Case study 21 new shoe company

strength. At the same time she recognises that marketing effort requires financing and that this was not adequately provided during the period in question.

The production director points out that the company has been able to lower its manufacturing costs substantially through the introduction of new technology into the manufacturing process. However, he points out the accounting practices adopted by the firm distort the true picture. Profitability, in his view, has improved, although this is not truly reflected in the company's management accounts.

The finance director feels that the drop in profitability is attributable to recent acquisitions the firm has made. Ventures into retailing have not been as profitable as had first been supposed. This might to some extent have been reflective of bad timing on behalf of the company, given the current recession, in making such acquisitions.

The managing director points out that there clearly is a problem and that perhaps one should pay particular attention to what competitors are doing and how the firm is responding from a marketing viewpoint.

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