Comprehensive Exam Answer structure (Product Business)

The answer of the comprehensive case will be structured as follows:-

Step 1:- Financial Analysis, Relative Technique Evaluation (Ratios)

Step 2:- Introduction:

Corporate name, SBUs, divisions, Territories, industry, products, customer branding, competitors, competitive advantage
Strategy Formulation (Strategic Mng. Level)

Step 3:- Develop Vision & Mission Statements

Step 4 :- The Input Stage

External Factor Internal Factor
Evaluation (EFE) Competitive Profile Matrix Evaluation (IFE)
Matrix Matrix

Step 5:- long term objectives (strategic objectives leads financial objectives)

Step 6 :- The Matching Stage

Strategic Position and
Action Evaluation Internal – External (IE) Matrix
(SPACE) Matrix

Step 7:- The Decision Stage, Quantitative Strategic Planning Matrix (QSPM)
 Step 8, Strategy Implementation (Functional/Operational Mng. Level) as follows:
Functional / Operational Plans

Production/Operation Plan
Marketing Plan Finance Plan HR Plan R&D , MIS Plan
Executive EPS/EBIT Analysis
Summary
Financial Budgets
Situation Analysis
Macro, Micro and
Financial analysis Sales Expenses Divisional
"Summary from Budget Budget Budget
strategy
formulation"

Marketing
Annual
Objectives

Marketing
Strategy
Competitive:- Cost leadership (High demand , Economy of scale) , need less skill in marketing
Differentiation (Using competitive advantage), seek quality leadership and effectively communicate their quality
Focus (Niche) (Localized Differentiation), business focuses on one or more narrow market segment
Growth (Ansoff) :- Market penetration (convert non user to user , Increase the consumption of actual users)
Partial or complete development of new product (Product development)
New Market Development (New Geographic coverage, Globalization)
Diversification (Related or Unrelated)

Segmentation: - Geographic, Demographic, Psychographic

Targeting
Marketing Mix: - 4 Ps (Product , Place , Price, Promotion)
Positioning
Financial Analysis using Ratios:-

Scenario (1) Scenario (2)

Market Remarks
.Liquidity Ratios Formula 2008 2009 2010 2010
Index
Current Ratio Current Assets/Current Liabilities *Overall Decreased Trend (2010 < 2008):-
(Times) If the result is less than industry average or is decreased from
last year, So The comment will be:
The firm has a great risk in related to its ability to satisfy it's
short term obligations which is critical indication for both
creditors & shareholders.

* Overall Increased Trend (2010 > 2008):-

If the result is greater than industry average then:
From shareholder standpoint, a high current ratio could mean
that the firm has a lot of money tied up in non-productive
assets.

From creditors point of view, an encouraged indicator that the

claims of short term obligations are covered by assets that
expected to be converted to cash fairly quickly.

Note:-
Current ratio = 1 – 1.4 …… Bad
Current ratio = 1.5 – 2 …… Slightly bad to Good
Current ratio > 2 …….. ….. Strong situation

Scenario (1) Scenario (2)

Profitability Market Remarks
Formula 2008 2009 2010 2010
Ratios Index
Gross Profit Gross Profit /Total Sales (%) *Decreased Trend (2010 < 2008):-
Margin (%) Limited chain value and needs to minimize the cost of
Gross profit = Sales-COGS (cost suppliers of raw materials, production process and logistics.
of goods sold) (Cost Leadership Strategy is a must and optional integration
strategy).
Total sales= Net revenue
*Increased Trend (2010 > 2008):-
Efficient performance of production & logistics.
Operating EBIT / Total Sales (%) *Decreased Trend (2010 < 2008):-
Income Margin EBIT=Earnings before interest & High operational risk that indicates to poor operation
OR EBIT Margin tax =revenues-COGS-operating management and needs some advancement.(Retrenchment
(%) expenses strategy)

*Increased Trend (2010 > 2008):-

Efficient operation management performance.
Net Profit Net Income / Total Sales (%) *Decreased Trend (2010 < 2008):-
Margin NOI (%) The company is using more debt to finance operations which
leads to increased interest rates.
“Net Operating Income From Operations = Gross We recommend:-
Income “ profit or margin - Operating 1- The firm should change its financial strategy to
Expenses depend more on equity rather than debt.
2- Firm should change its marketing strategy to increase
Net Income = Income From sales in less operations cost to increase its net
Operations + Non Operating income.
Income - Taxes
*Increased Trend (2010 > 2008):-
High combined performance of liquidity, assets and debt
management on operating results.
Return on Net Profit (Income) After Taxes / *Decreased Trend (2010 < 2008):-
Assets(ROA) Total Assets (%) This means poor management performance due to utilizing its
(ROI) assets in inadequate way. also means that the firm is paying
more interest expenses which decrease the net income .We
recommend:-
1. Avoid inadequate inventory or insufficient
production capacity.
2. The firm should change its financial strategy to be
more effective in managing its assets

*Increased Trend (2010 < 2008):-

High performance in managing Assets that facilitates planning
for expansion.

