FIN515: Week 6 Signature Assignment – Capital Budgeting Analysis

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FIN515: Week 6 Signature Assignment – Capital Budgeting Analysis

Once again, your team is the key financial management team for your company. The company’s CEO is now looking to expand its operations by investing in new property, plant, and equipment. calculate the WACC for your company(Costco), which will now be useful in evaluating the project’s effectiveness. You are now asked to do some capital budgeting analysis that will determine whether the company should invest in these new plant assets.

The parameters for this project are:

Your team will be using the same company (Costco) for this project

https://www.sec.gov/Archives/edgar/data/909832/000090983217000014/cost10k90317.htm#s2960e74129804ad79a675bc789ef1246

The company is now looking to expand its operations and wants you to do some analysis using key capital budgeting tools to do this. The parameters for this project are as follows.

The firm is looking to expand its operations by 10% of the firm’s net property, plant, and equipment. (Calculate this amount by taking 10% of the property, plant, and equipment figure that appears on the firm’s balance sheet.)

The estimated life of this new property, plant, and equipment will be 12 years. The salvage value of the equipment will be 5% of the property, plant and equipment’s cost.

The annual EBIT for this new project will be 18% of the project’s cost.

The company will use the straight-line method to depreciate this equipment. Also assume that there will be no increases in net working capital each year. Use 35% as the tax rate in this project.

The hurdle rate for this project will be the WACC that you are able to find on a financial website, such as Gurufocus.com.

Deliverable for this Project

Prepare a Financial repot that will highlight the following items.

· Your calculations for the amount of property, plant, and equipment and the annual depreciation for the project

· Your calculations that convert the project’s EBIT to free cash flow for the 12 years of the project.

· The following capital budgeting results for the project

· Net present value

· Internal rate of return

· Discounted payback period.

· Your discussion of the results that you calculated above, including a recommendation for acceptance or rejection of the project

Once again, you may embed your Excel spreadsheets into your document. Be sure to follow APA standards for this project.

Grading Rubric

Possible

Points

 Criteria and Point Range
Calculation of Cost of Project 16 0-3 4-7 8-12 13-16
All calculations are incorrect, or not presented. Calculation of PP&E, salvage value, or annual depreciation is incorrect. Cost of PP&E is mostly correct with some minor calculation errors. Cost of Property, plant and Equipment and annual depreciation correctly calculated.
Estimation of Cash Flows 24 0-6 7-12 13-18 19-24
All aspects of the cash flow calculation are incorrect, or not presented. Significant, but identifiable errors are presented in the calculation to convert income to cash flows.. Cash flows are properly converted from accrual-based net income to cash flows from the project, with minor errors. Cash flows are properly converted from accrual-based net income to cash flows from the project.
Capital Budgeting

Analysis

 24 0-6 7-12 13-18 19-24
All of the capital budgeting calculations are incorrect, or not presented. Two errors noted in the NPV, IRR, and Discounted Payback Period calculations.

 One error noted in the NPV, IRR and Discounted payback period calculations. All of the NPV, IRR, and Discounted Payback period calculations are correct.
Form 16 0-3 4-7 8-12 13-16
Poor writing and presentation skills, or no presentation provided. Several problems noted in regard to writing and presentation skills. Writing and presentation done well with a few minor errors Virtually no errors in writing or presentation.

1

FIN515: Week

6

Signature Assignment

–

Capital Budgeting Analysis

1

Once again, your team is the key financial management team for your company.

The

company’s

CEO

is

now

looking

to

expand

its

operations

by

investing

in

new

property,

plant,

and

equipment.

calculate

the

WACC

for

your

company

(Cost

co)

,

which

will

now

be

useful

in

evaluating

the

project’s

effectiveness

.

You

are

now

asked

to

do

some

capital

budgeting

analysis

that

will

determine

whether

the

company

should

invest

in

these

new

plant

a

ssets.

The parameters for this project are:

Your team will be using the same company

(

Costco)

for this project

https://www.sec.gov/Archives/edgar/data/909832/000090983217000014/cost10k90317.htm#s2960e7

4129804ad79a675bc789ef1246

The company is now looking to expand its operations and wants you to do some analysis using key

capital budgeting t

ools to do this. The parameters for this project are as follows.

