F&B strategic planning and logistics ch 3 and 4
1. debt-to-equity ratio 2. debt-to-total-assets ratio.
. two key financial ratios that indicate whether a firm's financing decisions have been effective are
an increase in costumers bargaining power
. under the following circumstances: 1. If they can inexpensively switch to competing brands or substitutes 2. If they are particularly important to the seller 3. If sellers are struggling in the face of falling consumer demand 4. If they are informed about sellers' products, prices, and costs 5. If they have discretion in whether and when they purchase the product what is likely to happen?
Advantages of a Strong Dollar for Domestic Firms
1. Leads to lower exports 2. Leads to higher imports 3. Makes U.S. goods expensive for foreign consumers 4. Helps keep inflation low 5. Allows U.S. firms to purchase raw materials cheaply from other countries 6. Allows USA to service its debt better 7. Spurs foreign investment 8. Encourages Americans to travel abroad 9. Leads to lower oil prices because oil globally is priced in U.S. dollars 10. Encourages Americans to spend more are examples of
Key Questions a firm should answer About Competitors
1. What are the strengths of our major competitors? 2. What are the weaknesses of our major competitors? 3. What are the objectives and strategies of our major competitors? 4. How will our major competitors most likely respond to current economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive trends 5. How vulnerable are the major competitors to our alternative strategies? 6. How vulnerable are our alternative strategies to successful counterattack by our major competitors? 7. How are our products or services positioned relative to major competitors? 8. To what extent are new firms entering and old firms leaving this industry? 9. What key factors have resulted in our present competitive position in this industry? 10. How have the sales and profit rankings of our major competitors in the industry changed over recent years? Why have these rankings changed that way? 11. What is the nature of supplier and distributor relationships in this industry? 12. To what extent could substitute products or services be a threat to our competitors? are all examples of...
Marketing Audit Checklist of Questions
1.Are markets segmented effectively? 2.Is the organization positioned well among competitors? 3.Has the firm's market share been increasing? 4.Are present channels of distribution reliable and cost effective? 5.Does the firm have an effective sales organization? 6.Does the firm conduct market research? 7.Are product quality and customer service good? 8.Are the firm's products and services priced appropriately? 9.Does the firm have an effective promotion, advertising, and publicity strategy? 10.Are 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?
Characteristics of the most competitive companies:
1.Market share matters 2.Understand and remember precisely what business you are in 3.Whether it's broke or not, fix it-make it better 4.Innovate or evaporate 5.Acquisition is essential to growth 6.People make a difference 7.There is no substitute for quality represent ....
Current Ratio: Current assets / Current liabilities Quick Ratio: (Current assets - inventory) / Current liabilities
2 liquidity ratios include
Debt-to-total-Assets Ratio: total debt / total assets Debt-to-Equity Ratio: total debt / total stockholders' equity Long-term Debt-to-Equity Ratio: Long-term debt / total stockholders' equity Times-Interest-Earned Ratio: Profits before interest and taxes / total interest charges
4 leverage ratios include
Inventory turnover: Sales / Inventory of finished goods Fixed Assets Turnover: Sales / Fixed assets Total Assets Turnover: Sales / Total assets Accounts Receivable Turnover: Annual credit sales / Accounts receivable Average Collection Period: Accounts receivable /( total credit sales/365 days)
5 activity ratios include
customer analysis selling product/services product and service planning pricing distribution marketing research opportunity analysis
6 Functions of Marketing include
Distinctive competencies
A firm's strengths that cannot be easily matched or imitated by competitors Building competitive advantages involves taking advantage of ...
business analytics
A key distinguishing feature of _______ is that it enables a firm to learn from experience and to make current and future decisions based on prior information.
external audit
AKA environmental scanning or industry analysis is the act of focusing on or identifying and evaluating trends and events beyond the control of a single firm
(1) economic forces; (2) social, cultural, demographic, and natural environment forces; (3) political, governmental, and legal forces; (4) technological forces (5) competitive forces.
