You are on page 1of 38

Year

Description
2013 2014 2015 2016

Current Assets 33961 29434 32042


Current Liabilities 32895 33321 37517
Inventory 9172 8153 8401
Total Sales 91612 88785 89469
Fixed Assets 28421 26567 27554
Total Assets 133450 123992 131901
Total Liabilities 61566 60006 65920
Earnings Before Interest and Taxes (EBIT) 10268 11784 12526
Interest Expense 448 401 352
Owners' Equity 71884 63986 65981
Net Income 14456 9066 8531
Average Number of Common Shares 0 0 0
COGS 47553 44730 44199
Market Price per Share 68.8 74.1 74.66
Cash Flow per Share
Dividends Paid 6883 6950 6937
no.shares 3184 3126 3090
Earnings per Share $4.54 $2.90 $2.76
Dividance per Share
2017
[Company Name]
Ratio Analysis

Liquidity Ratios 2014 2015 2016 2017

Definition: Ability to meet short-term obligations


Current Ratio = Current Assets 1.03 = 33961 0.88 = 29434 0.85 = 32042 #DIV/0! = $0
Current Liabilities 32895 33321 37517 $0
Industry Average 0.86 0.86 0.91 2.00
Variance 0.17 0.02 (0.06) #DIV/0!

Quick Ratio = Current Assets – Inventory 0.75 = 33961 - 9172 0.64 = 29434 - 8153 0.63 = 32042 - 8401 #DIV/0! = $0 - $0
Current Liabilities $32,895 $33,321 $37,517 $0
Industry Average 0.28 0.28 0.31 7.20
Variance 0.47 0.36 0.32 #DIV/0!
[Company Name]
Ratio Analysis

Asset Ratios 2014 2015 2016 2017


Definition:

Inventory Turnover Ratio = Total Sales 9.99 = 91612 10.89 = 88785 10.65 = $89,469 #DIV/0! = $0
Inventory 9172 $8,153 $8,401 $0

Industry Average 5.11 5.11 5.11 6.00


Variance 4.88 5.78 5.54 #DIV/0!

Fixed Assets Turnover = Total Sales 3.22 = $91,612 3.34 = $88,785 3.25 = $89,469 #DIV/0! = $0
Ratio Fixed Assets $28,421 $26,567 $27,554 $0

Industry Average 2.00 2.00 2.00 2.00


Variance 1.22 1.34 1.25 #DIV/0!

Total Assets Ratio = Total Sales 0.69 = $91,612 0.72 = $88,785 0.68 = $89,469 #DIV/0! = $0
Total Assets $133,450 $123,992 $131,901 $0
Industry Average 0.72 0.72 0.72 2.00
Variance (0.03) (0.00) (0.04) #DIV/0!
[Company Name]
Ratio Analysis

Debt Ratios 2014 2015 2016 2017


Definition:

Total Debt Ratio = Total Liabilities 46.13% = $61,566 48.40% = $60,006 49.98% = $65,920 #DIV/0! = $0
Total Assets $133,450 $123,992 $131,901 $0
Industry Average 2.00 2.00 2.00 2.00
Variance (1.54) (1.52) (1.50) #DIV/0!

Times-interest-earned (TIE) Ratio = Earnings Before Interest and Taxes (EBIT) 22.91964 = $10,268 29.38653 = $11,784 35.58523 = $12,526 #DIV/0! = $0
Interest Expense $448 $401 $352 $0

Industry Average 2.00 2.00 2.00 2.00


Variance 20.92 27.39 33.59 #DIV/0!

Debt/Equity Ratio = Total Liabilities 85.65% = $61,566 93.78% = $60,006 99.91% = $65,920 #DIV/0! = $0
Owners' Equity $71,884 $63,986 $65,981 $0
Industry Average 2.00 2.00 2.00 2.00
Variance (1.14) (1.06) (1.00) #DIV/0!
[Company Name]
Ratio Analysis

Profitability Ratios 2014 2015 2016 2017


Definition:

Return on Assets Ratio (ROA) = Net Income 11% = $14,456 7% = $9,066 6% = $8,531 #DIV/0! =
Average Total Assets $133,450 ### $131,901
Industry Average 100.00 100.00 100.00 100.00
Variance (99.89) (99.93) (99.94) #DIV/0!

