Case 1: The Sports Guy
The Sports Guy
Key Events/ Case synopsis – (5):
Bob (Rocky”) Rhodes sports enthusiastic, founder of “The Sports Guy”, a sporting goods store located outside of the GTA. 10 years ago with 40% worth of equity capital from family and friends and 60% of his own investments he purchased a 2 corner lot. 70% of sales came from local teams and 30% from walk-in customers, but due to high competition from Canadian Tire there has been a slow increase of revenue. Rocky was warned by his advisors about his wages being too high and poor ordering skills, in which concerns about inventory turnover and high debt arise. Problem Statement and Objectives – (5):
70% of his sales are from local teams, over the years there has been a decrease in sales growth due to smaller size families and competition with other activities for kids. Only 30% of sales are from walk-in customers, in which customers are going to bigger franchise with lower prices, which carry more variety and inventory such as Canadian Tire their main retail competitor. Advertising through a small new paper ad that is only read by long-term residents in the area that was newly developed over the years. Over the past few years the sales to local teams has covered the business costs of about 70%, and walk-in sales accounted for 30% profit. Inventory management is a problem, when Rocky was ordering for local teams, he had control over the stock, but when ordering for an entire store, and it was too complex for Rocky. In order to keep up with walk-in demand Rocky is forced to purchase more inventory, in which would result in a high inventory turnover, that had to be sold off at a loss Rocky’s objective: To own a sporting goods business in his local community, and help out with all sporting events and needs. Advisors objective: They informed Rocky his wages were far too high, and he had a high inventory turnover and an increasing debt issue, due to lack...
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