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Managing Growth Simulation: How to Manage Working Capital

Autor:   •  October 13, 2015  •  Research Paper  •  1,700 Words (7 Pages)  •  764 Views

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Managing Growth Simulation

Introduction

The complete course has reveled us the great idea to influence our trends and intelligence while analyzing the entire details of Sunflower Nutraceuticals (SNC) company followed with all the decisions of the company which tends to increase their working capital and maximizing the overall organizational growth potentially with respect to time, as we have figured out the data and change in numbers below which reflects the growth annually. Moreover in addition to various details of the SNC firm we have also examined various decisions which took place in each of the phase of SNC’s simulation which has an estimated values to figure out the results, secondly the paper also describes how SNC’s decisions are influenced with respect to their working capital followed with the final step of evaluating the general affects associated with the limited access of financial mix.

Sunflower Nutraceuticals (SNC) Background

No wonder SNC is a privately owned Nutraceuticals company , more over one can say it is a wide distributor which provides all the vital dietary supplements such as herbs for women’s, vitamins, and minerals for all the consumers (mainly women’s), distributors and retailers. (Harvard Business School Publishing, 2012). Once the business was initiated after 2006, SNC expanded their operations and came up with various retail outlets in the nutraceutical industry and moreover has been successful while introducing their own brands of sports drinks, vitamins for teenagers, metabolism- boosting powders, etc and various other products from a same product line which enable to enhance the metabolism system of humans.

Although being potential to grow as one of the major nutraceutical distributors in the, they are still struggling to break even and one more than one occasion have been forced to exceed the company’s credit line ($1,00,000) to finance their payroll and other operational needs. Because of their somewhat restrictive financing options, they are only able to use a small percentage (approx. 10%) to evaluate and invest in new business expansion which resembles great opportunities in other retail markets across the globe.

Phase 1 of SNC’s Simulation (Years 2013-2015)

During the initial phase of the simulation, they presented four major opportunities which could be helpful for their company to maximize their growth, those opportunities includes-

I. Discontinuing their Poorer Selling Nutraceutical Products –since they have more than 100 products, some of those products can be dropped off SNC’s inventory because they are outdated. Reducing or discounting those items will allow SNC to a) reduce its DSI to approximately 3 months, b) cut its EBIT by 50k approximately, c) drop sales to 1mm, and d) create more

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