Return on Equity Ratio (ROE) = Net Income 20% = $14,456 14% = $9,066 13% = $8,531 #DIV/0! =
Average Owners' Equity $71,884 $63,986 $65,981
Industry Average 100.00 100.00 100.00 100.00
Variance (99.80) (99.86) (99.87) #DIV/0!

Profit Margin Ratio = Net Income 16% = $14,456 10% = $9,066 10% = $8,531 #DIV/0! =
Total Sales $91,612 $88,785 $89,469
Industry Average 100.00 100.00 100.00 100.00
Variance (99.84) (99.90) (99.90) #DIV/0!

Basic Earnings Power Ratio = Earnings Before Interest and Taxes 8% = $10,268 10% = $11,784 9% = $12,526 #DIV/0! =
Total Assets $133,450 ### $131,901

Industry Average 100.00 100.00 100.00 100.00


Variance (99.92) (99.90) (99.91) #DIV/0!

Earnings per Share Ratio = Net Income #DIV/0! = $14,456 #DIV/0! = $9,066 #DIV/0! = $8,531 #DIV/0! =
Average Number of Common Shares $0 $0 $0
Industry Average 100.00 100.00 100.00 100.00
Variance #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Gross profit Ratio = SALES – COGS 48% = ### - ### 50% = ### - ### 51% = ### - ### #DIV/0! =
SALES $91,612 $88,785 $89,469
Industry Average 100.00 100.00 100.00 100.00
Variance (99.52) (99.50) (99.49) #DIV/0!

Operating profit Ratio = Earnings Before Interest and Taxes 11% = $10,268 13% = $11,784 14% = $12,526 #DIV/0! =
SALES $91,612 $88,785 $89,469
Industry Average 100.00 100.00 100.00 100.00
Variance (99.89) (99.87) (99.86) #DIV/0!

comments
[Company Name]
Ratio Analysis

Market Ratios 2014 2015 2016 2017


Definition:

Earnings per Share = Net Income #DIV/0! = $14,456 #DIV/0! = $9,066 #DIV/0! = $8,531 #DIV/0! = $0
(EPS) Ratio Average Number of Common Shares 0 0 0 0

Industry Average 2.00 2.00 2.00 2.00


Variance #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Price to Earnings Ratio = Market Price per Share #DIV/0! = $68.80 #DIV/0! = $74.10 #DIV/0! = $74.66 #DIV/0! = $0.00
Earnings per Share #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Industry Average 2.00 2.00 2.00 2.00
Variance #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Price to Cash Flow = Market Price per Share #DIV/0! = $68.80 #DIV/0! = $74.10 #DIV/0! = $74.66 #DIV/0! = $0.00
Ratio Cash Flow per Share $0.00 $0.00 $0.00 $0.00

Industry Average 2.00 2.00 2.00 2.00


Variance #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Payout Ratio = Dividends Paid 0.48 = $6,883.00 0.77 = $6,950.00 0.81 = $6,937.00 #DIV/0! = $0.00
Net Income $14,456.00 $9,066.00 $8,531.00 $0.00
Industry Average 2.00 2.00 2.00 2.00
Variance (1.52) (1.23) (1.19) #DIV/0!
[Company Name]
Ratio Analysis

Growth Ratios 2014 2015 2016 2017


Definition:

annual growth in sales = pev. slaes-actual sales #DIV/0! = $91,612 - $0 -3.09% = $88,785 - $91,612 0.77% = $89,469 - $88,785 -100.00% = $0
(EPS) Ratio pev. Sales $0 $91,612 $88,785 $89,469

annual growth in net income = pev. net income-actual net income #DIV/0! = $14,456 - $0 -37.29% = $9,066 - $14,456 -5.90% = $8,531 - $9,066 -100.00% = $0
pev net income $0 $14,456 $9,066 $8,531

