AutoZone
Case Study Analysis
Executive Summary:
A case brief on AutoZone,Inc is being presented in this article. The paper briefly discusses the history and progress strategy of the company so far. The main idea of the paper is the dilemma faced by a portfolio manager- Mark Johnson- and the wise decision he could make in order to safeguard his client’s portfolio. The paper examines the current position of AutoZone in the market and its growth potential which would help Johnson in making his decision.
At the closure of the paper, recommendations are being presented not only to the portfolio manager but also to the AutoZone. Interestingly, how much of an impact can an interference of a corporate raider have on the growth of a company
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In the short-run share repurchases might look good in order to increase the share price in the market and increasing the Earnings Per Share of the stock. Even though the act of share repurchases might be an elusive move, no doubt that it is a sophisticated move as well. Most of the time management is well aware of its decisions and makes judgments in the best interest of the shareholders. But, AutoZone was pushing its luck by accumulating debt and somehow seemed like the management wasn’t concerned about the credit rating of the company.
Another alternative would be to use the cash to increase number of stores or expansion of its business in Brazil. There is always a first mover advantage that AutoZone could capture in the Brazil market. AutoZone had already captured the market in Mexico, Canada and Puerto Rico.Yet again, autoparts industry seems to have slowed down its number of store in the last year but the distance travelled by light trucks has remained the same while the average age of these vehicles has increased (Appendix - Figure 4 & 5). This means that these vehicles require maintenance in the long run. Also, AutoZone could be the first to capture new markets.
Conventionally, AutoZone could also utilize its cash flow in acquisition transaction. Although, acquiring a budding or established counterpart might increase the cash flow of the firm, additional legal formalities
The organization prides itself on being the first choice for DIY consumers. Making DIY consumers their target audiences as allowed AutoZone to grow to 4,400 retail auto parts stores within the United States and Puerto Rico and an additional 250 locations in Mexico (Parnell, 2014). While the organization is the industry leader, its competitors are also huge corporations and neither of them appear to be slowing down, this includes AutoZone. AutoZone has implemented an internal growth strategy that involves expanding and opening up to 200 more locations per year (Parnell, 2014). While AutoZone has acquired several companies and risen over its competitors, it is important that the organization remain focused on maintaining its #1 spot through internal growth
AutoZone is not immune to the economic downturns in the United States of America. However, AutoZone finds itself in a weird position whereby it experiences high-profit margins during the economic recession and low-profit margins during the economic boom. During economic downturns, you expect companies such as AutoZone to experience hard times during economic downturns. The truth is during economic downturns AutoZone makes profits compared to when there is an economic boom. The reason for this assertion is the fact that during economic downturn most consumers prefer to repair their cars rather than buying new ones as during such times buying a new car is not economical. This situation leads to companies such as AutoZone making profits during economic downturns as most consumers prefer repairing their cars rather than buying new ones.
A company with poor financial ratios and shady recent earnings results that announces a stock repurchase should be looked upon with much more trepidation. The next time you see a stock buyback announcement; take a close look at the company involved before making a final determination of what it may mean for the future of the stock.
As with any company, the AutoZone mission statement outlines their primary goals, objective, their focus and their purpose, while also providing a clearly defined direction for employees and customers. The AutoZone mission statement is "AutoZoners always put customers first! We know our parts and products. Our stores look great! We've got the best merchandise at the right price" (AutoZone, Inc., n.d.). As per company values, AutoZone continues providing the highest quality products available, with an unparalleled quality of customer service. This tactic retains the interest of both customers and stockholders.
If ATC does not make this equipment investment, it has no other real asset investment projects which it is considering. Therefore, an alternative use of the money in the capital budget would be a purely financial investment, such as stock, bonds, short-term CD’s, and so forth.
CarMax (Nasdaq: KMX), was established by Sharp when he took a gander at the $150 billion utilized auto advertise and saw three qualities that persuaded him the Circuit City way to deal with retailing could be joined onto the utilized auto market: to begin with, the supply of utilized autos was plenteous; second, the interest for utilized autos was reliable; and third the administration rehearses utilized inside of the divided business were unsophisticated. Similarly as numbers for CarMax goes, in the second from last quarter it came to make back the initial investment of $0.00 per offer contrasted with $0.31 a year prior and from $0.00 per offer from the past quarter.
