The Masri Toys Company Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

I would like to respond to the case study which I have read of the Masri Toys Company, the case is about performance and valuation of the business that is engaged in creating, designing and distributing children toys and books to retail firms, which is widespread across the entire region.

I have recognized that the main character of the case is Samir Masri who has taken over his father’s business in early 2008 after the death of his father. After the business was taken over by Samir Masri, the industry has grown in the fiscal years 2009 and 2010. The main problem I have analyzed, in this case, is that despite the growth in the industry, there is no growth or progress in the Masri Toys Company. Samir Masri is worried that as to what had happened that in spite of growth in the industry, his company was unable to grow.

Samir is also worried because the operating profit margins have been decreased from 10% to 6%, and he is off the view that if this trend is continued, then the company would plunge into losses and recession. He has also considered selling his business because of the decreasing profitability of the company.

To assist him in the affairs of the business, he has hired Nader Mansour as the general manager of the company. Nader Mansour has an extensive experience in sales and marketing of foreign toys. He analyzed the whole situation of the company as well as he closely considered the decreasing profitability of the company and he told Samir that if we could control costs as well as focus on volumes of sales we could surely enhance the profitability of the company.

It seems that Nader was very determined in his concern, as he had closely analyzed the records of operating and sales department and found that the company has performed really poor in penetrating other markets.

According to my observation understanding the possible reasons of the decreased profitability of the company is that the company is unable to make its operation cost effective, the company has no proper system of cost controlling as well as the company does not make any strategies to control costs. In my opinion, the company should make operative strategies to control cost, as well as the company should also implement efficient systems that can control the cost.

I had also observed that the company is not focusing on its profitable products as well as the company is not bringing innovation in its products that might be the reason of under profitability of the company. As per my opinion, the company should bring innovation in its products as well as the company should revive older but potentially profitable products.

In Exhibit 4, I have made calculations which show bench marking of the company with its three competitors. I have analyzed that the period of receivables and payables is inconsistent with the industry as well as the gap between the receivables and the payables is also greater than the average time in the industry. In my view, the company should maintain its collection and payment period by the average period of the industry to avoid liquidity and cash flow problems.

Moreover, I have also identified that the inventory turnover ratio is significantly less than the average inventory turnover ratio in the industry. In my opinion, the company should enhance its inventory turnover ratio to make huge sales as well as enhance the overall profitability of the company.

The pretax operating margin ratio of the company, as I have calculated in Exhibit 4, is comparatively high than its competitors that I think beneficial in the interest of the company. In my view, this will attract the investors to invest in the company because the company has high operating profit margin than any other company in the industry, which implies that the company has the potential to give greater returns than any of its competitors in the industry.

The Masri Toys Company Case Solution

Moreover, as per my calculation, the current ratio of the company is low than the other players in the industry. In my opinion, the company should consider taking some steps to enhance its current ratio to compete strongly in the industry............................

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