BSG Study Guide Solved 100% Correct
What are your current plants? - ANSWER-a 2 million-pair plant in North America and a
newer 4 million-pair plant in Asia.
How were sales in year 10? - ANSWER-Sales volume in Year 10 equaled 5.2 million
pairs, so there's no immediate urgency to add more capacity. In Year 10 the company
sold 4.5 million pairs of branded shoes to retailers and individuals, and it bid
successfully for contracts to supply 740,000 pairs of private label shoes to large multi-
outlet retailers of athletic footwear.
Where are the dist. centers? - ANSWER-The distribution center for Europe-Africa is in
Milan, Italy. The distribution center for the Asia-Pacific region is in Bangkok, Thailand.
The Latin American distribution center is in Rio de Janeiro, Brazil, and the North
American distribution center is in Memphis, Tennessee.
Whats important about Tariffs? - ANSWER-currently average $4 per pair in Europe-
Africa, $6 per pair in Latin America, and $8 in Asia-Pacific. However, the Free Trade
Treaty of the Americas allows tariff-free movement of footwear between all the countries
of North America and Latin America.
How can models and sizes be delivered? - ANSWER-Each distribution center maintains
sufficient inventory of each model and size to enable orders to be delivered within 1 to 4
weeks from the time the order is placed. You and your co-managers will decide whether
to staff for 1-week, 2-week, 3-week, or 4-week delivery to retailers.
What is important with our stock and financial records? - ANSWER-The company's
stock price has risen from $11.00 in Year 6, when the company went public, to $30 at
the end of Year 10. There are 10 million shares of the company's stock outstanding.
The company's financial statements are prepared in accord with generallyaccepted
accounting principles and are reported in U.S. dollars.
What does the overall market growth forecast look like? - ANSWER-The combined
effect of these factors is reliably expected to produce 7-9% annual growth in global
demand for athletic footwear for Years 11-15, slowing to about 5-7% annual growth
during Years 16-20.
What are some current possibilities? - ANSWER-(1) intense competition among rival
footwear companies (in the form of declining prices, higher footwear quality, and so on)
can spur market growth above the projected levels or (2) weak competition (in the form
of rising prices, subpar footwear quality, and so on) can produce weaker thanprojected
rates of market growth
What decides the S/Q rating? - ANSWER-(1) current-year spending per footwear model
for new features and styling, (2) the percentage of superior materials used, (3) current-
, year expenditures for Total Quality Management (TQM) and/or Six Sigma quality control
programs, (4) cumulative expenditures for TQM/Six Sigma quality control efforts (to
reflect learning and experience curve effects), and (5) current-year expenditures to train
workers in the use of best practices.
What damages S/Q? - ANSWER-The IFF's S/Q rating formula calls for a 1-star
reduction in the S/Q rating on all unsold branded pairs carried over in inventory to the
following year
What are the ways of selling shoes? - ANSWER-Whole sale, Online sales, private label
sales
What kind of discounts are avalible? - ANSWER-Retail markups over the wholesale
prices of footwear manufacturers can run anywhere from 40% at discount chains to as
high as 100% at premium retailers. Thus, a pair of shoes wholesaling for $50 usually
retails for between $70 and $100.
What are private labels attractive? - ANSWER-The private-label segment is projected to
grow a healthy 10% annually during Years 11-15 and a brisk 8.5% during Years 16-20
and Making private-label shoes for chain retailers allows a manufacturer to use plant
capacity more efficiently.
What are the main factors causing competition in the industry? - ANSWER-pricing,
styling and product quality, the breadth of product selection, celebrity endorsements,
advertising, the comparative sizes of the footwear retailer networks rival companies
have attracted to stock and merchandise their brand of athletic footwear, the amount of
merchandising and promotional support provided to footwear retailers, mail-in rebates,
the speed with footwear rivals deliver new orders from footwear retailers, sales efforts at
company websites, and efforts to boost the loyalty of prior customers in making repeat
purchases.
What is important about sup. materials? - ANSWER-The use of superior materials
improves shoe quality and performance, but shoes can be manufactured with any
percentage combination of standard and superior materials.
How are material prices decided? - ANSWER-By instructor or the prevailing base prices
are adjusted up or down according to the percentage mix of standard-superior materials
usage and the strength of demand for footwear materials
How do rates automatically change? - ANSWER-The going market prices of standard
and superior materials in any one year deviate from their respective base prices
whenever the percentage mix is anything other than 50% for standard and 50% for
superior materials.
