Professional Documents
Culture Documents
PumKash
India Ali, Tamira Conner, Alyssa Moore, Nenna
Olu, Stacy-Ann Telfer
Strategy
Implemented Best Cost Strategy to achieve our company vision and also aim to stay
above or maintain investor expectation in terms of earnings per share, return on equity, stock
price, credit rating or image rating within this footwear industry. PumKash provides low-cost
quality products with a focused strategy aimed at gaining sales and market share in a particular
geographic region. Our main competitive efforts were focused in North America, with plants
operating in Asia-Pacific and Latin America.
In order to implement the Best Cost Strategy strategy it was important for us to reach out to large
number of customers. Thus, we decided to make optimum use of all our retail outlets in order to
spread out our product to a larger consumer base. However, we focused too much on best cost
was unable to offer more models to our consumers. Initially, we were above industry average
with the number of models being offered , however in Year 14 we feel behind considerably and
did not increase our models until Year 18 and we were still at least 8% below industry average.
Wholesale Segment
Industry
Average
PumKash
11 12 13 14 15 16 17 18
20%
PumKash
10%
Industry
0%
11 12 13 14 15 16 17 18
Years
Internet
Maintain internet market share at 20% or higher. Stay price competitive relative to industry
staying at a reasonable lower price than competitors. Pass certain costs to our consumers
whenever possible (free shipping).
Private Label
Our main geographic region was North America; we did not enter Latin America until Year 15.
Since our primary focus was the branded footwear we did not have a strategy to obtain market
share in the private label segments thus our market share was lower compared to our competitors
until the later years.
Production Strategy and Workforce Compensation
Our main goals of our production strategy were to upgrade facility capacity, reduce reject rate,
and decrease operation costs. We concentrated most of our production in the most cost effective
regions North America and Asia-Pacific and Latin America. By focusing our capacity in the
appropriate regions we were able to meet expected demand. A part of our strategy was to
upgrade facilities and resources as often as finances allow, unfortunately we only upgraded one
plant at Option A, when we should have upgraded all plants early on to reap the benefits of cost
savings later on. We also used the lowest amount of superior materials possible without
sacrificing our SQ rating. We maintained a balance between workers incentive pay and base
wage changes with that of the industry average. Additionally, we pursued six sigma and best
practices only to increase productivity without sacrificing our profit margin. However, had we
spent more on these practices early on the benefits of cost savings would have occurred in the
later years.
Pairs Produced
Year 11 Year 12 Year 13 Year 14 Year 15* Year 16 Year 17 Year 18 Year 19
1871
2288
2342
2937
2937
2937
2937
4106
4106
NA
EA
3145
4420
4608
4622
4622
4617
4617
4608
4608
AP
2046
2046
2046
2036
2036
LA
Number of Workers Employed
Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19
488
495
492
606
601
596
596
597
840
NA
EA
1342
1619
1604
1648
1648
1652
1678
1764
1764
AP
697
675
681
675
664
LA
Productivity
NA
AP
LA
Year 11
3.83
2.34
Year 12
4.62
2.73
Year 13
4.76
2.87
Year 14
4.85
2.80
Year 15
4.89
2.80
2.94
Year 16
4.93
2.79
3.03
Year 17
4.93
2.75
3.00
Year 18
6.88
2.61
3.02
Year 19
4.89
2.61
3.07
Productivity
8.00
7.00
6.88
6.00
5.00
4.00
4.89
North America
3.83
3.00
2.34
2.00
3.07
2.80 3.03
2.79 3.00
2.75 3.02
2.73 2.87 2.80 2.94
2.61 2.61
Latin America
1.00
0.00
1
Asia-Pacific
5
Years
Finance Strategy
PumKash wanted to keep outside financing minimal, thus we raised a lot of money and any
additional capacity that was purchased was through use of our own funds. Our strategy was to
increase profitability, increase net revenues, and maximize stock prices.
Year Cash on Hand ($000s)
11
19,244
12
33,803
13
59,364
14
30,369
15
96,457
16
173,414
17
224,063
18
314,484
Financials
Ratios
Gross
Margin
(%)
Oper.
Mar.
