Running head: RUBBERSOLE BUSINESS PLAN 1

RubberSole Business Plan

Name

Institution Affiliation
RUBBERSOLE BUSINESS PLAN 2

RubberSole Business Plan

Introduction

RubberSole is a national shoe retailer with more than 100 chains across the United

Kingdom and active online presence. Particularly, the company has shops in the city centers,

rails stations, and airports. The company has undergone significant expansion in the past year

which has led to open two stores per year. RubberSole deals with adult female footwear, adult

male footwear, children shoes, and accessories. They rely on constant innovation and product

design development to maintain market share in a very competitive market. The report will

recommend a strategy for RubberSole based on the assessment of the competitive environment,

analysis of the market trend, evaluation of the company’s financial position, an assessment of the

alternative and an analysis of the risks. From this analysis, the leadership of RubberSole should

be able to make informed decisions promoting further growth of their company and increasing

the company’s financial health.

Market Analysis

Porter's Five Forces

The framework of pure competition suggests that the risk-adjusted rates of return should

be consistent across markets and the companies. However, various economists have established

that different markets can sustain different degrees of profitability based on the structure of the

market (Thompson, Peteraf, Gamble, & Strickland, 2016.). Michael Porter depicts a model that

outlines the influence of the market by five forces. The model is useful in developing an edge

over the competitors as well as understanding the market context in which RubberSole functions.
RUBBERSOLE BUSINESS PLAN 3

Supplier Power

A producer company needs raw materials such as supplies, labor, and components which

results in the relationship between suppliers and the buyer as well as between the industry and

the firm that generate the product. When the suppliers are powerful, they can have an influence

on the producing industry such as selling the products are increased price or extracting some

profits from the industry (Thompson et al. 2016). Rubbersole’s operations source stock of

branded footwear products from third parties overseas manufacturers from Portugal, China,

Brazil, Vietnam, Bangladesh, and India. Resultantly, the company does not rely on only one

supplier which makes it have control over the suppliers. Specifically, this approach reduces the

suppliers’ bargaining power which makes supplier power to be low.

Buyer Power

A competitive industry with high prices and high downsizing of firms has a critical role

in the current economy. Customers are propelled to cut back on their expenditure with makes

them focus on cheap quality products (Thompson et al. 2016). Specifically, Rubbersole sales its

products at a lower price than its competitors which makes more customers focus on their

products to gain value for the money. Resultantly, customers have high buying power since the

company has lower-priced products than its competitors. According to the Five Forces analysis,

customers define the competitiveness of the business. In RubberSole’s case, the industry

environment and the business competitiveness contribute to the customers’ bargaining power.

Besides the low switching cost which makes it easy for the customers to buy various shoes, the

limited consumer size limits the individual forces on the firm (RubberSole, n.d).
RUBBERSOLE BUSINESS PLAN 4

Competitive Rivalry

In the classical framework, the competition among the rival companies propel the profits

to zero. However, competition is never perfect and the companies in the market are complex

passive price takers (Thompson et al. 2016). Resultantly, firms in the market strive for a

competitive advantage over their rivals. Specifically, competition defines how RubberSole

sustains its share of the footwear market in the United Kingdom. Based on the Five Force

assessment, the competition impacts the market setting as well as the performance of

RubberSole. The Five Force depicts a high external force that generates a significant force of

competitive rivalry in the case of RubberSole. The declined rate of market growth is significantly

due to the company’s concentration in one market position. In fact, this condition generates

pressure on RubberSole as the company competes for the UK market with other international as

well as locally based firms. Besides, international firms that have established stores in the United

Kingdom are aggressive in competing for market shares with RubberSole. Based on the factors

of the Five Force assessment, these external factors that generate significant competition requires

RubberSole to consider market expansion and product development to guarantee a competitive

edge and growth share in the footwear industry.

Threat of Substitution

According to the Five Forces assessment, substitute product comes from other industries.

Specifically, the threat of substitution exists when the demands of a product are affected by the

price alteration of the substitute product (Thompson et al. 2016). In fact, substitutes have a threat

to RubberSole’s performance as the main dealer in footwear products in the United Kingdom.

The existence of substitute causes a significant force against RubberSole since the buyers have a

various alternative to RubberSole’s products. Resultantly, the customer has a high chance of
RUBBERSOLE BUSINESS PLAN 5

considering substitutes because of the high performance of the substitutes when compared to

RubberSole’s shoes and apparel.

