QUESTION

• Question 1: Using the formulas in Table 4.1 and the data in your company’s financial statements for the most recent year available, calculate the following measures of financial performance for your company:
A. Operating profit margin = $23.38%
B. Current Ratio = 3.70
C. Working Capital = $101,576
D. Long-term-debt-to-capital ratio = 22.00%
E. Price-Earnings ratio = 23.02
F. Return on Total Assets = 19.23%
Question 2: Based on your company’s latest financial statements and all of the other available data regarding its performance that appear in the most recent Footwear Industry Report, list the three measures of financial performance on which your company did “best” and the three measures on which your company’s financial performance was “worst.”
Compared to the other three companies, Blue Ribbon Sports did “best” in Earnings Per Share (EPS), with $3.92 per share, Return on Equity (ROE), with 31.4%, and Stock Price, with $90.22 per share. In comparison, Company A performed closest in these areas to Blue Ribbon Sports with a $2.38 EPS, 20.4 ROE and $25.12 Stock Price.
Blue Ribbon Sports did the “worst” in Administrative Expenses, at $17,648, Liabilities, with Total Liabilities of $118,962, and Private-Label Revenues at $0 since the company did not expand into the private-label market. Company C had the lowest Administrative Expenses at $15,149 as well as the lowest Total Liabilities, at $117,214. As Blue Ribbon Sports did not expand into the private-label, all the three other companies had greater private-label revenues.

Question 3: What hard evidence can you cite that indicates your company’s strategy is working fairly well (or perhaps not working so well, if your company’s performance is lagging behind that of rival companies)?
Blue Ribbon Sports began Year 11 with the strategy of providing quality products to our customers. This strategy worked extremely well as we met or exceeded all the Board of Director’s five performance objectives for Year 11. First, our Board of Directors expected at least $2.50 in Earnings per Share, and we ended Year 11 with 3.92. Second, the Board set an objective of 21% Return on Equity, and we ended with 31.4%. Third, Blue Ribbon Sports increased Stock Prices to $90.22 per share, greatly exceeding the Board’s expected $40. Fourth, the Board set a B+ credit rating objective and we ended with an A credit rating. Lastly, Blue Ribbon Sports met the Board’s expected image rating of 70 at the end of Year 11.

Question 4: What resource strengths and resource weaknesses does your company have? What external market opportunities for growth and increased profitability exist for your company? What external threats to your company’s future well-being and profitability do you and your co-managers see? What do the four SWOT lists indicate about your athletic footwear company’s present situation and future prospects? Where on a scale of 1 to 10, where 10 = “exceptionally strong” and 1 = “alarmingly weak” does the attractiveness of your company’s situation rank?

Blue Ribbon Sports’ major strength is in the Wholesale Segment, as we ended Year 11 owning 28.2% of the market share. Our weakness is in the Private-Label Segment as we did not contribute to this segment during Year 11, although all three other companies did so. This weakness is also an external threat as the other companies expand more into the Private-Label Segment. If we do not put our efforts into the Private-Label, this could potentially affect our profitability in future years.
Overall, Blue Ribbon Sports scores an 8 on a scale of 1-10 on the attractiveness of our current situation. However, we must explore expanding into the Private-Label to earn profits in this segment.
Question 5: Does your company have any core competencies? If so, what are they?
Blue Ribbon Sports’ core competencies include providing high quality products and successful marketing techniques. In comparison to the industry, our company provides average to high superior materials in both the North America and Asia-Pacific market. Our Marketing Expenses are high compared to the industry in all four regions; however, they prove successful as our Operating Profit and Operating Profit Margins are also high.