The firm is looking to expand its operations by 10% of the firm’s net property, plant, and equipment.

(Calculate this amount by taking 10% of the property, plant, and equipment figure that a

ppears on the

firm’s balance sheet.)

The estimated life of this new property, plant, and equipment will be 12 years.

The salvage value of the

equipment will be 5% of the property, plant and equipment’s cost.

The annual EBIT for this new project will be 1

8% of the project’s cost.

The company

will use the straight

–

line method to depreciate this equipment

. Also assume that there

will be no increases in net working capital each year. Use

35% as the

tax rate

in this project

.

The hurdle rate for this project

will be the WACC

that you are able to find on a financial website, such as

Gurufocus.com

.

Deliverable

for

this Project

Prepare a

Financial

repot

that will highlight the following items.

·

Your calculation

s for the amount of property, plant, and equipment and the annual depreciation

for the project

·

Your calculations that convert the project’s EBIT to free cash flow for the 12 years of the project.

·

The following capital budgeting results for the project

o

Net

present value

o

Internal rate of return

o

Discounted payback period.

·

Your discussion of the results that you calculated above, including a recommendation for

acceptance or rejection of the project

Once again, you may embed your Excel spreadsheets into your

document. Be sure to follow APA

standards for this project.

FIN515: Week 6 Signature Assignment – Capital Budgeting Analysis

1

Once again, your team is the key financial management team for your company. The company’s CEO is

now looking to expand its operations by investing in new property, plant, and equipment. calculate the

WACC for your company(Costco), which will now be useful in evaluating the project’s effectiveness. You

are now asked to do some capital budgeting analysis that will determine whether the company should

invest in these new plant assets.

The parameters for this project are:

Your team will be using the same company (Costco) for this project

https://www.sec.gov/Archives/edgar/data/909832/000090983217000014/cost10k90317.htm#s2960e7

4129804ad79a675bc789ef1246

The company is now looking to expand its operations and wants you to do some analysis using key

capital budgeting tools to do this. The parameters for this project are as follows.

The firm is looking to expand its operations by 10% of the firm’s net property, plant, and equipment.

(Calculate this amount by taking 10% of the property, plant, and equipment figure that appears on the

firm’s balance sheet.)

The estimated life of this new property, plant, and equipment will be 12 years. The salvage value of the

equipment will be 5% of the property, plant and equipment’s cost.

The annual EBIT for this new project will be 18% of the project’s cost.

The company will use the straight-line method to depreciate this equipment. Also assume that there

will be no increases in net working capital each year. Use 35% as the tax rate in this project.

The hurdle rate for this project will be the WACC that you are able to find on a financial website, such as

Gurufocus.com.

Deliverable for this Project

Prepare a Financial repot that will highlight the following items.

 Your calculations for the amount of property, plant, and equipment and the annual depreciation

for the project

 Your calculations that convert the project’s EBIT to free cash flow for the 12 years of the project.

 The following capital budgeting results for the project

o Net present value

o Internal rate of return

o Discounted payback period.

 Your discussion of the results that you calculated above, including a recommendation for

acceptance or rejection of the project

Once again, you may embed your Excel spreadsheets into your document. Be sure to follow APA

standards for this project.

Determine two to three (2-3) methods of using stocks and options to create a risk-free hedge portfolio can be created. Support your answer with examples of these methods being used to create a risk-free hedge portfolio.

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Determine two to three (2-3) methods of using stocks and options to create a risk-free hedge portfolio can be created. Support your answer with examples of these methods being used to create a risk-free hedge portfolio.

 

  • * From the scenario, create a unique hypothetical weighted average cost of capital (WACC) and rate of return. Recommend whether or not the company should expand, and defend your position.

 

Peer REsponse

 

 

Determine two to three (2-3) methods of using stocks and options to create a risk-free hedge portfolio can be created. Support your answer with examples of these methods being used to create a risk-free hedge portfolio.

 

Hedging is a transaction that lowers a firm’s risk of damage due to fluctuating commodity prices, interest rates, and exchange rates (Brigham, 2014).  Hedging, whether in your portfolio, your business or anywhere else is about decreasing or transferring risk.  It is a valid strategy that can help protect your portfolio, home and business from uncertainty.

