Copyright 2005 Prentice Hall Bus 411 Day 7 Copyright 2005 Prentice Hall

Agenda Assignment #2 DUE Disney SWOT posted with class slides Assignment 3 Posted Due Feb 20 Disney SWOT posted with class slides Finish Discussion on Internal Assessment Copyright 2005 Prentice Hall

Management Functions of Management Planning Organizing Motivating Staffing Controlling Copyright 2005 Prentice Hall

Stage When Most Important Management Stage When Most Important Function Planning Strategy Formulation Organizing Strategy Implementation Motivating Strategy Implementation Staffing Strategy Implementation Controlling Strategy Evaluation Copyright 2005 Prentice Hall

Management Planning Beginning of management process Bridge between present & future Improves likelihood of attaining desired results Copyright 2005 Prentice Hall

Establishing objectives Management Forecasting Establishing objectives Devising strategies Developing policies Setting goals Planning Copyright 2005 Prentice Hall

Management Organizing Achieves coordinated effort Defines task & authority relationships Departmentalization Delegation of authority Copyright 2005 Prentice Hall

Organizational design Management Organizational design Job specialization Job descriptions Job specifications Span of control Unity of command Coordination Job design Job analysis Organizing Copyright 2005 Prentice Hall

Management Motivating Influencing to accomplish specific objectives Communication – major component Copyright 2005 Prentice Hall

Organizational change Management Leadership Communication Work groups Job enrichment Job satisfaction Needs fulfillment Organizational change Morale Motivating Copyright 2005 Prentice Hall

Management Staffing Personnel management Human resources management Copyright 2005 Prentice Hall

Management development Wage & salary admin. Employee benefits Interviewing Hiring Discharging Training Management development Affirmative Action EEO Labor relations Staffing Copyright 2005 Prentice Hall

Management Controlling Establishing performance standards Ensure actual operations conform to planned operations Taking corrective actions Copyright 2005 Prentice Hall

Management Quality Financial Sales Inventory Expense Analysis of variance Rewards Sanctions Controlling Copyright 2005 Prentice Hall

Management Audit Checklist Does the firm use strategic management concepts? Are objectives/goals measurable? Well communicated? Do managers at all levels plan effectively? Copyright 2005 Prentice Hall

Management Audit Checklist Do managers delegate well? Is the organization’s structure appropriate? Are job descriptions clear? Are job specifications clear? Is employee morale high? Copyright 2005 Prentice Hall

Management Audit Checklist Is employee absenteeism low? Is employee turnover low? Are the reward mechanisms effective? Are the organization’s control mechanisms effective? Copyright 2005 Prentice Hall

Marketing Customer Needs/Wants for Products/Services Defining Anticipating Creating Fulfilling Copyright 2005 Prentice Hall

Marketing Marketing Functions Customer analysis Selling products/services Product & service planning Pricing Distribution Marketing research Opportunity analysis Copyright 2005 Prentice Hall

Marketing Customer surveys Consumer information Market positioning strategies Customer profiles Market segmentation strategies Customer Analysis Copyright 2005 Prentice Hall

Selling Products/Services Marketing Advertising Sales Promotion Publicity Sales force management Customer relations Dealer relations Selling Products/Services Copyright 2005 Prentice Hall

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Planning Product/Service Marketing Test marketing Brand positioning Devising warrantees Packaging Product features/options Product style Quality Planning Product/Service Copyright 2005 Prentice Hall

Marketing Forward integration Discounts Credit terms Condition of sale Markups Costs Unit pricing Pricing Copyright 2005 Prentice Hall

Marketing Warehousing Channels Coverage Retail site locations Sales territories Inventory levels Transportation Distribution Copyright 2005 Prentice Hall

Support business functions Marketing Data collection Data input Data analysis Support business functions Marketing Research Copyright 2005 Prentice Hall

Cost/benefit/risk analysis Marketing Assessing costs Assessing benefits Assessing risks Cost/benefit/risk analysis Opportunity Analysis Copyright 2005 Prentice Hall

Marketing Opportunity Analysis Are markets segmented effectively? Is the organization positioned well among competitors? Has the firm’s market share been increasing? Are the distribution channels reliable & cost effective? Is the sales force effective? Copyright 2005 Prentice Hall

Marketing Opportunity Analysis Does the firm conduct market research? Are product quality & customer service good? Are the firm’s products/services priced appropriately? Does the firm have effective promotion, advertising, & publicity strategies? Copyright 2005 Prentice Hall