Threats of New Entry

Both the threats of the existing companies as well as the possibility that new companies

may enter the market effects competition. Theoretically, any company should be entered and

exist an industry freely (Thompson et al. 2016). When there exist free entry and exist, the profits

are expected to be nominal. However, the market entails traits that safeguard the high-profit

margins of companies and limit more rivals from entering the industry. RuberSole has the most

cost efficiently degree of production where the unit cost of production as at minimal. The

existence of the minimum efficient scale develops a barrier to entry. Specifically, this prevents

the entry of start-up and small companies.

PESTEL for RubberSole

Political Factors

United Kingdom approach to leave the EU in 2016 was projected to cause political

uncertainty and upheaval. Specifically, the most regions in the UK experienced political turmoil

with David Cameron, the British Prime Minister resigning afterward and most of the nations in

EU seeking to protect their interest in EU (Douglas & Gross, 2016). Specifically, this caused

uncertainty to international business who had operations in the UK. However, RubberSole

benefited from the weak pound which fell against the Euro since their operations were only

based in the UK. In fact, this approach causes some companies such as Primark to have

uncertainty in the UK business environment and financial market. Particularly, the threat of

Britain leaving EU had an adverse transactional effect on the profit margin of international

companies trading in the UK (Douglas & Gross, 2016).

RUBBERSOLE BUSINESS PLAN 6

Economic Factors

UK is one of the established players in the shoe industry and among the strongest

economies in the European Union with sixth greatest GDP per capita in the context of

purchasing power (Datamonitor, 2010). The increase in value-added tax from 17.5% to 20%

(2010-2011) propelled retailers to increase prices and made the consumer be careful when

buying products (Government of UK, n.d). The increase in food prices, as well as the austerity

measures, have threatened the disposable income and increase the competition in the UK.

Furthermore, the pound currency has been depreciating against the Euro in recent times and it

has been projected to increase the cost of importation (FOX News, n.d). Since 2007, there has

been a decrease in the inflation rate which had a significant impact on the importation

competitiveness.

Social Factors

The most social trend that most retailing establishment in UK face is the rising obesity

and an aging population. National Health Service (NHS) terms the UK as the “fat man of

Europe” with nearly 65% of the British men and 54% of the women being overweight or obese

((NHS, 2015). It has been demonstrated that most obese women shoppers avoid shopping at

specific stores because of the lack of extra sizes and ranges. In fact, this is depicted by some

retailers such as the Topshop and Zara who do not have stock plus size ranges (FOX News, n.d).

However, the increasing incidence of obesity avail a significant gap in the market opportunity for

RubberSole to cater for plus size consumers. With nearly 50% of the UK population projected to

be obese by 2050, RuberSole should consider investing in plus size footwear.

The existing trend depicts that the young and middle-aged generation (23-40 years) enjoy

changing their footwear on a regular basis based on the existing fashion. Besides, the consumer
RUBBERSOLE BUSINESS PLAN 7

behavior has been transitioning towards low-end of the market. While the mid-market products

decline in 2010, the private label products appeared to perform well. RubberSole present a high

growth as the company suits British ladies who enjoy purchasing “grab and go” such as sandals

and flats (RubberSole, n.d). However, UK expects to have a significant increase of the people

above the age of 50 by 2019 due to better health and lifestyle. In fact, the number of over 65

years old accounts for almost 30% of the UK population (FOX News, n.d). Statistics reveal that

the aging population has a significant relation to business opportunities as pension aged

consumer have sufficient income as they are employed full time for long and earn higher

disposable income than the young age. Surprisingly, 64% of people above the age of 50 buy

shoes online which depicts online shopping as a significant trend and opportunity (FOX News,

n.d).

Technological Factors

The increasing progression and development of e-commerce are consistently opening up

more competition for companies in the UK footwear retail as evidence with the uprising of

online pure-plays such as the Boohoo, Amazon, and Asos (Sustainable Business Report, n.d.)

These new distribution channels are opening competitive spaces because of their relative ease

and minimum cost of operation. Generally, the competition is fierce among the big companies

which have strong positions. Being a mid-market retailer, RubberSole will struggle with the

fierce competition due to the tendency of the consumer to buy international products.

RubberSole with its focus on website shopping causes a competition for international firms

although it provides casual and conventional designs.