One method of using stocks and options to create a risk-free hedge portfolio is through call options.  A call option is an agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument at a specified price within a specific time period. It may help you to remember that a call option gives you the right to “call in” (buy) an asset. You profit on a call when the underlying asset increases in price.  Call options offer investors a way to leverage their capital for greater investment returns. For a better understanding please click the link below that shows an animated clip of this process:

http://www.investopedia.com/video/play/call-option/

Another method of using stocks and options to create a risk-free hedge portfolio is through put options.  A put option is an option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time. This is the opposite of a call option, which gives the holder the right to buy shares. A put becomes more valuable as the price of the underlying stock depreciates relative to the strike price. Put option allow investors to hedge an investment they own or speculate in an investment they don’t own. For a better understanding please click the link below that shows an animated clip of this process:

http://www.investopedia.com/video/play/put-option/

 

Brigham, E. F., & Ehrhardt, M. C. (2014). Financial management (14th ed.). Mason, OH: South-Western Cengage Learning.

RES-811 Topic 7 Synthesis Resources

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College of Doctoral Studies

RES-811 Topic 7 Synthesis Resources

Learners will be asked to select two articles from the list below to strengthen the synthesis for the Topic 7 Enhanced Synthesis Paper.

Baker, V., & Lattuca, L. R. (2010). Developmental networks and learning: toward an interdisciplinary perspective on identity development during doctoral study. Studies in Higher Education, 35(7), 807-827.

Beauchamp, C., Jazvac-Martek, M., & McAlpine, L. (2009). Studying doctoral education: Using Activity Theory to shape methodological tools. Innovations in Education & Teaching International, 46(3), 265-277.

Bieber, J. P. (2006). Conceptualizing the academic life: Graduate student’s perspectives. The Journal of Higher Education, 77(6), 1009-1035.

Colbeck, C. L. (2008). Professional identity development theory and doctoral education. New Directions for Teaching & Learning, 2008 (113), 9-16.

Foot, R., Crowe, A., Tollafield, K., & Allan, C. (2014). Exploring doctoral student identity development using a self-study approach. Teaching & Learning Inquiry The ISSOTL Journal Teaching & Learning Inquiry, 2(1), 103-118.

Gardner, S., Jansujwicz, J., Hutchins, K., Cline, B., & Levesque, V. (2014). Socialization to interdisciplinary: faculty and student perspectives. Higher Education, 67(3), 255-271.

Malfroy, J., & Yates, L. (2003). Knowledge in action: Doctoral programmes forging new identities. Journal of Higher Education Policy & Management, 25(2), 119-129. doi:10.1080/1360080032000122606

Noonan, S. J. (2015). Doctoral pedagogy in stage one: Forming a scholarly identity. International Journal of Educational Leadership Preparation, 10(1), 2-28.

Switzer, V. (2009) Towards a theory of doctoral student professional identity development: A developmental networks approach. The Journal of Higher Education, 80(1), 1-33.

Weidman, J. C., & Stein, E. L. (2003). Socialization of doctoral students to academic norms. Research in Higher Education, 44(6), 641-656.

© 2013. Grand Canyon University. All Rights Reserved.

3 Which of the following securities is likely to be the most liquid according to these data? Explain.

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2 In late 2014, you purchased the common stock of a company that has reported significant earnings increases in nearly every quarter since your purchase. The price of the stock increased from $12 a share at the time of the purchase to a current level of $45. Notwithstanding the success of the company, competitors are gaining much strength. Further, your analysis indicates that the stock may be over-priced based on your projection of future earnings growth. Your analysis, however, was the same one year ago and the earnings have continued to increase. Actions that you might take range from an outright sale of the stock (and the payment of capital gains tax) to doing nothing and continuing to hold the shares. You reflect on these choices as well as other actions that could be taken. Describe the various actions that you might take and their implications.

