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Lawrence Sports Simulation
Finance & Accounting
Pages 3 (753 words)
Lawrence Sports Simulation (Add Student’s Name) (Add Tutor’s Name) (Add Date) Lawrence Sports Stimulation Introduction Lawrence Sports is a manufacturer and distributor of sports equipments for games like baseball, football, volleyball, and basketball…
Policy Recommendation Lawrence Sports has created a strategic alliance with Central Bank with intent to receive credit facilities in times of cash deficit. According to this policy, money is automatically transferred from the Central Bank to Lawrence Sports’ account whenever the company experiences a cash deficit. Currently, the company’s line of credit with Central Bank has reached its limit, $1.2 million (cited in University of Phoenix, n.d). Here, the company has to take some strategic decisions to continue its business effectively. The firm’s current difficulties are mainly due to Mayo’s default on outstanding payments for the weeks of March 17-23 and March 24-30. However, it must be noted that Mayo is the Lawrence’s principal customer and hence Lawrence Sports should not take a tough stance on Mayo’s outstanding payments. It is advisable for the company to allow Mayo an extra week for paying 80% of the outstanding payments. Evidently Gartner is the potential supplier of Lawrence Sports as this vendor assists the company to meet its 70% of the raw materials needs. However, Lawrence has a restricted bargaining power over Gartner since Lawrence Sports is not a key customer for Gartner. Hence, it is recommendable for Lawrence to distribute 60% of its outstanding payments for the week of March 24-30 over the weeks of March 31-April 6 and April 7-13; and subsequently, continue the payment mechanism as before. ...
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