Larry's Farm Equipment Store has been in business for severalyears. The firm's owners have described the store as a "high-price,high-service" operation that provides lots of assistance to itscustomers. Margin has averaged a relatively high 25% per year forseveral years, but turnover has been a relatively low 0.6 based onaverage total assets of $1,200,000. A discount Farm Equipment Storeis about to open in the area served by Larry's, and management isconsidering lowering prices to compete effectively. 11.value: 0.83pointsRequired information Required: a. Calculate current sales andROI for Larry's Farm Equipment Store. (Round your "ROI" to 1decimal place. (e.g., 32.1)) b. Assuming that the new strategywould reduce margin to 20%, and assuming that average total assetswould stay the same, calculate the sales that would be required tohave the same ROI as Larry's currently earns. (Do not round yourintermediate calculations.) c. Suppose you presented the results ofyour analysis in parts a and b of this problem to Larry, and hereplied, "What are you telling me? If I reduce my prices asplanned, then I have to practically double my sales volume to earnthe same return?" Given the results of your analysis, what is theactual amount of increase in sales required? (Do not round yourintermediate calculations.) d. Now suppose Larry says, "You know,I'm not convinced that lowering prices is my only option in stayingcompetitive. What if I were to increase my marketing effort? I'mthinking about kicking off a new advertising campaign afterconducting more extensive market research to better identify who mytarget customer groups are." In general, explain to Larry what thelikely impact of a successful strategy of this nature would be onmargin, turnover, and ROI. 011

What are the other alternative strategy that might help Larrymaintain the competitiveness of his business. (Select allthat apply.)

Increase in selling price

Labor saving strategies

Reduction in inventory carrying costs