Download Jan. 22

Where are we?
Situation/SWOT
Analysis
Strategic
Planning
Functional
Integration
Assignment
•Company
•Consumers
•Competitors
•Conditions
• PEST
Growth &
Competitive
Strategies
Performance
Assessment
#1
Functional
Integration
Marketing
 Profits
 Mrkt Share
 ROA
R&D
 ROS
Production  ROE
 Asset T/O
 Stock
HR
 Mrkt Cap
Finance
M A RKETING
M G T.
Begin Situation-Analysis
S I M U LA T I ON
Company
INTERNAL ENVIRONMENT
Your Company's
Strengths & Weaknesses:
Consumer
Competitors
Conditions
EXTERNAL ENVIRONMENT
Opportunities & Threats
You are finding answers re:
How the market is segmented & the
Consumers
Competitors
relevant criteria that influence
consumers use in their purchasing
decisions
The nature & magnitude of the
competition
Conditions
Existing & emerging Economic &
Technological trends that will impact
demand, pricing, product design &
positioning
Strategic Thinking- the ten big ideas
1. Long-range planningconsiders the external factors that affect
success & integrates the various functional
strategies.
2. Strategic analysis
Industry structure
Market segmentation
The lifecycle.
SWOT analysis.
Strategic Thinking- the ten big ideas
4. Portfolio theoryGE-(three-by-three matrix, using
business strength & market
attractiveness as variables).
The Boston Consulting Group
(BCG) introduced its two-by-two matrix(invest in the stars, divest the dogs, milk the
cows, and solve the question marks)
Portfolio Analysis
Which Brands should
receive more/ less/ no
investment-Based on:




Product Position/
Potential
Profitability/ Margins
Market-Growth/MarketShare Matrix
Competitive Strategy
G.E Strategic Planning Model
Business Strength
Strong
Average
Weak
High
Industry
Attractiveness
Low
Business Strength Index
Industry Attractiveness Index
* Market Share
* Price Competitiveness
* Product Quality
* Customer Knowledge
* Sales Force and Effectiveness
* Geographic Advantage
* Market size
* Market Growth
* Industry Profit Margin
* Amount of Competition
* Seasonality
* Cost Structure
Boston Consulting Group’s
Growth-Share Matrix
STARS
Product-Market
Growth (%)
High
Low
PROBLEM
CHILD
CASH COWS
10x
4x
High
DOGS
2x 1.5x 1x
Relative
Market Share
.5x
Low
.2x .1x
Complete Situation-Analysis
Company
Consumer
Competitors
Conditions
INTERNAL ENVIRONMENT
Your Company's
Strengths & Weaknesses:
Finance
Marketing & R&D
Production & HR
EXTERNAL ENVIRONMENT
Opportunities & Threats
M A N A G E M E N T
S IM U L A T I O N
1.
2.
3.
4.
5.
6.
7.
8.
Answered Key
Financial Q’s:
Are You Making Enough Profit?
Liquidity? Enough Money on hand to run/grow your co.
Leverage? ideally proportioned betw. Debt & Equity?
How effectively are you utilizing your assets? A/T
R U providing your investors an Adequate Level of Return?
How close are you to Bankruptcy?
How’s those Bond Ratings?
Do you have Adequate Levels of Investment in your
Company's Plant, People & Processes?
As FINANCIAL MANAGER
M A N A G E M E N T
Acquire Capital
S IM U L A T I O N
–Issue Stock
–Short Term Debt
–Issue Long Term Bonds
Set Dividend
Retire Long Term Bonds
Retire Stock
• Responsible for Emergency
Loans
Big AL
The Loan Shark
M A RKETING
M G T.
S I M U LA T I ON
Next Big Q
How good
are your
goods…
R U Meeting Consumers’ Expectations?
M A N A G E M E N T
As MARKETING MANAGER
S IM U L A T I O N
You’re will be responsible for:
Planning, implementing & controlling
your marketing strategy
Product
Place
Target
&
Position
Price
Promotion
Marketing Managers
become one-w/
Relationships betw
M A N A G E M E N T
S IM U L A T I O N
• Price & demand
• Price & margin
• Promotion budget &
awareness
• Sales budget &
accessibility
• A/R policy & demand
Promotion budget &
awareness …
M A N A G E M E N T
S IM U L A T I O N
Sales budget
& accessibility
•Marketing also
selects media
vehicles &
message weights
• AND
determines
composition of
sales/distribution
staff ..and
allocation of
their efforts by
segment & Brand
M A N A G E M E N T
As R&D
Mgr
S IM U L A T I O N
A
SIZE
B
Performance
Responsible for:
Product Position
Age & Quality
New product
development
High
High
Eight
<
<
<
Low
Quality
Low
Age
One
Prdt Line

Establish product positioning to meet customer demand
M A RKETING
M G T.

