Sustainability at Top Shelf Shoes

Assignment 3: Course Project—Sustainability at Top Shelf Shoes

 

In this course, you will work independently to analyze sustainability issues for a hypothetical organization. The assignments follow one another so that you can apply the methods and skills you learn in each module to develop your Course Project. Each week you will be asked to prepare a document that addresses the specified topics. In this assignment, you will begin your analysis.

Outlined below is the scenario for the organization that is the focus of your Course Project—Top Shelf Shoes.

Course Project Scenario: Top Shelf Shoes

Top Shelf was found in 1990 by Tie Woodward. Within five years, Top Shelf had established a solid presence in the global shoe business with production facilities in Asia and sales throughout the world. By 2000, Top Shelf had a share of 45 percent of the global market in shoe sales. In 2001, Top Shelf made the Fortune 500 list of privately held companies and Tie was awarded the coveted International Business Award. However, Tie claimed the real success of his firm could be seen in the stylish Top Shelf shoes being worn by everyone from villagers in Africa to rock stars in Hollywood.

In 2003, a major competitor of Top Shelf began a green marketing campaign to highlight its efforts to reduce its environmental footprint with its new “Green Shoe.” A simultaneous, growing concern for environmental issues helped spur the sales of Top Shelf’s competitor—it gained market share. As the competitor’s sales increased, news stories began to question the implications of Top Shelf’s business practices, especially as they related to low cost labor and environmental concerns. Within a fiscal quarter, Top Shelf sales were down by 10 percent. Tie responded by exclaiming on the Nightly Business Report that everyone had to wear shoes and Top Shelf made the best looking and most affordable foot fixtures on the planet. Sales fell another 5 percent the following quarter. Tie’s management team attributed this to the competition’s green efforts and the bad publicity received by Top Shelf.

Tie’s firm hired a middle manager for environmental affairs and launched a green campaign that touted a Top Shelf shoe-recycling program with the slogan “We make them, you wear them, we’ll recycle them. It’s good for your feet and good for the earth.” Sales climbed back up 7 percent over the next quarter, and the boss gave out bonuses to his management team.

While initial reaction to the marketing was positive, especially among longtime Top Shelf shoe wearers, two reporters, Burnstone and Woodwoe, broke a story about the impact of air and water pollution at Top Shelf’s shoe-recycling facility on the outskirts of a major city in Asia. Apparently, some of the shoes were recycled to produce energy. According to the report by Burnstone and Woodwoe, the shoes were being burned by low-wage workers without any precautions for the workers’ health. An increasing number of children and elderly in the region began showing up at clinics and hospitals with breathing problems, dizziness, and toxic blood poisoning. Then, a worker at the plant collapsed and died in front of the large kiln.

Global news organizations, bloggers, and YouTube broadcasters quickly picked up the story. The sales of Top Shelf began to plummet. By the end of the fiscal year, the company saw a 50 percent reduction in revenue as compared to the previous year. Growth was no longer the issue. Instead the company was faced with the problem of how to stay afloat despite the significant losses and depleting capital. This time, Tie made no public pronouncements. He laid off the manager of the recycling plant, shut down the kiln at the plant, and, on the advice of long-time friend Gifford Pinchot III, hired a reputable sustainable business consulting firm, Sustainable Growth Strategies, to advise Top Shelf on everything from public relations to substantive changes in the company’s labor and environmental policies.

Assume you are leading the consulting team for Sustainable Growth Strategies. You are responsible for the analysis leading to a report with a set of recommendations to put Top Shelf on the path to sustainability. Your first task is to prepare a brief paper for Top Shelf that explains the meaning and use of sustainability within a business context.

Your team reports directly to Tie Woodward. He is a sharp, hardworking, and open-minded leader with a sense of humor. Tie realizes that every day without a genuine sustainability plan is bad for business. Therefore, he wants to show as soon as possible that the company is committed to sustainability. He realizes that there may be advantages in positioning Top Shelf as a sustainability leader in the long run.

Using the module readings, the Argosy University online library resources, and the Internet, research sustainable business practice.

Develop a comprehensive report that includes the following:

  • An introduction to the concept of sustainability.
  • Identification of and elaboration on the three main themes or pillars of sustainability—ecology, society, and economy.
  • An explanation of how sustainability is being defined by businesses giving relevant examples.
  • Identification and analysis of effective sustainability strategies employed by leading businesses.
  • A discussion of how sustainability is being used as a public relations tool.
  • An overview of the positive and negative reactions Tie’s firm might expect from supporters and critics.
  • A compelling case for Tie’s firm to pursue sustainability.

Write a 3–4-page report in Word format. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M1_A3.doc. For example, if your name is John Smith, your document will be named SmithJ_M1_A3.doc.

Informative Communication

Week 2 Guiding Questions for the Week 2 Reading  These Guiding Questions are for the Week 2: Written Communication Lesson and for the Week 2 : Framing a Problem Lesson. Feel free to use these discussion questions for your student replies in your discussion forum.