= pev.EPS-actual EPS #DIV/0! = $5 - $0 -36.12% = $3 - $5 -4.83% = $3 - $3 -100.00% = $0


annual growth in EPS
pev.EPS $0 $5 $3 $3

annual growth in devidens per share = pev. DPS-actual DPS #DIV/0! = $0 - $0 #DIV/0! = $0 - $0 #DIV/0! = $0 - $0 #DIV/0! = $0
pev. DPS $0 $0 $0 $0
Ratio Years
2014 2015 2016
Liquidity Ratios
Current Ratio times 1.03 0.88 0.85
Quick Ratio times 0.75 0.64 0.63
Asset Ratios
Inventory Turnover Ratio times 9.99 10.89 10.65
Fixed Assets Turnover Ratio times 3.22 3.34 3.25
Total Assets Ratio times 0.69 0.72 0.68
Debt Ratios
Total Debt Ratio % 46% 48% 50%
Times-interest-earned (TIE) Ratio times 22.92 29.39 35.59
Debt/Equity Ratio % 86% 94% 100%
Profitability Ratios
Return on Assets Ratio (ROA) % 11% 7% 6%
Return on Equity Ratio (ROE) % 20% 14% 13%
Profit Margin Ratio % 16% 10% 10%
Basic Earnings Power Ratio % 8% 10% 9%
Earnings per Share Ratio #DIV/0! #DIV/0! #DIV/0!
Gross profit Ratio % 48% 50% 51%
Operating profit Ratio % 11% 13% 14%
Market Ratios
Earnings per Share times #DIV/0! #DIV/0! #DIV/0!
Price to Earnings Ratio times #DIV/0! #DIV/0! #DIV/0!
Price to Cash Flow Ratio times #DIV/0! #DIV/0! #DIV/0!
Payout Ratio times 0.48 0.77 0.81
book value per share times 22.58 20.47 21.35
market /book value ratio times 3.05 3.62 3.50
Growth Ratios
annual growth in sales % #DIV/0! -3% 1%
annual growth in net income % #DIV/0! -37% -6%
annual growth in EPS % #DIV/0! -36% -5%
annual growth in devidens per share % #DIV/0! #DIV/0! #DIV/0!

finance check list:


1-where is the firm financially strong and week as indicated by financial ratio analysis
2-can the firm raise needed short term capital
3-can the firm raise needed long term capital through debt and or eqyity
4-dose the firm have sufficint working capital working capital
5-are capital budgeting procedures sffective
1 6-are divdend payout policies reasonable
2 7-dose the firm have good relations with its investors and stack holders
3 8-are the firm financial managers experienced and well trined
4 9-is the firm debt situation excelent

strength weekeness
1
2
3
4
Years
2017 Industry healthy result

#DIV/0! 0.91 high should be >1


#DIV/0! 0.31 moderate

#DIV/0! high
#DIV/0! high
#DIV/0! high

#DIV/0! low
#DIV/0! high
#DIV/0! low

6% high
13% high
10% high
9% high
#DIV/0! high
51% high
14% high

#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!

-100%
-100%
-100%
#DIV/0!

working capital

eness
marketing
A-customer analysis
1-examin customer needs and wants
2-analyzing consumer info.
3-customer survey
4-develop customer profile
5-devolp optimal market segmentaion strategy
B-selling product and services
1-advertising
2-sales promotion
3-publicity
4-personal selling
5-sales force management
6-customer relation
7-delar relation
C-product and service planning
1-test marketing
2-product and brand
3-positioning
4-devising warranties product development or diversification
5-packing
6-product option
7-feature
8-style
9-quality
9-dleting old product
10-provide customer service
D-pricing
affect pricing
1-consumers
2-governments
3-suppliers
4-distributers
5-competitors
E-distribution:
1-distribution coverage
2-retail site location
3-sales territories product development or forward integration
4-inventory levels and locations
5-transportation carriers
6-wholesaling and retails

F-market reseach:
gathering recording and analyzing data

G:cost benefits
assesing :
cost
benfits
risk

Marketing Audit
1.Are markets segmented effectively?
2.Is the organization positioned well among competitors?
3.Has the firm’s market share been increasing?
4.Are the distribution channels reliable & cost effective?
5.Is the sales force effective?
6.Does the firm conduct market research?
7.Are product quality & customer service good?
8.Are the firm’s products and services priced appropriately?
9.Does the firm have effective promotion, advertising, and publicity strategies?
10.Are the marketing, planning, and budgeting effective?
11.Do the firm’s marketing managers have adequate experience and training?
12.Is the firm’s Internet presence excellent as compared to rivals?
management
planning Beginning of management process
Bridge between present & future
Improves likelihood of attaining desired results
organizing
Achieves coordinated effort
Defines task & authority relationships
Determines who does what
Determines who reports to whom

motivating
Leadership
Group dynamics
Communication
Organizational change
staffing
Personnel management
Human resource management
controling
Establishing performance standards
Ensure actual operations conform to planned operations
Taking corrective actions

Management Audit Checklist

Does the firm use strategic management concepts?