Marketing Opportunity Analysis Are the marketing planning & budgeting effective? Do the firm’s marketing managers have adequate experience and training? Copyright 2005 Prentice Hall

Determining financial strengths & weaknesses key to strategy formation Finance/Accounting Determining financial strengths & weaknesses key to strategy formation Copyright 2005 Prentice Hall

Finance/Accounting Finance/Accounting Functions Investment decision (Capital budgeting) Financing decision Dividend decision Copyright 2005 Prentice Hall

Financial ratios Business and Company Resource Center Objective indicators Two uses Trending over time Comparison to industry norms Websites with definitions and examples http://www.netmba.com/finance/financial/ratios/ http://cpaclass.com/fsa/ratio-01a.htm http://www.va-interactive.com/inbusiness/editorial/finance/ibt/ratio_analysis.html Industry norms are available through UMFK electronic resources Business and Company Resource Center Business Source Premier Valueline templates\Ratios.xlt Copyright 2005 Prentice Hall

Firm’s ability to meet its short-term obligations Basic Financial Ratios Firm’s ability to meet its short-term obligations Ratios Current ratio Quick (or acid test) ratio Liquidity Ratios Copyright 2005 Prentice Hall

Extent of debt financing Basic Financial Ratios Extent of debt financing Ratios Debt-to-total assets Debt-to-equity Long-term debt-to-equity Times-interest earned Leverage Ratios Copyright 2005 Prentice Hall

Effective use of firm’s resources Basic Financial Ratios Effective use of firm’s resources Ratios Inventory-turnover Fixed assets turnover Total assets turnover Accounts receivable turnover Average collection period Activity Ratios Copyright 2005 Prentice Hall

Effectiveness shown by returns on sales & investment Basic Financial Ratios Effectiveness shown by returns on sales & investment Ratios Gross profit margin Operating profit margin Net profit margin Return on total assets (ROA) Profitability Ratios Copyright 2005 Prentice Hall

Basic Financial Ratios Effectiveness shown by returns on sales & investment Ratios Return on stockholders equity (ROE) Earnings per share Price-earnings ratio Profitability Ratios (cont’d) Copyright 2005 Prentice Hall

Firm’s ability to maintain economic position Basic Financial Ratios Firm’s ability to maintain economic position Ratios Sales Net income Earnings per share Dividends per share Growth Ratios Copyright 2005 Prentice Hall

Natural Environment Perspective EU Countries Impose Curbs on Use of Chemicals Tough new laws start in 2008 Use of some 30,000 chemicals need to be documented Cease using 1,500 of the most dangerous chemicals EU countries need to cut emissions Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Finance/Accounting Audit Where is the firm strong/weak as indicated by financial ratio analysis? Can the firm raise short-term capital as needed? Can the firm raise long-term capital as needed through debt and/or equity? Copyright 2005 Prentice Hall

Finance/Accounting Audit Does the firm have sufficient working capital? Are capital budgeting procedures effective? Are dividend payout policies reasonable? Are the firm’s financial managers experienced & well trained? Copyright 2005 Prentice Hall

Finance/Accounting Audit Effective Financial Analysis Requires: Analysis of how the ratios have changed over time How the ratios compare to industry norms How the ratios compare with key competitors Copyright 2005 Prentice Hall

Production/Operations Production/Operations Functions Process Capacity Inventory Workforce Quality Copyright 2005 Prentice Hall

Production/Operations Facility design Technology selection Facility layout Process flow analysis Facility location Line balancing Process control Process Copyright 2005 Prentice Hall

Production/Operations Forecasting Facilities planning Aggregate planning Scheduling Capacity planning Queuing analysis Capacity Copyright 2005 Prentice Hall

Production/Operations Raw materials Work in process Finished goods Materials handling Inventory Copyright 2005 Prentice Hall

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Global Perspective Auto Industry Work Week and Hourly Pay Variation Germany $44.05 U.S. $33.95 Canada $29.17 Japan $27.38 France $26.34 S. Korea $15.82 Mexico $ 3.50 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Motivation techniques Production/Operations Job design Work measurement Job enrichment Work standards Motivation techniques Workforce Copyright 2005 Prentice Hall

Production/Operations Quality control Sampling Testing Quality assurance Cost Control Quality Copyright 2005 Prentice Hall

