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Final Presentation and Notes for MKTG4500

by: berbaroot

Final Presentation and Notes for MKTG4500 MKTG 4500

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About this Document

This was my final presentation of the simulation project.
Retail Strategy
Dr. Carol Finnegan
Study Guide
Accounting, Inventory, Retailing, MKTG4500
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This 4 page Study Guide was uploaded by berbaroot on Thursday May 19, 2016. The Study Guide belongs to MKTG 4500 at University of Colorado Colorado Springs taught by Dr. Carol Finnegan in Spring 2016. Since its upload, it has received 10 views.


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Date Created: 05/19/16
Final Presentation I. Business Goals, Mission and Initial Position Mission:   Bringing a sense of comfort with casual wear.  Objectives:  1. Carry the business forward at least a 1% increase in Return On Assets from previous years 2. Maintaining less expenses than revenue by paying loan off  3. Ordering the right amount of inventory by having no more than 3 stock outs 4. Creating community presence investing in marketing without incurring a promotion expense  over $1500.  Initial Position Off­the­cuff Wardrobe started out with the original location at campus side, as well as continued the  casual clothing lines. These decisions were made on the basis that community acquaintance would be  valuable to business and sales, as well as the university community. As for products, t­shirts, jeans,  sweaters, and sportswear are ideal for the current target market in the campus and surrounding  community. Off­the­cuff Wardrobe has remained in this location with the same original products  through entire simulation duration.  Policies:   All returns must be within 10 days with receipt.  All employee purchases must be logged/tracked.  Unauthorized payments from merchandise vendors are NOT allowed.  Zero theft; cameras are in use   II. Marketing Policy & Results (product, pricing, advertising & promotion decisions  over time) Products & Pricing  Products consist of casual wear t­shirt, sweaters, sportswear tops and bottoms. Prices remained  consistent over two years at $20 for tops and $30 for bottoms. I as the owner chose to keep the product,  prices, and even the location the same as this provides a sense of familiarity to the local consumers  which notably the community was relieve in the 1  quarter to see as the same.  Advertising & Promotion  Advertising and promotions remained the same all eight quarters. The store used the local campus  newspaper and social media, and advertising remained constant at $4605. However the budget for  marketing promotions, unfortunately, dropped in order to remain in budget and financially stable in  quarters 0, 1, and 2. As seen below, in quarter 0, 1, and 2, the expenses total drop to $6105 in the 3   quarter and remain constant as a result of an approximately$1000 decrease in promotion funds. Despite  the cutback, the profit comparatively in quarters 3 to 4 did not suffer significantly. Therefore the  marketing efforts completed objective 3.  Marketing Expenses  Profit After Tax III.  Finance (Loans and Cash) Policies & Results (must use Chapter 6 ratios as  evidence) Q1 Asset Turnover = $3017/ $77630 = 3.88% Net Profit Margin % = $3017/ $45960 = 6.56 % ROA = 3.88% * 6.56% = 25.45% Profit After Tax Q8 Asset Turnover = $3115/ $78900 = 3.95%  Net Profit Margin % = $3115/ $45005 = 6.92% ROA = 3.95% * 6.92% = 27.33% Subsequently there was only two overdraws for a loan from the bank, a drastic just from $500 additional payment to $1500 in order to prevent the bank overdraw resulting in expenses. After those regulations in quarter 2 the additional payments were leveled to $1200 and in the 5th quarter was dropped to$750 as only  $12k is only remaining at that point. As of now the loan is currently at $3209, and would be  rd foreseeably paid off within the 3  year of bustness. Based on the above information, objective 1 was  fulfilled by a 1.88% increase of ROA from 1  quarter and thus previous years and additionally  objective 2 is likely to be paid off within the 3  year of operation. IV. Inventory Policies & Results (must use Chapter 12 ratios) Inventory Record Q1        GMROI = ($45960/ $58000) = 79.24 % Q8 GMROI = ($45005/ $49000) = 91.85% According to the above graph and my calculations the  Gross Margin Return on Inventory or the  ability to turn inventory into cash above the cost of the inventory, has a 12.6% increase from first  quarter. Mean the use of, and management of inventory has been used resourcefully and an overall  improvement. The business did reach an optimal ordering pattern for the level of sales, however with changing local retail demand every quarter there are some fluctuations. In quarters 6 and 7 there was  a low ending inventory, and constructive feedback on lack of variety, despite that the store actually  never completely stocked out of tops or bottoms, which is achieving objective 3.  V. Human Resource Policies & Results (at a minimum, use sales per employee measure  and discuss training budget decisions) I invested ample in our associates, they are the face of the business and they are the front runners for  customer service, which is why I initially invested $100 per employee, even when hiring a new  associate. Upon retention of associates, sales remained constant and I dropped it to a minimum of  $200. Additionally I raised their wages $0.50 making it $7.50, which is indicated by the major  increase as seen in quarter 3, and the total part time wages was $7313 thus making the total cost  much less than what each associate produces in sales. Overall payroll, as you can see is  Investing in  workforce is the biggest advantage in sale, and just as people change so does sale strategies that’s  why abase minimum of training is the most optimal was to boost sales.  Payroll + Taxes Q8 Sales per Employee $23,228 10.9% VI.  Executive Summary  Business objectives consisted of carring the business forward at least a 1% increase in Return On  Assets from previous years, maintaining least amount expenses than revenue by paying loan off,  ordering the right amount of inventory ensuring to having no more than 3 stock outs and finally  creating community presence via investing in marketing without incurring a marketing promotion  expense over $1500.  Based upon my calculations, and simulation  business records,  stated  objectives 1,3, and 4 are completed and objective 2 to pay the bank loan off is well on its way to  being achieves by roughly quarter 3 of the 3  year.  VII. Conclusions –  Exit Options  Based on Stock Price in Quarter 7 Retain the Shares     $13.67 * 5000 = $68,350 Current Stock Price $13.67 * 2500 shares = $34,175 ($244 net profit * 5)+10000 deposit + 29255MoneyMutualFund = $40,475 Liquidate: Assets $79,035 – Total Expenses$40,519 = $38,516 As seen in the above calculations with values taken from the balance sheet for Quarter 7 and 1 at the end of this report, there are several lucrative exit options. I believe the most profitable and prosperous for the business and community is to retain the shares despite recent drop in profit. This is why retaining the  earnings, is more profitable for the store and will provide another new entrepreneur experience in  running a business.  As seen above selling half the share and leaving 2500 to myself would be $34k, and surely pay off the  $6459 left on the loan however the initial investment in Q1 was $41K, and would make this choice a  loss. Next would be selling the store off would still be only $40,475 which is roughly $27K less that  retaining the shares that is $68K as seen above. Furthermore liquidation only provides $38K, which is  far less than just retaining the shares and putting a more dedicated professional in the store. As of  recently the stock is now $14.98 in quarter 8, which would further justify my decision to retain the  shares and hiring another entrepreneur to run the business and invest the time needed to be successful. In summary, retaining the shares is the most profitable option in that with a person in place to be more  dedicated to inventory, and the business, they store will flourish once again like in Q1.  Main Lessons Learned from the Simulation  Business Requires Math­ Face it! Take Ownership­ Pride in your work will create a much better result


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