Sell-it Products Inc.
Sell-it Products Inc.’s (SPI’s or the Company’s) business is the manufacturing,
marketing, and distribution of consumer products. SPI sells all its products to grocery
stores, drug stores, and mass merchandisers in the United States, Canada, Mexico, Asia,
and Europe. SPI has a dedicated sales force with individuals assigned by geographic area.
Each salesperson is responsible for representing and selling all of SPI’s products.
SPI is organized into three divisions that include the following products:
Beauty care — cosmetics and shampoo.
Family care — paper towels and diapers.
Drinks and snacks — Blasto Energy Drink, Jazzy Juice, and Fruit & Granola
Snacks — each of these products contains no added sugar or preservatives in
order to appeal to the diet- and health-conscious consumer.
The production, distribution, and sale of each of SPI’s products are subject to the Federal
Food, Drug, and Cosmetic Act (FD&C Act) in the United States and other federal, local,
and state laws in the regions in which SPI conducts business.
Although SPI’s competition in the cosmetics, shampoo, paper towels, diapers, juice, and
snack markets has remained fairly constant over the past few years and is expected to
remain fairly constant in the foreseeable future, SPI expects to face increased competition
in the energy drink marketplace because of the introduction of new energy drinks by two
of SPI’s competitors in 2011.
Managers responsible for each product line (product managers) report to the respective
divisional executive vice presidents (EVPs), who are responsible for the day-to-day
operations of the division. The EVPs report to the chief executive officer (CEO). The
CEO makes decisions regarding the strategic direction and resource allocations of SPI
based on frequent interaction with the EVPs and product managers, consultation with the
other corporate officers, and review of the monthly operating package (MOP).
The MOP includes financial information for each division (summary by division) and
product (summary by product) on a monthly and year-to-date (YTD) basis. It is the
internal financial information used by the CEO to evaluate SPI’s performance and to
make decisions regarding allocation of resources — see Handout 1 below for the latest
MOP that was provided to the CEO (for simplicity purposes, only the YTD portion of the
package has been provided). The MOP is also provided to the board of directors and is
used by the CEO to facilitate discussion regarding results of operations at the quarterly