IntroductionSleek Motors Company is a car manufacturing company that was established in 2009. It was established based on increasing demand for vehicles in the transportation industry. It is aimed at gaining a significant market share in the European car market as well as other parts of the world. The company aimed at achieving a 30% market share in a five year period since it was launched. In the third year of its operation, it aim was to attain a $ 22,000,000 in sales. In addition it borrowed a short term loan of $ 159, 000 where by the end of third year since operation, half of this loan would be repayable.
The company’s strategic intents that differentiates its market offering include; operational excellence, product leadership, and customer intimacy. This business simulation involves the performance review report of the Sleek Motors Company based on its initial goals set in the business plan. It also provides recommendations for the next five years of the operations of the organisation. Sales, profit and profit marginSince the launching of the company, its sales have increased to a value of $21,010,000 in the third year of its operation.
Based on the company goals of attaining $21,000,000 in this year, the company is doing well in regard to profitability since the increase in sales is also reflected in its net profit dollars. For the period of three years, the company has also attained a profit margin of 15% with also a rise in net profit during these years. With good net margin as well as the concurrent increase in net profits, it is also true that majority of other parts of this business will also fall into place.
In addition, this will be reflected by increase in return on equity and assets. It is worth also nothing that the cash position of this company will even improve over time. In general, due to good work in profitability area that Sleek Motors Company has achieved, the outcome will be the company’s overall financial health (Anthony, Perrewe & Kacmar 1999)DebtsWith improvement in net profitability, the company has been able to repay almost a ($ 82,000) half of its short term borrowed debt ($159,000) as per its set goals in the business plan during the launching of the company.
Thus, being able to improve its profitability with no borrowing of money is an indication of the company’s efficient use of debts and a competitive advantage (Kleiman 2000) ChallengesHowever, the company is also facing several challenges in its operations. The main challenge is competition where major sources of competition result from branding, pricing and imports. There has been increase in the number of imported vehicles for the last year which has led to the proliferation of cheaper foreign vehicles.
This in turn will be reflected in reduction of prices or improvement of the quality of our vehicles in order to overcome this challenge in the following years. This means that the challenges may lead to reduction in sales as well as the net profits in the next years. These challenges will also lead to the following; new product development in order to maintain or increase our market share, research and development and incorporation of more skills in order to ensure efficiency and effectiveness in manufacturing.
Another challenge is that the existing skilled employees are approaching retirement thus, the need for more employees with wide range of skills (Mathis & Jackson 2000).