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GNC Holdings Inc. is a leading retailer of health and nutrition products, which are sold through both company-operated (3,500 outlets) and franchised retail (3,200 outlets) stores. In addition, GNC manufactures many of the products that it sells through its company-operated and franchised channels. As such, GNC's operating segments are Retail, Franchise and Manufacturing. The Retail segment is made up of company-operated stores, and the Franchise segment is made up of franchised stores. Recent financial information from these segments is as follows (in millions):

	Retail			Franchise			Manufacturing
Sales		$1,939			$433			$486
Income from operations		349			157			90
Invested assets		1,573			512			407

Analyze the profit margin for each segment

Profit Margin = Income from Operations/Sales Retail: $349/$1,939 = 18.0% Franchise: $157/$433 = 36.3% Manufacturing: $90/$486 = 18.5%

Analyze the investment turnover for each segment

Investment Turnover = Sales/Invested Assets Retail: $1,939/$1,573 = 1.2 Franchise: $433/$512 = 0.8 Manufacturing: $486/$407 = 1.2

Analyze the Return on Investment

Return on Investment (ROI) = Profit Margin Investment Turnover Retail: 18.0% 1.2 = 21.6% Franchise: 36.3% 0.8 = 29.0% Manufacturing: 18.5% 1.2 = 22.2%

Form your discussion by answering the following:

1. Differentiate between a profit center and an investment center.
2. Why might the profit margin of the Franchise segment be larger than the other two segments?
3. What is the source of revenues for the Manufacturing segment?
4. With all of the above in mind, how would you enhance retail sales, which demonstrate the lowest profit margin and return on investment?

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