External forces can be divided into five broad categories:
1.Where is the firm financially strong and weak as indicated by financial ratio analyses? 2.Can the firm raise needed short-term capital? 3.Can the firm raise needed long-term capital through debt and/or equity? 4.Does the firm have sufficient working capital? 5.Are capital budgeting procedures effective? 7.Are dividend payout policies reasonable? 8.Does the firm have good relations with its investors and stockholders? 9.Are the firm's financial managers experienced and well trained? 10.Is the firm's debt situation excellent?
Finance/Accounting Audit Checklist questions include
Financial ratio analysis
Financial ratio analysis is the most widely used method for determining an organization's strengths and weaknesses in the investment, financing, and dividend areas.
1. How has each ratio changed over time? 2. How does each ratio compare to industry norms? 3. How does each ratio compare with key competitors?
Financial ratio analysis should be conducted on three separate fronts:
consumers, governments, suppliers, distributors, and competitors
Five major stakeholders affect pricing decisions:
1. Net present value (NPV) 2. Present value of benefits (PVB) 3. Present value of costs (PVC) 4. Benefit cost ratio (BCR) = PVB/PVC 5. Net benefit = PVB - PVC 6. NPV/k (where k is the level of funds available)
Government agencies across the world rely on a basic set of key cost/benefit indicators, including the following:
1.important to achieving long-term and annual objectives 2.measurable 3.applicable to all competing firms, and 4.hierarchical in the sense that some will pertain to the overall company and others will be more narrowly focused on functional or divisional areas
Key external factors should be:
1.Does the firm use strategic-management concepts? 2.Are company objectives and goals measurable and well communicated? 3.Do managers at all hierarchical levels plan effectively? 4.Do managers delegate authority well? 5.Is the organization's structure appropriate? 6.Are job descriptions and job specifications clear? 7.Is employee morale high? 8.Are employee turnover and absenteeism low? 9.Are organizational reward and control mechanisms effective?
Management Audit Checklist of Questions
Key Social, Cultural, Demographic, and Natural Environment Variables
Population changes by race, age, and geographic area Attitudes toward retirement Regional changes in tastes and preferences Energy conservation Number of marriages Attitudes toward product quality Number of divorces Attitudes toward customer service Number of births Pollution control Number of deaths Attitudes toward foreign peoples Immigration and emigration rates Social Security programs Social programs Life expectancy rates Number of churches Per capita income Number of church members Social media pervasiveness Social responsibility issues are all examples of...
Regional Business News
Provides comprehensive full-text coverage for regional business publications; incorporates coverage of more than 80 regional business publications covering all metropolitan and rural areas within the United States.
Value Line Investment Survey
Provides excellent online information and advice on approximately 1,700 stocks, more than 90 industries, the stock market, and the economy. Company income statements and balance sheets are provided.
IBISWorld
Provides online USA Industry Reports (NAICS), U.S. Industry iExpert Summaries, and U.S. Business Environment Profiles. Also has a global version
Standard & Poor's NetAdvantage
Provides online access to Industry Surveys, stock reports, corporation records, The Outlook, mutual fund reports, and more.
Mergent Online
Provides online access to Mergent's (formerly Moody's/FISOnline)tical information on hundreds of public companies and industries. Company income statements and balance sheets are provided.
Lexis-Nexis Company Dossier
Provides online access to extensive, current data on 13 million companies. It collects and compiles information into excellent documents.
