How Things Move Around the Circuit

In today's business one of the most important components it takes to run the business is cash. According to Wikipedia, cash usually refers to money in the form of liquid currency, such as banknotes or coins (2002). The inflow and outflow of cash is important when it comes to running a business. A company must have balance because to much of one and not enough of the other could lead to bankruptcy. For example, if a company has more cash going out of the business than there is coming inn, a company will not be able to survive.

The simulation discussed Lawrence, which is a 20 million dollar revenue company that manufacturers and distributes equipment and protective gear for baseball, football, basketball and volleyball. The CEO has to make sure there is a balance of the amount of cash that is going in and company out. There are several ways a CEO could maintain the balance between the two. A way Circuit City makes sure they maintain there balance is by reinvesting in their business. Founded in 1949, Circuit City was run by Richard L. Sharp, whose computer programming skills helped the company to design a sophisticated inventory system that provided for efficient movement of equipment in addition to trimming shrinkage losses by as much as percent (Gale, 2006).

By developing this inventory system it allows Circuit City to monitor the number of products that are being shipped and sold. If Lawrence Corporation had a type of inventory or internal monitoring system they would be able to maintain some type of balance of how cash flows in and out of the company. When running the simulation I was able to find a way that Lawrence Corporation could maintain a steady payment plan with there business partners. Circuit City is able to maintain a good relationship with their customer by focusing on in-house efficiency and knowledgeable salespeople.

Reference

Anderson, William L.; Shah, Amit. American Business Review, Jun2004, Vol. 22 Issue

2, p13-19, 7p, 10 charts (Ebscohost)

Barnett, Chris. Public Relations Tactics, Jan2003, Vol. 10 Issue 1, p15, 2p, 2c

(Ebscohost)

Brealey, R. A., Myers, S. C., & Allen, F. (2005). Principles of Corporate Finance. New

York: The McGraw-Hill Companies.