Environmental Factors
RUBBERSOLE BUSINESS PLAN 8

The emerging trends that affect the UK footwear market entail the increasing

environmentally and ethically concern consumers who consistently demand companies to adopt

practices such as the use of recycled products and paper packaging. Rubbersole has already

launched products that environmentally friendly. The UK government has also pressured many

retailers to have a proper waste disposal.

Legal Factors

One of the most legal factor impacting the footwear market in the UK is the inclusion of

the new Workplace Pension law that propels companies to contribute 3% to their staff’s

workplace pension for eligible British employees.

Strategic Alternatives

As a national established firm, RubberSole could use several strategies to promote

success and increase the bottom line. One of the strategies entails outsourcing from well-

established international companies. The footwear industry in the UK is fairly mature and a

downward fall in the size of the market is projected in the future. However, the decline rate is

likely to be slow and thus present an opportunity for RubberSole to restructure and adapt to the

UK environment. Besides, the changes in fashion are faster and more ad hoc through the

influence of celebrities and media on shoes which implies that the producers have to adapt to a

rapid turnover in shoe styles. Resultantly, outsourcing has increasingly taken place in a way that

the producers supply small quantities and ensure a time to market. Specifically, outsourcing has

been an ongoing trend for years. For instance, footwear companies such as Nike have relocated

some of their production to UK which provides the retailers in the UK an opportunity to grade up

and stay competitive. In order for RubberSole to sustain competition in the UK and share some
RUBBERSOLE BUSINESS PLAN 9

of its cost, it has to join with designers, colleagues and trade associates which is more effective

than operating alone.

Another approach is to focus on the rising obesity and an aging population. NHS (2015)

terms the UK as the “fat man of Europe” with nearly 65% of the British men and 54% of the

women being overweight or obese. In 2015, the prevalence of diabetes in the UK was estimated

to be in the region of between 4.6% and 6.0%, representing about 3.2 million people (NHS,

2015). This is likely to rise over time, to an estimated 5 million by 2025. The increasing

incidence of obesity avail a significant gap in the market opportunity for RubberSole to cater for

plus size consumers. With nearly 50% of the UK population projected to be obese by 2050,

RuberSole should consider investing in plus size footwear. The number of over 65 years old

accounts for almost 30% of the UK population. Statistics reveal that the aging population has a

significant relation to business opportunities as pension aged consumer have sufficient income as

they are employed full time for long and earn higher disposable income than the young age.

Surprisingly, 64% of people above the age of 50 buy shoes online which depicts online shopping

as a significant trend and opportunity.

Finally, an expansion into the Russian market will benefit RubberSole. Russia is one of

the fast-growing economies in Europe demonstrated by the 2018 World Cup and it is

transitioning towards more market based as well as international mix economy through the

facilitation of new business entrance (Euromonitor International, 2016). Although the recent

events involving Russia and Ukraine had a strong effect on foreign business, the nation imported

nearly USD$ 3 million of footwear. In 2015, the Russian footwear market grew 12% up to

USD$12 billion (APICCAPS, 2015). In social terms, the income distribution among the

population is quite uneven which makes the difference between low and high-income families
RUBBERSOLE BUSINESS PLAN 10

quite significant. However, foreign products are often socially perceived as quality products and

people are willing to pay more for them, in order to guarantee the quality and durability.

Strategic Choice

The most conservative scenario for RubberSole is a consistent decline in sales volume.

Based on the company’s participation in a competitive market that has limited barriers of the

entrance, the changing trends in fashion as well as technological improvement, the revenue has

declined in website use, male adult product, accessories and female adult range. However, there

is a revenue growth for the children products at 26%. The increase in revenue and growth rate

among children product is an extension of historical trends and RubberSole’s ability to use the

increase in assets to increase ROE and ROA.

A strategic shift to enter into the Russian market appears to an excellent approach for

RubberSole to compensate to the sales decline and make business growth competitive

environment in the future. RubberSole can maximize its strength and opportunities as well as

minimize its weaknesses and threats in its approach to enter the Russian market. The company

should increase revenues by penetrating the Russian market and exploring its potential by using

the best know-how in shoes, its inherent quality, and brand. The use of low fixed costs can

rapidly expand the production and create economies of scale by ordering more from the suppliers

and achieving a lower price. When deciding to enter the Russian market, RubberSole should

choose to supply only the footwear, disregarding the uniforms and accessories segments, in order

to avoid competition on fields with poor competitive advantage. This will also diminish the tax

impact which will be charged on only one category of product. This could be a pilot strategy in

order to understand whether the market is receptive to additional product categories. Finally, the

company should make an extra effort in the customization field and start by offering the product
RUBBERSOLE BUSINESS PLAN 11

in the B2C segment, in order to take advantage of the willingness to spend more for comfort

footwear. This strategy will overcome the low-cost product dominance competing in quality and

avoid the bargaining power of B2C clients by presenting a new product which fulfills their

needs.