Lexis-Nexis Academic
Provides online access to newspaper articles (including New York Times and Washington Post) and business information (including SEC filings).
internal audit
Requires gathering and assimilating information about the firm's management, marketing, finance/accounting, production/operations, research and development (R&D), and management information systems operations Provides more opportunity for participants to understand how their jobs, departments, and divisions fit into the whole organization
key economic variables
Shift to a service economy in the USA Demand shifts for different goods and services Availability of credit Income differences by region and consumer groups Level of disposable income Price fluctuations Propensity of people to spend Foreign countries' economic conditions Interest rates Monetary and fiscal policies Inflation rates Stock market trends Gross domestic product trends Tax rate variation by country and state Consumption patterns European Economic Community (EEC) policies Unemployment trends Value of the dollar in world markets Import/export factors Organization of Petroleum Exporting Countries (OPEC) policies are all examples of...
forward integration strategy
Sometimes an organization will pursue a _____________ primarily to gain better control over prices charged to consumers
Business analytics
Sometimes called predictive analytics, machine learning, or data mining, is an MIS technique that involves using software to mine huge volumes of data to help executives make decisions.
1.the investment decision 2.the financing decision 3.the dividend decision
The functions of finance/accounting comprise three decisions:
(1) to provide a general understanding of an industry and its competitors, (2) to identify areas in which competitors are vulnerable and to assess the impact strategic actions would have on competitors, and (3) to identify potential moves that a competitor might make that would endanger a firm's position in the market.
The three basic objectives of a CI program are
(1) specific (i.e., quantified to the fullest extent possible); (2) actionable (i.e., meaningful in terms of having strategic implications) (3) stated as external trends, events, or facts rather than as strategies the firm could pursue. For example, regarding actionable, "the stock market is volatile" is not actionable because there is no apparent strategy that the firm could formulate to capitalize on that factor. In contrast, a factor such as "the GDP of Brazil is 6.8 percent" is actionable because the firm should perhaps open 100 new stores in Brazil.
When identifying and prioritizing key external factors in strategic planning, make sure the factors selected are
distribution
_________ especially important when a firm is striving to implement a market development or forward integration strategy
business analytics
__________ enables a company to benefit from measuring and managing risk.
internet
____________ is altering economies of scale, changing entry barriers, and redefining the relationship between industries and various suppliers, creditors, customers, and competitors
Technological advancements
___________________________can... Create new markets, Result in a proliferation of new and improved products, Change the relative competitive cost positions in an industry, Render existing products and services obsolete.
Porter's Five-Forces Model
a competitive analysis widely used for developing strategies in many industries that considers the following: potential development of substitute products, bargaining power of suppliers, rivalry among competing firms, bargaining power of costumers and potential entry of new competitors.These factors determine the nature of competitiveness within a given industry.
test markets
allow an organization to test alternative marketing plans and to forecast future sales of new products.
External Factor Evaluation (EFE) Matrix
allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information
forecast
are educated assumptions,based on facts, figures, trends, and research, about future trends and events that better guide our current decisions to achieve a more desirable future state of affairs
Dividend decisions
concern issues such as the percentage of earnings paid to stockholders, the stability of dividends paid over time, and the repurchase or issuance of stock; determines the amount of funds that are retained in a firm compared to the amount paid out to stockholders.
functions of management
consist of five basic activities: planning, organizing, motivating, staffing, and controlling.
Planning
consists of all those managerial activities related to preparing for the future, such as forecasting, establishing objectives, devising strategies, and developing policies.
financing decision
determines the best capital structure for the firm and includes examining various methods by which the firm can raise capital (for example, by issuing stock, increasing debt, selling assets, or using a combination of these approaches); considers both short-term and long-term needs for working capital
Forecasting
factors such as... technological innovation, cultural changes, new products, improved services, stronger competitors, shifts in government priorities, changing social values, unstable economic conditions, and unforeseen events. should all beconsidered when
The Competitive Profile Matrix (CPM)
identifies a firm's major competitors and its particular strengths and weaknesses in relation to a sample firm's strategic position.
quantified and actionable
in strategic planning and case analysis, relevant variables listed should be ________ and ________ to be useful.