Are objectives/goals measurable? Well communicated?
Do managers at all levels plan effectively?
Do managers delegate well?
Is the organization’s structure appropriate?
Are job descriptions clear?
Are job specifications clear?
Is employee morale high?
Is employee absenteeism low?
Is employee turnover low?
Are the reward mechanisms effective?
Are the organization’s control mechanisms effective?

operation
Process
Capacity
Inventory
Workforce
Quality

Production/Operations Audit
•Are suppliers of materials, parts, etc. reliable and reasonable?
•Are facilities, equipment, machinery, and offices in good condition?
•Are inventory-control policies and procedures effective?
•Are quality-control policies & procedures effective?
•Are facilities, resources, and markets strategically located?
•Does the firm have technological competencies?

R&D
Development of new products beforecompetitors
Improving product quality
Improving manufacturing processes to reduce costs
These functions can be done internally or externally
Research & Development Audit
•Are the R&D facilities adequate?
•If R&D is outsourced, is it cost-effective?
•Are the R&D personnel well qualified?
•Are R&D resources allocated effectively?
•Are MIS and computer systems adequate?
•Is communication between R&D and other organizational units effective?
•Are present products technologically competitive?

Management Information Systems


Improve performance of an enterprise by improving the quality of managerial decisions

Are strategists of the firm familiar with the information systems of rival firms?
Is the information system user-friendly?
Do all users understand the competitive advantages that information can provide?
Are computer training workshops provided for users?
Is the firm’s system being improved?

value chain management

The process whereby a firm determines the costs associated with:


Purchasing raw materials
Manufacturing products
Marketing products
And compares them to the value chain of rival firms

Core competencies
Distinctive competencies
Benchmarking

Transforming Value Chain Activities into Sustained Competitive Advantage


Value Chain Activities Are Identified and Assessed
Core Competencies Arise in Some Activities
Some Core Competencies Evolve into Distinctive Competencies
Some Distinctive Competencies Yield Sustained Competitive Advantages
Key Internal Factors Weight Rating Weighted
Score
Strengths

1.       The company’s cost cutting 
practices have reduced negative 
net income from -$198 million in 
January 2005 to -$42 million in  0.1 3 0.3
January 2007.

2.       As of January 2007, there 
are 296 stores open in US and 
123 internationally and there are 
plans to open additional 200  0.1 4 0.4
stores abroad.

3.       Brand name recognition,  0.06 4 0.24


strong tradition, and recognizable 
menu.
4.       Corporate web site is well  0.04 3 0.12
designed and navigable and offers 
many items for sale.
5.       Addition of frozen drinks to  0.06 3 0.18
its menu.

6.       All Krispy Kreme doughnuts  0.06 4 0.24


are cooked in 100 percent 
vegetable oil.
7.       Open late hours to cater to  0.06 4 0.24
travelers.

8.       Hot Doughnuts Now sign  0.06 4 0.24


lures in potential customers.

Weaknesses

1.       The company's stock has 
tumbled from $50 per share to $ 
2.50 per share and most Wall 
Street analysts recommend the  0.1 2 0.2
stock as a "strong sell."

2.        The  company  recently  hired  new 


CEO,  James  Morgan,  to  replace  the  old 
CEO  Daryl  Brewster.    This  makes  Mr. 
Morgan  Krispy  Kreme’s  third  CEO  in  4  0.05 2 0.1
years

3.        Last  quarterly  revenue  growth  was 


-11.70 percent compared to 18.60 percent 
of    direct  competitor,  Tim  Horton's,  for 
the same period.
3.        Last  quarterly  revenue  growth  was 
-11.70 percent compared to 18.60 percent 
of    direct  competitor,  Tim  Horton's,  for 
the same period. 0.05 1 0.05

4.        The  company  has  completley  0.06 2 0.12


withdrawn  from  the  big  city  markets 
such as Boston and Chicago.
5.        The  doughnuts  have  the  high 
content  of  calories  and  fat,  such  as 
Original Glazed with 200 calories and 12 
grams  of  fat  that  is  18  percent  of  daily  0.1 1 0.1
value.