(%)
ROA
(%)
ROE
(%)
Current
Ratio
Debt to
Asset
Total
Asset
Turnover
Year 11
G
Ind.
Year 12
G
Ind.
Year 13
G
Ind.
Year 14
G
Ind.
Year 15
G
Ind.
Year 16
G
Ind.
Year 17
G
Ind.
Year 18
G
Ind.
40
46
46
49
47
49
48
50
44
45
47
49
46
46
44
47
15.2
22.1
25.4
26.8
26.6
26.5
27.7
28.4
25.6
25
27.3
27.3
25.1
24.8
23.6
25.2
7.4
11.5
16.7
15.7
16.5
15.5
16.6
16.3
15.9
14.1
16.2
15.6
12.8
14.4
16.9
14.2
12.4
19.3
26.1
23.7
23
20.8
21.3
20.6
19.5
16.4
18.6
18
14.3
15.7
2.89
3.09
3.52
4.24
4.44
5.34
4.24
5.53
6.04
7.45
12.06
8.76
14.4
6
12.1
9
14.4
0
16.7
6
0.31
0.30
0.22
0.21
0.15
0.15
0.09
0.11
0.05
0.05
0.02
0.89
0.88
1.05
0.93
0.97
0.9
0.91
0.85
0.93
0.83
0.87
0.83
0.72
0.83
0.75
0.79
Debt to
Equity
Ratio*
Year 11
Year 12
Year 13
Year 14
Year 15
Year 16
Year 17
Year 18
0.55
0.38
0.24
0.15
0.11
0.04
0.04
0.04
15.7
14.6
4
Competition
North America
Private Label
Year
11
12
13
14
15
16
17
18
Competition
Mkt.Sh.
Price
Wholesale
Mkt.Sh.
Internet
Price
Mkt.Sh.
Price
PumKash
24.50%
43.00
14%
50.00
21.40%
65.00
Ballerz
17.40%
33.00
14.90%
46.00
13.90%
70.00
D C Shoes
0%
70.00
15.90%
62.00
15.90%
79.00
PumKash
8.70%
35.00
17.90%
50.00
24.80%
65.00
20%
35.00
16.10%
53.00
12.90%
70.00
D C Shoes
17.40%
45.00
13.40%
62.00
14.80%
73.00
PumKash
8.20%
35.00
21.40%
50.00
21%
65.00
Ballerz
21.40%
36.00
15.50%
56.00
12.10%
75.00
D C Shoes
0.00%
45.00
9%
62.00
11.50%
72.00
PumKash
10.20%
35.00
20.30%
50.00
23%
65.00
Ballerz
17.20%
36.00
13.90%
58.00
11.60%
77.00
D C Shoes
51.10%
32.00
7%
58.00
9.50%
68.00
PumKash
26%
35.00
20.20%
50.00
22.50%
65.00
Ballerz
17.50%
36.00
12.10%
59.00
9.50%
80.00
D C Shoes
15.20%
35.00
9.30%
58.00
7.70%
72.00
PumKash
23.40%
35.00
20.70%
50.00
24.30%
65.00
Ballerz
18.30%
34.99
10.40%
59.00
6.90%
83.00
D C Shoes
18.20%
35.00
11.90%
58.00
13%
72.00
PumKash
17.50%
35.00
17.80%
50.00
20.20%
66.00
Ballerz
22.60%
34.99
12.50%
57.50
9.20%
80.00
D C Shoes
0%
35.20
15.10%
58.00
18.10%
72.00
PumKash
34.50%
34.00
19.60%
50.00
19.70%
68.00
Ballerz
21.10%
33.99
12.20%
57.50
9%
80.00
D C Shoes
20.80%
31.99
16.30%
56.00
22.80%
67.00
Ballerz
Our main competitors were Ballerz and D C Shoes. Initially, we did not play the game to
compete with other industry members and did not pay much attention to them until later in the
game which was a mistake on our end.
