Problem Solution: Lawrence Sports Inc.
Problem Solution: Lawrence Sports Inc.
Lawrence Sports, a $20 million revenue company, is a manufacturer and distributor of equipment and protective gear for baseball, football, basketball, and volleyball. The company two primary vendors: Gartner Products and Murray Leather Works. Gartner Products supplies Lawrence with 70% of its raw materials and Murray Leather the remaining 30%. Lawrence has Mayo Stores, the world’s leading retailer, as a principal customer. Recently, Mayo Stores has defaulted on 80% of its outstanding payment and expects additional delays of two more weeks. Lawrence is forced to negotiate payment deferrals to it suppliers. (University of Phoenix, 2008) As a result, Lawrence is faced with cash management issues. This paper will identify the different issues and opportunities and look at different alternatives available to Lawrence Sports. Next, the paper will look at stakeholder perspectives, problem statement, end-state vision, risk assessment, and mitigation and finally look at how to implement the optimal solution.
Situation Analysis
Issue and Opportunity Identification
Lawrence Sports’ first issue is they have one major source of income, Mayo Stores. This source is not sufficient to meet the cash flow needs of the business without resorting to stretching payables and borrowing against the Central Bank line of credit. The opportunity for Lawrence Sports is to expand their customer base, to improve cash inflows and to reduce the company’s reliance on one customer for a source of revenue.
The second issue for Lawrence Sports is not effectively controlling the flow of cash. In effort to not impact sales figures, Lawrence Sports has accommodated Mayo Stores to the point of not only taxing them financially but is also impacting Lawrence Sports’ sub-tier suppliers and their relationships. The opportunity for Lawrence Sports is to develop and implement a credit management policy which clearly...
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