6.        The coffee  brand offered have only  0.05 1 0.05


4  different  roasts  and  no  other 
caffeenated drinks except for drip coffee.
7.        Force substantioanly large capital of  0.05 1 0.05
$30 million for foreign franchisees. 

TOTAL 1 2.63
PEST
Political, Governmental, and Legal Forces
Key
Special tariffs
Tax law changes
PAC’s
Voter participation rates
Regulation/deregulation
Environmental protection laws
Changes in patent laws
Equal employment legislation
Government subsidies
Number of patents
Import/export regulations
Global relationships
Political conditions
Location and severity of terrorist activity
Anti-trust enforcement

Economic Forces
Key
Trends in the dollar’s value
European Union
Layoffs
Economic standard of living

Social, Cultural, Demographic, and Environmental Forces


Actuarial RatesMonitor KeyVariables
Per Capita Income
Attitudes Toward Business
Avg. Disposable Income
Consumer Behavior
Monitor Key
VariablesEthical ConcernsAttitudes Toward Saving
Racial Equality
Avg. Educational LevelMonitor KeyVariables
Governmental Regulation
Attitudes Toward Customer ServiceAttitudes Toward QualitySocial
Energy Conservation
Monitor Key
Variables
Social ResponsibilityLeisure-Time Values
Recycling
Waste Management
Monitor Key
Variables
Air & Water Pollution
Ozone Depletion
Endangered Species
Technological ForcesMajor
ForcesMajor Impact –
•Internet
•Communications
•Semiconductors
Competitive Forces
Identifying Rival Firms
•Strengths
•Weaknesses
•Capabilities
•Opportunities
•Threats
•Objectives
•Strategies

The Five-Forces Model


1-Rivalry Among Competing Firms
number of firms
market growth
switching costs
product differentiation
storage costs
Gain competitive advantage through many competitive moves;
Changing prices
Product differentiation
Manage channels of distribution/suppliers

2-Potential Development of Substitute Products


Pressures increase when consumers’ switching costs decrease
Firm’s plans for increased capacity & market penetration

3 Potential Entry of New Competitors


Barriers to entry are important
Quality, pricing, and marketing can overcome barriers

4-Bargaining Power of Consumers


Customers concentrated or buying in volume affects intensity of competition
Consumer power is higher where products are standard or undifferentiated
Conditions Where Consumers GainBargaining Power
If they can inexpensively switch
If they are particularly important
If sellers are struggling in the face of falling consumer demand
If they are informed about sellers’ products, prices, and costs
If they have discretion in whether and when they purchase the product

5-Bargaining Power of Suppliers


Large number of suppliers & few substitutes affects intensity of competition
Backward integration can gain control or ownership of suppliers

models
porter model
ndustry Analysis: Competitive Profile Matrix (CPM)
Porter 5 forces model
Key External Factors Weight Rating Weighted
Score
Opportunities
1.       Economies in China and India grew 11.5 and 8 
percent in 2007, and are expected to grow 8 and 7 
percent respectively in next 5 years. 0.08 4 0.32

