Discuss Wayne Hurt and The Kroger Company
Executive Summary: Introduce the current status of your company (a brief overview of your company's status. Include the good and the bad.
Recommendations & Justifications: You will use the Recommendations below (or make up some of your own) and justify whether the firm should go along with the recommendation.
Concluding thoughts: include what the potential is for your chosen company if they are able to execute your recommendations and the ramifications if they do not.
As a financial consultant, what recommendations would you propose to current company management based on your findings? This added value content should include conclusions and recommendations for the firm going forward (as if you were a consultant for the firm). Adding value means having detailed conclusions and recommendations. Having detailed RECOMMENDATIONS and being able to JUSTIFY them are VERY IMPORTANT! Typical recommendations and conclusions that you will probably use include:
â?¢ Should the firm increase capital expenditures to increase competitiveness?
â?¢ Should the firm increase growth by acquiring other companies for synergies or grow internally?
â?¢ Should the firm risk increasing their leverage (debt) to increase earnings and return on capital or keep the leverage the same (or even decrease it?)
â?¢ Should the firm increase/decrease marketing spending?
â?¢ Should the firm increase/decrease R&D spending?
â?¢ How should they go about controlling costs including labor, health care, and pension liabilities? (GM and Ford need help in this department).
There are many more recommendations you can offer. (Note: feel free to add more recommendations or change some of the ones above that fit your chosen company. Note that you want a minimum of at least 6 recommendations.) Feel free to be creative. If you make these recommendations, you want to list WHAT the recommendation is and JUSTIFY WHY the firm should embrace it (and how it benefits the firm). You are the chief financial consultant so you have full rein to make any recommendations.
Name: Wayne Hurt The Kroger Company
It is recommended that Kroger should increase its investments in opening stores abroad.. This form of investment will bring Kroger the best returns. It is also recommended that Kroger may grow by acquiring retail chains abroad that have the real estate and suitable locations. When Kroger grows there will not be any problem of culture because the existing employees can be offered their jobs if they adopt themselves to the Kroger culture. After examining the current leverage of Kroger, it has been suggested hat Kroger can increase its debt and so earn a higher return on capital. The recommendation for increase in marketing expenditure is directly related to the growth of Kroger abroad. A higher marketing expenditure is required for Kroger to commence business in a new country. Similarly, if Kroger chooses to grow abroad within limits it must increase its R&D expenditure and marketing research expenses. When in a new country, Kroger needs to look at the labor laws of that country and adopt a strategy of employment that will keep its fixed costs low. It has been strongly recommended that Kroger should expand overseas. The suggested countries are Canada, UK, and Brazil.
Recommendations and Justifications:
1. RECOMMENDATION #1: Should the firm increase their capital expenditures to increase competitiveness? This will almost always be true but what segments of the business get the most capital allocated to them and why?
Kroger should increase its capital expenditures to increase competitiveness. Capital expenditure should be increased to into those areas that help increase the sales volumes of Kroger. The reason for this is that the strategy of Kroger is selling key products at the lowest possible prices. To achieve cost leadership Kroger must increase its overall sales volume. So Kroger must invest more in stores not merely in the US but also abroad. These investments will help Kroger set up a presence abroad. There will be several advantages enjoyed by Kroger. Not only will the sales revenues and profits of Kroger increase but Kroger will also be able to develop low cost sources abroad. In this context, Kroger should focus its investment also on selling through the internet. This is the first focus that Kroger should concentrate on.
Kroger also owns manufacturing facilities in Diaries, bakeries, meat plants, and grocery items. In the second round of investment Kroger should invest in manufacturing plants that on a global scale have low cost advantage. So after, the Kroger stores are located internationally, Kroger manufacturing units should be located in such parts of the world where there are strong factor advantages. This ...
Wayne Hurt and The Kroger Company is discussed in great detail in this solution.