Profit Margin Increase
When writing a proposal two things need to be addressed, the problem and the proposed solution to that problem. Our task is developing a solution, to a need for a profit margin increase at Artemis Sportswear Company. Artemis Sportswear Co., is an international, multimillion dollar company, has been mentioned countless times in top financial and business magazines such as Forbes, Fortune, and Business Inc., to name a few. The problem at Artemis Co., is their profit margin of 2011, shows a significant decrease from overall profits in the past 6 years. Our task, find a way to cut their operational expenses and increase their profit margin. A company’s profit margin allows the company to forecast its future earnings potential (Fairfield, Kitching, & Tang, 2009). The current profit margin at, Artemis Co., shows the company operating in five locations around the world; total costs to operate $50 million. The chart below shows Artemis Co’s., profits for the last 6 years. When the present CEO Joe Jacobs took over in 2006, the company showed steady earnings for 4 years. However, in 2011 things took a drastic change, the Artemis Sportswear Co., reported only $45M (M=million) in profits from its five operations worldwide. The worldwide operation for Artemis has five splits; each operation is in charge of its own purchasing, project development, and manufacturing of Artemis products. The Artemis Sportswear Co., has locations in: Germany, Mexico, United States of America, Singapore, and Japan. Below is a chart illustrating the profits the Artemis Co., gained, lost, and the amounts of profits from the Artemis Sportswear Company’s five operations.
In this chart, we see that from 2007-2010 the Artemis Sportswear Co., reported steady profits between $119M-$126M. In 2011, one of the Artemis Sportswear Company’s competitors introduced a ‘new’ product that, allowed them to almost completely takeover most of the Artemis Co’s client base. By offering, a similar product to what sales at Artemis Sportswear Co., the competitor made a profit. Since the ‘new’ item is not part of the package sold by the Artemis Sportswear Company, Artemis products now seem over priced; thus costing it millions in lost earnings/profits for 2011.
We propose the Artemis Sportswear Co., does the following: Shut down major operations in two of the five countries they currently operate (CEO and Board choice). Those countries will still have two options for clients to continue their vendor and or consumer relationships with the Artemis Sportswear Company: The consumer relationship would not suffer because Artemis Sportswear Company can provide 10 retail locations in each country, for less than what it takes to keep the full operation going. As well, vendors who the Artemis Sportswear Company uses, would be unaffected because; the Artemis Company does not have to change any of their productions with this proposal; only where they produce. According to (Agran, 2012) “take a step back and see where overhead can be reduced and what the appropriate staffing level is for the business's size. In a restructuring, decisions must be based on needs and costs rather than emotions and loyalties” (para. May/Jun2012, Vol. 23 Issue 3, p18-19, 2p). As well, addressing the issue of staffing and restructuring is necessary when creating a proposal. The solution we came up with minimizes the amount of employees and management personnel the Artemis Sportswear Company needs to reassign or lay off, in order to help increase its profit margin. The Artemis Company reported spending $50M annually on their operations alone; by following this first part of our proposal the Artemis Company would save between $15M-$20M on their operations the first year after implementing the proposed changes. Research shows profits can increase if companies follow the advice of...