Key performance indicators (KPI)

For RubberSole to be successful, there is need to focus on Key Performance Indicators

and their effect on the supply chain. One aspect of Key Performance indication is Return on

Equity. Particularly, this is the amount of net income returned as a percentage of shareholder’s

equity. ROE is popularly used to connect shareholders’ equity (balance sheet) to income

statement (net profit/loss). Besides representing the end outcome of structured financial ratio

assessment, REO has a contribution towards it popularity among financial analysts and

shareholders (Stowe, Robinson, Pinto, & McLeavy, 2002). The approach to calculate ROE is net

income divided by equity or profit margin × Total Asset Turnover × Financial leverage (Jang &

Tang, 2009). The profit margins present information regarding the ability of the company to

produce funds internally. A company that has poor margin is likely to be distressed while

improvement in the profit margin demonstrates a likely reduction in production cost factors as

well as the inventory costs or an increase in the price of the company’s product. Although it is

important to have high profit margin, the return earned by stockholders is affected by the stock

price. The asset turnover ratio provides knowledge regarding the quantity of sales produced for

every pound’s worth of assets. When the assets turnover ratio is low, it implies the increase in

productivity from the asset base. As such, a growth can happen due to high efficiency in

operation or sales increase which implies an improvement in the market condition for the

company’s products. Financial leverage signifies the company’s long-term debt levels. A high
RUBBERSOLE BUSINESS PLAN 12

leverage, demonstrated through past change in the percentage of total long-term debt to average

total assets can either be a negative or positive indication to the investors (Jang & Tang, 2009).

However, through the increase of external capital, a company that is in financial distress is likely

to be unable to produce enough internal funds. The product of profit margin and total assets

turnover present the return on assets.

Another approach to assess a firm’s supply chain efficiency is through different formulas

regarding inventory. One way to judge a company’s supply chain efficiency is through

inventory turnover. Inventory turnover is how fast the company can turn over its inventory over a

one year period. If a company has a HIGH inventory turnover rate, this means the company has

low inventory, which could be good in a way because the company would spend less on storage

that would include rent, utilities and other costs (Jang & Tang, 2009). An item that only turns

over once in a year, has a lot higher carrying cost than an item that can be turned over several

times during the same period. High inventory turnover also is an indicator of strong sales.

Different industries will have very different turnover rates. For example, since RubberSole is in

footwear/apparel, the turnover rate needs to be higher due to fashions changing constantly. In

contrast, a car dealership would have quite a bit lower turnover rate because cars move a lot

slower than fashion items. However, a company does not want such a high turnover rate that

could lead to inadequate inventory to cover any future orders. A low inventory turnover may be

due to limited marketing campaigns and overstock. RubberSole’s inventory decreased from 2015

to 2016 when it went from 30814 to 28624 but from 2016 to 2017 in increased to 29663

(RubberSole Financial Analysis). To arrive at the turnover rate takes the gross margin dived by

the average inventory. RubberSole’s annual gross margin in 2017 was 76312 dollars; divide this

by the average inventory of the same period of 29663 and the turnover for the year 2017 is 2.573
RUBBERSOLE BUSINESS PLAN 13

(RubberSole financial analysis). This turnover rate is lower than the average turnover rate for

RubberSole due to their inventory buildup. A higher rate implies fewer funds directed to storage

of the inventory and old out of date inventory. Therefore, RubberSole has some work to increase

their inventory turnover ratio which can be achieved by getting rid some of their inventory

buildups.

