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Strategic Management (STRAMAN) M71 Submitted by: Sato, Hiroyuki Tiburcio, Dan Jason Villanueva, Quennie Joyce Submitted to: Dr. Nestor Nisperos
To be able to continue expanding the business by establishing more branches in areas where operation will boom with the aid of proper and well-built management in the business. MISSION Buguis Merchandise is fully committed in serving its customers to a bigger and better quality of service through dedication of maintaining its smooth relationship with not only its customers and clients but with its employees too.
Threats Hold-ups Theft Bankruptcy due to bad debts made by the customers New competition Non-moving stocks Loss of customers Price hike .15 .05 .10 .05 .10 .05 .05 1.00 3 2 2 1 2 1 1 .45 .10 .20 .05 .20 .05 .05 2.35
Total
b) Positioning Zapote areas are easily flooded because goods that are damaged by flood cannot be sold. The business is far from the bank which makes them uneasy to bring
may be given terms for two weeks or a month in maximum. Main branch near the well known Zapote-Wet Market. The streets of Zapote area always crowded so there are many customers all the time especially weekend and peak seasons. The back of the store is a village so its a big advantage for retail.
Weight
Rating
Weighted Score
.3 .2 .03 .02
4 3 2 2
b) Positioning Major branch in Zapote attracts customers since near wet market. Deliveries are free on board around Cavite, Las Pinas and Paranaque area. Gives terms for two weeks or a month in maximum for new and trusted customers
1 1 3
Weaknesses a) Products Prices changes all the time Large quantity selling to customers results to bad debts .03 .02 3 2 .09 .04
b) Positioning Zapote areas are easily flooded because goods that are damaged by flood cannot be sold The business is far from the bank which makes then uneasy to bring large amounts of money with them
3 2 1
Lack of security
Total
1.00
1.93
Strengths- S a) Product Good Quality (S1) Low Price (S2) Large Quantity of Sales (S3) Different Varieties of Products (S4) b) Positioning
Weaknesses- W a) Products Prices change all the time (w1) Large quantity selling to customers results to bad debts (w2) b) Positioning
Opportunities- O
Major branch in Zapote attracts customers since near wet market. (S5) Deliveries are free on board around Cavite, Las Pinas and Paranaque area. (S6) Gives terms for two weeks or a month in maximum for new and trusted customers (S7) SO Strategies Expansion of business in
Zapote wet market (O1S5) Adding a bakery since large quantity of sales (O2S3) Expansion of different varieties of products (O1S4)
Zapote areas are easily flooded because goods that are damaged by flood cannot be sold. (w3) The business is far from the bank which makes them uneasy to bring large amounts of money with them. (w4) Lack of security (w5)
WO Strategies Expansion to areas were flood is not easily affecting the business (O1W3) Expansion to areas near the bank (O1 W4) Adding a bakery without changing the prices at all times instead seasonally (O2W1)
Threats- T
ST Strategies Good quality of products for the new competition arising (S1T4) Gives terms to customers to avoid bad debts by the customers (S7T3) Free deliveries to nearby areas to avoid hold ups (S6T1)
WT Strategies Large quantity sold to customer leads to bankruptcy (W2T3) Lack of security causes thefts and hold ups (W5 T1T2) Price change at all time results to loss of customers (W1T6)
Hold-ups (T1) Theft (T2) Bankruptcy due to bad debts made by the customers (T3) New competition (T4) Non-moving stocks (T5) Loss of customers (T6) Price hike (T7)
SPACE Matrix
FS
Conservative CA
+ 1 + 2
+6 +5 +4 +3 +2 +1
Aggressive Diversification
+1 +5 -3 -2
-1 -2 -3 -4 -5 -6
+2 +6
+3
+4 IS IS
-6 -5 -1Defensive
+ 3
-4
Retrenchment
ES Internal Strategic Position +1 (worst) to +6 (best) Financial Strength (FS) Working Capital +3 Earnings Per Share +3 Return On Investment +4 Price Earnings Ratio +2 Average: 3 External Strategic Position -1 (best) to -6 (worst) Environmental Stability (ES) Price Range of Competing Products -3 Competitive Pressure -5 Ease of Exit From Market -3 Risk Involved in Business -5 Average: -4
Product Quality +4 Customer Loyalty +2 Market Share +2 Technological Know-How +2 Average: 2.5
X-Axis = 0.5 Y-Axis = -1 An organization that is competing fairly well in an unstable industry.
