company analysis i

8/12/2019 Company Analysis I

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Company Analysis

What is Corporate success and howshould it be measured ?


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Corporate Success

Size ?

Sales ?

Market share ? Stock exchange value ?

ROI ?

Growth ? P/E ratio ?


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Added Value

The key measure of corporate success isadded value :

The difference between a firms output

and the cost of its inputs.


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Value addition is measurable

Microsoft Corporation, Added ( US $ Millions),1992

Value of output 2750

Wages and salaries 400

Cost of capital employed 50

Cost of materials 1650

Total input 2100

Added Value 650


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Who is interested in the Companys

success ?

Employees / present and prospective

Investors

Customers

Competitors

Suppliers

Analysts / Business professionals

Government Agencies


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Corporate successes

The key lesson from histories of Corporatesuccesses is that corporate success isbased on an effective match between afirms external relationships and its

distinctive capabilities.


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Foundations of Success

Disney

BMW

Honda

Microsoft

All the above firms identified their distinctive

capabilities, selected the markets best

suited to their strengths, and built effective

competitive strategies to exploit them. All these companies

were adept at adding value.


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Example of failure

IBM with the most rewarding distinctivecapabilities ever enjoyed by anycorporation, saw its markets develop in away that steadily diminished the value ofthe competitive advantages it derived from

them.


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Marketing Strategy

No Marketing strategy is possiblewithout reference to the overall planningof a company.

Corporate plans

Functional Plans e.g.

marketing

Sub Functional Plans e.g. SalesAdvertisin etc.


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Development of a marketing

strategy All strategy formations impact on each other.

Selection of a target market and developing amarketing mix are inter-related.

Both parts of a marketing strategy must bedecided together.

Strategies must be evaluated against the

companys objectives not versus alternatetarget markets or alternate marketing mixes.


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The Company Vision and Mission

While a company is continually adapting toit competitive environment certain coreideals remain relatively steady and guide

its strategic decision making process.

These unchanging ideals form theBusiness Vision and are expressed in thecompany Mission statement.


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The mission statement helps to set thecourse but needs to translate itself intomore specific objectives which must ofcourse be consonant with the missionstatement.


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The Mission statement

Communicates the firms core ideology and

visionary goals and generally consists of thefollowing three components:

a) Core Values to which the firm is committed

b) Core purpose of the firm

c) Visionary goals the firm will pursue to achieveits mission


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The companys mission

statement

Fred Smith wanted to deliver mail anywhere in the US before 10.30 am. This was his

Vision.

Fedex states as its mission statement People, Service, Profit.

The core philosophy that governs every activity at FedEx Express is

People-Service-Profit (PSP): Take care of our people; they in turn

will deliver impeccable service demanded by our customers, who will

reward us with the profitability necessary to secure our future.

People-Service-Profit: These three words are the very foundation of FedEx

Express.


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Mission statements

Infosys :

To achieve our objectives in an environment of

fairness, honesty and courtesy towards ourclients, employees, vendors and society at large.

eBay

We help people trade practically anything onearth. We will continue to enhance the onlinetrading experience of all.


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Purpose of the Mission statement

These are developed to share withmanagers, employees, and customers. It

gives them a shared sense of purpose,direction and opportunity. It guidesgeographically separated employees to

work independently and yet collectivelytowards a single goal.


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Mission statements: Ideally threemajor characteristics

1. Limited number of goals

2. Stress the companies major policies andvalues

3. Define the major competitive spheres inwhich the company will work.


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The three basic objectives ofcompanies

1. Engaged in specific activities performinga socially and economically usefulfunction.

1. Developing an organization to carry onbusiness and implement strategies.

1. Earn enough profit to survive and to grow


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Company Objectives should lead toMarketing Objectives

Company objectives guide managers in searchingand evaluating opportunities and later planningmarketing strategies.

Particular marketing objectives must be set within the

framework of larger company objectives

Thus the hierarchy of objectives moves fromcompany objectives down to marketing departmentobjectives

For each marketing strategy firms need objectives foreach of the 4 Ps as well as more detailed objectiveswithin each of these areas.

C t


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Corporate

Involves applying

business planning to

different units

Business

Involves other

resources required for

identified markets

Mkting.