Financial Analysis

Actuals Business Plans

Sales volum es '000 SKUs 2017 2018 2019 2020 2021 2022
Web site 401 396 392 388 384 380
Female adult range 2,093 2,066 2,091 2,147 2,186 2,223
Male adult range 515 491 502 516 531 546
Children and Young Teenage 998 946 968 994 1,023 1,052
Accessories 250 222 225 230 235 240

Incom e Statem ent

Total Retail and Web Sales £'000 159874 165424 170871 177547 185440 193453
Direct Costs 83561 86244 88816 92131 95338 98620
Gross Profit 76312 79180 82055 85416 90103 94832
Retail outlet w ages 37587 38782 39120 39457 40131 40806
Marketing 8561 8665 8884 9045 9226 9440
Overheads 25396 25711 26141 26596 27270 27839
Operating Profit 4769 6022 7909 10318 13476 16748
Interest and Tax 1554 2688 2806 3002 3312 3767
Profit after Tax 3215 3334 5103 7316 10164 12981

EBITDA 15389 16702 18669 21158 24498 27938

Gross Margin % 48% 48% 48% 48% 49% 49%
Net operating margin % 3% 4% 5% 6% 7% 9%
ROCE 6% 8% 10% 13% 17% 21%
Net Debt / Equity % 54% 53% 46% 35% 26% 15%
Net Cash Balance -9743 -9777 -6353 -994 1162 3127
RUBBERSOLE BUSINESS PLAN 14

DECISIONS
Price positioning before in-store prom otions Past decisions 2018 2019 2020 2021 2022
PRICING v Market benchmarks Female adult range 0% 0% 0% 4.0% 5.0% 5.0% 6.0% 7.0%
Male adult range -5% -5% -5% 5% 5% 5% 5% 5%
Children and Young Teenage 0.0% 0.0% 0.0% 6.0% 6.0% 6.0% 6.0% 6.0%
Accessories 0.0% 0.0% 0.0% 5.0% 5.0% 5.0% 5.0% 5.0%
On-line discounts 10% 10% 10% 10% 10% 10% 10% 10%

Shelf Space usage SKUs Female adult range 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0% 55.0%
Male adult range 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0% 17.0%
Children and Young Teenage 22.0% 22.0% 22.0% 22.0% 22.0% 22.0% 22.0% 22.0%
Accessories 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0%
Marketing & merchandising
as % of previous year sales In store promotions 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Web site advertising 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%
Brand Advertising / Sponsorship 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%

Store management Retail Staff hourly pay rate 11.00 11.13 11.24 11.50 11.50 11.50 11.50 11.50
Retail Staff training as % of work time 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Number of New in-store coffee shop franchises 2 10 10 15 20 25 30 30
New store openings / closures 2 2 2 1 1 1 2 2

Inventory management Planned retail stock level days 55 55 55 55 55 55 55 55

Planned warehouse (web sales) stock level days 30 30 30 30 30 30 30 30

Finance Creditor days 45 45 45 45 45 45 45 45

Receivables days (credit sales only) 30 30 30 30 30 30 30 30
LT finance - new debt / repayments £'000 0 0 0 0 0 0 -3000 -4000
LT finance - new equity £'000 0 0 0 400 300 0 0 0
Dividend % of profit after tax 75% 75% 75% 75% 75% 75% 75% 75%

Forecasts Exchange Rate US$ to £ sterling 1.50 1.50 1.35 1.30 1.30 1.30 1.30 1.30
Long term interest rates 3.5% 3.5% 3.0% 4.0% 3.5% 3.5% 3.5% 3.5%

RubberSole is projected to be a healthy company. For the next five years, the company will

outperform its current industry standards. In order to calculate the outcome of the scenario it was

assumed that in the first year of partnership, RubberSole is going to supply a national firm in

Russia with the four products: female adult footwear; male adult footwear; children and young

teenage footwear and accessories. Hence, it is considered that RubberSole is not going to benefit

from any B2C sales, and the incremental revenues correspond only to the contract with Russian

Company.
RUBBERSOLE BUSINESS PLAN 15

Sales volumes '000

4500

4400

4300

4200

4100

4000

3900

3800

3700

3600
2015

2016

2017

2018

2019

2020

2021

2022
Hence, according to this scenario, RubberSole is going to sell a total of 6393 thousand

pairs of footwear by 2022. The forecasted Net Present Value is 1 203 286€. Nevertheless, one

must pay special attention to import duties to Russian Federation (5.2%). Hence, the import duty

of +160 000 pairs (supplied in the 1st year) accounts for more than 35 000€ of total incremental

costs.

Gross Margin %
50%

49%

49%

48%

48%

47%
2017 2018 2019 2020 2021 2022

In the next five years, both the gross merging is expected to increase drastically with 48%

for the first three years and increase to 49% in the following two years. Gross margin measures

the number of net sales over cost of goods sold in a percentage form. Gross margin is calculated
RUBBERSOLE BUSINESS PLAN 16

before interest expense and will show an increase because of greater efficiency. The drastic

increase is due to inventory buildup as the company establishes itself in the Russian market. As

the business progress into the new market, the gross margin is expected to rise to 49%. In fact,

this high rate implies that the funds spent on storage of the inventory and old out of date

inventory, so RubberSole will have little work to increase their inventory turnover ratio which

can be achieved by getting rid of some of their inventory buildups. Since inventories will be

reduced to increase efficiency, inventory turnover will also increase.

