“Case Analysis of Luxor Cosmetic”
REGIS UNIVERSITY
Date: March 25th, 2013
Week-4 assignment
MSAA 609: Cost Management
Executive Summary
An effective business strategy and budgeting is very essential in a manufacturing industry. A company without a proper business strategy and master budgeting plan would usually faces tremendous challenges and losses during its business operations. The importance of company’s business strategies and budgeting plans, as well as the challenges and losses in the absence of these items has clearly presented in this case study. (“Wiley,” 2013)
Luxor Cosmetics is a cosmetic company which manufactures variety of lipstick, nail polish, and cosmetic cream
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For instance, from schedule A: inventory movement expressed in WSP in exhibit 1, shows that Luxor’s inventory increases every year, except its inventory on creams. (Hopkins, 2009)
Lipstick
Nail Polish
Creams
Ending inventory at 12/31/2007
9.5
9.5
9.5
Ending inventory at 12/31/2008
11.5
11.5
9.5
Ending inventory at 12/31/2009
13.5
14
9.5
Ending inventory at 12/31/2010
15
14.4
9.7
The detail full version of this table is presented in appendix 1 in page number 8 (Hopkins, 2009).
The company’s creams inventory remains constant because it does not follow a trend in innovation and changes so often as the other products. The surplus in inventory is a big disadvantage since; last year’s products may not be in style this year in addition to the cost of storage. For all these reasons their cash flow is less in comparison with previous years causing that Luxor Cosmetics keeps increasing their bank loans, creating more debt, making it harder to pay out as 2011. In this particular situation the company could have either decrease its budgeted sales (productions) or increase its actual sales by improving more effective marketing strategy and research and development of its products in the markets. This way their inventory would decrease and their cash flow would increase. (Hopkins, 2009)
Further, through effective marketing strategy Luxor
This research paper is a brief discussion of budget management analysis. Budgeting is the key to financial management, and is the key to translates an organization goals or plan into money. Budgeting is a rough estimate of how much a company will need to get their work done, and provides the basis for evaluating performance, a source of motivation, coordinating business activities, a tool for management communication and instructions to employees. Without a budget an organization would be like a driver, driving blinded without instructions or any sense of direction, that’s how important a budget is to every organization and individual likewise (Clark, 2005).
This report is on LUSH cosmetics – a sustainable brand in cosmetic industry. This report will
A budget is essential for a company to succeed. Without these budgets, it is very hard to be able to see where all
(cost of goods manufactured in 2008/ sales value for units produced in 2008) * ending inventory 2008
Moreover, the slight increase in Kohl’s average total assets has impacted their Du Pont ROI. Attributing to the decrease is the increased inventory and significant shrinkage in cash. Inventory turnover “measures how many times inventory turns over in a year.” (Berman, 2006) On average Kohl’s turned inventory 3.81 times in 2010, as compared to 3.53 times in 2012. This calculation of inventory turnover is illustrated in exhibit1.2. On average, the higher the ratio the better the company is at managing inventory it also gives them a better cash position. However, the company anticipated higher sales, but due to external factors mentioned above the company was unable to quickly convert inventory into sales as expected. To move inventory Kohl’s offered discount pricing on merchandise in the last six months of 2012.In anticipation of the 2012 holiday season, Kohl’s spent $523 million on inventory. This investment contributed
The relationship of inventories to sales was also an important one that Berman focused on. “In a period of rising inventories on a square foot basis”, Berman says “it is quite obvious that same store sales should rise as the offering to the customer is that much greater. Simply put, the more offerings you put in a store, ceteris paribus, the bigger sales should be.” “It is at this time,” Berman argued, “that the stock price
Becca Cosmetics is a go to for their highlighters. I saw this set on Ulta.com and knew this would be a good option for anyone wanting to try this brand out. The kit has Becca's Luminizer Shimmering Skin Perfector Pressed Opal paired with Liquid Opal Spotlight Wand. It is perfect to throw in your purse and use it to brighten up your face throughout the day.
Asset turnover has trended downward slightly from 1.46 in 1983 to 1.32 in 1986 due to a decline in inventory turnover (3.99 in 1983 and 3.16 in 1985). In addition, any AMT"s product sits in inventory 255 days before being sold (for 1985). The fixed asset turnover ration has trended upward (from 14.6 in 1983 to 17.1 in 1985) indicating low capital intensity.
MISSHA has created a history in the cosmetic industry. Through MISSHA’s emergence and the remarkable success in early 2000’s, the low-priced cosmetics niche market created by them became bigger enough to attract many other companies.
sales, is a measure of how many dollars of net income is produced by each
actresses and to models, this genius idea set a trend as it was featured in
Fashion is a popular style or practice that aesthetically expresses cultural values in a society. Fashion includes all embracing multiple categories, from adornment to clothing, accessories (e.g., handbags, earrings) and cosmetics. Worldwide fashion brands generally have both apparel and cosmetics product lines. The pressure to innovate becoming important, in this industry, it is no surprise that evidence based medicine and its application to cosmetics have become common. The hybrid term ‘cosmeceutical’ proposed by Mr. Raymond Reed in 1961 from ‘cosmetic’ & ‘pharmaceutical’, seem apt when referring to ‘active’, science based cosmetics that have, or are purported to have, medicinal properties.
Makeup Art Cosmetics (MAC) was founded in 1985 in Toronto by Frank Toskan and the late Frank Angelo. The business plan concentrated on targeting young, fashionable females by creating cosmetic products which contain unique textures and colours. Using this strategy, the company targeted the ¡°hip¡± celebrities and other cosmetic influencers to gain recognition and market share in the younger consumer market. Since its inception, the company has grown to become a multi-national organization operating in over 180 locations worldwide. In the late 1990¡¯s, MAC was purchased by Estee Lauder, which has led to the alteration of the company¡¯s governance; the culture of the firm changed from that of an entrepreneurial-style with limited rules into
Gabrielle Brown, D. M. (2014). Differences Between a Strategic Plan & an Operations Plan. Retrieved from Chron Small Business: http://smallbusiness.chron.com/differences-between-strategic-plan-operations-plan-10634.html
Reviewing Exhibit 1 it is indicative that each year their actual inventory ratio continued to increase as opposed to decreasing. Keeping inventory in stock is good for clients but bad for capital when it remains on the shelves and doesn’t sell as quickly as you are producing it.