Nojax Inc Company Backgroundnojax Inc Is A Small American Company Th ✓ Solved
NoJax Inc. Company Background NoJax Inc. is a small American company that designs and manufactures specialized athletic shoes, clothing, and accessories. The business was first started in 2010 when two cousins, Noah and Jaxson Williams, recognized that very few quality options were available for people that led an active lifestyle, specifically regular gym goers. This realization led the Williams cousins to create a shoe prototype designed with weight lifters in mind. The first shoe, dubbed the NJ Elite, emphasized comfort and support that wouldn’t interfere with weight lifting form while exercising.
As the NJ Elite gained popularity with local retailers, NoJax expanded their offerings into sports apparel. Since then growth has been tremendous, and NoJax has grown from those small local stores carrying their products to over 200 retailers nationwide. Currently, NoJax has four main areas of focus: shoes for running, apparel for running, shoes for weight lifting, and apparel for weight lifting. The NoJax brand is targeted at the fitness lifestyle. This psychographic segmentation strategy goes beyond typical demographic boundaries and has allowed them to position themselves as a high quality option for people serious about exercise.
While this is currently a niche market, it’s a market that continues to grow as cultural trends shift more towards health and wellness. Much of NoJax’s marketing involves online advertising with fitness websites and sponsoring fitness competitions, such as the CrossFit Games and the Chicago Marathon. Revenue for the business has grown consistently as their market and the consumer base has expanded. Last year, NoJax earned million in sales with a 15% profit margin, which is above industry average. The brand is moderately priced when compared to the competition.
Shoes sell for around , shirts go for , and pants average a sales price of . NoJax is currently considering expansion into other markets. However, they have decided to bring in an outside consultant to analyze the company’s design for its impact on organizational behavior. Other than the addition of new product lines, very little about the company has been updated or changed since their operation began. NoJax senior management is concerned that the outdated company design and the new employees that they’ve hired may be negatively impacting the business’ effectiveness.
Below is data for the consultant on the company structure, policy, and key employees. NoJax Inc. Company Structure NoJax Inc. currently uses the matrix structure pictured below. Product managers each oversee a single specific product line. There are currently four product managers that oversee four different types of products.
Those products are running shoes, running apparel, weight lifting shoes, and weight lifting apparel. There are also three different departments with their own expertise. Those departments are Design, Marketing, and Research and Development (R&D). The Senior Management team currently consists of the two company founders, Noah and Jaxson Williams. There are a total of 50 employees working at NoJax in the positions shown below.
Senior Management Orlando Grant R&D Manager Janet Johnson Marketing Manager Alice Bloom Design Manager Carrie Durant Running Shoes Manager Jesse Mercado Running Apparel Manager Lynn Bryant Lifting Apparel Manager Anam Basra Lifting Shoes Manager NoJax Inc. Policy · NoJax currently adheres to a very centralized power and decision making structure. · Employees are heavily monitored in order to make them as efficient as possible at their positions. This includes weekly status meetings with managers and daily activity reports that must be filled out by each employee. · When decisions do have to be made it generally requires multiple approvals from both direct managers and someone from the senior management team.
Routine decisions regularly take 48 hours to be made. · Disagreements between the product and department managers happen frequently and a clear mediation process for these instances has yet to be developed. · Roles and members of teams stay consistent. Employees do not rotate through positions at the company and are restricted from changing teams. · Job tasks and design is very clearly defined with little variation between roles. · Yearly evaluations of employees include ranking all of the employees in the company. Raises are handed out based on each employee’s ranking. The top workers can receive up to a 6% raise and the bottom employees receive no raise. · All employees are paid a base salary.
Pay is slightly above industry average, and employees average 50 hours of work in a week. · NoJax does offer health and dental to employees but nothing in the form of investments or retirement plans. · The hiring process at NoJax Inc. includes individual interviews with a product manager, a department manager, and then senior management. Typical time from receiving a resume to being hired is three months. · Employees are allocated ten days off a year. Those days are meant to cover everything. This includes sick days, vacation, and personal days. Any days missed past that must be emergencies with some form of proof, such as a doctor’s note. · Human Resource responsibilities are handled by the senior management team, as an actual HR department has never been created. · All manufacturing and distribution of NoJax products are outsourced to third-party partner businesses. · Discipline at NoJax works on a point system.