3 Which of the following securities is likely to be the most liquid according to these data? Explain.

Stock Bid Ask
R $39.43 $39.55
S 13.67 13.77
T 116.02 116.25

4 You purchased shares of Broussard Company using 50 percent margin; you invested a total of $20,000 (buying 1,000 shares at a price of $20 per share) by using $10,000 of your own funds and borrowing $10,000. Determine your percentage profit or loss under the following situations (ignore borrowing costs, dividends, and taxes). In addition, what would the percentage profit and loss be in these scenarios if margin were not used?

a. the stock price rises to $23 a share

b. the stock price rises to $30 a share

c. the stock price falls to $16 a share

d. the stock price falls to $10 a share

6 The Trio Index includes three stocks, Eins, Zwei, and Tri. Their current prices are listed below.

Stock Price at Time (t)
Eins $10
Zwei $20
Tri $40

a. Between now and the next time period, the stock prices of Eins and Zwei increase 10 percent while Tri increases 20 percent. What is the percentage change in the price-weighted Trio Index?

b. Suppose, instead, that the price of Eins increases 20 percent while Zwei and Tri rise 10 percent. What is the percentage change in the price-weighted Trio Index? Why does it differ from the answer to part a?

7 The four stocks below are part of an index. Use the information below:

a. Compute a price-weighted index by adding their prices at time t and time t + 1. What is the percentage change in the index?

b. Compute a value-weighted index by adding their market values at time t and time t + 1. What is the percentage change in the index?

c. Why is there a difference between your answers to (a) and (b)?

Stock # Of Shares Outstanding Price at Time (t) Price at Time (t + 1)
Eeny 100 10 15
Meeny  50 20 22
Miney  50 30 28
Moe  20 40 42

8 The Quad Index is comprised of four stocks: Uno, Dos, Tres, and Fore.

a. Given the data below on the number of shares outstanding and their share prices at time (t) and time (t + 1), what is the percentage change in the Quad Index if it is calculated as a price-weighted index? As a value-weighted index?

Stock # Of Shares Outstanding Price at Time (t) Price at Time (t + 1)
Uno 1000 $10 $11
Dos  500  20  21
Tres  250  40  42
Fore  100  50  60

b. Instead of the prices shown above, suppose we switch the prices for Uno and Fore. That is, Uno’s stock price is $50 at time (t) and it rises to $60 by time (t + 1), and Fore’s stock price rises from $10 to $11 over the same time frame. What is the percentage change in the Quad Index if it is computed as a price-weighted index? As a value-weighted index?

c. Explain similarities or differences in your answers to Parts (a) and (b).

9 A U.S. firm wants to raise $10 million of capital so it can invest in new technology. How much will it need to raise to net $10 million using the average costs of raising funds in the chapter?

10 A U.S. firm wants to raise $15 million by selling 1 million shares at a net price of $15. We know that some say that firms “leave money on the table” because of the phenomenon of underpricing.

a. Using the average amount of underpricing in U.S. IPOs, how many fewer shares could it sell to raise these funds if the firm received a net price per share equal to the value of the shares at the end of the first day’s trading?

b. How many less shares could it sell if the IPO was occurring in Germany?

c. How many less shares could it sell if the IPO was occurring in Korea?

d. How many less shares could it sell if the IPO was occurring in Canada?

11 Below are the results of a Dutch auction for an IPO of Bagel’s Bagels, a trendy bagel and coffee shop chain. Bagel’s is offering 50 million shares.

Bidder Bid Price Number of Shares
Matthew $50.25 15 million
Kevin  49.75 20 million
Amy  49.45 20 million
Megan  49.00 10 million

a. What will be the clearing price?

b. How many shares will each bidder receive if Bagel’s allocates shares on a pro rata basis to all the successful bidders?

12 Boneyard Biscuits’ Dutch auction for an IPO was a great success. The firm offered 100 million shares. Bids appear below.

Bidder Bid Price Number of Shares
Manahan $25.25 25 million
Campbell  24.95 30 million
Maloney  24.75 25 million
Touma  24.40 10 million
Clark  24.40 30 million
Fry  24.25 15 million

a. What is the clearing price?

b. What options do Boneyard and its underwriters have for allocating shares? How many shares will each bidder receive under each option?

