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Example research essay topic: Wal Mart Inventory Turnover - 1,992 words

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... Research in San Diego, California revealed that shave ice is sold along with other products. Several businesses in Mission Bay sold shave ice with prices ranging from $ 1. 79 (small), $ 1. 99 (medium) and $ 2. 39 (large). In terms of licuados, prices were $ 2. 79 (regular) and $ 3. 15 (large). Research conducted in Honolulu, Hawaii, showed that in some locations, shave ice sold as high as $ 5. 00 for a regular size. However, the majority of sno-cones were sold by the flavor and not necessarily by the size.

For example, one flavor was $ 1. 79, two flavors were $ 2. 29, and three flavors sold for $ 2. 79. The shave ice industry in El Centro, California currently has no key players since no other business of this type currently exists in the Imperial Valley. 4. 3. 2 Competition and Buying Patterns The shave ice business will be new to El Centro. Competitors in this type of business primarily sell raspados or sno-cones and do not focus on the shave ice market. One major competitor is the "Snow Shack" located on State Street. Snow Shack sells sno-cones through a small, one person trailer with limited choices of syrups. Other competitors sell sno-cones through Garcia's Market and the Wal-Mart store which also have limited syrup selections and do not necessarily focus on the sno-cone or shave ice industry as their primary product.

The keys to success will definitely focus on selling shave ice and not sno-cones made with coarse ice and selling high quality syrups. Prices will also be competitive with those of the competition. Main competitors include the Snow Shack, Garcia's Market, and Wal-Mart. The following are strengths and weaknesses of each. Snow Shack Strengths: The main strength of Snow Shack is that it is the only business in El Centro that caters to the sno-cone market. It also has very reasonable prices.

The primary weakness of Snow Shack is that it does not sell shave ice but rather sno-cones made from very coarse ice. Syrups are also not of good quality. The main strength of sno-cones sold by Garcia's Market is their low price of $ 1. 00 and the convenience to the shopper in buying sno-cones while doing their shopping. Weaknesses: The main weakness of sno-cones sold by Garcia's Market is that they do not sell quality syrups and prefer to sell the more inexpensive brand with lower quality taste. Main strength of sno-cones sold by Wal-Mart is the convenience to the shopper and low price. Wal Mart's weakness, like Garcia's Market, is that they do not sell quality syrups.

Also, the sno-cone business is not their primary focus or product. 5. 0 Strategy and Implementation Summary Ice Dreams is planning for slow growth by expanding flavors available from 20 to 30 in year two of operation. Also, an additional product to be sold in year two will include ice cream in flavors of vanilla and chocolate. Ice Dream's overall marketing strategy will be to create an image of offering the highest quality shave ice in Imperial County. The business will be located in a high traffic area of El Centro. Customers will be reached through advertisements such as fliers, newspaper ads, and through its grand opening ceremonies. A special marketing program will also be incorporated by offering special coupon prices for nearby restaurants, motels, city pool, the donut shop, and the gas station to customers who purchase any product at Ice Dreams.

Distribution of shave ice will be through the business facility only. It is anticipated that in the future, a small portable ice shaver will be purchased such that the product could be sold on site at various fund raising functions through churches, schools, etc. Shave ice will be offered at the following prices: Products will be sold on a cash basis only. Ice Dreams will promote shave ice to customers by: 1. Flier distribution to consumers' homes within a five-mile radius. 2. Newspaper advertisements will be purchased during the first three months of business until a clientele is built. 3.

Ice Dreams will offer discounts to recreational groups such as children / adult baseball and football teams who play in nearby facilities. 4. Promoting products for an introductory price at its Grand Opening. 5. Ice Dreams will "adopt a school" and provide shave ice to individuals who are selected for having excellent attendance, good grades, and good citizenship. Other incentives will include sponsoring a good attendance program by purchasing a bike and raffling it to students with the best attendance.

This will be a promotional strategy to encourage business. Major marketing will be conducted through newspaper advertisements and local flier distribution during the first three months of operation. Total costs will be approximately $ 500. Sales strategy will be directly linked to marketing programs since all sales will be through the business facility only. Consumer sales will start in January, 1997 (or sooner if construction it completed before targeted date) with its grand opening anticipated by then. Sales and units costs for the first six months of 1997 are shown in the sales forecast as projected numbers.

As indicated, primary sales will occur during the peak warm weather months as noted by the following table. Sales $ 52, 217 $ 77, 383. 00 $ 104, 446. 00 Total Sales $ 52, 217 $ 77, 383 $ 104, 446 Subtotal Cost of Sales $ 12, 114 $ 17, 772 $ 24, 227 Ice Dreams will hire an employee to assist with the business. Ice Dreams will require minimum daily supervision after it has been established since all three products are fairly easy to make. Ofelia R. Arellano, the owner, will have one individual assisting her with the business. Long range plans will include a second employee to assist with the weekend hours.

Ofelia R. Arellano is the most important member of the management team. Dr. Arellano is a graduate of the University of California, Santa Barbara with several advanced degrees (Masters and Doctorate in Psychology).

She has spent the last six years working as an administrator overseeing a budget of approximately $ 800, 000. Ofelia will oversee the business primarily during the weekend hours and Frank Arellano will oversee the business during weekdays along with one employee. Planned Programming Budgeting Systems Advertising for Educational Purposes Business and Educational Partnerships Board of Director, San Ysidro Planning and Development Group Business Needs Assessment and Consultation Board of Directors, San Ysidro Chamber of Commerce Frank Arellano will serve as a consultant on a volunteer basis. Mr. Arellano spent over 35 years in the retail business handling marketing and inventory for a major food chain. He is familiar with all aspects of business management and operations having owned and operated his own grocery store in El Centro.

