Your Interface with the Rest of the World AG BM 460

Confidence is what you feel when you do not really understand the situation.

Why is it important? Source of materials Source of funds Source of information Source of competition Past, present & future customers

An example - Hershey Foods Who is the final customer? What do they want? How do you reach them? Who has the most power in this transaction?

Competition Who is your competition? Who is stronger? Do you compete in all markets or just some? Does what they do affect your fate?

Your Direct Buyer Who is the final customer? What do they want? How do you reach them? Who has the most power in this transaction?

Penn State Creamery Who is customer? Who is competition? How important is price? How important is service?

Your Inputs What are your key inputs? Where do you buy them? How is the price established? Is timing important? What type of control do you have? How does your supplier know your specific needs?

Transportation How is your product shipped? Do you own the trucks? Do you have a backhaul? How about your raw materials? Do you have imported inputs? How are they shipped? Who handles the customs issues, etc.?

Your workforce Are most of your jobs skilled or unskilled? How much turnover do you have? Is your workforce unionized? Do you have trouble finding the workers you need?

The Government Are you subject to regulation? If so, what? What about environmental laws? Do these regulations apply to your competitors as well?

Your Source of Funds What is your capital structure? If you need money fast, where do you get it? Do outsiders have a big say in funding decisions? If you have plenty of time, where can you get more money? Will you need to expand soon?

Your Location Is your location competitive? Can you expand? How is your access to markets? How about raw materials?

Creamery New location vs. old Pluses and minuses

Your Information How do you learn about your customers’ needs? How do you learn about your suppliers’ needs? How do you get market information? How reliable is your information?

Change How hard is it to introduce a new product? What steps are involved? How can you enter new markets? Can you sell to a new customer group? Have some of your existing products outlived their usefulness?

Fenn’s Sugar

Concluding comments No firm stands alone Each has similar questions The answer to these questions affects your future Improving performance usually involves improving one or more of these areas