Strategic Management

Accent Group Limited (formerly RCG Corporation) is a large retailer (more than 400 stores) and distributor of footwear throughout Australia and New Zealand. The firm’s brands include The Athlete’s Foot, Platypus, Hype DC, Skechers, Merrell, Cat, Vans, Dr Martens, Saucony, Timberland, Sperry, Palladium, and Stance. Group revenue exceeded AUD$700 million in 2018 and the firm’s market capitalisation was AUD$806 million at 3 June 2019. Market competition for Accent Group Limited is intense given the arrival of a number of large international competitors and fast-changing customer preferences.

Question 1 – Strategic Management 

You have been asked to prepare a report on the future strategic positioning of Accent Group Limited. Areas you need to address include:

  1. A brief overview of the nature and history of the firm together with the firm’s current strategic priorities .
  2. A detailed overview of the firm and its environment using Porter’s Five Forces Model. For simplicity, you are encouraged to focus on a narrow range (i.e. one or two) of the firm’s products or brands.
  3. Using Porter’s generic strategies, what strategy would you recommend for the firm going forward? This recommendation should be detailed and make specific reference to the firm’s product lines and segments.
  4. Potential financial and non-financial measures the firm could use to evaluate the success of your recommended strategy. It is suggested that you provide around five measures and these measures should be clearly linked to the different components of your strategy recommendation.

Using APA referencing, this report must be supported by reference to a range of relevant academic and other research sources (4 marks for academic writing).

Question 2 –Product Mix and Tactical Decisions 

Timberland sells a range of men’s jackets. The following discussion presents hypothetical information in regards to the production of this line of products. This information assumes that these products are manufactured on the same production line:

Logo HoodieWaterproof Pullover JacketBomber JacketSnowdown Waterproof Jacket
Selling price per unit$120.00$200.00$230.00$300.00
Direct materials per unit$20.00$35.00$35.00$40.00
Direct labour per unit$20.00$25.00$28.00$30.00
Variable overhead per unit$15.00$18.75$21.00$22.50
Fixed overhead per unit$7.50$9.38$10.50$11.25
Machine hrs0.300.550.700.80
Annual demand10,0007,5005,0004,000

Required:

  1. Assuming that production was constrained by machine hours, which product should be the focus of the manufacturing efforts? Why? Would your answer be different if production was not constrained by machine hours?
  2. Assume that 12,000 machine hours are available each year. How many of each product should be produced?
  3. Assume that the firm was considering renting an additional item of machinery to increase the firm’s capacity and reduce its reliance on manual labour. The new machine will cost $100,000 p.a. to rent and would increase the available machine hours from 12,000 to 13,000. A number of staff would be made redundant and the direct labour costs for each product would be reduced by 10%. Prepare an analysis of relevant costs and revenues and discuss whether this proposal is acceptable on financial grounds. Outline the relevant social, environmental and other considerations that the firm should recognise in evaluating this proposal.

Ensure that your answers for the above are discussed and supported by relevant calculations/workings.

Question 3 – Linear Programming 

Skechers sells a range of women’s street shoes. The following presents hypothetical information in regards to the production of this line of products. The production manager would like your assistance to identify the optimal production mix. Below is an estimation of the costs to manufacture these products.

Street CleatGoldieSide StreetAuraHi-LitesModa
Selling price per unit$125.00$120.00$120.00$80.00$125.00$110.00
Direct materials per unit$30.00$28.00$25.00$20.00$32.00$32.00
Direct labour per unit$15.00$14.00$13.50$10.00$16.00$11.50
Variable overhead per unit$9.00$8.40$8.10$6.00$9.60$6.90
Fixed overhead per unit$4.50$4.20$4.05$3.00$4.80$3.45

Each of the products goes through the same manufacturing process. The time for each process and the hours available are provided in the table below.

ActivityStreet CleatGoldieSide StreetAuraHi-LitesModaAvailable hours
Sole preparation0.2500.2500.2500.1500.2500.2501,150
Pattern preparation0.1880.1880.1880.1130.1880.188900
Stitching0.3500.3750.3750.2250.3750.3751,700
Final assembly0.3000.3000.3000.1800.3000.3001,500
Inspection and packaging0.1250.1250.1250.0750.1250.125650

Required:

  1. Using Excel Solver, formulate a linear program to determine the optimal production mix which ensures that the maximum contribution margin is obtained. How would your answer be different if the objective was to maximise profit? Discuss the key features of your results and why there were considered to be the optimal result.
  2. Discuss and suggest three possible ways in which the firm could improve its contribution margin in light of the above Solver analysis. Provide financial information to support your recommendations and clearly illustrate how your proposals impact the production mix and the firm’s contribution margin.

Ensure that your answers for the above are discussed and supported by relevant calculations/workings.

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