Year
11
12
13
14
15
16
17
18
$
$
$
$
$
$
$
$
EPS
2.00
5.16
5.80
6.70
7.54
8.71
7.89
9.16
PumKash
ROE
12.40%
26.10%
23%
21.30%
19.50%
18.60%
14.30%
14.40%
Stock$
$ 19.18
$ 91.50
$ 104.54
$ 124.14
$ 117.08
$ 131.03
$ 99.25
$ 117.09
$
$
$
$
$
$
$
$
Performance Targets
Ballerz
EPS
ROE
Stock$
2.60 15.80% $ 26.97
6.72 32.60% $ 129.69
8.17 30.20% $ 171.88
8.38 24.40% $ 180.98
8.29 19.90% $ 129.34
8.88
18% $ 118.49
11.49 19.70% $ 184.20
12.32 18.50% $ 191.06
$
$
$
$
$
$
$
$
EPS
3.60
6.10
5.91
5.69
5.44
8.21
8.37
10.83
D C Shoes
ROE
21.20%
27.90%
21.60%
17.70%
14.90%
19.40%
16.90%
18.90%
Stock$
$ 52.70
$ 113.54
$ 113.19
$ 91.25
$ 71.57
$ 135.80
$ 134.74
$ 178.94
Discus differences in performance targets and ratios and what they mean
GPumKash
Ratio
Gross Margin
Operating
Margin/ROS
ROA
Year 11
40%
Year 12
46%
Year 13
47%
Year 14
48%
Year 15
44%
Year 16
47%
Year 17
46%
Year 18
44%
15.2%
25.4%
26.6%
27.7%
25.6%
27.3%
25.1%
23.6%
7.40%
16.7%
16.5%
16.6%
15.9%
16.2%
12.8%
16.9%
ROE
Current Ratio
Debt to Asset Ratio
Debt to Equity Ratio*
Total Asset Turnover
12.40%
2.89
0.31
0.55
0.89
26.10%
3.52
0.22
0.38
1.05
23%
4.44
0.15
0.24
0.97
21.30%
4.24
0.09
0.15
0.91
19.50%
6.04
0.05
0.11
0.93
18.60%
12.06
0
0.04
0.87
14.30%
14.46
0
0.04
0.72
14.40%
16.76
0
0.04
0.75
Year 15
49%
Year 16
52%
Year 17
49%
Year 18
49%
Ratio
Gross Margin
Operating
Margin/ROS
ROA
ROE
Current Ratio
Debt to Asset Ratio
Total Asset
Turnover
Ballerz
Year 13 Year 14
52%
51%
Year 11
45%
Year 12
52%
18.0%
32.0%
33.0%
32.0%
29.0%
31.0%
30.0%
30.0%
9.4%
15.8%
3.12
0.20
21.2%
32.6%
3.9
0.21
21.7%
30.2%
5.71
0.14
19.3%
24.4%
5.92
0.08
16.7%
19.9%
6.52
0.05
15.7%
18%
7.76
0.02
17.8%
19.7%
12.99
0
12.9%
18.5%
13.49
0
0.89
1.00
0.98
0.87
0.81
0.71
0.84
0.79
Ratio
Gross Margin
Operating Margin/ROS
ROA
ROE
Current Ratio
Debt to Asset Ratio
Total Asset Turnover
Year 11
46%
22.0%
12.0%
21.2%
2.23
0.33
0.9
Year
12
51%
29.0%
18.6%
27.9%
5.06
0.2
1.01
Year
13
51%
28.1%
16.4%
21.6%
6.86
0.14
0.88
Year
14
48%
30.0%
14.6%
17.7%
9.79
0.09
0.72
Year
15
44%
26.9%
13.5%
14.9%
10.08
0
0.73
Year
16
48%
26.1%
17.0%
19%
8.34
0
0.93
Year
17
46%
24.1%
15.1%
16.9%
8.83
0
0.89
Year 18
50%
27.8%
17.7%
18.9%
9.89
0
0.9
26
24.5
20
Ballerz
23.4
D C Shoes
17.5
10
8.7
8.2
10.2
12
13
14
PumKash
0
11
15
16
17
18
20
20.3
20.2
20.7
17.9
15
%
17.8
19.6
14
PumKash
10
Ballerz
D C Shoes
5
0
11
12
13
14
15
Years
16
17
18
24.8
21.4
21
23
22.5
24.3
20.2
19.7
PumKash
% 15
Ballerz
10
D C Shoes
5
0
11
12
13
14
15
Years
Lessons Learned
16
17
18