2.       Weak US dollar makes US products and 
technologies more affordable in Europe and Asia.
0.08 4 0.24
3.       Popularity of premium coffee drinks and their  0.05 3 0.15
addition to fast food menus.
4.       Growing popularity of canned coffee drinks,  0.05 4 0.2
especially in Japan and China.
5.       The industry growth of 7.9 percent in last 5  0.12 3 0.36
years.
6.       Consumers demand more foods made out of  0.04 3 0.12
organic products.
7.       Increasing popularity of diets which do not place 
strict limitations on lower fat, carbohydrate, and 
sugar content. 0.04 3 0.12
8.       An average diet costs of $85.79 per week is 
substantially more than average food expense of 
$54.44 0.04 4 0.16
9.       E-commerce continues to grow, third quarter 
sales in 2007 were $34.7 billion, a 3.6 percent 
increase from the previous quarter. 0.05 3 0.15
Threats
1.       Sluggish US economy is causing a decrease in  0.08 3 0.24
consumer spending.
2.       Growing health concerns and correlation 
between higher risk of diabetes and heart problems 
caused by excessive weight.
0.07 4 0.28
3.       The competitors' sales grew by an industry  0.05 4 0.2
average 7.90 percent in past five years.
4.       Starbucks opened 2,199 new stores world wide  0.03 4 0.12
in 2006.
5.       USDA is now projecting 2008 food prices could 
increase as much as 4.5 percent, which is the top end 
of their 3.5 percent to 4.5 percent projection.
0.08 3 0.24
6.       The price increase in raw materials such as  0.05 3 0.15
sugar, coffee, wheat, cooking oil.
7.       The energy prices are on constant rise and cause  0.04 4 0.16
increase in operational expenses.
8.       Dunkin Donuts and other competitors diversified  0.05 3 0.15
their menus and beverages that they are offering to 
their customers.
TOTAL 1 3.36
STRATEGIES
 Vertical Integration Strategies (Gain Control Over: Distributors, Suppliers, Competitors)
1-Forward Integration(Gain Control Over ---Distributors, Retailers)
 Guidelines 
Current distributors – expensive or unreliable
Availability of quality distributors – limited
Firm competes in industry expected to grow markedly
Firm has both capital & HR to manage new business of distribution
Current distributors have high profit margins

2-Backward Integration (Ownership or Control -- Firm’s suppliers)
Guidelines 
Current suppliers – expensive or unreliable
 of suppliers is small; # competitors is large
High growth in industry sector
Firm has both capital & HR to manage new business
Stable prices are important
Current suppliers have high profit margins
3-Horizontal Integration (Ownership or Control  --Firm’s competitors)
Guidelines 
Gain monopolistic characteristics w/o federal government challenge
Competes in growing industry
Increased economies of scale – major competitive advantages
Faltering due to lack of managerial expertise or need for particular resource

Intensive Strategies : Improve competitive position with existing products


1-Market Penetration (Increased Market Share)
·         Present products/services
·         Present markets 
·         Greater marketing efforts
           Guidelines 
Current markets not saturated
Usage rate of present customers can be increased significantly
Shares of competitors declining; industry sales increasing
Increased economies of scale provide major competitive advantage

2-      Market Development (New Markets -- Present products/services to new geographic areas)
Guidelines 
New channels of distribution – reliable, inexpensive, good quality
Firm is successful at what it does
Untapped/unsaturated markets
Excess production capacity
Basic industry rapidly becoming global
3-      Product Development(Increased Sales -- Improving present products/services, Developing new prod
Guidelines 
Products in maturity stage of life cycle
Industry characterized by rapid technological development
Competitors offer better-quality products @ comparable prices
Compete in high-growth industry
Strong R&D capabilities

 Diversification Strategies (  Less Popular -- More difficult to manage diverse business activities)


1-      Concentric Diversification (New & related products/services)
Guidelines 
Compete in no/slow growth industry
New & related products increases sales of current products
New & related products offered at competitive prices
Current products—decline stage of product life cycle
Strong management team

2-      Conglomerate Diversification(New & unrelated products/services) 
Guidelines 
Declining annual sales & profits
Capital & managerial ability to compete in new industry
Financial synergy between acquired and acquiring firms
Current markets for present products - saturated
3-      Horizontal Diversification(New & unrelated products/services for current customers)
Guidelines 
Adding new products/services would significantly increase revenues
Highly competitive and/or no-growth industry; low margins & returns
Current distribution channels can be used
New products have counter cyclical sales patterns

 Defensive Strategies 
1-      Retrenchment: (Regrouping , Cost & asset reduction to reverse declining sales & profit)
Guidelines 
Failed to meet objectives & goals consistency; has distinctive competencies
Firm is one of weaker competitors
Inefficiency, low profitability, poor employee morale, pressure for stockholders
Strategic managers have failed
Rapid growth in size; major internal reorganization necessary

2-      Divestiture(Selling a division or part of an organization)
Guidelines 
Retrenchment failed to attain improvements
Division needs more resources than are available
Division responsible for firm’s overall poor performance
Division is a mis-fit with organization
Large amount of cash is needed and cannot be raised through other sources

3-      Liquidation: Selling , Company’s assets, in parts, for their tangible worth
Guidelines 
Retrenchment & divestiture failed
Only alternative is bankruptcy
Minimize stockholder loss by selling firm’s assets
Marketing strategies:
Principles of defensive marketing warfare
1.      Only the market leader should consider playing defense.
2.      The best defensive strategy is the courage to attack.
3.      Strong competitive moves should always be blocked.