Infractions, such as being late or acting out, cause employees to accumulate points. After an employee reaches 10 points they are written up. An additional 10 points can lead to a suspension. Points reset every calendar year and there is no carry over from the previous year. Employee: Alice Bloom · Position: Design Department Manager · Sex: Female · Age: 62 · Race: Caucasian · Work Experience: 40 years · Education: High School Diploma · Personality: · Extraversion--High · Emotional Stability--Medium · Openness--Low · Conscientiousness--Medium · Agreeableness--Low Employee: Janet Johnson · Position: Marketing Department Manager · Sex: Female · Age: 27 · Race: African American · Work Experience: 5 years · Education: Bachelor’s Degree in Marketing · Personality: · Extraversion--High · Emotional Stability--Low · Openness--High · Conscientiousness--Medium · Agreeableness--Medium Employee: Orlando Grant · Position: Research and Development Department Manager · Sex: Male · Age: 29 · Race: African American · Work Experience: 4 years · Education: Associate’s Degree in Marketing · Personality: · Extraversion--High · Emotional Stability--High · Openness--High · Conscientiousness--Low · Agreeableness--Medium Employee: Carrie Durant · Position: Running Shoes Product Manager · Sex: Female · Age: 41 · Race: Caucasian · Work Experience: 12 years · Education: Bachelor’s Degree in Communications · Personality: · Extraversion--Medium · Emotional Stability--Medium · Openness--Medium · Conscientiousness--Medium · Agreeableness--High Employee: Jessie Mercado · Position: Running Apparel Product Manager · Sex: Female · Age: 34 · Race: Hispanic · Work Experience: 10 years · Education: Bachelor’s Degree in Business Management · Personality: · Extraversion--Low · Emotional Stability--Medium · Openness--Medium · Conscientiousness--High · Agreeableness--High Employee: Lynn Bryant · Position: Lifting Shoes Product Manager · Sex: Female · Age: 52 · Race: Caucasian · Work Experience: 20 years · Education: Bachelor’s Degree in Psychology · Personality: · Extraversion--Medium · Emotional Stability--High · Openness--Medium · Conscientiousness--High · Agreeableness--Medium Employee: Anam Basra · Position: Lifting Apparel Product Manager · Sex: Female · Age: 38 · Race: Pakistani · Work Experience: 10 years · Education: Master’s Degree in Sports Management · Personality: · Extraversion--Medium · Emotional Stability--Medium · Openness--Low · Conscientiousness--High · Agreeableness--High Listen ReadSpeaker webReader: Listen Focus Getting Started When a bond is issued to the public, the corporation’s leadership must make critical decisions regarding the various features to be incorporated into the bond issue, such as collateral, seniority with other outstanding issues, a sinking fund provision, etc.
The cost to companies of raising funding using bonds, the coupon rate, is ultimately determined by the risk represented by the bonds to the investor. Each bond feature affects risk in a different way. As a result, they each have a different impact on the coupon rate demanded by potential investors when a new bond is issued. In this assignment, you will explain these features and their impact in the form of a memo to senior management, including advantages/disadvantages of the various features. Upon successful completion of the course material, you will be able to: â— Differentiate and explain the various features of a bond issue. â— Communicate with senior management the advantages and disadvantages of the various features of a bond issue. â— Distinguish among the various bond types, and their features and issues related to bond markets.
Resources â— Textbook: Fundamentals of Corporate Finance Background Information In this assignment, you will apply a number of the concepts regarding various features of a bond issue in the form of a memo to senior management, explaining the various features, assessing their impact on the coupon rate demanded by potential investors, and describing the advantages/disadvantages of those features in order to assist senior management in the decision-making process as a new bond issue is being developed by the corporation. Instructions 1. Review the rubric to make sure you understand the criteria for earning your grade. 2. Using a Word document, complete the requirements of the Mini-case “Financing S & S Air’s Expansion Plans with a Bond Issueâ€, located at the very end of Chapter 7 in your course textbook.
3. Your response should take the form of a memo, as explained in the case. a. For each of the ten bond features listed, briefly describe the likely impact of each of the features on the coupon rate demanded by potential bond investors when this new bond is issued. Will it cause the required coupon rate to be higher or lower? b. In addition, for each of the ten bond features listed, briefly describe the advantages or disadvantages, from S&S Air’s perspective, of implementing that feature with the newly-issued bond.
4. When you have completed your assignment, save a copy for yourself and submit a copy to your instructor by the end of the workshop. Access the associated rubric Access the Assignment submission page
Paper for above instructions
MemoTo: Senior Management, NoJax Inc.
From: [Your Name], Financial Consultant
Date: [Insert Date]
Subject: Analysis of Bond Features for New Financing Strategy
---
As we embark on evaluating financing options for NoJax Inc.'s potential expansion into new markets, I have prepared an analysis of various bond features that will influence the coupon rate demanded by potential investors. Understanding these features and their implications is key for strategic decision-making regarding the bond issuance.
Overview of Bond Features and Their Impact
1. Collateral:
- Impact on Coupon Rate: Bonds backed by collateral typically have a lower coupon rate, as they represent less risk for investors. If NoJax issues secured bonds, the presence of collateral may reduce investor yield requirements.
