Accent Group Limited Research Paper 2022

Accent Group Limited
Table of Contents

Particulars Page No
Executive Summary 2
Question-1
Introduction
Porter's Five Forces Model
Recommendation
Conclusion
3-9
Question-2 10-13
Question-3 14-17
References 18-19
1

Executive Summary
This paper examines the Financial and Strategic Review on Accent Group. It gives an inside and
out vital examination of the organization's tasks. The outline has been planned to bring a rational
and fair perspective on the organization's essential characteristics and weaknesses and the
implied chances and dangers. The report encourages you detail methodologies that develop the
business by allowing to grasp the company confederates, clients, and contenders better. Porter's
Five Forces Analysis is a vital administration apparatus to examine the industry and explain
fundamental switches of benefit in a provided industry. Accent Limited administrators utilize
Porter Five Forces to understand how the five focused powers impact productivity and build up a
system for improving supply chain management and optimize the working hours.
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Question-1
STRATEGIC MANAGEMENT
INTRODUCTION
Accent Group Limited (some time ago RCG Corporation Limited) is the provincial head in the
retail and dispersion of lifestyle footwear. They have higher than 420 stores crosswise over 10
various retail pennants and discriminating circulation rights for 10 worldwide trademarks across
New Zealand and Australia. Their labels comprise The Athlete's Foot, Merrell, CAT, Hype DC,
Saucony, Skechers, Platypus Shoes, Vans, Palladium, Dr. Martens, Sperry Top-Sider,
Timberland, and Stance.
Its ongoing achievement is on account of cooperation crosswise over numerous specialty units.
That includes an unexpected advanced change in recent months with full inventory network
change driven by Tim Greenstein, General Manager Supply Chain and Technology, and Supply
Chain Manager Mark Rizza. (ltd, 2019)
The Chief Digital Officer, related to the innovation group, have adequately empowered 13 sites
for the business over the most recent three years. Space has been developing and had the option
to start up new stores across New Zealand and Australia, which has likewise presented
drastically to the development.
Their is a huge development in online deals- Accent's FY 18 digital deals are up 131% on FY 17
and up 88%YTD in FY19. They have around 45 to 55 percent of online transactions currently
coming legitimately from the markets, of which the dominant part is empowered. New
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functionalities that includes 'snap and gather,' 'send from the store,' same day conveyance and
interminable walkway, are for the most part currently empowered.
PORTER’S FIVE FORCES ANALYSIS
This part of the report analyses the five forces of Porter’s model.
The porter's 5 forces is a straightforward method to understand where the company base is
perfect in any business situation. The porter's forces likewise support organization to understand
the character of a dominant focused position. The model include bargaining power of buyers,
bargaining power of provider, the threat of new section, threat of substitute and contention
among competitors. ("Porter's Five Forces Example Essay- iWriteEssays," 2019)
Porter's five forces are beneficial for each company. It is a basic pattern; nevertheless, a
compelling device for the company. It considers urgent work in accommodation and the travel
business. By utilizing this device, it determines the position of the business in the market. It
announces the characteristics and shortcomings of the company, which is significant for the
company. They can recognize their weaknesses and venture to perform by practicing the best
choice. The most substantial part of the cordiality market is giving great organizations to the
clients.
I have chipped away at this model with a result of Accent Group and have contemplated the
organization based on that product.
Skechers USA five forces of Porter’s model
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The threat of New Entrants
● The economies of scale are genuinely challenging to achieve in the industry in which
Skechers U S A works. This executes in an uncomplicated manner which gives a cost
preferred position by delivering enormous capacitates. It also makes it costlier for new
entrants.
● The capital prerequisites inside the industry are high, subsequently, creating it hard for
new players to set up organizations as powerful consumptions should be brought about.
Capital consumption is additionally high due to top Research and Development costs.
Bargaining Power of Suppliers
● The number of suppliers in the market where Skechers U S A operates is a great deal
opposed with the purchasers. This indicates the suppliers possess less authority over
costs, and this creates the bargaining power of suppliers ineffective energy.
● These suppliers deliveries are genuinely institutionalized, less marked, and have low
exchanging costs. This inturn makes it more manageable for purchasers like Skechers U
S A to switch suppliers.
Bargaining Power of Buyers
● The amount of suppliers in the industry wherein Skechers U S A operates is quite high
than the number of firms delivering the products. This indicates the buyers have several
firms to study, and therefore, don't have enough power covering costs. This forces the
bargaining power of buyers a more fragile force inside the company.