economies of scale barriers to market entry product differentiation the economy levels of competitiveness
in the industrial organization I/O view a firm's performance is based more on 5 external industry properties including
distribution ,
include ________ channels, _________ coverage, retail site locations, sales territories, inventory levels and location, transportation carriers, wholesaling, and retailing
Product and service planning
includes activities such as test marketing; product and brand positioning; devising warranties; packaging; determining product options, features, style, and quality; deleting old products; and providing for customer service; important when a company is pursuing product development or diversification
Organizing
includes all those managerial activities that result in a structure of task and authority relationships, such as organizational design, job specialization, job descriptions, span of control, coordination, job design, and job analysis.
selling
includes many marketing activities, such as advertising, sales promotion, publicity, personal selling, sales force management, customer relations, and dealer relations. David, Fred R.. Strategic Management (p. 100). Pearson Education. Kindle Edition.
cost/benefit analysis,
involves assessing the costs, benefits, and risks associated with marketing decisions.
Motivating
involves efforts directed toward shaping human behavior. Specific topics include leadership, communication, work groups, behavior modification, delegation of authority, job enrichment, job satisfaction, needs fulfillment, organizational change, employee morale, and managerial morale.
Competitive intelligence (CI),
is a systematic and ethical process for gathering and analyzing information about the competition's activities and general business trends to further a business's own goals
the investment decision, also called capital budgeting
is the allocation and reallocation of capital and resources to projects, products, assets, and divisions of an organization.
Long-term Debt-to-Equity Ratio
measures the balance between debt and equity in a firm's long-term capital structure
Current Ratio
measures the extent to which a firm can meet its short term obligations
Quick Ratio
measures the extent to which a firm can meet its short term obligations without relying on the sale of its inventories
Times-Interest-Earned Ratio
measures the extent to which earnings can decline without the firm becoming unable to meet its annual interest costs
Debt-to-total-Assets Ratio
measures the percentage of total funds provided by creditors
Debt-to-Equity Ratio
measures the percentage of total funds provided by creditors versus by owners
altering the life cycles of products, increasing the speed of distribution creating new products and services erasing limitations of traditional geographic markets changing the historical trade-off between production standardization and flexibility.
name 5 ways The Internet has changed the very nature of opportunities and threats
Rivalry among competing firms
out of Porters 5 competitive forces which is usually the most powerful
Controlling
refers to all those managerial activities directed toward ensuring that actual results are consistent with planned results. Key areas of concern include quality control, financial control, sales control, inventory control, expense control, analysis of variances, rewards, and sanctions.
Staffing
refers to human resource (HR) activities, such as wage and salary administration, employee benefits, interviewing, hiring, firing, training, management development, employee safety, equal employment opportunity, and union relations. .
external audit
reveals key opportunities and threats confronting an organization so that managers can formulate strategies to take advantage of the opportunities and avoid or reduce the impact of threats
Customer analysis
the examination and evaluation of consumer needs, desires, and wants; involves administering customer surveys, analyzing consumer information, evaluating market positioning strategies, developing customer profiles, and determining optimal market segmentation strategies; essential in developing an effective mission statement
Barriers to entry of an industry
the need to gain economies of scale quickly, the need to gain technology and specialized know-how, the lack of experience, strong customer loyalty, strong brand preferences, large capital requirements, lack of adequate distribution channels, government regulatory policies, tariffs, lack of access to raw materials, possession of patents, undesirable locations, counterattack by entrenched firms, potential saturation of the market. are examples of
Marketing
the process of defining, anticipating, creating, and fulfilling customers' needs and wants for products and services
organizational culture
the set of values, ideas, attitudes, and norms of behavior that is learned and shared among the members of an organization significantly affects business decisions and thus must be evaluated during an internal strategic-management audit.
