Posted: July 18th, 2022
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Respond to each classmate statement with at least 100 words: Classmate 1) I will be talking about the apparel industry and one of the companies that have struggled throughout the decades but remain in today’s society. The company I will be talking about is Converse. They were founded in 1908 as a rubber company but made the famous All-Star sneakers nine years later. The company soon faced bankruptcy due to The Great Depression. The company has faced many possible bankruptcies throughout the years due to the lack of cash flow. Ownership of the company has continuously changed over time. To improve its cash flow, Converse tried to expand the company. It eventually put the company into debt due to the failed acquisition and the downtrend of its business cycle. In 2001 the company was under new ownership. Under this new regime, the management team was revamped, and some facilities were closed. This could bring new strategies to the company and provide more liquidity due to the multiple facility closures. The cash flow could have increased due to new marketing strategies and the deepened relationships built with retailers. A little-known fact today is that Nike bought the company Converse in 2003. The revenue, marketing strategies, and infrastructure that was already there could be implemented into converse, which would boost the company’s cash flow. Their marketing team soon began highlighting celebrities who wore the shoes and collaborating with various designers. They are iconic shoes that will forever live on. I believe the reason they were not successful until 2003 is due to the lack of management financially and marketing. Nike provided that and so much more. Classmate 2) A company in entertainment that has experienced cash flow problems is Interplay Entertainment Corp (Huffstutter, 1989). Back in the 1990’s, Interplay was experiencing cash flow problems and cut their staff by 10 percent, according to Huffstutter. With these problems, Interplay actually helped the cash flow problem by increasing its credit line (Huffstutter, 1989). To do this, Brian Fargo, the Chief Executive, offered $5 million of his own money as collateral (Huffstutter, 1989). This increased Interplay’s credit by $14 million to a new total of $37.5 million dollars for the duration of the 1990’s (Huffstutter, 1989). Doing these things, along with production licensing and non-disclosed deals, helped Interplay Entertainment ease their cash flow pressure (Huffstutter, 1989). Of course, this was not the end of issues with cash flow. Interplay continued to face competition and went bankrupt, leaving the company in a life support state (Corden, 2018). Corden mentions during this time that Interplay sold the rights to its game Fallout to Bethesda. of course, was not enough to save the company, so they were bought out by Microsoft (Corden, 2018). This would not be until after the same Chief Executive, Brian Fargo, founded inXile Entertainment (Corden, 2018). Interplay is a thing of the past, and now inXile Entertainment is owned by Microsoft. Cash flow has such a big role in company success. Interplay struggled, got increased credit, and made cuts to its staff (Huffstutter, 1989).This helped Interplay entertainment stay alive during the 1990s (Huffstutter, 1989). This, unfortunately, was not enough as competition led to more cash flow issues, according to Corden. When cash flow issues exist, bankruptcy is bound to happen. Then a company will either disappear or reimage themselves, like Interplay did by transitioning to inXile Entertainment (Corden, 2018). Finally, thanks to Microsoft, inXile might still have a future without cash flow issues (Corden, 2018).
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