Production/Operations Audit Are suppliers of materials, parts, etc. reliable and reasonable? Are facilities, equipment & machinery in good condition? Are inventory-control policies and procedures effective? Copyright 2005 Prentice Hall

Production/Operations Audit Are quality-control policies & procedures effective? Are facilities, resources, and markets strategically located? Does the firm have technological competencies? Copyright 2005 Prentice Hall

Research & Development Research & Development Functions Development of new products before competitors Improving product quality Improving manufacturing processes to reduce costs Copyright 2005 Prentice Hall

Research & Development Financing as many projects as possible Use percent-of-sales method Budgeting relative to competitors How many successful new products are needed R&D Budgets Copyright 2005 Prentice Hall

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? Copyright 2005 Prentice Hall

Research & Development Audit Are MIS and computer systems adequate? Is communication between R&D & other organizational units effective? Are present products technologically competitive? Copyright 2005 Prentice Hall

Management Information Systems Purpose Improve performance of an enterprise by improving the quality of managerial decisions. Copyright 2005 Prentice Hall

Management Information Systems CIO/CTO Security User-friendly E-commerce Copyright 2005 Prentice Hall

Management Information Systems Audit Do managers use the information system to make decisions? Is there a CIO or Director of Information Systems position in the firm? Is data updated regularly? Copyright 2005 Prentice Hall

Management Information Systems Audit Do managers from all functional areas contribute input to the information system? Are there effective passwords for entry into the firm’s information system? Are strategists of the firm familiar with the information systems of rival firms? Copyright 2005 Prentice Hall

Management Information Systems Audit 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? Copyright 2005 Prentice Hall

The IFE Matrix A summary step in conducting an internal strategic-management audit is to construct an IFE Matrix. This strategy-formulation tool summarizes and evaluates the major strengths and weaknesses in the functional areas of a business, and it also provides a basis for identifying and evaluating relationships among these areas. Intuitive judgments are required in developing an IFE Matrix, so the appearance of a scientific approach should not be interpreted to mean this is an all-powerful technique. Copyright 2005 Prentice Hall

5 Steps to an IFE List key internal factors as identified in the internal-audit process. Use a total from ten to twenty internal factors including both strengths and weaknesses. Assign a weight ranging from 0 (not important) to 1.0 (very important). The weight indicates the relative importance of the factor to being successful in the firm’s industry. The sum of all the weights must equal 1.0. Assign a 1-4 rating to each factor to indicate whether that factor represents a major weakness (1), minor weakness (2), minor strength (3), or major strength (4). Multiply each factor’s weight by its rating to determine a weighted score for each variable. Sum the weighted scores for each variable to determine the total weighted score for the organization. Total weighted scores of below 2.5 indicate an internally weak organization. Copyright 2005 Prentice Hall

IFE– Gateway Computers (2003) Key Internal Factors Weight Rating Wtd Score Strengths 1. Several new senior executive with world-class skills and leadership experience 0.05 4 0.40 2. Continuous decline in operating costs and cost of goods sold 3 0.15 3. Well-known brand name 4. Consumer Reports (Sept 2002) recommended Gateway 500X as #1 0.10 5. As a direct seller, Gateway holds high brand recognition Copyright 2005 Prentice Hall

IFE– Gateway Computers (2003) Key Internal Factors Weight Rating Wtd Score Strengths (cont’d) 6. Gateway is diversifying into non-PC products 0.10 3 0.30 7. Good relationship with its suppliers. 0.05 4 0.20 8. Economies of scale, the 6th largest PC maker I the world 9. Gateway retails stores excellent 0.15 Copyright 2005 Prentice Hall

IFE– Gateway Computers (2003) Key Internal Factors Weight Rating Wtd Score Weaknesses 1. High operating expense (22% of revenue vs. 10% for Dell) 0.05 2 0.10 2. Almost no budget for R&D vs. Dell’s 18% of revenue 1 3. Low return on assets ratio 0.025 4. No niche market Copyright 2005 Prentice Hall

IFE– Gateway Computers (2003) Key Internal Factors Weight Rating Wtd Score Weaknesses (cont’d) 5. Shortage of cash due to successive losses 0.10 2 0.20 6. Limited number Gateway stores 0.05 7. Weak performance in overseas market TOTAL 1.00 2.80 Copyright 2005 Prentice Hall

Copyright 2005 Prentice Hall

Copyright 2005 Prentice Hall