Question 6: How favorably do your company’s costs compare on the benchmarking data provided in the most recent year’s Footwear Industry Report? On how many of the benchmarking measures were your company’s costs below the footwear industry average? On how many of the benchmarking measures were your company’s costs above the industry average? Based on the benchmarking data, how strong on a scale of 1 to 10 (where 1 = very weak and 10 = very strong), is your company’s cost competitiveness? Are there any areas where you and your
co-managers should take actions to lower costs and improve your company’s relative cost position?
Overall, Blue Ribbon Sports had average to high operating benchmarks on Marketing Expenses, Operating Profits and Operating Profit Margins across all four regions in the Internet and Wholesale Segments. Our North America, Asia-Pacific and Latin America Distribution and Warehouse costs were low to average, whereas the Europe-Africa Distribution and Warehouse Costs were high.
In production benchmarks, Blue Ribbon Sports scored low in compensation in both the North America and Asia-Pacific markets and average in Workforce Productivity. As a result, Production Labor Costs were also low. Our TQM/6-Sigma Spending was high in North America but low in Asia-Pacific.
Based on this benchmarking data, Blue Ribbon Sports scores a 7 on a scale of 1-10 of cost competitiveness. We will want to take action to decrease the Europe-Africa Distribution and Warehouse Costs.
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Question 1
Using the formulas in Table 4.1 and the data in your company’s financial statements for the most recent year available, calculate the following measures of financial performance for your company:

A. Operating profit margin = 22.2%
B. Current ratio = 3.70
C. Working capital = $288,320
D. Long-term debt-to-capital ratio = 21.9%
E. Price-earnings ratio = 23.01
F. Return on total assets = 19.2%
Question 2
Based on your company’s latest financial statements and all of the other available data regarding its performance that appear in the most recent Footwear Industry Report, list the three measures of financial performance on which your company did “best” and the three measures on which your company’s financial performance was “worst.”
Our company did the best on net profits, EPS and ROE. We were almost double our competitors in each of these categories. Our company did the worst on total liabilities, admin expenses and dividends.
Question 3
What hard evidence can you cite that indicates your company’s strategy is working fairly well (or perhaps not working so well, if your company’s performance is lagging behind that of rival companies)?
Our company’s strategy is working well. The hard evidence that backs this up is our earnings per share, net profits and return on equity. We are almost double our rivals in each of these categories. Additionally, we were able to keep a good image rating and credit rating in the process as well.
Question 4
What resource strengths and resource weaknesses does your company have? What external market opportunities for growth and increased profitability exist for your company? What external threats to your company’s future well-being and profitability do you and your co-managers see? What do the four SWOT lists indicate about your athletic footwear company’s present situation and future prospects? Where on a scale of 1 to 10, where 10 = “exceptionally strong” and 1 = “alarmingly weak” does the attractiveness of your company’s situation rank?
Our company is weak in the private-label segment, as we have not put any resources to this area. Our company is however strong in the internet and wholesale markets, as we own 25% and 28.2% market share in each respective segment. Our higher prices could cause an issue on our future well-being as a company. I would say our company is at a 8 when we consider our present situation and future prospects. We are low risk for defaulting on our loans, have a good image rating, have good market share and have great profits.
Question 5
Does your company have any core competencies? If so, what are they?
Yes our company has multiple core competencies. They include the ability to produce high quality product at reasonable costs, the ability to market and sell our product at higher selling prices, and skills in manufacturing.
Question 6
How favorably do your company’s costs compare on the benchmarking data provided in the most recent year’s Footwear Industry Report? On how many of the benchmarking measures were your company’s costs below the footwear industry average? On how many of the benchmarking measures were your company’s costs above the industry average? Based on the benchmarking data, how strong on a scale of 1 to 10 (where 1 = very weak and 10 = very strong), is your company’s cost competitiveness? Are there any areas where you and your co-managers should take actions to lower costs and improve your company’s relative cost position?
Overall, we are on the low-average end of the scale for North America in terms of our company’s production costs. In Asia-Pacific, we are the highest on cost. Our company ranks an 8 on cost competitiveness in North America, but only a 2 on cost competitiveness in Asia-Pacific. We are going to need to take some actions in Asia-Pacific to ensure we stay cost competitive and can continue to keep that operation running.