Question 1: Assuming Bachand’s proposed system is accepted; compare the profitability of a franchised PK store to a corporate-owned store.
Answer: In my point of view the proposed system of Bachand seems to be more profitable for PK in contrast to the current franchise system. I would like to quote following reasons in favor of my conception:
Incentive system:
In the franchise system franchisee was to be had a definite salary of $50000 but he had full liberty to draw as large salary as he wants contingent to the growth of equity by means of profitable operations and diminishing of debt. So, PK was to pay the salary on the basis of the growth of equity. But in the proposed system by Bachand the salary was made fixed with
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But PK’s total sales had not yet exceeded 10 percent of Hawthorne’s general merchandise sales.
While Hawthorne believed that the PK business has the potential to be tremendously profitable, Hawthorne had always wanted to pursue a corporate store model for PK. In early 2005, Hawthorne was able to renegotiate the contract with general merchandise stores gaining the flexibility to pursue a corporate-owned store model. In August 2005, Kevin Bachand, as the newly appointed Ontario operations manager, was expected to provide his expertise in the planning, launch and ongoing operations for three corporately owned Part King stores.
2. Problem: Bachand was particularly concerned about how best to motivate the managers of a corporate-owned store given that they did not share in its ownership. He wondered what control system features would make sense for the Corporate Owned stores?
3. Analysis
To answer those questions, I will perform an evaluation on the corporate-owned store control system from budgeting, performance evaluation, incentives, and transfer pricing perspectives. Part King is a decentralized organization. Every corporate-owned store is a profit center. The stores buy auto parts from Part King and then sell them to the two segmentations: hobbyists and commercial customers. Profit is the difference between revenue and cost. Thus, profit center managers are evaluated in terms of
Identify five control activities that you would commonly find in a men’s clothing department of a major department store. Identify the control objective associated with each of these activities.
Senior Management of PepsiCo is evaluating the potential acquisition of two companies – Carts of Colorado and California Pizza Kitchen – in order to expand the company’s restaurant business. If indeed PepsiCo decides to pursue the acquisition of one or both, they must decide how to align each of these business units in its historically decentralized management approach and how to forge relationships between the acquired business units and existing business units. In their evaluation, Senior Management is faced with the question of whether the necessary capital investment in order to purchase one or both of the businesses can be profitable for each of the acquired business units, but must
When it comes to warehouse-style club stores, there are really only four names out there: Costco, Sam’s Club, Wal-Mart and BJ’s. This paper will discuss the Costco and BJ’s. The different type of strategies being utilized by each company, the purpose of the financial statements, their Vertical & Horizontal analysis, how each financial rations ties into the two company’s strategies, Solvency & Performance for each company, a SWOT analysis of each company and finally if the expectations of the stakeholders of each company are being met.
Develop product lines by introducing vegetable sandwiches (Appendix 4) shows an increase in cash inflow from 155% in 2013 to 319% in 2015
The design and implementation and objectives of company controls are not adequate to meet the control objectives. The control environment control objective is ineffective. This control objective lacks a written policy on ethical conduct, is lacking oversight from the board of directors and audit committee, lacks a consistent style and philosophy from management, and lacks a strong commitment to competence. The risk assessment control objective is effective but lacks any antifraud program and controls. The information and communication control is ineffective. A virus has been detected and is affecting the files of the company. This control is lacking a strong IT department. The general controls financial reporting control objective is effective but is weak in detecting or preventing material misstatement. The monitoring control objective is ineffective; this control has need of an internal auditor.
Overall Strength: in general, the article provides structure to a concept that is very intangible by: (a) describing the nature and the functions of control; (b) segregating the MCS into categories: core control system, organizational structure, and organizational culture; (c) illustrating how to apply the control model (satisfied my approach) (d) provides a basis for designing and evaluating the system. The manner, in which the model is presented, with its use of figures, further emphasizes the structure of the model. See below on further emphasis on parts (a) -(c).
In our analysis, we compared the profits earned by 60 Crusty Dough Pizza Company restaurants to factors associated to their menu, amenities, services, and statistics regarding the restaurant communities. The factors that we analyzed are listed in Table 1.
Lastly, in order to enhance current earnings at the expenses of future earnings, the unusual structure system has been applied. For example, in the case, Boston Chicken actually acts like a financial institution that give loans for both its franchisees and area developers in order to open new stores. Boston Chicken only creates the impression that their operation is successful and profitable by opened many stores but in reality, the stores was never made any profit. The profits that they gain were not coming from selling chicken but coming from selling franchises. Boston Chicken only wants to boost their Boston Market “concept” just to increase their earnings per share (EPS). At the end, the system collapsed and
1) What do you think of Boston Beer’s business model relative to the traditional beer companies’ business model? Relative to Redhook and Pete’s? (Hint: consider their brewing, production, distribution, marketing strategies. How is each firm attempting to achieve its own sustainable comparative advantage in the market place?)
A concept we learned about in Business Leadership that relates to the main point in this book is control systems. We looked at the importance of control in management and learned about various different systems. In this book, systems are shown to greatly help customer service. Systems are predetermined ways to get a specific result and still ensure consistency. Andrew, the plant manager said “Systems give you a floor, not a ceiling”. Thus, a system is the sort of thing you build on, a starting point. An external control measure, for example, involves
The analyses indicate that the franchisees are profitable at this level of sales; some franchisees appear to be having cash flow problem, since footnote 7 points out Boston Chicken had been forced to make advances to franchisees to fund local and national advertising; the sales from same store and distribution of same store sales; late payments by franchisees; the total cash floe generated by all stores.
1) What do you think of Boston Beer’s business model relative to the traditional beer companies’ business model? Relative to Redhook and Pete’s? (Hint: consider their brewing, production, distribution, marketing strategies. How is each firm attempting to achieve its own sustainable comparative advantage in the market place?)
Carlson Rezidor Hotel Group, like most large organizations, uses all four forms of control identified by Knights and Willmott (2012); Direct control of behaviour, control through
[Appendix B shows Pro Forma for Option 1 and Appendix C shows a Pro Forma for Option 2] A1 can also take a reactive approach by increase its advertising while Lawry is running its two-for-$5 promotion. A1 Steak Sauce can pay for more efficient shelf spacing in the retail outlet. This will include end caps, more facings in the stores, larger and increase signage (bigger and better than what they have done in years past). A1 can also use their brand recognition to their advantage by ensuring more restaurants that publically use A1 display their products, rather it’s on the menu or tables. Currently A1 spends roughly 15% of total revenue on advertising. Option 3: A1 could simply increase their percentage of revenue to marketing and adverting from 15% to 20%. This approach will decrease A1’s net profit by roughly 7.5million (with the worst case scenario that A1 will not increase sales at all) but it will allow A1 to increase its brand awareness and make it substantially harder for Lawry to penetrate the market with its new steak sauce. [Appendix D displays A1’s pro forma with the original 15% of revenue funding its marketing while Appendix E displays an increase to 20% of revenue funding marketing initiatives]Recommendation: Based on the financial analysis of each option, Option 2 would be the best approach for A1. Although each scenario is profitable, Option 2 has more
Kohl’s is one of the biggest retailing department stores catering to its middle class consumers. This company sales household items, clothing, shoes, electronics and jewelry a lot of other stores sale these same items but there is a few things that Kohl’s strives in that sets them apart from the rest. The top department stores are Macy’s and Kohl’s, they sell a lot of the similar stuff however, and Macy’s consumer base is more of the upper class consumer. Although they cater to two different types of customers there are some similarities in their over all operations management. This paper serves as a competitive analysis of Kohl’s vs. Macy’s.