Specific Economic Trends and Conditions - Assignment Example

GENERAL AND INDUSTRY- SPECIFIC ECONOMIC TRENDS AND CONDITIONS a. What is the current condition of the economy? The current condition of the economy is not very good because given the report from the financial information of cloud 9 Pty Ltd, the company projects to make losses in the incumbent financial year. b. Is the business affected by developments in other countries, foreign currency fluctuations or other global forces? The business is affected by developments in other countries such as foreign currency fluctuations and other global forces because its parent company has subsidiaries in several countries, which are KU, GERMANY, Canada, China and Brazil. This means that the company has international transactions which are subject to the constant fluctuation of the global financial market. c. If the industry is labour intensive, are there unusual or unique labour relations issues? Though the company is labor intensive, there are no incidences of labor relations issues that are out of the normal expected performance from the employees. d. How does the company’s growth and overall financial performance compare with the industry and what are the reasons for any significant differences? Compared to the rest of the industry, the company’s growth and overall financial performance is above average. This is because its other competitor like Nike traded with total revenue of between $20,000,000 and $27,000,000against Cloud 9’s revenue of between $32,000,000 and $34,000,000. However, in terms of profitability, the company is doing below its competitors in the global market, considering its $1.4 million profit against Nike’s 2.5 million. e. What is the volume and the type of transactions in the business? The volume of transactions in the business is expected to increase by 3% of the total company net worth and the transaction types for …………………… f. Are the client’s operations centralized or decentralized? The client’s operations are decentralized with an independent financial department, which is not controlled by the central management team. g. Is the client’s business cyclical in nature or influenced by seasonal fluctuations in the market? The business is cyclical in nature and is not greatly affected by fluctuations in the global financial market, except slightly. This is because the company uses purchases its goods on Free on Board terms once they are shipped, thus, taking immediate ownership of the goods as soon as the international courier accepts delivery. This and other factors make the company more dependent on its internal system, rather than the external environment, to ensure that it has a cyclic performance. h. What is the susceptibility to fraud/theft? (Is the product something that can be stolen and has a sale market?) The susceptibility to fraud and theft is very high for the product because it has a ready sale market, which is why there were reports of thefts from the stores in Sydney. COMPETITIVE ENVIRONMENT i. What products does the client sell, and have there been significant changes with respect to: I. Major products or brands? II. Selling strategies? III. Sales/gross margin by product? The client sells basketball shoes and in the recent past, there have been a couple of major changes in respect to major brands, such as the introduction of Heavenly 456, which is a walking shoe introduced in 2009. The selling strategy was also changed significantly in 2011 when the company agreed to sponsor Queensland Thunder and when the company signed Kevin McDonald as a spokesman for the brand. The gross margin by products has not changed significantly, neither has the sales margin. j. Who are the client’s major competitors, and what share of the market does each hold? The major competitors in the industry are Reebok, Nike, Adidas, Converse, and Puma. The Leader of the market is Nike with 47% of the total market share, followed by Reebok with 16%, and Adidas with 6%, followed by New Balance and Converse, each with 3and then by Cloud 9 with 2%, %. k. Is there significant differentiation between the client’s and competitor’s merchandise? There is no differentiation of the client’s products with the competitors’ products as both produce similar products by design and utility. l. What is the effect on the client of potential new entrants into the market? Are there any significant barriers to entering the market? Potential new entrants into the market pose a threat to the client, but there are significant barriers that face new entrants, such as difficultly in establishing a brand and stiff competition that is already going on among the top brands for the saturated market. PRODUCT INFORMATION m. Is there specific lifecycles for the product? The product has a specific life cycle, which follows three essential stages of molding, sowing and use/reuse. n. Is the product dependent on trends or styles? The product depends on current trends and its design is intended to keep up with the latest industry and consumer trends. CUSTOMER INFORMATION o. Are there specific customers on whom the client is highly dependent? There are specific customers on whom the company is dependent, which include David Jones, Myer, Foot Locker and Rebel Sports. p. What is the overall profile of the client’s customers? Have there been significant fluctuations in the client’s customer base? The clients’ customers are high profile sports teams and there have not been any significant fluctuations in the customer base in the recent past. SUPPLIER INFORMATION q. What are the key suppliers? The key suppliers for the products used by the client are the China Production Plant, which produces most of the materials used in the company, and United States, which produces the rest of the materials required by the company. r. Are the materials subject to significant price movements or influenced by external market forces? The materials are subject to significant price movements and are influenced by external market forces. TECHNOLOGICAL ADVANCE AND THE EFFECT OF THE INTERNET s. How does the industry use technology? The industry uses technology to accelerate its internal operations as well as facilitate communication and data exchange between its several branches and subsidiaries by use of emails. The industry also uses technology to link its international subsidiaries by using electronic inventory systems. t. What technological trends are impacting the industry? Some of the technological trends affecting the industry includes the rapid growth of the social media, current evolution of brick and mortar businesses to partial or fully based online businesses, and the use of sophisticated DBMS (database management systems). LAWS AND REGULATORY REQUIREMENTS u. Are the client’s operations affected significantly by local or foreign legislation? The client’s operations are completely affected by local and foreign legislations such as revenue and tax laws, consumer laws, foreign relations, and human rights issues regarding treatment of employees. v. What new laws and regulation recently enacted or pending may have significant effects on the company? a. Some of the newly enacted laws that may have significant effects on the company include U.S. Victims of Trafficking and Violence Protection Act, the Lawsuit Abuse Reduction Act of 2005 (LARA), Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) (the federal liability statute), the Medicare, and Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) among others. Some of the newly enacted laws that may have significant effects on the company include U.S. Victims of Trafficking and Violence Protection Act, the Lawsuit Abuse Reduction Act of 2005 (LARA), Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) (the federal liability statute), the Medicare, and Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) among others. Read More