2

In late 2014, you purchased the common stock of a company that has reported significant earnings

increases in nearly every quarter since your purchase. The price of the stock increased fro

m $12 a share

at the time of the purchase to a current level of $45. Notwithstanding the success of the company,

competitors are gaining much strength. Further, your analysis indicates that the stock may be over

–

priced based on your projection of future ea

rnings growth. Your analysis, however, was the same one

year ago and the earnings have continued to increase. Actions that you might take range from an

outright sale of the stock (and the payment of capital gains tax) to doing nothing and continuing to hol

d

the shares. You reflect on these choices as well as other actions that could be taken. Describe the

various actions that you might take and their implications.

3

Which of the following securities is likely to be the most liquid according to these data? E

xplain.

Stock

Bid

Ask

R

$39.43

$39.55

S

13.67

13.77

T

116.02

116.25

4

You purchased shares of Broussard Company using 50 percent margin; you invested a total of $20,000

(buying 1,000 shares at a price of $20 per share) by using $10,000 of your own funds and borrowing

$10,000. Determine your percentage profit or loss under th

e following situations (ignore borrowing

costs, dividends, and taxes). In addition, what would the percentage profit and loss be in these scenarios

if margin were not used?

a.

the stock price rises to $23 a share

b.

the stock price rises to $30 a share

c.

the stock

price falls to $16 a share

d.

the stock price falls to $10 a share

6

The Trio Index includes three stocks, Eins, Zwei, and Tri. Their current prices are listed below.

Stock

Price at Time (

t

)

Eins

$10

Zwei

$20

Tri

$40

a.

Between now and the next time period, the stock prices of Eins and Zwei increase 10 percent

while Tri increases 20 percent. What is the percentage change in the price

–

weighted Trio Index?

b.

Suppose, instead, that the price of Eins increases 20 percent while

Zwei and Tri rise 10 percent.

What is the percentage change in the price

–

weighted Trio Index? Why does it differ from the

answer to part a?

2 In late 2014, you purchased the common stock of a company that has reported significant earnings

increases in nearly every quarter since your purchase. The price of the stock increased from $12 a share

at the time of the purchase to a current level of $45. Notwithstanding the success of the company,

competitors are gaining much strength. Further, your analysis indicates that the stock may be over-

priced based on your projection of future earnings growth. Your analysis, however, was the same one

year ago and the earnings have continued to increase. Actions that you might take range from an

outright sale of the stock (and the payment of capital gains tax) to doing nothing and continuing to hold

the shares. You reflect on these choices as well as other actions that could be taken. Describe the

various actions that you might take and their implications.

3 Which of the following securities is likely to be the most liquid according to these data? Explain.

Stock Bid Ask

R $39.43 $39.55

S 13.67 13.77

T 116.02 116.25

4 You purchased shares of Broussard Company using 50 percent margin; you invested a total of $20,000

(buying 1,000 shares at a price of $20 per share) by using $10,000 of your own funds and borrowing

$10,000. Determine your percentage profit or loss under the following situations (ignore borrowing

costs, dividends, and taxes). In addition, what would the percentage profit and loss be in these scenarios

if margin were not used?

a. the stock price rises to $23 a share

b. the stock price rises to $30 a share

c. the stock price falls to $16 a share

d. the stock price falls to $10 a share

6 The Trio Index includes three stocks, Eins, Zwei, and Tri. Their current prices are listed below.

Stock Price at Time (t)

Eins $10

Zwei $20

Tri $40

a. Between now and the next time period, the stock prices of Eins and Zwei increase 10 percent

while Tri increases 20 percent. What is the percentage change in the price-weighted Trio Index?

b. Suppose, instead, that the price of Eins increases 20 percent while Zwei and Tri rise 10 percent.

What is the percentage change in the price-weighted Trio Index? Why does it differ from the

answer to part a?

Fin550 fin560

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Fin550 fin560

4. Currently, the dividend-payout ratio (D/E) for the aggregate market is 60 percent, the required return (k) is 11 percent, and the expected growth rate for dividends (g) is 5 percent.

a. Compute the current earnings multiplier.

b. You expect the D/E payout ratio to decline to 50 percent, but you assume there will be no other changes. What will be the P/E?

c. Starting with the initial conditions, you expect the dividend-payout ratio to be constant, the rate of inflation to increase by 3 percent, and the growth rate to increase by 2 percent. Compute the expected P/E.

d. Starting with the initial conditions, you expect the dividend-payout ratio to be constant, the rate of inflation to decline by 3 percent, and the growth rate to decline by 1 percent. Compute the expected P/E.