● The separation inside the market is high, which indicates that the buyers are not ready to
search for optional firms building a particular item. This delay in swapping and makes
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the bargaining power of buyers weaker from inside. ("Skechers U.S.A., Inc. Porter Five
(5) Forces & Industry Analysis [Strategy]", 2019)
The Threat of Substitute Products or Services
● There are quite few substitutes available for the products that are delivered in the
business where Skechers U S A works. This signifies there is no shelter on the most
excellent advantage that firms can earn in the business in which Skechers U S A works.
These determinants make the threat of substitute products a flimsier force inside the
company.
● The substitutes obtainable are of high quality yet are far more costly. Nearly, firms
fulfilling the business where Skechers U S A trades sell at a lower price than substitutes,
with adequate quality.
Rivalry Among Existing Firms
● The number of competitors in the industry where Skechers U S A practices are not much.
This indicates firms in the company won't make moves externally being ignored.
● The lesser competitors have a large piece of the pie. This intends these will component in
vigorous ventures to pick up status and become exhibition pioneers.
RECOMMENDATION
The organization can utilize the economies of scale with the existing resources of the business,
opposing new entrants through its damage preferred situation. The organization can focus on
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separating its outputs. This will assure that buyers contemplate them to be as extraordinary and
don't move efficiently to substitute products that don't present these particular benefits. It can
provide so remarkable powers to its clients by more reliable opinion their requirements through
analytical surveying, and delivering what the client needs. (St, 2019)
Skechers U S A can examine on development to distribute its products from that of distinct
entrants. It can contribute on advancing to construct reliable brand distinguishing proof. Skechers
U S A can concentrate on advancement and disconnection to lure in more buyers. Item
embarkation and characteristics of products are essential to buyers inside the company, and
Skechers U S A can express in an enormous number of customers by examining on these.
CONCLUSION
By utilizing the information of five forces investigation, essential organizers will probably see
how various constituents under each one of the five forces impact the profitability of the
business. A more grounded impact means lower profitability, and a more fragile power implies
higher profitability. In light of this, a consideration of the enterprise' profitability can be made
and employed in essential arrangement. Subsequently, with the complete examination, the
gathering is working rigorously on its money related and social perspectives. Some of the
financial and non-financial parameters for the success of the analysis, as mentioned above, are
listed below:
● Return On Capital Employed
Accent Group is somewhat very high with its capital utilized, and if this rate proceeds into the
future, financial specialist capital will most likely compound after some time. This has colossal
potential development. (WIRE, 2019)
● Inventory Management
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Accent Group is next propelling same-day conveyance and afterward 3-hour conveyance. That
won't merely be from a distribution center, and it will be of all of the storehouses the nation over.
This implies they will have around 80-90% inclusion of the customer showcase and have the
option to get an item to them inside three hours the nation over.
● Advanced Transformation
Accent gathering had its first web-based business execution five years back. The reaction was
very high. Inside a couple of months from that point onward, however, being on the web turned
into the most significant issue in the business to get understood and they sent a site for them.
● Capital Structure
The Debt to Equity proportion for Skechers is exceptionally high since the previous five years...
The reasonable development rate (SGR), gives off an impression of being leveling off at the 20%
imprint after last year's development. This implies Skechers is well inside their way to keep up a
10-15% development into the not so distant future. ("Skechers Financial Statement Analysis",
2019)
● Free Cash Flow model.
This model uses the rule that costs are the present estimation of all future cash flows. The free
cash flowed from Skechers to discover the market estimation of benefits and subtracted the
liabilities to determine the market estimation of equity. Most by far of costs seen utilizing this
model demonstrates Skechers as undervalued. Subsequently, this is an incredible breadth for the
organization to increment in market cost and appreciate immense returns.
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Question 2
Product Mix and Tactical Decisions
Answer-1
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Particular Logo Hoodie
Waterproof
Pullover
Jacket Bomber Jacket
Snowdown
Waterproof
Jacket
Annual demand 10,000 7,500 5,000 4,000
Selling price per unit $120.00 $200.00 $230.00 $300.00
Direct materials per unit $20.00 $35.00 $35.00 $40.00
Direct labour per unit $20.00 $25.00 $28.00 $30.00
Variable overhead per unit $15.00 $18.75 $21.00 $22.50
Total variable costs $55.00 $78.75 $84.00 $92.50
Contribution per unit $65.00 $121.25 $146.00 $207.50
Fixed overhead per unit $7.50 $9.38 $10.50 $11.25
Net profit per unit $57.50 $111.87 $135.50 $196.25
Machine hrs 0.3 0.55 0.7 0.8
In case the machine hours are unlimited, only Snowdown Waterproof Jackets should be
considered, as it gives the highest profit to the company. As compared to machine hours Bomber
Jacket will be using almost the same amount of machine hours but will be contributing 45% less
profit than Snowdown Jacket.
