Mr Jax Fashion Inc
MEMORANDUM:
TO: Louis Eisman and Joseph Segal
FROM: Sean Mayer
DATE: January 16, 1989
SUBJECT: Mr. Jax Fashion Growth Strategy and US Expansion
PROBLEM (See Appendix 1: Problem Highlights):
Mr. Jax Inc. has successfully grown into one Canada’s largest clothing apparel company. We have grown to be the 6th largest and had four successful acquisitions. Our success in the past eight years has shown our revenue stream at 1500% and profits at 500%. Over the last 2 years, the company has been in a loss position due to aggressive growth and operational costs. Profit margin has declined from 23.52% to 9.91% as a result of increased selling and General Administrative costs outpacing sales revenues. The ROA for 1987 was 8.59% and for 1988 4.65% is declining due to aggressive growth acquisitions that are ailing business and hence effecting the ROE for 1987 was 13.35% and 1988 was 8.34% trending downward as well. These recent losses have been financed through bank debt and additional share investment in the company in 1987.
------------------------------------------------- Our mission to be a large-scale retail operation in clothing apparel within Canada has reached a market limit. Mr. Jax fashion Inc. is facing stagnant growth in the Canadian apparel market, with very little room to grow by consumption rate. Naturally looking at growth outside of Canada is the eventual goal for this company. But before we can implement our future growth strategy there are key immediate issues we need to address within our organization. We need to restructure our operations in order to better manage our existing operation and look at some key financial and cost savings issues. Hence our proposed action plan is to remedy some of operational costs within company and bring it back to profitability and management strength. Furthermore, the development of an effective strategy to enter the US apparel market is in need of development and effective implementation
ANALYSIS (See
TO: Louis Eisman and Joseph Segal
FROM: Sean Mayer
DATE: January 16, 1989
SUBJECT: Mr. Jax Fashion Growth Strategy and US Expansion
PROBLEM (See Appendix 1: Problem Highlights):
Mr. Jax Inc. has successfully grown into one Canada’s largest clothing apparel company. We have grown to be the 6th largest and had four successful acquisitions. Our success in the past eight years has shown our revenue stream at 1500% and profits at 500%. Over the last 2 years, the company has been in a loss position due to aggressive growth and operational costs. Profit margin has declined from 23.52% to 9.91% as a result of increased selling and General Administrative costs outpacing sales revenues. The ROA for 1987 was 8.59% and for 1988 4.65% is declining due to aggressive growth acquisitions that are ailing business and hence effecting the ROE for 1987 was 13.35% and 1988 was 8.34% trending downward as well. These recent losses have been financed through bank debt and additional share investment in the company in 1987.
------------------------------------------------- Our mission to be a large-scale retail operation in clothing apparel within Canada has reached a market limit. Mr. Jax fashion Inc. is facing stagnant growth in the Canadian apparel market, with very little room to grow by consumption rate. Naturally looking at growth outside of Canada is the eventual goal for this company. But before we can implement our future growth strategy there are key immediate issues we need to address within our organization. We need to restructure our operations in order to better manage our existing operation and look at some key financial and cost savings issues. Hence our proposed action plan is to remedy some of operational costs within company and bring it back to profitability and management strength. Furthermore, the development of an effective strategy to enter the US apparel market is in need of development and effective implementation
ANALYSIS (See