Felicia & Fred, a publicly held U.S. corporation and manufacturer of jewelry, requires a financial analysis of its current year operating performance. Previously, the company expanded capacity to include a Czech crystal bracelet product line. During this year, the company expanded its product offering to include womens accessories, specifically handbags. These are outsourced through a licensing agreement the company initiated with a manufacturer in Asia. In order to preserve intellectual property and branding rights in the United States, this manufacturer exclusively has the right to Felicia & Freds womens logo purses.

As previously mentioned, the companys inventory investment has grown, but to date it has not required additional storage space in terms of increases in total plant and property since the company is renting warehouse space to accommodate the necessary real estate. However, the company anticipates that this will change if the demand for this product continues to be met with fervor among its customer base.

Given these considerations and the results indicated in the companys income statements and balance sheets for the prior year and current year, as well as the companys cash flow statement for the current year, answer the following questions and address specific qualitative elements as requested.

• Introduction/Abstract: Discuss briefly the difference between strategic and tactical decision making.
• Is the decision to enter the handbag distribution business strategic or tactical?

What indications of financial performance must a company consider in evaluating whether an investment has successfully increased shareholder wealth