Lawrence Sports is a $20 million revenue company that manufacturers and distributes sporting goods. Revenues are generated by purchasing material from vendors and in turn selling those materials to consumers. Lawrence Sports sources all its materials from Gartner Products and Murray Leather Works. Lawrence Sports encountered problems with capital management and was forced to find ways to improve cash inflow while delaying cash outflow. Negotiating formal contracts, outlining a payment timetable and acquiring business from new vendors will be important in getting Lawrence Sports back to a position to be successful.
Issue and Opportunity Identification
Lawrence Sports sources material from two primary vendors, Gartner Products and Murray Leather Works. Gartner Products is a $200 million revenue producer of precision testing equipment, cured leather and fabric for sports accessories and supplies Lawrence Sports with 70% of the raw material used (University of Phoenix, 2008). Murray Leather Works is a $10 million revenue company and supplies Lawrence Sports with semi-finished leather products and accounts for 75% of their annual revenue (University of Phoenix, 2008). Mayo Stores is the world's leading retailer with over 3,000 stores in the United States, Canada, South America and Europe and accounts for 95% of Lawrence Sports sales (University of Phoenix, 2008).
In recent weeks, Lawrence Sports' primary customer, Mayo Stores, has defaulted on 80% of their outstanding payments. Mayo Stores accounts for 95% of Lawrence Sports revenues resulting in Lawrence Sports being unable to meet their financial obligations. Lawrence Sports was forced to stretch payables to Gartner Products and Murray Leather Works as the outstanding line of credit and interest burden has increased. Lawrence Sport is facing several financial issues which need to be addressed in order for business operations to continue... [continues]
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