Scenario (1) Scenario (2)

Leverage (Debt) Market Remarks
Formula 2008 2009 2010 2010
Ratios Index
Debt to Asset Total Liabilities (Debt) /Total *Overall Decreased Trend (2010 < 2008):-
Ratio (Total Debt assets (%) Creditors prefer low debt ratios because the lower the ratio,
Ratio) the greater the cushion against creditors' losses in the event of
Note : total debt = total assets – liquidity.
total equity Stockholders, on the other hand, may want more leverage
because it magnifies expected earnings.

* Overall Increased Trend (2010 > 2008):-

According to the ratio value > 30%, Financial department
needs to re-configure company "Finance Plan" depends more
on "Equity"
Note:-
If the ratio = 30% , it means that 30% of the company assets
are financed by "Debt" and the other 70% comes from
"Equity"
Long Term objectives:-

Financial Objectives Strategic Objectives Notes:-

1. Growth in Revenue 1. Larger market share There is a trade-off between financial
2. Growth in Earnings 2. Quicker on-time delivery than rivals and strategic objectives
3. Higher dividends 3. Shorter design-to-market times than rivals
4. Large profit margins 4. lower costs than rivals Financial objectives can best be met
5. Greater return on investment 5. Higher product quality than rivals by focusing first and foremost on
6. Higher Earning per share 6. Wider geographic coverage than rivals achievement of strategic objectives
7. Rising Stock price 7. Achieving ISO 14001 (Environment) & ISO 18001 (Occupational Safety) that improve a firm's competitiveness
8. Improved cash flow 8. Achieving technological leadership and market strength
Marketing Plan:-

Item in Market
Market Penetration Strategy Market development Strategy
Plan
Executive Summary
Situational & Financial Analysis
-Increase our market share by 10%
-Increase (4-6) new outlets "according to financial
Annual "SMART" objectives situation" and re-arrange its distributed network to
widen brand coverage & customer accessibility
- Increase Revenue by 20%
According to financial analysis ,Cost leadership to
Competitive strategy achieve lowest production and distribution costs that
can under price competitors and win market share
Convert nonusers to users.
Growth strategy
Increase consumption of current users.
Segmentation (Market segments opportunities)
Geographic: - the new outlets will be in new regions
Not all segments are useful
and neighborhood (NOT countries) that not reached
An ideal Market segment must be:
before.
Measurable (purchasing power can be measured),
Demographic:- age , family size, family life cycle,
substantial (Large and profitable enough to serve),
income, occupation, education, social class
accessible( effectively reached) , differentiable
Psychographic:- benefits, user status , usage rate ,
(different respond to product), Actionable (easy
loyalty status and attitude toward product
attracted)
Marketing
Targeting (segmentation evaluation):- we look to
Strategy
the segment's overall attractiveness aligned with
company's objectives & resources availability
Financial position:- Low
Targeting Five criteria :- business size, growth, Targeting approach :- undifferentiated (mass
profitability, scales economies and low risk marketing) , design marketing program for superior
image product
Targeting approaches:-
Mass market (Product oriented marketing program) Financial position:- High
Full market coverage (diff. products , diff. groups) Targeting approach:- Multiple segment specialization
Multiple segments specialization:" Product "product specialization" approach
Specialization) OR "Market specialization"
Single segment (customer oriented marketing prog.
Individuals as segments
Item in Market
Market Penetration Strategy Market development Strategy
Plan
Product :- description of product quality, design,
features , brand name, packaging , sales support,
warranties
Place :- new regions and neighborhoods that haven't
been reached before in same cities
Price:- unit price should be minimized
Promotion: good sales commission
Marketing Mix :- 4 Ps Advertising by Internet and social media
websites
some software programs with each sell
as a sell force
Marketing
One hotline no (16006) for technical
Strategy
Support
Direct marketing through SMS to cell
Phones and email massages
Brand/product Positioning:-
What exactly the customer gets? "Competitive
advantage".
Using points of parity POPs and Points of
Differences PODs to provide reasons to believe or
proof points BY Positioning maps (according to
most product beneficial features).
Brand Mantra

Final recommendation:
Recommendation for formulation
Recommendation for Implementation
Recommendation for evaluation