Spencer Case

1. What business is Spencer in? Who are his suppliers? Who are his customers? What is your assessment of his competitive position?

Spencer is in the business of distributing a broad range of sporting goods and apparel, camping equipment, and leisure-time products in Phoenix, Arizona. His suppliers are prominent manufacturers of sporting goods and allied products. His customers consist of department stores, discount houses, and sporting-good shops.

Based on the information in the case, Spencer Sporting Goods' competitive position is relatively strong. The reason for this assessment is as follows:

- Spencer's experience in football has given him many sporting contacts that have allowed him to secure numerous customers as well as distribution rights from prominent manufacturers of sporting goods and allied products, such as the exclusive Southwest distribution rights for a popular line of French-made athletic and leisure-time shoes.

- Spencer's driving energy and natural selling ability has given him the opportunity to go on trips where he has been able to exchange promotional ideas with other distributors from different parts of the country; his degree in marketing gives him a competitive advantage over managers/owners without a background in marketing

- The diversified lines carried in stock and even climate of the Phoenix area lead to sales not being seasonal, and therefore, prevented the need to finance seasonal sales peaks; this saves the company time and money that otherwise would have been required.

2. Why does this profitable company need funding?

Spencer Sporting Goods needs funding because the company's cash balance has been declining for a considerable period of time and is too low to support the company's current scale of operations. Suppliers are requiring prompter payment of their invoices; Spencer Sporting Goods needs funding to be able to accelerate its payment to trade suppliers to take advantage of prompt-payment discounts and to continue to maintain excellent relationships with suppliers so Spencer's could continue to have exclusive regional distribution rights for their products.