Marketing research
the systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services; can uncover critical strengths and weaknesses
1. earnings-per-share ratio 2. dividends-per-share ratio 3. price-earnings ratio.
three financial ratios that are helpful in evaluating a firm's dividend decisions include
(1) compute the total costs associated with a decision, (2) estimate the total benefits from the decision, and (3) compare the total costs with the total benefits.
three steps are required to perform a cost/benefit analysis:
true
true or false An important part of an external audit is identifying rival firms and determining their strengths, weaknesses, capabilities, opportunities, threats, objectives, and strategies
true
true or false If strategies can capitalize on cultural strengths, such as a strong work ethic or highly ethical beliefs, then management often can swiftly and easily implement changes.
true
true or false In conducting a test market project, an organization must decide how many cities to include, which cities to include, how long to run the test, what information to collect during the test, and what action to take after the test has been completed.
false lower return industries have higher competition
true or false Intensity of competition is highest in higher-return industries.
true
true or false Regardless of the number of key opportunities and threats included in an EFE Matrix, the highest possible total weighted score for an organization is 4.0 and the lowest possible total weighted score is 1.0. The average total weighted score is 2.5.
true
true or false Sometimes the variables included in a cost/benefit analysis cannot be quantified or even measured, but usually reasonable estimates can be made to allow the analysis to be performed.
false. external factors are more important for gaining a competitive advantage I/O theorists contend that external factors—such as economies of scale, barriers to market entry, product differentiation, the economy, and level of competitiveness—are more important than internal resources, capabilities, structure, and operations.
true or false The Industrial Organization view of strategic planning advocates that internal factors are more important than external ones for gaining and sustaining competitive advantage.
false it is a significant political factor
true or false The extent that a state is unionized is not a significant political factor in strategic planning decisions as related to manufacturing plant location and other operational matters
true
true or false The history of a firm's interaction with its customers, suppliers, distributors, employees, rival firms, and more can all be tapped with data mining to generate predictive models.
true
true or false The increasing global interdependence among economies, markets, governments, and organizations makes it imperative that firms consider the possible impact of political variables on the formulation and implementation of competitive strategies.
true
true or false The size of American labor unions has fallen sharply in the last decade due in large part to erosion of the U.S. manufacturing base
true
true or false a good example of an unattractive industry is one that yields low profits, has severe rivalry among existing firms , allows new rivals to enter the industry with relative ease, and both suppliers and customers can exercise considerable bargaining leverage.
false Industries can differ dramatically on certain ratios.
true or false different Industries are fairly consistent on most financial ratios
false Many firms now have a higher demand for Chief Information Officer (CIO) and a Chief Technology Officer (CTO)
true or false due to tecnological advancments firms are nolonger in need of a Chief Information Officer (CIO) and a Chief Technology Officer (CTO) because they have computer software that have made these positions obsolete
true
true or false functions of management are important to assess in strategic planning because an organization should continually capitalize on its management strengths and improve on its management weaknesses.
true
true or false in price wars companies typically lower prices and spend heavily on advertising to "cripple" the competition
true
true or false the lower the profit margin within a industry, for example food manufacturing having (2.3), implies fierce competition in that industry.
true
true or false. it is not a question of whether external or internal factors are more important in gaining and maintaining competitive advantage. In contrast, effective integration and understanding of both external and internal factors is the key to securing and keeping a competitive advantage.
true
true or false. the external audit is not aimed at developing an exhaustive list of every possible factor that could influence the business; rather, it is aimed at identifying key variables that offer actionable responses.
lowering prices enhancing quality adding features providing services extending warranties increasing advertising.
what are some examples of retaliatory measures taken to maintain a competitive advantage.
Chief Information Officer (CIO) and Chief Technology Officer (CTO)
work together to ensure that information needed to formulate, implement, and evaluate strategies is available where and when it is needed
legal and ethical ways to obtain competitive intelligence
• Hire top executives from rival firms. • Reverse engineer rival firms' products. • Use surveys and interviews of customers, suppliers, and distributors. • Conduct drive-by and on-site visits to rival firm operations. • Search online databases. • Contact government agencies for public information about rival firms. • Systematically monitor relevant trade publications, magazines, and newspapers. are examples of...
