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BSG Company B Industry 42

BSG Company B Industry 42. Presented by: Sebastian Corredor Senior, Business Administration- Finance, December 2010 Johnathan Lee Senior, Business Administration- Finance and Supply Chain Management, May 2011 James Ball Senior, Accounting- Managerial Accounting, May 2011.

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BSG Company B Industry 42

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  1. BSG Company B Industry 42 Presented by: Sebastian Corredor Senior, Business Administration- Finance, December 2010 Johnathan Lee Senior, Business Administration- Finance and Supply Chain Management, May 2011 James Ball Senior, Accounting- Managerial Accounting, May 2011

  2. 5 Forces Analysis, Industry 42

  3. 5 Forces, New Entry, Industry 42 • Summary: • Suppliers: HIGH • Buyers: HIGH • Substitutes: LOW • Rivalry: MODERATE • Threat of Entry: LOW • Because there are a total of TWO low forces, expected profitability of a new entrant would be ABOUT EQUAL to average cost of capital.

  4. BSG Strategic Group Map This strategic position represents the North America region in year 16.

  5. Key Success Factors • Between the athletic footwear industry and BSG, effective quality control and S/Q rating are similar. Effective quality control benefits the S/Q rating in the simulation. • In addition, Operational Efficiency from BSG can be obtained by acquiring economies of scale as management reduces cost per unit by increasing capacity. • Furthermore, Establishment of Brand Names from the footwear industry and Advertising from BSG have similar connections. A major component of brand name recognition arises from celebrity appeal. • From Footwear Industry: • Effective Quality Control • Economies of Scale • Establishment of Brand Names • From BSG: • S/Q Rating • Operational Efficiency • Celebrity Appeal

  6. Strength Assessment The strength assessment is based on the three BSG key success factors, taken from the North America wholesale segment in year 16 : S/Q Rating Operational Efficiency Celebrity Appeal Strength Assessment Table • Based on the strength assessment score, management is performing at or above average in all three BSG key success factors. * Operational efficiency= Cost of Pairs Sold/Net revenues year 16

  7. Market Share Growth Trend Analysis shows market share is decreasing on all geographic regions. Management should determine the causes for this decline in order to regain lost market share and build a sustainable competitive advantage in all four geographic regions. Data only represents market share for wholesale segment.

  8. Wholesale Segment Market Share

  9. Financial Performance Trend ROE, EPS, and Net Profit were exceptional on year 12. Company B experienced a decline in years 13 and 15 but was able to increase them in year 14 and 16. As shareholders we would like to see these numbers return to their year 12 levels. Management should determine the causes of the decline in years 13 and 15 to prevent future fluctuation. *Net Profit as a percent on net revenues.

  10. ROE and Net Profit Earnings per share (EPS)

  11. Recommendation • To create and sustain competitive advantage in relationship with customers we recommend the following: • We are pleased to see management has increased their celebrity endorsements and are operationally efficient, but they should keep an eye on the relationship between quality and price because it is not in line with their competitors. Thus the S/Q rating should increase or prices should decrease. • To create and sustain competitive advantage in relationship with shareholders we recommend the following: • Management should continue giving out dividends and repurchase stocks in order to increase their earnings per share and stock price.

  12. References • "Global Footwear Manufacturing: C1321-GL." IBIS World Industry Report. 24. NCSU Libraries. Web. 14 Oct. 2010. <http://www.ibisworld.com/globalindustry/keyfactors.aspx?indid=500>.

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