Kamel Company is a chain of 125 retail outlets selling closing under the strong Kamel brand. Its sales have increased from 185 million to 586 million over the last five years. The companys gross profit is currently 17% of sales, giving it a little more than 20% mark-up on the cost of goods and retail store running costs. Corporate overhead is 19 million and the operating profit is 81 million.

Kamel Company finance director has produced a budget, which has been approved by the board of directors, to increase sales by 35% next year and to improve operating profit margin to 15% of sales. Corporate overheads will be contained at 22 million. The strategy determined by the marketing director is to continue expanding its sales by winning market share from competitors and by increasing the volume of sales to existing customers. It aims to increase its direct mailing of catalogues to customers and its television advertising. The company also intends to open new stores to extend its geographic coverage.

Kamel Company also plans to improve its cost effectiveness by continuing its investments in major regional warehouses and distribution facilities servicing its national network of stores, together with upgrading its information systems to reduce inventory and delivery lead times to its retail network.

Required:

1. Produce a report for the senior management team identifying the financial information that is required to support the business strategy. (Hint: use the below table in your answer; in your answer you need to cover the different aspects of strategy: budgets, marketing, costsetc.)

	Current year		Next year
Sales
Cost of sales
Gross profit
Less: Overheads
Operating profit