In case the machine hours are limited, contribution will be the deciding factor. Hence,
Snowdown Waterproof Jackets should be the first preference since it has the highest amount of
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contribution among all others. ("Accent Group responds to share irregularities - Inside Retail",
2019)
Answer-2
IF ONLY 12,000 MACHINE HOURS ARE AVAILABLE
Particular Logo Hoodie
Waterproof
Pullover
Jacket
Bomber
Jacket
Snowdown
Waterproof
Jacket
Annual demand 10,000 7,500 5,000 4,000
Contribution per unit $65.00 $121.25 $146.00 $207.50
Given the fact that the highest contribution/unit annually and also the highest contribution per
unit, as well as the highest fixed cost per unit are all allocated to the same type of jacket
(Snowdown Waterproof Jacket), if the number of machine hours are extremely short (12,000 in
the given case), it can be safely assumed that only the demand for these jacklets will be fulfilled.
Hence, jackets that can be manufactured = 4,000 units.
Answer-3
Calculation of Fixed cost as per machine hours
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Total Machine
hours 2.35 26,500 62275
Total additional FC 1276.595745 2340.425532 2978.723404 3404.255319
Additional FC/Unit 0.1276595745 0.3120567376 0.5957446809 0.8510638298
New FC $7.63 $9.69 $11.10 $12.10
Particular Logo Hoodie
Waterproof
Pullover
Jacket
Bomber
Jacket
Snowdown
Waterproof
Jacket
Annual demand 10,000 7,500 5,000 4,000
Selling price per unit $120.00 $200.00 $230.00 $300.00
Direct materials per unit $20.00 $35.00 $35.00 $40.00
Direct labour per unit $18.00 $22.50 $25.20 $27.00
Variable overhead per unit $15.00 $18.75 $21.00 $22.50
Total variable costs $53.00 $76.25 $81.20 $89.50
Contribution per unit $67.00 $123.75 $148.80 $210.50
Fixed overhead per unit $7.63 $9.69 $11.10 $12.10
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Net profit per unit $59.37 $114.06 $137.70 $198.40
Machine hrs 0.3 0.55 0.7 0.8
Annual Machine Hours 3000 4125 3500 3200
Financial factors to be considered:
● The cost of existing and new machine, as that would still need to be ensured in running
condition so that every year.
● Interest costs, and working capital costs should also be revised.
Non-Financial consideration:
● Handling all the labour disputes due to non-operation of factory, and hence labour
becoming unemployed. Managing the quality of the jacklets that get manufactured with
new machine. (Rajeck & Rajeck, 2019)
● Managing post sales service part from the corporate infrastructure setup itself.
● Synergical benefits as the acceptance of new machine by the labourers.
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Question-3
Particulars
Street
Cleat Goldie
Side
Street Aura Hilites Moda
Selling price per unit 125 120 120 80 125 110
Direct materials per
unit 30 28 25 20 32 32
Direct labour per unit 15 14 13.5 10 16 11.5
Variable overhead per
unit 9 8.4 8.1 6 9.6 6.9
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Fixed overhead per
unit 4.5 4.2 4.05 3 4.8 3.45
Total Cost 58.5 54.6 50.65 39 62.4 53.85
Profit 66.5 65.4 69.35 41 62.6 56.15
Activity
Street
Cleat Goldie
Side
Street Aura Hilites Moda
Available
Hours
Sole Preparation 0.25 0.25 0.25 0.15 0.25 0.25 1150
Pattern Prep 0.188 0.188 0.188 0.113 0.188 0.188 900
Stiching 0.35 0.375 0.375 0.225 0.375 0.375 1700
Final Assembly 0.3 0.3 0.3 0.18 0.3 0.3 1500
Inspection &
Packaging 0.125 0.125 0.125 0.075 0.125 0.125 650
Let a be the number of Street Cleat manufactured
Let b be the number of Goldie manufactured
Let c be the number of Side Street manufactured
Let d be the number of Aura manufactured
Let e be the number of Hilites manufactured
Let f be the number of Moda manufactured
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So, the Profit function is
Z = 66.5a+65.4b+69.35c+41d+62.6e+56.15f
Subject to constraints
1) Maximum hrs available per unit of sole preparation process
0.25a+0.25b+0.25c+0.15d+0.25e+0.25f<= 1150
2) Maximum hrs available per unit of pattern Preparation process
0.188a+0.188b+0.188c+0.113d+0.188e+0.188f<= 900
3) Maximum hrs available per unit of stitching process
0.35a+0.375b+0.375c+0.225d+0.375e+0.375f<= 1700
4) Maximum hrs available per unit of final assembly process
0.3a+0.3b+0.3c+0.18d+0.3e+0.3f<= 1500
5) Maximum hrs available per unit of final assembly process
0.125a+0.125b+0.125c+0.075d+0.125e+0.125f<= 650
6) Non negative
a,b,c,d,e,f>=0
7) Integer values
a,b,c,d,e,f are integer only
Answer-1
As per the excel solver the following tables shows the production quantity appropriate to have
maximum contribution margin. The machine time as per the maximum contribution margin is
also mentioned.
