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This misalignment is in part to blame for the company’s very low bid success rate of 15%. From a financial standpoint, looking at their 1989 and 1990 P&L, they do not seem to be delivering on one of their most important premises for selecting orders (20% of gross profit before SG&A), getting dangerously close to the upper limit of their average cost of goods threshold of 80% to 85% of sales (See Exhibit 1 in the Appendix). Additionally, SG&A as a percentage of sales has risen significantly and steadily in the last three years. This in part supports Management’s view of poor results driven by erratic marketing and unstable market conditions...
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