High Performance Tire Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Weaknesses

HPT’s accounting system is not a good enough system for maintaining its accounting records which can cause problems in future if that data can be extracted for using in different report preparations. In addition, the absence of customer feedback mechanism and employee appraisal process have let these issue unidentified. Meanwhile, unskilled and untrained work force is providing lower level and bad quality service which is harming HPT’s brand image and in addition to this poor quality tire with no brand name has badly damaged the public image. However, William Wallace’s poor management skills have led the business to the declining edge and the business has hardly been able to meet its expenses. Moreover, long waiting hours irritates customers and pre-appointment requirement also discourage customer from using HPT’s service and workforce aggressive sales approach discourage the customers for revisits. However, HPT’s outlets are underutilized which undermines the efficiency of it employed capital.

Opportunities

HPT can negotiate with suppliers in order to obtain inventories at competitive prices which help control its cost of sales, meanwhile, improvement in service quality and deletion of pre-appointment policy will attract more customers and during long waiting hours customer can be served with beverages or entertainment facilities in order to engage them in activities so they don’t feel the waiting time. Moreover, HPT can hire professional employees in order to improve its service quality, in addition to this, improve credit term for business customers in favor of HPT will help in order to manage working capital and implementation of better quality accounting system will improve the data management and information recording will be improved.

Threats

HPT has been taken to courts by its customer and HPT has lost those law suits which have damaged the public image and its brand awareness has declined due to law suits. Meanwhile, competitor’s high quality products and improved service quality coupled with no requirement of pre-appointment are threats for HPT because it will slice the existing market share of HPT. Moreover, HPT’s sales of poor quality tires might lead to some legal implication which will further damage its public image and declining customer loyalty can lead to further loss of customer base. However, Jane Wallace is well experienced but she is quite old aged women who might not be able to bear the stress of business problems and she might encounter some health issues, meanwhile, banks are not willing to continue with the provision of credit facility which will expose HPT to the problems of liquidity and fund shortages, meanwhile, its gearing has also reached to high levels. Moreover, William Wallace’s extensive drawings for personal luxuries will impact the profitability of business operations.

Ratio Analysis

Liquidity

HPTs liquidity ratios are well below the industry average ratios, which means HPT can found itself in liquidity position because no only its liquefy ratio are poor but they are also declining year by year.

Working Capital Ratios

HPT takes more days to sell its inventory in comparison to industry’s average days, which means that HPT has not been able to manage its inventory and in addition to this debtor’s collection period has shorten by more than 50% in comparison to industry average collection days which means HPT is offering more favorable credit terms in order to collect its creditors and is losing its revenues through offering credit terms. Meanwhile, trade payable period is higher than the industry average payable days which show that HPT has been delaying the payments of suppliers in order to finance its working capital which leads to unsatisfied suppliers and in long run this extended payable period will deteriorate HPT’s relationship with suppliers. However, HPT’s working capital cycle consists of 69 days in comparison to industry’s working capital cycle of 75 days which means HPT’s takes more days to complete its working capital cycle.

Asset Utilization Ratios

HPT is generating net income of 1.34 times of its fixed assets whereas industry ratio is 3.19 times which means that HPT’s fixed assets are underutilized and invested capital is not being efficiently used. Moreover, total asset turnover ratio is also about 50% below the industry average ratio again the assets are not being used efficiently in order to generate net income........................................

This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.