Internal factor Evaluation on Michael Kors Company - Essay Example

Michael Kors Holdings Ltd has currently made the headlines in the best performing stocks in America, catching the attention of the financial analysts and the investors. In addition to its growing market share, the company has recorded high profits and a high stock price. This means that there are various things that the management of the company is doing right, which its competitors are missing. This paper will evaluate the strengths and weaknesses of Michael Kors’ company as part of its internal factor evaluation in relation to the above ratings.

Strengths Michael Kors’ company, a highly profitable company, has high revenue turnover as a result of increased sales volume. According to (Caplinger web), the fashion designer company has increasingly invested in its trendy fashions targeting the high end markets, which have in the recent 10 years translated into high profits for the company. The profitability of the company has been translated into high stock prices that have jumped up to 60% in the current financial year. In comparison to the competitors, the company’s profitability performance is exemplary.

While other companies in the design industry such as the biggest rival coach are making profits, the company’s management has maintained a high profitability trend in the market. Michael Kors has taken the advantage of the fashionable conditions in most parts of the design market to maximize on its profitability levels. The high demand for fashion wear in the North market has made the company pitch tent in the area, strategically placing most of its retail chain shops. Strategically placing its operations in the high end markets with a high demand for the products, the company has tapped into the potential markets and drawn more customers into its shops.

Sales from the region have been high as revealed in the company’s financial reports that indicate a higher performance in comparison to that of the industry. To maximize in its profits, market diversification and production of clothes, Michael Kors has invested $88.2 million to fund its operations. This has translated into high profits for the company, as the current results reveal. Increased investor confidence in the company has subsequently drawn more capital investment into the company.

Profitability ratios of the company can attest to this trend, with the Pre-Tax Margin of 27.98, which is higher than that of the industry which is at 16.35 (Marder web). Financial ratios of the company indicate growth, high profits and increased market share by the company. The company has maintained a constant growth trend in the past 10 years. Recently after going public, the company’s has been tremendous. Against the average sales of the industry, the company has registered incredible growth rates in its recent financial statements.

While the industry’s total sales were at 15.5%, the company registered sales of up to 70.4% in growth (Caplinger web). Michael Kors Company has a wide market share in terms of its customer base. The increasing growth of the company’