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If we change our aspect to profit maximisation then too the result will be the same as increasing
the contribution margin will only yield maximum profits. Hence the production quantity remains
same.
Maximisation
Table
Particulars
Street
Cleat Goldie
Side
Street Aura Hilites Moda
Maximisa
tion
Profit 66.5 65.4 69.35 41 62.6 56.15
Production 1000 0 3600 0 0 0 316160
Machine Time (Hrs)
Subject to Constraints Used Available
Sole Preparation 1150 <= 1150
Pattern Prep 864.8 <= 900
Stiching 1700 <= 1700
Final Assembly 1380 <= 1500
Inspection & Packaging 575 <= 650
Answer-2
The best possible ways to increase the contribution margin is given below:
● Velocity
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The faster turnaround time (from order to delivery), the lower is the overhead cost per
unit produced. This, in turn, means improved profit margins. The accent is proposing a
model that has around 80-90% inclusion of the customer showcase and have the option to
get an item to them inside three hours the nation over.
● Cut low-margin
Handling clients, products, or services, and invest the saved time and money in higher-
producing parts of your business. This proposes that one has accurate and timely
reporting that shows which clients, products, or services produce what margins. The
digitalization by the Accent group will work wonders in this field and will help to cut
costs with the stakeholders.
● Scrap and spoilage management
Handling the products and team is necessary. For example, buying leads that your sales
team can't follow up. Investing in marketing that doesn't work. It is better to come up
with better strategies. Skechers are re-using the torn shoes so that they can save money on
materials. This will reduce the production cost by 30%.
References
Porter's Five Forces Example Essay - iWriteEssays. (2019). Retrieved 22 August 2019, from
https://www.iwriteessays.com/samples/porter-s-five-forces-example-essay
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ltd, R. (2019). Skechers USA Inc (SKX) - Financial and Strategic SWOT Analysis Review.
Retrieved 22 August 2019, from
https://www.researchandmarkets.com/reports/1495479/skechers_usa_inc_skx_financial_and_stra
tegic
Skechers U.S.A., Inc. Porter Five (5) Forces & Industry Analysis [Strategy]. (2019).
Retrieved 22 August 2019, from http://fernfortuniversity.com/term-papers/porter5/analysis/824-
skechers-u-s-a---inc-.php
WIRE, B. (2019). SKECHERS Announces Record Full Year 2018 Sales of $4.64 Billion.
Retrieved 22 August 2019, from
https://www.businesswire.com/news/home/20190207005845/en/SKECHERS-Announces-
Record-Full-Year-2018-Sales
Skechers Financial Statement Analysis. (2019). Retrieved 22 August 2019, from
https://www.slideshare.net/AlexanderAppugliese/skechers-financial-statement-analysis-
43783581
Accent Group responds to share irregularities - Inside Retail. (2019). Retrieved 22 August
2019, from https://www.insideretail.com.au/news/accent-group-responds-to-share-irregularities-
201807
St, S. (2019). Have You Considered This Before Investing In Accent Group Limited
(ASX:AX1)?. Retrieved 22 August 2019, from
https://simplywall.st/stocks/au/retail/asx-ax1/accent-group-shares/news/have-you-considered-
this-before-investing-in-accent-group-limited-asxax1/
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Rajeck, J., & Rajeck, J. (2019). The digital transformation of Accent Group: A retail case
study (part 1) – Econsultancy. Retrieved 22 August 2019, from https://econsultancy.com/the-
digital-transformation-of-accent-group-a-retail-case-study-part-/
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(ASX:AX1)?. Retrieved 22 August 2019, from
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this-before-investing-in-accent-group-limited-asxax1/
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