Business Policy Case The Sporting Guy
Rocky was warned by his advisors about his wages being too high and poor ordering skills, n which concerns about inventory turnover and high debt arise. Problem Statement and Objectives – (5): 70% of his sales are from local teams, over the years there has been a decrease in sales growth due to smaller size families and competition with other activities for kids. Only 30% of sales are from walk-in customers, in which customers are going to bigger franchise with lower prices, which carry more variety and Inventory such as Canadian Tire their mall retail computer.
Advertising through a small new paper ad that is only read by long-term residents in the area that was newly developed over the years. Over the past few years the sales to local teams has covered the business costs of about 70%, and walk-Len sales accounted for 30% profit. Inventory management Is a problem, when Rocky was ordering for local teams, he had control over the stock, but when ordering for an entire store, and it was too complex for Rocky.
In order to keep up with walk-in demand Rocky is forced to purchase more Inventory, In which would result In a high inventory turnover, that
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Situations Analysis ? (25): The Sports Guy retail store has been successful at the start of the business, and has 1 OFF keeping the business a float. With high demands and growing businesses he is having a hard time bringing home a decent salary, to a growing family with responsibilities. Rocky is in a very competitive market, and with growing competition Rocky is headed on a downward spiral trying to keep up with bigger franchises. There are other competitors selling same or similar products at lower rates and with more variety.
The poor inventory management and lack of growing customer base, and competing with Canadian Tire are the main weaknesses for business. The growing community has resulted in a rising property tax for this store which is increasing overall expenses to keep the store running of up to $12,000 per year. Strength: With 70% of his sales coming from local teams, in which he has built a strong relationship with, he is able to keep his company running. When he first started the business Rocky had great control of his inventory, by ordering only what was accessory.
If need be Rocky could sell his second lot for $120,000 in which was told by a relater. Weakness: Half the population lives on the other side of town, making it harder to increase revenue, he won’t have the same volume of customers, in which if he was located in the centre of the town. Rocky also has considerable amount of debt. Over the years his 70% of sales has not been growing. Rocky currently uses a newspaper ad for marketing his products, but only long-term residents read the paper.
Rocky has to find a better way of bringing customers to the store, with only 30% of walk-in sales. There is a high concern from Rocky advisors in regards to growing inventory and debt rising due to lack of inventory control, and book keeping skills. Opportunity: Rocky was lucky to have his family and friends to help support the start-up of the company. After 2004 the town grew, and Rocky was fortunate to have a developed community around his business increasing the chance for new customers and expansion.
Rocky also had his store advertised on the local TV station. Threat: Over the years league sports started to decline, in which he makes 70% of his revenue from. The Sports Guys major competitor was Canadian Tire, with their lower ricers and bigger inventory selections makes it harder for The Sports Guy to compete. Rocky had high wages, taking away from profit for the company, that could have been used to help bring in more revenue.
Entrants: Easy to get into the industry Substitutes: Other activities, people are watching more than playing Buyer: strong bargaining power, very high clients Supplier: Stronger Bargaining power small store Identification of Alternatives – (5): Wages: The wages can be lowered to help save some money for the company, which could go towards important things, such as, bills, larger inventory on specialty items, many expansion. Walk-in Sales: Walk in sales need major improvements, sales, discounts, coupons, deals, free give away, anything to get customers in the store, improve interior and exterior of the company.
Inventory Management: Ordering according to needs, supply and demand factor, very important when controlling School/Apt learning Advertising Sell empty lot Sales training Analysis – (5): The wages are an issue for this business as the owner is over paying his inexperienced staff for no reason other than “giving back to the community’. This good gesture is not benefiting his business in any sort of way and is causing his expenses to be unnecessarily high. The money that could potentially be saved can go towards inventory management, company expansion and the reduction of his current debts.
The next issue is his walk in sales which only amount to 30% of his sales. It is true that he is competing with larger stores such as Canadian Tire however; he has been recognized for better customer service. Sales strategies such as discounts, coupons, special deals (buy 1 get 1 half of, and contests can all improve his walk in sales and business expansion. His main issue is his overstocked and undersold sitting inventory he has year to year. This poor inventory management is causing major issues for his expansion. He is generating losses for this inventory and his not putting any time and effort to fix the problem.