1.    Which type of writing do you do at work, persuasive writing? Expository writing? Descriptive writing? Or narrative writing?

2.  How do you find credible sources when researching for a presentation at work?

3.  What are research questions? How can asking researching questions help you formulate a thesis?

Assume that more than one product is being sold in each of the four following case situations

Assume that more than one product is being sold in each of the four following case situations

Assume that more than one product is being sold in each of the four following case situations:

 

 

Case #1 Case #2 Case #3 Case #4
Sales $ 441,000 $ 200,000 $ $ 301,000
Variable expenses 132,000 90,300




Contribution margin $ 185,220 $ 68,000 $ 567,440 $ 210,700
Fixed expenses 54,000 474,000




Net operating income (loss) $ 74,220 $ $ 93,440 $ (13,300)




Contribution margin ratio (percent) 42 % % 82 % %

Assume that Larson Florals fiscal period does not end

Assume that Larson Florals fiscal period does not end

 

Assume that Larson Floral’s fiscal period does not end on June 30 but rather December 31. Using the information from Practice Exercise 2, complete an interim balance sheet for June for Larson Floral.

Practice Exercise 2

The adjusted trial balance for Larson Floral is listed below. Using this information, journalize the four closing entries.

Assume that Koslowski Inc

Assume that Koslowski Inc

Assume that Koslowski Inc. sold bonds with face value of $100,000 for $104,000. Was the Market interest rate equal to, less than, or greater than the bond’s. contracting interest rate? Explain

Assume that historical returns

Assume that historical returns

Assume that historical returns and future returns are independently and identically distributed and drawn from the same distribution.

a. Calculate the 95% confidence intervals for the expected annual return of four different investments included in Tables 10.3 and 10.4 (the dates are inclusive, so the time period spans 86 years).

b. Assume that the values in Tables 10.3 and 10.4 are the true expected return and volatility

(i.e., estimated without error) and that these returns are normally distributed. For each investment, calculate the probability that an investor will not lose more than 5% in the next year.

c. Do all the probabilities you calculated in part (b) make sense? If so, explain. If not, can you identify the reason?

ables 10.3

Average Annual Returns for U.S. Small Stocks, Large Stocks (S&P 500), Corporate Bonds, and Treasury Bills, 1926–2011

Investment

Average Annual Return

Small stocks

18.7%

S&P 500

11.7%

Corporate bonds

6.6%

Treasury bills

3.6%

ables 10.4

Volatility of U.S. Small Stocks, Large Stocks (S&P 500), Corporate Bonds, and Treasury Bills, 1926–2011

Investment

Return Volatility (Standard Deviation)

Small stocks

39.2%

S&P 500

20.3%

Corporate bonds

7.0%

Treasury bills

3.1%

 

Assume that Health Management Associates

Assume that Health Management Associates

Assume that Health Management Associates (HMA) is evaluating the feasibility of building a new hospital in an area not currently served by the company. The company’s analysts estimate a market beta for the hospital project 1.1, which is somewhat higher than the 0.8 market beta of the company’s average project. Financial forecasts for the new hospital indicate an expected rate of return on the equity portion of the investment of 20 percent. If the risk-free rate, RF, is 7 percent and the required rate of return on the market, R(Rm), is 12 percent, is the hospital in the best interest of HMA’s shareholder’s? Explain your answer.

What will be the resulting percentage change in EBIT if they expect units sold to changes by 6.5 percent

Assume that current level of sales is 362 units.

Question 5

The Poseidon Swim Company produces swim trunks. The average selling price for one of their swim trunks is $65.10. The variable cost per unit is $25.37. Poseidon Swim has average fixed costs per year of $6,521.

Assume that current level of sales is 362 units. What will be the resulting percentage change in EBIT if they expect units sold to changes by 6.5 percent? (You should calculate the degree of operating leverage first)

Round the answer to two decimal places.

Assume that capital markets are perfect

Assume that capital markets are perfect

Assume that capital markets are perfect. A firm finances its operations with $50 million in stock, with a required return of 15 percent, and $40 million in bonds, with a required return of 9 percent. Assume that the firm could issue $10 million in additional bonds, at 9 percent. Using the proceeds to retire $10 million worth of equity, what would happen to the firm’s WACC? What would happen to the required return on the company’s stock?

How should researchers decide which factors to investigate

How should researchers decide which factors to investigate

Assume that both Portfolios A and B

Assume that both Portfolios A and B are well diversified, that E(rA) = 12%, and E(rB) = 9%. If the economy has only one factor, and βA = 1.2, whereas βB= .8, what must be the risk-free rate?

If the APT is to be a useful theory, the number of systematic factors in the economy must be small. Why?

The APT itself does not provide guidance concerning the factors that one might expect to determine risk premiums. How should researchers decide which factors to investigate? Why, for example, is industrial production a reasonable factor to test for a risk premium?