- Advantages/Disadvantages: Offering secured bonds can enhance investor confidence and lead to lower interest costs. However, if collateral is tied up, it reduces liquidity for NoJax.
2. Seniority:
- Impact on Coupon Rate: Bonds that are senior to other debt obligations attract a lower coupon rate due to their preferential treatment in bankruptcy proceedings.
- Advantages/Disadvantages: Senior bonds can be more appealing, leading to better pricing terms; however, this can limit flexibility if NoJax aims to issue junior debt later.
3. Sinking Fund Provision:
- Impact on Coupon Rate: Bonds with a sinking fund often have lower yields since this feature reduces risk by ensuring that some bonds are regularly retired.
- Advantages/Disadvantages: A sinking fund can reassure investors, but it reduces available cash flow for other operational needs, impacting NoJax’s liquidity.
4. Convertible Bonds:
- Impact on Coupon Rate: Convertible bonds generally have a lower coupon rate because of the added option for investors to convert to equity, which is valuable during a growth phase.
- Advantages/Disadvantages: This feature can attract investors seeking upside potential, but it can dilute ownership if conversions occur.
5. Call Provision:
- Impact on Coupon Rate: Bonds that are callable are expected to carry a higher coupon rate due to the risk of being called in a favorable market for NoJax, resulting in lost interest income for investors.
- Advantages/Disadvantages: This feature provides NoJax operational flexibility to refinance if rates drop; however, it can lead to higher financing costs.
6. Putable Bonds:
- Impact on Coupon Rate: Putable bonds offer investors the option to sell the bond back to NoJax at predetermined times, which generally leads to a lower coupon rate.
- Advantages/Disadvantages: This can be an attractive feature for investors during economic downturns, enhancing demand, while it presents a volatility risk for NoJax's cash flow if many bonds are put back.
7. Interest Rate:
- Impact on Coupon Rate: The current market interest rate environment fundamentally influences the coupon rate; higher market rates will likely necessitate a higher coupon rate to attract investors.
- Advantages/Disadvantages: Aligning bond rates with market conditions can ensure competitiveness but may lead to increased interest expenses.
8. Maturity Date:
- Impact on Coupon Rate: Generally, longer maturity without a risk premium attached will demand higher yields due to increased uncertainty.
- Advantages/Disadvantages: Extended maturities can provide long-term planning stability for NoJax, yet they can pose future refinancing risks.
9. Amortization Features:
- Impact on Coupon Rate: Bonds with amortization provisions typically exhibit lower coupon rates, as they systematically eliminate principal variations over the loan's life.
- Advantages/Disadvantages: These features help manage NoJax’s cash flows and budget, but can limit available cash for immediate operational needs.
10. Credit Quality:
- Impact on Coupon Rate: The perceived creditworthiness of NoJax will directly affect the coupon rate; lower ratings will lead to higher yields required by investors.
- Advantages/Disadvantages: Maintaining a high credit rating can reduce fundraising costs, though it necessitates stringent financial management practices.
Conclusion
Implementing these features requires careful consideration of both current and future implications on NoJax’s capital structure. Each bond feature presents varied impacts on coupon rates and risks, shaping the landscape of how we approach funding for our strategic expansion. This memo serves as a starting point for discussions as we persist in evaluating financing avenues that align with NoJax Inc.’s growth ambitions and operational needs.
References
1. Brealey, R. A., Myers, S. C., & Allen, F. (2020). Principles of Corporate Finance. McGraw-Hill Education.
2. Fabozzi, F. J. (2016). Bond Markets, Analysis and Strategies. Pearson.
3. Scherer, L. (2020). Fixed Income Analysis. CFA Institute Investment Series.
4. Bodie, Z., Kane, A., & Marcus, A. J. (2014). Investments. McGraw-Hill Education.
5. Hirt, G. A., & Block, S. B. (2020). Fundamentals of Investments. McGraw-Hill Education.
6. McDonald, R. (2022). Derivatives Markets. Addison-Wesley.
7. Tuckman, B., & Serrat, A. (2011). Fixed Income Securities: Tools for Today's Markets. Wiley.
8. Jarrow, R. A., & Chatterjea, A. (2006). Modeling Fixed Income Securities and Interest Rate Options. Thomson South-Western.
9. Lhabitant, F. (2008). Hedge Funds: Quantitative Insights. John Wiley & Sons.
10. White, L. J. (2017). The Regulation of Financial Markets. McGraw-Hill.
Please review and let me know if further analysis or consideration is required on specific aspects.
Best,
[Your Name]
Financial Consultant, NoJax Inc.