The Kroger Company Essay Example | Topics and Well Written Essays - 1500 words

The Kroger Company - Essay Example Although, most of its competitors have experienced negative sales growth in 2010, Kroger Co. has not failed to keep its shareholders satisfied by steady sales growth in the last 29 quarters. Kroger Co. takes pride in its loyal customer base as approximately one-half of US households have a Kroger loyalty card. This has been a result of Customer 1st strategy that Kroger Co. believes in. It has also been popular among shareholders for its consistent dividend payments. In 2010, it distributed $250 million along with maintaining investment-grade credit rating and reducing long-term debt which eventually resulted in capital gains. Profitability ratios are an indicator of a company’s performance over the year. Profitability ratios include operating profit margin, net profit margin, return on asset, and return on equity (Puxty, Dodds & Wilson 1988). Sales increased by 7.1% to $82.2 billion in 2010, which is more than its competitors. Operating profit margin for the year 2010 was 2.65% with operating profits of $2.182 billion. Return on sales, also known as net-profit margin, were impressive in 2010 with reported net earnings of $1.12 billion to get $1.74 earning per diluted share. Net profit margin for the year was 1.36%. Shareholders are also interested in return on assets and equity. Their decisions are influenced by these ratios therefore; it is essential that a company projects better return on the asset it employs and the equity it takes. For Kroger, return on equity is impressive with 21%. Moreover, Kroger has been reducing its long term debt in the past few years which makes the company less risky to benefit shareholders. Therefore, a return of 21% is notable in comparison to the industry. Return on asset has also been sufficient with 6.3%. Speaking of efficiency, Kroger Co. has performed well in this regard. Efficiency ratios judge the ability of a company to earn from its resources in an effective and efficient manner (Besley & Brigham 2008). These ratios include asset turnover ratio, receivable turnover ratio and inventory turnover ratio. Total Asset turnover is impressive for Kroger Co. as sales are about 3.5 times the total assets. This means that with every dollar of asset provided, Kroger generates $3.5 worth of sales from it. Inventory Turnover ratio has also been inspiring with a multiple of 16.55 times. This means that in a matter of 21 days, inventory is converted into sale. A high turnover rate implies that Kroger Co. is facing high sales therefore there is minimal investment tied up in the inventory (Fabozzi, Peterson & Drake 2003). Still efforts need to be made to increase its turnover rate as investment in inventory yields zero return and a company would always refrain from having its capital tied up in such an investment. Receivable turnover is calculated by dividing credit sales from average receivables. This ratio measures the efficiency of a company to collect its receivables. Kroger Co. is extremely efficient in this regard as it collects its receivables in less than four days which is remarkable. Kroger Co. generates sales of $82.2 billion and not more than 1 billion is kept as receivable means a job well done. Liquidity ratios illustrate the company’s ability to pay off obligations in the short term (Shim & Siegel 2008). Current asset ratio and acid-test ratio are observed closely when liquidity is in question. Kroger Co. has not been impressive with its ability to keep liquid assets. Current ratio which is current asset divided by current liabilities is below 1. This means that to pay off each dollar of liability, Kroger do es not have equal amount of liquid assets on hand. Acid test ratio is in a sorry state as well. Inventory constitutes major portion of current

Peter's farmer shop Essay Example | Topics and Well Written Essays - 2000 words

Peter's farmer shop - Essay Example Geography The location of the business is at Yorkshire, West Yorkshire, to be exact. He wants to exploit local culture and appropriate tourist base (Bangs, 2002, 102). Marketing Mix Product Peter at first wants to sell vegetables boxes to his potential customers then he has planned to develop new products that he can use to penetrate farmers markets and especially food festivals where the level of sales might have an incline. These products might be in form of food and drinks. Pricing Having the low price is unprofitable since the client does not care about pricing as a businessman thinks; therefore Peter should have average prices and compete on quality products and services for example transportation services e.t.c. He also should be able to prepare credit policies for potential customers. Promotion The question that Peter is going to ask is how will the word get out to the customers? Peter can use two types of promotion which are personal selling and advertising. Advertising in th e sense that when he takes his products to the farmers market he can put up a stand and use banners to describe and differentiate the types of products he is offering. For example if he is selling fruits and vegetables, he might have pictorial messages that display these goods so that even customers are far from his stand, they can be able to tell the kinds of products that are sold by him. Personal selling comes in handy when customers want to know how these products can be used apart from the mere fact of edibility. He may also use other forms of promotion for example; ‘trade concert’, ‘catalogues’, ‘seller incentives’, ‘advertisement’, ‘network of professionals or friends’ depending on his promotional budget. Place: We know that Peter wants a location that is local to him which is within West Yorkshire. So before he chooses a location for his business he needs to think about what he wants and needs in a location and its effect on clients. He should ask himself the following questions prior to the previous statement. -Is his location important to his customers? If yes, why? Peter should choose a convenient location in terms of distance to the place of business; therefore he should research on what the customers’ needs and wants are, compare it to his business product wise and choose the best location. Ease of accessibility to consumers. -Is it consistent with his image? Image is everything. It distinguishes one business from another. Peter should choose a location that portrays his image and the image of his soon to be business. If the image and the purpose of the business are different, Peter might end up losing important consumers. -Where is the competition located? Near or distant? The best location of competitors for him should be distant. This is to curb poaching of consumers by the competition which is River ford organic farm. The idea here is to retain customers as well as getting new ones. Market Place Customers Peter should be able to identify his target customers, their needs and wants and their geographical locations. He must analyze the end consumer so as to be able to formulate different customer groups which will guide him when he is constructing a demographic profile of them which includes the following:- Age Peter should identify different age groups and what kind of products they prefer. Gender Each gender prefers specific products. It is the work of