Mr. Arellano will also assist in the building design, landscaping layout and business marketing. Mr. Arellano will supervise the business during the week days which means managing one employee. Monthly personnel cost estimates are included in the following table. Total Payroll $ 10, 800 $ 11, 232 $ 11, 681 Total Payroll Expenditures $ 13, 284 $ 13, 815 $ 14, 368 We want to finance growth mainly through cash flow.

We recognized that this means we will have to grow slowly. The most important indicator in our case is that minimal inventory will have to be stored for these products. Monthly sales are the largest indicator for this business. There are some seasonal variations with the months of March through September being the highest sales months. Short-term Interest Rate % 13. 50 % 13. 50 % 13. 50 % Long-term Interest Rate % 0. 00 % 0. 00 % 0. 00 % Inventory Turnover Estimator 12. 00 12. 00 12. 00 Expenses in Cash % 0. 00 % 0. 00 % 0. 00 % Personnel Burden % 23. 00 % 23. 00 % 23. 00 % The following table and chart show the current break-even analysis. The operation will require sales of approximately $ 2, 900 to break even during the first year of operation.

Average Per-Unit Variable Cost $ 0. 36 We expect a profit of $ 6, 740 in year one; $ 19, 212 in year two; and $ 32, 886 in year three of operation. Direct Cost of Sales $ 12, 114 $ 17, 772 $ 24, 227 Total Cost of Sales $ 12, 114 $ 17, 772 $ 24, 227 Gross Margin $ 40, 103 $ 59, 611 $ 80, 219 Advertising/Promotion $ 600 $ 624 $ 649 Payroll Expense $ 10, 800 $ 11, 232 $ 11, 681 Total Operating Expenses $ 19, 810 $ 20, 602 $ 21, 427 Profit Before Interest and Taxes $ 20, 293 $ 39, 009 $ 58, 792 Interest Expense Short-term $ 5, 672 $ 5, 672 $ 5, 672 Taxes Incurred $ 4, 386 $ 10, 001 $ 15, 936 Net Profit/Sales 19. 60 % 30. 16 % 35. 60 % Projected cash flow is estimated as follows for the next three years: Change in Accounts Payable $ 1, 266 $ 365 $ 374 Current Borrowing (repayment) $ 3 $ 0 $ 0 Increase (decrease) Other Liabilities $ 0 $ 0 $ 0 Long-term Borrowing (repayment) $ 10, 500 $ 10, 500 Change in Inventory ($ 1, 013) $ 146 $ 166 Change in Other Short-term Assets $ 0 $ 0 $ 0 Net Cash Flow $ 25, 213 $ 36, 339 $ 50, 267 Cash Balance $ 35, 213 $ 71, 553 $ 121, 820 The balance sheet shows a slow but steady upward growth in net worth after initial start-up as follows: Cash $ 10, 000 $ 35, 213 $ 71, 553 $ 121, 820 Other Short-term Assets $ 675 $ 675 $ 675 $ 675 Total Short-term Assets $ 12, 000 $ 36, 200 $ 72, 685 $ 123, 119 Capital Assets $ 4, 000 $ 4, 000 $ 4, 000 $ 4, 000 Accumulated Depreciation $ 0 $ 2, 196 $ 4, 480 $ 6, 855 Total Long-term Assets $ 4, 000 $ 1, 804 ($ 480) ($ 2, 855) Total Assets $ 16, 000 $ 38, 004 $ 72, 205 $ 120, 264 Accounts Payable $ 0 $ 1, 266 $ 1, 632 $ 2, 005 Short-term Notes $ 42, 010 $ 42, 013 $ 42, 013 $ 42, 013 Other Short-term Liabilities $ 0 $ 0 $ 0 $ 0 Subtotal Short-term Liabilities $ 42, 010 $ 43, 279 $ 43, 645 44, 018 Long-term Liabilities $ 0 $ 10, 500 $ 21, 000 $ 31, 500 Total Liabilities $ 42, 010 $ 53, 779 $ 64, 645 $ 75, 518 Paid in Capital $ 10, 000 $ 10, 000 $ 10, 000 $ 10, 000 Retained Earnings ($ 36, 010) ($ 36, 010) ($ 25, 775) ($ 2, 439) Total Capital ($ 26, 010) ($ 15, 775) $ 7, 561 $ 44, 745 Total Liabilities and Capital $ 16, 000 $ 38, 004 $ 72, 205 $ 120, 264 Net Worth ($ 26, 010) ($ 15, 775) $ 7, 561 $ 44, 745 Standard business ratios are included in the table that follows. The ratios show a plan for balanced, healthy growth. Profitability Ratios: 1997 1998 1999 RMA Net Profit Margin 19. 60 % 30. 16 % 35. 60 % 0 Return on Assets 26. 93 % 32. 32 % 30. 92 % 0 Return on Equity 0. 00 % 308. 64 % 83. 10 % 0 Inventory Turnover 14. 80 46. 18 44. 79 0 Accts Payable Turnover 14. 72 15. 05 15. 60 0 Total Asset Turnover 1. 37 1. 07 0. 87 0 Short-term Lab. to Lab. 0. 80 0. 68 0. 58 0 Net Working Capital ($ 7, 079) $ 29, 041 $ 79, 100 0 Additional Ratios 1997 1998 1999 RMA Current Debt/Total Assets 114 % 60 % 37 % 0 Bibliography:


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Research essay sample on Wal Mart Inventory Turnover

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