7. Given the three EPS estimates in Problem 6, you are also given the following estimates related to the market earnings multiple:

a. Based on the three EPS and P/E estimates, compute the high, low, and consensus intrinsic market value for the S&P Industrials Index in 2013.

b. Assuming that the S&P Industrials Index at the beginning of the year was priced at 2,050, compute your estimated rate of return under the three scenarios from Part a. Assuming your required rate of return is equal to the consensus, how would you weight the S&P Industrials Index in your global portfolio?

8.You are analyzing the U.S. equity market based upon the S&P Industrials Index and using the present value of free cash flow to equity technique. Your inputs are as follows:

a.Assuming that the current value for the S&P Industrials Index is 2,050, would you underweight, overweight, or market weight the U.S. equity market?

b.Assume that there is a 1 percent increase in the rate of inflation—what would be the market’s value, and how would you weight the U.S. market? State your assumptions.

4. Select an industry from Standard and Poor’s Analysts’ Handbook, or some other source of industry data with different demand factors. Evaluate your industry in terms of the five factors that determine an industry’s intensity of competition. Based on this analysis, what are your expectations about the industry’s profitability in the short run (1 or 2 years) and the long run (5 to 10 years)?

5. Using Standard and Poor’s Analysts’ Handbook or another source, plot the latest 10-year history of the operating profit margin for the S&P Industrials Index or another aggregate market series versus an industry of your choice. Is there a positive, negative, or zero correlation?

7. Prepare a table listing the variables that influence the earnings multiplier for your chosen industry and the market index series for the most recent 10 years.

a. Do the average dividend-payout ratios for your industry and the market index differ? How should the dividend payout influence the difference between the multipliers?

b. Based on the fundamental factors, would you expect the risk for this industry to differ from that for the market? In what direction, and why? Calculate the industry beta using monthly data for five years. Based on the fundamental factors and the computed systematic risk, how does this industry’s risk compare to the market? What effect will this difference in risk have on the industry multiplier relative to the market multiplier?

c. Analyze and discuss the different components of growth (retention rate, total asset turnover, total assets/equity, and profit margin) for your chosen industry and a market index during the most recent 10 years. Based on this analysis, how would you expect the growth rate for your industry to compare with the growth rate for the market index? How would this difference in expected growth affect the multiplier?

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Unit 1 Assignment:

The following Course Outcome is assessed in this Assignment:

MT450-1: Examine how marketing strategies influence marketing decisions.

Introduction and instructions: In this Assignment you have the opportunity to demonstrate your understanding of concepts from your reading as applied to a simulation. First read the background concerning the scenario Adaptive Sports Global (ASG) company. Then view the simulation provided all the way through to gain a glimpse of what it might be like to work as a marketing product line manager in a well-funded startup company.

The second simulation will provide details you need to understand to more successfully complete the Assignment. Once you have thoroughly viewed the second simulation at least once, address the required checklist items below to complete the Assignment.

Read Adaptive Sports Global  (ASG) background information needed for this Assignment.Scenario: Adaptive Sports Global

-View the meeting of the marketing director at Adaptive Sports Global (ASG), and the

marketing management team meeting , to begin to develop the marketing strategy and marketing plan.

– View the simulation for details  for the Assignment below.

· Choose one of three product lines listed below for which you want to be responsible. Then respond to all the checklist items.

The first products within each of these three product lines that ASG will introduce to the market in three months (in the colors of red, navy, white, blue, black, green, and grey-unless otherwise stipulated) are:

Product line 1. Winter line:

Ski poles that convert to adjustable shock resistant hiking poles with a push of a button.

Skis that become snowshoes. Retractable length and when a button is pushed, cleats descend.

Ski boots (black or brown) that adapt to sleet, ice, or snow and/or unstable terrain, with retractable cleats; these boots can even be used for golfing.

Snowboards (ultra-aqua; navy; grey with logo) with lightweight retractable legs that become benches.

Product line 2. Spring/Summer/Fall line:

Boat and parasailing sails that adapt to wind, rain, and temperature conditions. They come in sizes for standard craft and in several colors. Parasails also double as tents.

