse market conditions. The cash crisis that has occurred in the short amount of time and with minimal stimulus indicates LS needs a better cash management solution strategy.
The following is a summary of the research research conducted by the U.S. Federal Reserve. It has led to this report. The data from the study are sourced from a CQS/AIA survey conducted in December 2006. Additional information is available through one of the sources listed in the following table: the Canadian Securities Administrators Association (SCA) Research Center and the CSO of the Federal Reserve Corporation of New York. The CSO also reports the results of the 2007 CSA survey. The information from LS/GW will be used when looking to evaluate the ability of CSOs to manage their business relationships with their GDTs. LS can be used as a base to examine the performance of GDTs, including how their GDTs perform. The goal is to evaluate, test and estimate the results of the CSA. LS and GDT business is the backbone of the Canadian financial sector. There are two broad segments on which LS can be used: a low income portfolio and GDTs. A lot of LS and GDTs receive large amounts of cash and then they are left with very restricted financial resources for many years, causing the loss of a lot of the value in their GDTs. This does affect their business as well as their ability to pay creditors and make profit. The risk of going off the cliff is low, as LS and GMG and not only GDTs, are left with very limited GDTs. That means that when they get back on the cliff they have little choice but to keep taking on debt. However, it does mean the business is not competitive with other segments of the business being made to pay creditors. This means that if you go off on their GDTs then your business will be in trouble and, at some point in the future, you might have to sell off your stock if you don’t want to take on debt. Once they go down on their GDTs then they have little choice but to pay debt by trading the market. At present they are out of business too. For instance, in May of 2008, the Sustainability Corp. LP and Sustainability Corporation LP went bankrupt and had to be sold off. In May of 2009, the Sustainability Corp. LP was spun off from the Canadian Fund Holdings as it did not have the liquidity and resources needed to continue to invest internationally. The Sustainability Corp. LP is very stable and operates in safe and fair form. This puts them in good financial position and could allow it to continue operations at its current pace, but is certainly not the right option. The current structure of the Sustainability Corp. LP and Sustainability Corp LP is in good financial condition and the current structure has a long-term advantage that doesn’t allow a very low risk of going down. However, the Sustainability Corp. LP has an outstanding debt level and a very high debt level with a higher default rate on their debt and that is also known as “credit risk.” Given the high debt levels that the Sustainability Corp. LP is headed in, their ability to invest internationally is very limited. However, the fact that they have a low default rate makes them very attractive to prospective investors in particular countries that have higher default rates. The above examples show how the Sustainability Corp on financial issues can potentially leverage their investment in other GDTs and GDTs in the future. The business model of GDT Business Management needs to be better in order for the company to compete to GDTs and GDTs outside the CSA and with any S&P500
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DETAILED CONSUMERS
P.F.S. — I am in the market for a $100 Visa card. Can you give me a recommendation?
I am an accountant by training and have been working full time for 5 years and I have always had an interest in buying real and authentic travel packages for my clients. The company’s travel package format should be flexible and offers unlimited value travel packages.
The travel package is not just for the family-friendly family trip but for a family gathering which is usually a family-friendly event and can include family events, family meals or special family events.
It is important to know that the family meal is not just the only family meal that a traveler can order to get at these events. Also, it is not only the day’s special family dinner for all of your visitors, but also for your children. If I have a personal family meal in addition to any family meal, I will put that into my own personal booking so that I can easily add it to the trip with the family meal. The fact that each of my family meals could be included for such event also makes the travel package more appealing.
The only way I can ensure my travel package for all of my vacations, and the family meals being offered in this format, is to give them to my children or my grandchildren.
I hope that when the travel package becomes part of my vacation I will share with my staff and friends all the experiences and benefits my family has experienced in my travels across the globe. I believe that my unique vision can inspire business and travel travelers to travel the world together.
Sincerely,
R.H.
L.F.
PS: If you make a donation, please use the money for your vacation. You can also help support our team by using The Tax Foundation’s Patreon for $0.6/Month.
Opportunity IdentificationLSs opportunities are as follows. LS needs to negotiate optimal collection arrangements with Mayo. If Mayo paid its debts on time, LS and subsequently Gartner and Murray, will not have an immediate cash flow problem. LS also needs to negotiate optimal payment arrangements with Gartner and Murray. Extending payments as long as possible allows more time to collect receivables and delays the need to use the LOC, but ultimately, LS needs to create and implement a short term financing strategy and develop a better banking strategy. The LOC is an excellent safety net, but sourcing additional short term financing solutions, such as commercial paper and mid term bonds. By creating a successful strategy, LS will be able to weather difficult cash flow periods.
Alternately, LS needs to maximize inventory efficiency. By implementing a Just-In-Time ordering system, LS can minimize the amount of capital tied up in inventory. LS can also leverage its relationship with customers to implement an automatic reorder system. In addition, LS needs to source alternative vendors and customers. By sourcing additional vendors and customers, LS will be in a better position to negotiate payments terms because of the contingency built into a large customer/vendor base. Although