Lawrence Sports Simulation Essay Example | Topics and Well Written Essays - 750 words

Lawrence Sports show - Essay ExamplePolicy Recommendation Lawrence Sports has created a strategic alliance with Central stick with determination to receive credit facilities in convictions of cash deficit. According to this policy, money is automatically transferred from the Central imprecate to Lawrence Sports account whenever the ships high society experiences a cash deficit. Currently, the companys line of credit with Central Bank has reached its limit, $1.2 million (cited in University of Phoenix, n.d). Here, the company has to take some strategic decisions to continue its business effectively. The firms current difficulties are mainly due to Mayos default on outstanding consecratements for the weeks of ring 17-23 and process 24-30. However, it must be noted that Mayo is the Lawrences principal customer and hence Lawrence Sports should not take a tough stance on Mayos outstanding renderments. It is advisable for the company to allow Mayo an extra week for paying 80% o f the outstanding payments. Evidently Gartner is the potential supplier of Lawrence Sports as this vendor assists the company to meet its 70% of the raw materials needs. However, Lawrence has a qualified bargaining reason over Gartner since Lawrence Sports is not a key customer for Gartner. Hence, it is recommendable for Lawrence to distribute 60% of its outstanding payments for the week of March 24-30 over the weeks of March 31-April 6 and April 7-13 and subsequently, continue the payment mechanism as before. Lawrences vendor relationships result Ann Wu opines that Murray is the more flexible vendor of the company although it is not the major one. However, Lawrence should not stretch payments indefinitely to this company because such a condition would put this company into great financial troubles. Therefore, it is advisable for the organization to pay 15% on purchase, 40% in the next week, and the remaining 45% in the second week from the week of March 31- April 6. Lawrence Spo rts may continue to respect this strategy for planning the subsequent weeks. To be specific, it is recommendable for Lawrence Sports to follow a tally working capital policy. According to Brigham & Daves (2007, p.725), a moderate policy is the one amidst relaxed working capital policy and restricted working capital policy extremes and under a moderate working capital policy, an organization neither adopts a liberal credit approach nor a restricted credit approach. However, the moderate policy may not be beneficial for Lawrence to improve its financial post quickly as this policy gives more focus to customer and vendor relationships. Hence, the organization can lone(prenominal) gradually improve its debt levels and minimize interest burden under this policy. This policy may pr razet Lawrence from bolt its market growth because the firm does not promote risky investments under this moderate policy. As Correia, Flynn, Uliana & Wormald (2012, pp.11.5-11.6) chief out, the organiza tion allows its customers to maintain payment dues to a fixed level and does not take long time to pay dues to its vendors. In the view of Periasamy (2009, pp.19.12-19.13), a major risk associated with this policy is that Lawrence cannot quickly realize dues from its customers even if it is badly in need of money. As the organization provides its customers with a fair period of time to pay dues, it cannot insist them to pay the dues instantly. Hence, Lawrence Sports may struggle to raise funds in times of unforeseen contingencies. As compared to a relaxed working c