S I M U LA T I ON


Build quality & reliability (MTBF)
into products
Create new products
Ensure age of product meets customer demands
Drift
Evaluate Your Company’s
Marketing
Complete Consumer Report
@ CapSim
Intro | Perceptual Map 1 | Perceptual Map 2 | Demand Analysis
| Capacity Analysis | Margin Analysis | Consumer Report
Next Big Q
How good
are you in
making
your
goods…
1) Assess your Production
Efficiencies- Plant Utilization &
Automation:
2) Assess your Company's HR &
Labor Force Productivity:
3) Assess levels of automation
on each of your production lines:
ROW
#1
FAIR SHARE ESTIMATES: 3-4 Rnds out:
ROW#2
Utilize 2nd Shift?
ROW#3
nd
2
Why run
shift –when
labor costs 50% higher?
Why run 2nd shift –when
labor costs 50% higher?
Answer by using your proformas:
1- On production spreadsheet
build at capacity- if have 1000
units – build 1000 units
2-On Marketing displayFORECAST 1000 UNITS
3.-ON Proforma Income
statement- note NET MARGIN –
THE BIQ Q: If we double sales will
we double our net margin?– Will we make
less because labor costs are 50% higher
for 2nd shift?
Why run 2nd shift –when
labor costs 50% higher?
Answer by using your proformas:
1- On production spreadsheet
double output-run full 2nd shift
2-On Marketing display- double
forecast
3.-ON Proforma Income
statement- NET MARGIN –will
more than double
THE BIQ Ar: When run 1 shift-
must pay all fixed costs- 2nd shift
gets a free ride-only has to pay
labor premium…
Optimum
Automation
Levels?
ROW#4
A Historical Consideration…
RE: Projected Share
• LOW
END: 0-1 product killed.. 0-1
repositioned or introduced
• TRADITIONAL: 3-6 repositioned
from High…0-1 killed…1-2 introduced
• SIZE: 0-1 killed, 0-1 repositioned to
Traditional, 1-2 introduced
• PERFORMANCE: 1-2 killed, 0-1
repositioned to Traditional, 0-1
introduced
• HIGH: 1-3 killed or repositioned to
Traditional, 1-3 new products arrive in
rounds 2 or 3
ROW
#1
FAIR SHARE ESTIMATES: 3-4 Rnds out:
Round 3- Forecast
Segment Competitive Density
• LOW
END: 6 products=rivalry
unchanged
• TRADITIONAL: 9 products,
w/ 3 repositioned= increased
competition
6
9
7
4
6
• SIZE: 7 products, w/ 2 new=
increased competition
• PERFORMANCE: 4
products, w/ 1 new= reduced
competition
• HIGH: 6 products, w/ 2 new=
increased competition
-Given Round 3 ScenarioHow should adjust your production capacities?
Traditional
Round 01st shift
Capacity
1800
Round 3Unit
Demand
1068
Low End
1400
2081
High End
900
668
Performance 600
823
Size
469
600
Capacity Adjustments
one might make-- based on how much
capacity you would need for the 1st 4
rounds
Evaluate Your Company’s
Production & HR
As soon as he said“Money isn’t Everything”
- I knew we were in trouble
It is important to focus on the means used
to achieve the ends …
…..not just on the ends themselves…
To only focus on
traditional financial
accounting measures
(such as ROI, ROE, EPS…)
…..does not give
mgt the whole
picture….
Performance
needs to be
judged thru mix
Will Make $$$ - if sell
product
of:
financial
measures….
& - non-
financial
measures
…which drive
financial
outcomes
Will sell product if: consumer
get what wants .. knows about &
can get product
To achieve “above’ everyone must
effectively do their job
To effectively do job: must
know what to do
Strategic Thinking- the ten big ideas
9 9. Metrics that matter
Balanced score card- a system that
attempts to balance financial
performance w/ consideration of:
– customer's perspective
– learning & growth perspective
– & internal business processes
perspective
Today …
Vast majority
Fortune 1,000
Companies utilize
a Balanced
Scorecard to help
manage
performance—
because…..
What is measured
gets noticed
What is noticed
gets acted on
What
is acted on
gets improved
For Each Perspective:
Financial…
Objectives Measures Targets Initiatives Responsibility Budget
1.
2.
3.
Customer… Business Processes…Learning & Growth
Objectives Measures Targets Initiatives Responsibility Budget
1.
2.
3.
Balanced Scorecard:
Southwest Airlines Example
Strategy Map
Strategic Theme:
Strategic
Theme:
Operations
Excellence
Objectives
Measures
Operating Efficiency
Profits and
ROA
Financial
Grow
Revenues
Customer
Fewer planes
Attract &
Retain More
Customers
On-time
Service
Lowest
prices
Internal
Fast ground
turnaround
• Profitability
• Grow
Revenues
• 30% +/yr
• 20%
• 5%
• Fewer planes
• # Customers
• More
Customers
• FAA On Time
Arrival Rating
• Flight is on time
• Market Survey
• Lowest prices
• Fast ground • On Ground
turnaround
•
Time
On-Time
Departure
alignment
Ground crew
alignment
• % Ground
crew trained
Initiatives
• 12% growth •Customer
• Ranked #1 loyalty
• Ranked #1 program
• Quality
management
• 30 Minutes • Cycle time
• 90%
optimization
• yr. 1
• Ground crew
Learning
Targets
70%
yr. 3 90%
yr. 5 100%
• Ground crew
training
Capstone's Balanced
Scorecard
M A RKETING
M G T.
S I M U LA T I ON
Can I be
excused my
brain is
full..