Business Strategy Essay Example | Topics and Well Written Essays - 1000 words

Business Strategy - Essay Example sion plan the company also took a strategic decision to reassess its standard shop formats and sizes from 7000 sq ft to more economical 2400-4200 sqft range outlets. Evidence indicating that these strategies are effective can be identified in the sales increase of over $ 185 million during the period of 1995 – 2001 since the implementation of new strategy. The profits too had reached a record of $ 14.75 million in 2001 from $4 million in 1995.The number of outlets have increased from a total of 88 in 1995 to 174 by 2001. Franchisee outlets have grown from 40 to 111 during this period. The financial performance of the company has been rather unstable over the past 5 years with losses and profits resulting in alternative years. However the year 2000 and 2001 has indicated steady growth with losses being converted to profits. Own outlet sales account for over 70% while franchisee income represent 3%. 26% of the income is from mixes and equipment sales. The most profitable part of the business is the Franchising operation where the GP margin is 62%. The other two business units generate 15% GP. The company’s financial performance during past two years has been outstanding with earnings per share jumping to $ 0.60 in 2001. The sales revenue has grown by 37% in 2001 while net income has grown by 147% over year 2000. This $ 8.76 million net income growth is also facilitated by the reduced interest costs of about $ 1 million for the year 2001 as a result of IPO funding relieving the company of its costly capital borrowings. The statement â€Å" The numbers just d on’t work† has been made pertaining to the company’s targeted 20% sales growth vs. 25% growth in earnings for the year 2002. The statement cannot be supported with the current evidence, as it is most likely that the company will be in a position to achieve such forecasts. The additional 5% growth in earnings are likely to come from reduced costs through increased sales per existing outlets as well as cost