Defensive strategies: For market leader
A)    Position defense: of the current market (weakest way)
B)    Mobile defense: market broadening, diversification into unrelated industries.
C)    Flanking defense: Don't ignore secondary markets
D)    Contraction defense: withdraw from segments &/or geographical regions which are most vulnerable
E)     Pre-emptive defense: Striking first by first gathering information about the competitors and capitalizing on comp
F)     Counter offensive attack: response after the attack by:
·         Attack head on
·         Attacker's flank
·         Pincer movement

Principles of offensive marketing warfare


The main consideration is the strength of the leader’s position
Find weakness in the leader’s strength and attack at that point.
Launch the attack on as narrow a front as possible.

Offensive strategies: For market challenger
G)Frontal attacks: matching competitors in everything (should have superior resources & willing to persevere.
H)Flank attack: attack part of  the market where the competitor is weak
I)Bypass attack: offer new type of product that makes the competitors product unnecessary
J)Encirclement: Encircles the competitor's position in terms of products or markets or both.
K)Guerrilla warfare: "Hit & Run", small intermittent assaults on different market segments (think of exit strategies)

Principles of flanking marketing warfare


 must be made into an uncontested area.
1. Tactical surprise ought to be an important element of the plan.
2. The pursuit is as critical as the attack itself.

Principles of guerrilla marketing warfare
1. Find a segment of the market small enough to defend.
2. No matter how successful you become, never act like the leader.
3. Be prepared to bugout at a moment’s notice.
ew geographic areas)
services, Developing new products/services)

rrent customers)

ning sales & profit)
re most vulnerable
titors and capitalizing on competitive advantage

s & willing to persevere.

ssary
both.
ments (think of exit strategies)
SWOT Matrix

SPACE Matrix
Steps required to develop a SPACE Matrix are as follows:
1-Select a set of variables to define the financial strength (FS),
competitive advantage (CA), environmental stability (ES), and industry
strength
2-Assign(IS).
a numerical value ranging from +1 (worst) to +6 (best) to each
of the variables that make up the FS and IS dimensions. Assign a
3-Compute an average score for FS, CA, IS and ES by summing the
values given to variables of each dimension and then by dividing by the
4-Plot the average scores for FS, IS, ES, and CA on the appropriate
axis in the SPACE Matrix.
5-Add the two scores on the x-axis and plot the resultant point on X.
Add the two scores on the y-axis and plot the resultant point on y.
6-Draw a directional vector form the origin of the space Matrix through
the new intersection point. The vector reveals the type of strategies
analysis

see charts

BCG Matrix
§Enhances multi-divisional firm in formulating strategies
§Autonomous divisions = business portfolio
§Divisions may compete in different industries
§Focus on market-share position & industry growth rate

Relative Market Share Position


§Ratio of a division’s own market share in an industry to the market share held by the large
analysis

Question Marks
§Low relative market share – compete in high-growth industry
§Cash needs are high
§Case generation is low

§Decision to strengthen (intensive strategies) or divest

Stars
§High relative market share and high growth rate
§Best long-run opportunities for growth & profitability

§Integration strategies, intensive strategies, joint ventures

Cash Cows

§High relative market share, competes in low-growth industry


§Generate cash in excess of their needs
§Milked for other purposes
§Maintain strong position as long as possible
§Product development, concentric diversification
§If weakens—retrenchment or divestiture

Dogs
§Low relative market share & compete in slow or no market growth
§Weak internal & external position
§Liquidation, divestiture, retrenchment

Grand Strategy Matrix


§Tool for formulating alternative strategies
§Based on two dimensions
§Competitive position
§Market growth
as follows:
re held by the largest rival firm in that industry.

You might also like