Net Debt / Equity %

60%

50%

40%

30%

20%

10%

0%
2017 2018 2019 2020 2021 2022

RubberSole will realize a slight decrease in debt ratio from 53% in 2018 to 15% by 2022

which will help determine the Rate of Return on investment. Debt ratio measures the amount of

debt in the capital structure. As it can be seen from the above figure, the debt ratio will begin

decreasing after entering the Russian Market. Debt ratio will eventually decrease because of the

capital gains realized from the sale of excess assets. Specifically, this ratio will speak to the

ability of RubberSole to compensate shareholders for their financial risk. In 2017, the ROE was

at 54% which is very good for the industry and will decrease to 15% by 2022. The return on

assets which will also increase speaks to how RubberSole can leverage their assets to generate
RUBBERSOLE BUSINESS PLAN 17

return or revenue. Although RubberSole has limited operating capital and income, it has a

healthy ROE. Specifically, this will attract investors and trust from financial institutions for debt

servicing. According to the RubberSole’s case, the firm as the capability through current assets

to pay off all their bills and financial obligation. Projecting the future, RubberSole will achieve

growth by decreasing inventory and maximizing their return on equity. The company has the

financial leverage to push innovation and the ability to sustain growth. In monitoring of their

financial health and ratio trends, it can be assumed that RubberSole will continue to create

growth as the ROA and ROE trend upwards.

Risk Assessments

The significant risk is that the use of return on equity could mislead the financial

performance of RubberSole. Specifically, this is because earning can be manipulated based on

the alteration of accounting policy in the legal context. Besides, the more the financial leverage,

the high the ROE provided that the returns attained on the borrowed funds exceed the cost of

borrowing (Fama & French, 2012). However, the increase in the leverage beyond specific degree

may lead to an increase in RubberSole’s systematic risk. Besides, inflation has an adverse impact

on the profit margin which will likely reduce the ROE as well as the expected growth. In

instances where RubberSole assumes extra debt to extend to new international market, the

company may experience distress. The problems associated with long-term debts are focused

upon debt management. If the debt cannot allow funds to be properly allocated to operational

expenses, a default will be a likelihood. Since leverage involves large amounts of debt, cash flow

projections should be initiated to avoid default (Fama & French, 2012). The leverages are

intended to be a short-term investment as excess assets are sold and the associated capital gains

are sufficient to reduce the debt (Fama & French, 2012). The long-term investment is the
RUBBERSOLE BUSINESS PLAN 18

refocusing of RubberSole’s objectives that will allow the company to effectively compete in the

future. Therefore, a successful leverage depends upon whether management will reduce the debt

and resume operations more efficiently.

Recommendations and Conclusion

RubberSole is currently among the major players in the footwear market in the UK. For

them to sustain or grow their position they need to be committed to using financial and

operational tools to grow their revenue. As demonstrated in the report, there are various ways to

grow way revenue through a focus on ROA, ROE, and market capitalization while decreasing

tax and interest expense to increase the bottom line without significant philosophical changes.

The use of investment income and cash flow can attain capitalize acquisitions and capital

improvements without increasing debt expense. Growth in major foreign markets such as Asia

and Australia where economically the middle class is growing and can support the purchase of

footwear and fashion shoes. Besides, RubberSole can use social media to decrease marketing and

advertising dollars, along with maximizing political influence to gain foreign market share and

maximizing sponsorship opportunities such as the fashion shows to reach various market niches.

The financial investment and condition of RubberSole in comparison to historical and

industry average are strong, based on profit margins, management efficiency of assets and equity

and market capitalization. RubberSole. needs to focus on an optimal capital structure, utilizing

both equity and debt structures to maximize net profits effectively while expanding into foreign

markets and maintaining current markets to remain a trusted brand leader in fashion footwear. In

an industry that is ever-changing and based on innovation, RubberSole needs to continue to

focus on advanced design and product development to maintain their competitive advantage.
RUBBERSOLE BUSINESS PLAN 19

Maximizing their economical and minimizing their environmental impact will only strengthen

the brand.
RUBBERSOLE BUSINESS PLAN 20

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