Based on

Markets/Custo

mers/Products


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Marketing Planning within theCorporate cycle

Corporate Financial Objectives

Management Audit

Objective and Strategy Planning

Functional Plans

(including Marketing Plan)

Corporate Plans


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The Marketing Plan

The Marketing Plan is a written statementof marketing strategy and gives timerelated details

It is necessary to know what needs to bedone and fills out the marketing strategy.

It is a guide to implementation and control


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Need for a Marketing Plan

It ensures the coordination of allactivities in the marketing function andsees that all individual effortscomplement each other.


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Broad Components of aMarketing Plan

A)

The Marketing Mix offered

Target Market

For How Long ?

B) Co. resources ( shown as cost ) neededmonthly/qtly

C) Results Expected ( Sales /Profits / CustomerService/ Control Procedures)


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Stages in a Marketing Plan

Mission Corporate Objectives

Marketing Audit

SWOT analysis Assumptions

Marketing Objectives and Strategies

Estimated Expected results Identify Alternative plans and budgets

Budget

First year detailed implementation


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A Typical Marketing Plansets out

A) The Market

The size and growth rate

Its distribution by Region and Competitivebrand

Sales by Population strata

Sales by category of Consumer


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B) The Target Customer

Age, Social/ Income class, Educationlevels, Attitudes towards product and itsuse

Product data/ formulation, efficiency of

performance vs. competitionPackaging, price,Product superiority vsCompetition


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C) Competition

Competitive brands and their market

share

Analysis of competitive advertising in

terms of theme, media, expenditure


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D) Marketing Objectives

Short and longterm aims of the marketing

strategy in terms of : Period

Target consumer

Distribution Policy Market Research Plans

Product Development Policy

Budget of all Marketing activity Two imperatives : Documentation / Periodic

review


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Need for SWOT

To ensure the successfulimplementation of a marketing strategya firm needs to go through a process of

: Identification of major strengths,

weaknesses , opportunities and threats

based on analysis of companysresources, customers , competitors andother aspects of the external company

environment


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SWOT

SWOTstands for strengths, weaknesses,opportunities, and threats.Strengths andweaknesses are internal factors.

A strengthcould be:

your specialist marketing expertise. a new, innovative product or service

location of your business

quality processes and procedures any other aspect of your business that adds

value to your product or service.


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A weaknesscould be:

lack of marketing expertise

undifferentiated products and service(i.e. in relation to your competitors)

location of your business

poor quality goods or services

damaged reputation


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Opportunities and threats are externalfactors.


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Anopportunitycould be:

a developing market such as the

Internet. mergers, joint ventures or strategic

alliances

moving into new market segments thatoffer improved profits

a new international market

a market vacated by an ineffectivecompetitor


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A threatcould be:

a new competitor in your home market

price wars with competitors

a competitor has a new, innovativeproduct or service

competitors have superior access tochannels of distribution

taxation is introduced on your product orservice


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Simple rules for successful SWOTanalysis

Be realistic about the strengths andweaknesses of your organization

Analysis should distinguish between whereyour organization is today, and where it could

be in the futures Be specific. Avoid gray areas.

Always analyze in context to your competitioni.e. better then or worse than your

competition Keep your SWOT short and simple. Avoid

complexity and over analysis

SWOT is subjective.


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Key uses of SWOT

Build on Strengths

Resolve Weaknesses

Exploit opportunities Avoid threats

A SWOT is an integral part of anyMarketing Plan


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Company Resources

To succeed, every company needs

some competitive advantage. Thisarises out of some unique resource orresources it possesses.

Breakthrough opportunitiescomefrom using these strengths and fromavoiding direct competition with firmswith similar strengths.


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Discovering Company strengths

Evaluate all functional areas

Evaluate products and Markets

Evaluate Specialized knowledge ofCompany personnel


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Company resources vs. firms

successes and failures

An analysis of past successes and failurescorrelated with the firms resources can

throw light on reasons for either and leadto framing of realistic and successfulfuture strategies.


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Financial strength is a major factor to beconsidered in looking at opportunities.

Where initial capital outlay is very high thismay prove to be a barrier to a companyfrom taking advantage of an attractive

opportunity thrown up by the environment.


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Intimate Customer relations and lowcostquality manufacturing are other resourcesa company may utilize effectively.

Production capability / flexibility /outsourcing are other resources to beconsidered.


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Marketing Strengths

Reputation and customer awareness of aproduct

Patent for a product

Good relations with distribution channelpartners

Effective use of Information Technology

Promotion and price resources Thorough understanding of the Marketing

Environment

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