November 11, 2013
Apex Performance is a shoe company with the mission to sell good quality shoes at affordable prices. Our strategy is to attack and focus on a specific market segment until we have a large market share. We are Apex Performance and we want you to get your "bang for the buck" out of our products.
Our company's objectives focused on five important goals:
1. Grow out earnings per share by at least 4% in the first few years.
2. Increase our Return on Equity (ROE) each year by at least 10%.
3. Uphold an A- credit rating in case we needed to borrow money.
4. Keep a good image rating ...view middle of the document...
The chart below indicates our For Y12 and Y13, our EPS was above investor expectation with relatively high net revenues compared to the expenses we had incurred.
[pic]Note: Y-axis is in Years
Apex Performance's credit rating remained high throughout the first few years. We never needed to borrow any money and used our cash on hand to finance all assets. Thus, we were considered a very low-risk company. We did not have any major debt and our ROE remained high because we did not have any financing, allowing all profits to go straight to investors. Our greatest success during Y11-Y13 was that we were able to obtain a large portion of the wholesale market as initially desired. Our goal was to target a specific market, and that is exactly what we were able to do. From this standpoint we were able to accomplish our goal, but we still needed to improve our model availability and our rate of production.
As previously mentioned, Apex Performance struggled in many important areas in Y11-Y13. We did not execute our strategy to the best of our abilities; we saw low stock prices, low global unit sales, and did not have a large enough market share. What we tried to initially accomplish failed, and drastic changes had to be made in order to obtain positive results. In the chart below, our unit sales in Y11-Y13 were stagnant. There was not any exponential growth or any movement of sales, and revenue was not coming in as planned.
Initially, our company did not wish to pursue production plants in all major regions. We chose to build in North America and Europe only, disregarding Latin America or Asia-Pacific. However, by limiting production to only two plants we were unable to create a competitive amount of good quality shoes for an affordable price. Our biggest downfall in Y11-Y13 was our lack of ample models and our slow production rate.
Additionally, the S/Q rating we initially set for our shoes was too low of product quality. In North America, we were selling shoes ranging from $65-$70 at a quality level of 3 stars. When...