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What are your current plants? - ANSWER-a 2 million-pair plant in North America and a
newer 4 million-pair plant in Asia.
How were sales in year 10? - ANSWER-Sales volume in Year 10 equaled 5.2 million
pairs, so there's no immediate urgency to add more capacity. In Year 10 the company
sold 4.5 million pairs of branded shoes to retailers and individuals, and it bid
successfully for contracts to supply 740,000 pairs of private label shoes to large multi-
outlet retailers of athletic footwear.
Where are the dist. centers? - ANSWER-The distribution center for Europe-Africa is in
Milan, Italy. The distribution center for the Asia-Pacific region is in Bangkok, Thailand.
The Latin American distribution center is in Rio de Janeiro, Brazil, and the North
American distribution center is in Memphis, Tennessee.
Whats important about Tariffs? - ANSWER-currently average $4 per pair in Europe-
Africa, $6 per pair in Latin America, and $8 in Asia-Pacific. However, the Free Trade
Treaty of the Americas allows tariff-free movement of footwear between all the countries
of North America and Latin America.
How can models and sizes be delivered? - ANSWER-Each distribution center maintains
sufficient inventory of each model and size to enable orders to be delivered within 1 to 4
weeks from the time the order is placed. You and your co-managers will decide whether
to staff for 1-week, 2-week, 3-week, or 4-week delivery to retailers.
What is important with our stock and financial records? - ANSWER-The company's
stock price has risen from $11.00 in Year 6, when the company went public, to $30 at
the end of Year 10. There are 10 million shares of the company's stock outstanding.
The company's financial statements are prepared in accord with generallyaccepted
accounting principles and are reported in U.S. dollars.
What does the overall market growth forecast look like? - ANSWER-The combined
effect of these factors is reliably expected to produce 7-9% annual growth in global
demand for athletic footwear for Years 11-15, slowing to about 5-7% annual growth
during Years 16-20.
What are some current possibilities? - ANSWER-(1) intense competition among rival
footwear companies (in the form of declining prices, higher footwear quality, and so on)
can spur market growth above the projected levels or (2) weak competition (in the form
of rising prices, subpar footwear quality, and so on) can produce weaker thanprojected
rates of market growth
What decides the S/Q rating? - ANSWER-(1) current-year spending per footwear model
for new features and styling, (2) the percentage of superior materials used, (3) current-
, year expenditures for Total Quality Management (TQM) and/or Six Sigma quality control
programs, (4) cumulative expenditures for TQM/Six Sigma quality control efforts (to
reflect learning and experience curve effects), and (5) current-year expenditures to train
workers in the use of best practices.
What damages S/Q? - ANSWER-The IFF's S/Q rating formula calls for a 1-star
reduction in the S/Q rating on all unsold branded pairs carried over in inventory to the
following year
What are the ways of selling shoes? - ANSWER-Whole sale, Online sales, private label
sales
What kind of discounts are avalible? - ANSWER-Retail markups over the wholesale
prices of footwear manufacturers can run anywhere from 40% at discount chains to as
high as 100% at premium retailers. Thus, a pair of shoes wholesaling for $50 usually
retails for between $70 and $100.
What are private labels attractive? - ANSWER-The private-label segment is projected to
grow a healthy 10% annually during Years 11-15 and a brisk 8.5% during Years 16-20
and Making private-label shoes for chain retailers allows a manufacturer to use plant
capacity more efficiently.
What are the main factors causing competition in the industry? - ANSWER-pricing,
styling and product quality, the breadth of product selection, celebrity endorsements,
advertising, the comparative sizes of the footwear retailer networks rival companies
have attracted to stock and merchandise their brand of athletic footwear, the amount of
merchandising and promotional support provided to footwear retailers, mail-in rebates,
the speed with footwear rivals deliver new orders from footwear retailers, sales efforts at
company websites, and efforts to boost the loyalty of prior customers in making repeat
purchases.
What is important about sup. materials? - ANSWER-The use of superior materials
improves shoe quality and performance, but shoes can be manufactured with any
percentage combination of standard and superior materials.
How are material prices decided? - ANSWER-By instructor or the prevailing base prices
are adjusted up or down according to the percentage mix of standard-superior materials
usage and the strength of demand for footwear materials
How do rates automatically change? - ANSWER-The going market prices of standard
and superior materials in any one year deviate from their respective base prices
whenever the percentage mix is anything other than 50% for standard and 50% for
superior materials.
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