Lawrence Sports Benchmarking

Dell Computers, Inc. - The managing of Lawrence Sports’ working capital is a delicate balance of short-run operating activities. When the company’s biggest customer, Mayo Stores defaults on a payment it sends the firm’s cash position into a tailspin. Does the company pay its vendors by borrowing money from banks? Do they ask their vendors to wait for payment? Do they ask only some vendors to wait for payment? Do they ask the vendors to renegotiate payment terms? Or does the company do a combination of all these things? Manufacturing companies have to be able to balance inventory needs with the firm’s cash position and that requires a solid cash flow plan and a good understanding of inventory needs. While the current situation at Lawrence means that action differing from the current cash flow plan must be taken, Dell computers provides a good example of reorganizing a cash flow plan to maximize the organization’s cash position. Lawrence can examine this plan and possibly reorganize their cash flow plan so that the plan is less dependent on weekly payments from Mayo stores by possibly having a better understanding of inventory needs.

During the 1990s Dell Computers was considered a strong and smart creator of shareholder value. Dell Computer Corporation’s radical direct sales model turned the PC industry on its head with its hugely successful, yet simple strategy. Dell is not the largest computer company in the world, in fact it is the second largest behind Hewlett-Packard, however during the 1990s it was by far the company with the fastest growth, and it continues to exceed industry standards. “Dell’s 2008 earning projections are currently showing a 21 percent increase this year, compared with just 8 percent for the PC industry as a whole” (Leckey, 2008). “While growth had been the focus and strength of Dell since its founding in 1984, in 1994 the company’s senior executives came to realize that the astounding growth the company was experiencing was...