I wanted to write about Autozone because I love cars. Ever since I was small, I used to watch the Cars, the movie from Disney, and it made me interested in cars. One day, when I was around 6, my step-dad’s cad broke down and we had to go to AutoZone to get the car repaired. I was intrigued by the person who worked there because there were alot of parts for a car and tools to fix it. Ever since, I wanted to build or even fix a car at Autozone-if I can anyways.
AutoZone employed a growth strategy that grew the company to 200 stores in 5 years. When the firm went public in 1991, AutoZone had grown to nearly 600 stores. The company began to acquire other businesses in 1998, including Chief Auto Parts and Adap’s Auto Palace Stores. At the turn of the century, AutoZone attempted a change in strategy from acquisition to internal growth averaging an additional 150 to 200 stores per year. AutoZone targets the do-it-yourself market and professional repair shops. Advance Auto Parts is AutoZone’s greatest competition holding at number two in the industry. Other competitors include Pep Boys and O’Reilly,
When companies have an interest in partnering, it is prudent for each to conduct a financial analysis–ensuring that both parties are making a sound investment. The purpose of the financial analysis is to scrutinize the profitability and financial stability of a company, while addressing any concerns (Jiambalvo, 2014, p. 535). In the case study, Bob Sherman founder of Mandrake Motorcycle manufacturing made a proposal to Marty “Monk” Fisher, a motorcycle dealer. Fisher proposed that Monk be the sole dealer for his motorcycles in the state of Ohio. Before investing, Mr. Sherman must do a financial analysis on Mandrake Motorcycle to insure that there are no financial concerns. This paper will analyze Mandrakes Motorcycle 's balance sheet, and income statement–calculating the ratios for 2015 and 2014. The calculated ratios will include, return on assets, gross margin percentage, receivables turnover, days’ sales in receivables, inventory turnover, days’ sales in inventory, debt to equity, and times interest earned. In addition, the paper will highlight areas of concern, and discuss what is the best decision for Monk based on the analysis. Finally, the paper will ascertain whether the financial analysis was indicative of future financial issues for Mandrake Motorcycles.
The automotive industry designs, develops, manufactures, markets and sells motor vehicles, and is one of the world’s most important economic divisions by profits. This analysis focuses on the industry, specifically, manufacturers of automobiles. There are five competitors in the StratSim environment: Firm A, B, C, D, and E. Industry sales in the most recent year were 4.3 million units, with expected growth in the next year. Within this industry, there are seven-vehicle classes: Economy, Family, Luxury, Sports, Minivan, Truck, and Utility. There are two new classes with potential – if properly marketed.
I will be comparing both companies General Motors Company and Ford Motor Company for the past three years. We will be able to see all the trends these two automotive manufacturers have and which one may be better to invest in by looking at the last few year’s ratios and percentages. This will give us a better understanding and the knowledge of who maybe the industry leader and who is the follower. These are both major corporations that strive off customer loyalty and both competing on a global scale to make their mark in the one of the top automotive manufacturers in the world. This analysis will give us an understanding of what lies ahead in the future for these two manufacturers.
First, a large share repurchase will significantly increase shareholders’ percentage ownership of BKI. BKI has been under levered for decades. The company acquisitions of several small manufacturers made shareholders’ equity be diluted even more. In other words, shareholders, especially the main shareholders in Blaine’s board, are paying for BKI’s over-liquidity. This share repurchase will not only give the board more flexibility to allot dividends, but will lead to a stable development of BKI’s business in the long run.
The purpose of this essay is to provide a complete analysis of BMW Group. First, some background information about the company will be provided for a better comprehension of this study. Next, BMW will be assessed from a microeconomic point of view: its demand curve, organisational structure, customers, suppliers, strengths, weaknesses and its operating environment. Then, this firm will be reviewed in context of its sector from a macroeconomic perspective and more specifically its market environment, followed by a PEST analysis of other external factors such as GDP, interest rate, cost of raw materials. This study will be further quantified by a ratio analysis in order to evaluate BMW’s financial health. In the end you
A financial analysis of Ford Motor Company’s (Ford) statements will identify their solvency in today’s automobile market. Elements such as liquidity, leverage, profitability, and activity ratios will demonstrate Ford’s financial health and stability. A further assessment of their technological advantages, global strategies, and benchmarking analysis will indicate the future prognosis of this company.
The company understands the risks for working with U.S. auto industry especially during the recession in 2008, so they venture out to produce four new business units to minimize it by looking into investing on early-stage opportunities.