Tennis rackets that convert to racquetball rackets with a collapsible shaft that stays stable under any normal use impact conditions.

Hiking/walking shoes (brown or black) that are waterproof but breathable and elevate when thick mud or rain are detected.

Surf boards (white/blue stripes; blue, white stripes) that have collapsible legs to convert to beach lounges.

Product line 3. Apparel: Hats, helmets, vests, and jackets (male and female lines): Fabrics and materials that adapt to the wearer’s temperature as well as the ambient temperature and that are sustainably made in the United States (US).

Checklist: Based on your analysis of the information provided regarding ASG and the simulation details provided above:

· Describe the company’s core competencies based on the limited information in the scenario.

· Provide a general company SWOT analysis based on the company scenario.

· Explain which of Porter’s three overall marketing strategies from the Learning Activity the company should use, and why.

· Identify your chosen ASG product line.

· Summarize the competition to your chosen product line as found on the Internet.

· Explain the distribution strategy that should be used for this product line. Should ASG consider strategic alliances for your product line? Why or why not?

· Analyze how your chosen marketing strategy (from Porter) shown above impacts what the 4 P’s will be for one (1) of the products from your chosen product line.

Respond in a minimum 350- to 500-word document in Microsoft® Word® in addition to the title and reference pages using APA format and citation style.

ASG_general_backg

round.pdf

Adaptive Sports Global (ASG) Corporation*

This brand new ASG startup company has just hired you on as one of three new

marketing product line managers reporting to the marketing director. Several years in

the planning, the start-up is now becoming operational. The founders are engineers and

managers who are sports enthusiasts that wanted better clothing and gear to pursue

their sports passions. Besides hiring based on specific qualifications for the particular

job, they only hire athletes and weekend sports enthusiasts who use various types of

sporting gear and clothing in their personal lives and can therefore relate to the user.

They allow the first two weeks at the company for intensive training and using the gear

to become thoroughly familiar with the product. Whatever feedback they get from users

they funnel into the production and design to make improvements. All production is

done within the United States (U.S.) The founders want to keep the company relatively

small in staff but with a global market. The headquarters is located outside of Pittsburg

PA. The headquarters building as well as their production facilities (which predominantly

uses robots for actual production work) and large warehouse are Green Seal® and

LEED certified®*(Green Seal; BuidingGreen, 2019). The company is committed to

planting the amount of trees each year to offset their carbon emissions generated from

production. The majority of products are currently sold directly to customers through the company website.

The mission of the company is: We make quality clothes and equipment that we sell to

active people anywhere, that adapt to the terrain and climate in a sustainable manner.

The objectives, according to the executives of ASG, are:

 Create sustainable clothes that adapt to temperature variations and weather

conditions in a sustainable manner.

 Design and produce sports equipment that will adapt to (1) differing terrains and

climates as well as (2) adapt to different sports and (3) provide excellent

performance.

The department has hired you as one of three new marketing product line managers

(you can read the general product manager job duties).

Product line 1. Sports Equipment: Winter sports (skiing, snowboarding, winter

climbing, skating, ice hockey, etc.) and shoes or boots that apply.

Product line 2. Sports Equipment: All other sports: Sailing (and parasailing), surfing,

tennis, golf, rock climbing (and indoor gym/parcourse, etc.) and footwear that fit those

sports.

Product line 3. Apparel: All sports clothing lines, starting with hats, helmets, vests, and

jackets (male and female lines).

All equipment and apparel is either compostable, or can be recycled. All equipment comes with

a free return label when the person has finished with the equipment so that it may be recycled.

corporate structure: 46 employees to date

ASG

For instance, wooden surf boards that are cracked from impact on rocks etc. can be sent back

to ASG. The company then recycles the components to make new surfboards or repairs them

and donates them to third world areas or poorer countries where sports equipment might be

considered unattainable economically.

*Disclaimer: The organization and characters depicted in this exercise are fictional. Any resemblance to real organizations or individuals is purely coincidental. This exercise may include actual companies and

brand names solely for instructional purposes; this exercise is not associated with any such actual company or brand name. All trademarks remain the property of their respective owners.