Lawerence Sport Problem Solution
...November 10, 2008
Problem Solution: Lawrence Sports Inc.
Lawrence Sports is an organization that operates in the sporting industry. Lawrence Sports has several issues that could be detrimental to them and their supplier. Lawrence Sports must develop a solution that will allow them financial stability in the sporting industry.
Situation Analysis
Issue and Opportunity Identification
Lawrence Sports earns nearly $20 million from sales a year for manufacturing and distributing sporting equipment. Lawrence Sports receives 95% of its revenues from Mayo. Mayo is leading the sports retail stores in the industry all over the world. Lawrence Sports receives raw materials and supplies from Gartner Products and Murray Leather Works. However, Gartner Products provide Lawrence Sports with 70% of its raw materials. Gartner Products is such a large corporation that Lawrence Sports is not considered a major customer for them. However, Murray Leather Works on the, other hand receives 75% of their annual income from Lawrence Sports. Currently, Lawrence Sports does not have a stable working capital policy to collect their debt. Lawrence Sports failed to measure the success or failure of their working capital policy, and Lawrence Sports is too financially depended upon Mayo. When Lawrence Sports does not have enough cash on hand to pay their account receivables Lawrence Sports borrow on an open credit line from Central Bank.
Lawrence Sports now has the opportunity to develop a strong working capital policy with metrics to evaluate their financial stability and success of their working capital policy. Another opportunity that Lawrence Sports could explore is the diversification of its customer base. Lawrence Sports could try to market to new customers to ensure that Lawrence Sports does not continue to be too depend on a given customer.
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