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    Lawrence Sports Generic Benchmarking

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    Step 1
    Individually, identify and research two companies that have faced specific issues related to those you identified in the scenario and connected with the course concepts. For each company selected, discuss the following: (A) issue identified in the scenario that is also facing the company, (B) how the company responded to the issue, and (C) outcomes of the company's response to the issue. Thus, each team member should have two synopses, one for each company, which provides the information identified. To avoid duplication of efforts, each team member should identify, to the team, the companies he or she will be researching before doing this part of the assignment.

    Step 2
    As a team, based upon the information gathered from the individual work done in Step 1, prepare an analysis that synthesizes the key findings. As a team, using the companies researched: (A) identify the key course concepts and (B) compare and contrast the practices of each company related to those concepts. Appropriately cite all references used.

    Step 3
    The team will submit a final composition which consists of a title page, the team's overall analysis, the individual company synopses (with the preparer of each synopsis identified), and an appropriate reference page.

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    Solution Preview

    STEP 1


    Situation Facing Company

    In the years 1999 and 2000, Amazon.com was facing serious problems making profits and maintaining a steady cash flow. An article written in July, 1999 states: "Once a pioneer, Amazon has become a symbol of the possibilities and pitfalls of cyberspace economics. Recently, the pitfalls have been getting many of the headlines" (Solman, 1999). Their main focus was satisfying customers and paying their bills. The time they had to pay their publishers were really short so Amazon had to collect the money and turn it over rather quickly. They were unable to maintain a steady flow of cash.

    How Company responded to issue

    What Amazon.com did is to really pay close attention to the concept of cash flow and conduct a constant cash flow analysis. From this analysis, they found some problems they had to solve. They first increased the amount of time they had to pay their publishers. They increased these days to 46 instead of the initial 21 days. So when customers order a book from the company, Amazon.com gets their money from the credit card company in 2-3 days. But they have 46 days to pay the publisher for that same book. As a result, they get to keep and use that cash for that period of time.
    According to Jeffrey Bezoz, founder of Amazon.com, "the fewer days Amazon can keep the book hanging around in its inventory, the longer it gets to keep and use our cash. In fact, this is a goal of any physical business: to get the goods out the door -- to turn the inventory -- as fast as possible" (Online News Hour, 1999). Another thing they did was to reexamine their inventory. They employed printing firms and book distributors to do most of their warehousing so that they could keep very few books in their own shipping plant. "Amazon keep so few books in its own shipping plants that it clears them out an amazing 20 times a year, versus three times a year for a typical bookstore, where the average book sits around for four months, gathering dusk, taking up pricey space like here at Borders, and already paid for by the bookstore" (Online News Hour, 1999). So unlike other companies that pay their bills first and then get their cash later, Amazon.com get their money today and pay their bills down the road, maximizing the use of that money and thereby, increasing cash flow. ...

    Solution Summary

    Detailed analysis of two companies that relate to the Lawrence Sports scenario.