BCG Matrix
Medium .50
High 1.0
High +20
Low 0.0
Market development
Stars II
Question Marks I
Medium 0
Retrenchment Divestiture
Dogs IV
IE Matrix
The IFE total weighted scores
Strong Average Weak
IV
V 3- 22%
VI
VII
VIII
IX
Division 1 2 3 Total
Weak Competiti ve
Quadrant II
Quadrant I
Strong Competiti ve
1. 2. 3.
1. 2.
Quadrant III
Quadrant IV
Key Factors
Opportunities Adding a new branch Adding a bakery in the business Threats Hold-ups Theft Bankruptcy due to bad debts made by the customers New competition Non-moving stocks Loss of customers Price hike
rating
.20 .15
AS 4 4
3 2 1 1
2 2
.10 .10
2 3 2 2 4
Strengths
a) Product Good Quality Low Price Large Quantity of Sales Different Varieties of Products b) Positioning Major branch in Zapote attracts customers since near wet market. Deliveries are free on board around Cavite, Las Pinas and Paranaque area. Gives terms for two weeks or a month in maximum for new and trusted customers. Weaknesses a) Products Prices change all the time Large quantity selling to customers results to bad debts b) Positioning Zapote areas are easily flooded because goods that are damaged by flood cannot be sold. The business is far from the bank which makes them uneasy to bring large amounts of money with them. Lack of security
3 3 3 3 2 2 -
4 2 -
.04 .04 -
3 3 4 -
.03 .02
1 2
. 03 .04
4 -
.12 -
.20
.05 .10
3 .15 -
Total
2.00
3.78
1.48
2.51
Expansion Advantage Allows to experienc e new possibilitie s and overall growth Form of developm ent in the business Improves the quality and quantity of the product Essential pace for more profits and overall improvem ent Takes the high road and sets up more places to expand clientele and reach Disadvantage Focuses on slow and steady growth Difficult to judge the success of the growth Propels your business ahead but fortunate to find a certain market niche Leads to bankruptcy Warned against seeking rapid or widespread change
Diversification Advantage Achieve their potential in a developing economy by taking advantage of existing expertise such as expanding into new activities (Concentric) help in leveraging the new products to that brand which helps in spreading their customer base Enhances the product portfolio of the company by introducing complimentin g products Control of inputs leading to continuity and improved quality Disadvantage Achieve their potential in a developing economy by taking advantage of existing expertise such as expanding into new activities (Concentric) help in leveraging the new products to that brand which helps in spreading their customer base Enhances the product portfolio of the company by introducing complimenting products Control of inputs leading to continuity and improved quality and markets by guaranteeing sales and distributions Provides better risk control and movement away from declining activities and spread risks.
Backward integration Advantage Generates cost savings Potential to reduce cost Suppliers have sizable profit margins Resource requirements are easily met Reduces risk depending on suppliers Disadvantage Competence to undertake Boost resource requirements Locks firms into same industry Reduces flexibility to make changes in component parts Requires radically different skills
Provides better risk control and movement away from declining activities and spread risks.
Step 9 and 10
Income Statement Remarks
Revenue increase
Prior year
P658, 300
Projected year
P987, 450 50%
Cost of Goods Sold Sales (274,114) Gross Profit 384,186 Selling expense (28,681) 15% of sales Earnings before interest and taxes 355,505 Tax Expense (113,761.60) rate Net Income (Beginning of Year) Dividends Retained Earnings 241,743.40 61,350 (16,000) _ P 287,093.40
691,215 70% of sales 296,235 ( 148,117.50) 148,117.50 (47,397.60) 100,719.90 287,093.40 (16,000) P371, 813.30
32%
Buguis Merchandising Company Balance sheet As of December 31 2009 ASSETS Prior year Projected year Remarks CURRENT Cash P20, 000 P157,750.50 25% Assets Accounts Receivable 44,833 126,200.40 20% Assets Inventory 15,657 23,485.50 50% increase Prepaid Expenses ---2,205 Total current Assets 80, 490 309,641.40 Plant and Equipment 175%Asset Less Depreciation Total Fixed Assets Total Assets LIABILITIES Accounts Payable Notes Payable increase 37,247 184,042.25
(12,570) (78,875.25) 75% Asset 24,677 105, 167 P105,167 P414,808.40 P19, 343 P 17,100 10% decrease 9,474 10,895.10 15%
28,817
27,995.10
Additional paid in capital 15,000 Retained Earnings 61,350 Total Liabilities and Net Worth
P414,808.40
LONG-TERM COMPANY OBJECTIVE The company should generate an increase of 50% in revenues in a year through expansion, diversification, and backward integration.
POLICIES To purchase more inventory through the suppliers To gain one or more suppliers To establish high or low safety stock of inventory To promote certain products Gain more connections to the suppliers and clients Provide logistics training to the delivery employees Provide time management training to the delivery employees