A Global Corporation Analysis - Research Paper Example

T & F AS A GLOBAL CORPORATION - BUSINESS PLAN Submitted to The Steering Committee Prepared by Director, Technical Support Place: T & F Headquarters Date: 27/12/2007 INTRODUCTION It is a challenging scenario for T & F company. The emerging market conditions and the competition have posed considerable threats to the company. It is believed that if we donot adapt ourselves and build up on our strengths it is going to be a threat for our growth and survival. Hence, it is very vital that the company explores new systems for business development and cateres to the needs of emerging market. Hence, a business plan is developed to integrate the findings of SWOT analysis of T & F company into the strategy that can be adopted for creating new business strategies. The business plan presented here includes the current position of the company, market scenario, industry competition, marketing strategy, financial analysis and business strategy. This proposal is to provide an overall view to highlight the following issues: 1. Strengths and weaknesses of the company 2. Future opportunities and threats faced 3. Need for adaptation and change 4. Scope of ebusiness in the globalised era 5. Proposed course of action. This plan is submitted to the Steering Committee to understand the present position of the company and to decide on the future course of action. The important question before the steering committee is to decide on the course of action to increase the sales and revenue for the company by exploring new opportunities. The business plan submitted here is to provide an idea about the course of action that has to be adopted in the coming year. SWOT ANALYSIS The SWOT analysis of the company shows the following: Strengths Weaknesses Loyal customers Strong reseller network Good products Focused management/staff Competitive product prices Has not utilized Internet technology T&F not well-known among prospective customers Drop in growth rate Profit margin is too small (company needs to reduce costs) Opportunities Threats To create a web site to serve customers and promote the company To enter the international market To establish online sales as a new distribution channel Other larger and more well-known competitors may enter T&Fs targeted market segment Economic slowdown could reduce demand Competitors have utilized Internet to enhance customer relationships The current market scenario is highly influenced by globalization and the information technology. T & F company has grown and has established itself in the market. But the recent slump in growth rate creates a need for SWOT analysis. The results of the SWOT analysis shows that, all the weaknesses listed points to just one thing, i.e., the company are not proactive. The company has become comfortable with the profits and hence, it has become fat and slow to respond to the information technology which is reflected with the rising costs and slowing growth rates. As we have not tuned itself to the current trends in the market, we have not tried to take advantage of the internet, and we have not sought to marketing methods for capturing prospective customers and this has lead to the drop in the growth. But at this point of time, what has company learnt and how it is going to react to the changes in the environment will decide whether we survive and grow or become stale and perish. MISSION AND VISION OF THE COMPANY The importance of mission and vision statements to effective growth is mentioned by Vitton and Rarcick that the organizations with the formalized missions and vision statements have twice the average return on shareholder’s equity than those firms without a formalized mission statement. The mission statement of T & F company should include customers, products, markets, philosophy, technology and distinctive competence and the mission statement can be as follows: To become the market leader in providing CAD/ CAM solutions to architectural and engineering firms across the world and to create value for the shareholders, employees and resellers. The vision statement of the company can be; “to be the leader in providing software solutions for architects and engineers” After we have an understanding of our strengths and weaknesses and having an idea about the opportunities and threats in front of the company, next a strategy for the company to take advantages of the opportunities and move ahead has been identified. To formulate the marketing strategy first the following have to be mentioned: Products: The current products CAD/ CAM software can be concentrated and in addition to that services like providing software solutions for customized needs trhough internet. Building an effective B2B and B2Cbusiness network. Markets: Medium sized and large architectural and engineering firms across the world, especially in Europe. Customers: our customers are engineering and architectural companies who undertake engineering and constructions services to of homes, factories , development of prototypes, research and development of new techniques. Competitors: There are three to four major US companies which target to the same markets. But the major competition from the Indian software companies who can take advantage of the cheap human resource. Marketing strategy For marketing our products and services across the world through ebusiness, we have to first identify what is the strategy we are going to use. The 5 p’s of marketing have to be redefined as follows: Product: The product range has to be increased. We should not just stop with CAD/ CAM software, but we should also undertake customization according to the needs of our customers though our resellers. We have to adopt a differentiation strategy which will help us to charge a higher price for our product and to attain consumer loyalty. For increasing the products and services offered to the customer we can enter into strategic alliance/ partnering with research and development companies and we can support each other with their products and our marketing strengths. Price: Our current and potential markets shares can be highly increased by concentrating more on cost leadership. For gaining cost leadership, backward integration can be suggested through partnerships and alliances as discussed above. We can create more software for our clients to meet their needs. By doing so, we can be the market leaders with respect to technology and cost. Cost leadership is especially effective when the markets are very price sensitive. With slump in consumer spending, markets become more price sensitive and it is advantageous for companies which have effective cost control. The cost leadership and product differentiation strategy may compete with each other. For deciding upon which strategy to adopt we have to segment the market based on the expectation of the customer. What does the customer wants from us? The answer for this question can help us decide which approach to handle. Place: In the virtual space our presence has to be established. For this first we should develop a proactive website. This website should not stop with giving complete information about our company, our products, services and our current clients. In addition to this we should also develop our website so that it becomes a portal for exchange of information for architects and engineering firms. We can also develop it as a resource where customers can log in and have online update information about the recent trends in the industry. In the real world, the current network of resellers have to be maintained even if we launch the ebusiness. The resellers can be used as the nodal points for our interface with the end-user. Through internet and teleconferencing we can coordinate with our resellers and customers about their requirements and we can provide customization. We can also set up internet FTP for easy transfer of large files. This can also reduce the travel cost and other expenses which will be very helpful in bringing down the costs. Promotion: To position ourselves as a market leader in technology for engineering firms we can give advertisements in engineering magazines, sponsor conferences and seminars for engineering consultants and architects. Also web advertising should be done, which will create awareness of our company throughout the world. With these new Ps of marketing, our new strategy will be: 1. Develop new features of our current product and service 2. Strengthen the network of our resellers 3. Create a website in the internet 4. Find out the areas of cost control After we have analyzed our new Ps for marketing strategy, the next step is to establish the system for the implementation of the strategy. How to implement these ideas into our system to gain market advantage is the next challenge. Implementation of the marketing strategy includes analyzing the management issues which includes establishing annual objectives, devising policies, allocating resources, restructuring the organization. ROLE OF THE UPPER MANAGEMENT Change in the organization strategy often gives rise to changes in the way an organization is structured mainly for two reasons. First, the structure dictates how objectives and policies will be established. Another reason is that when there is a change in the strategy there is also change in allocation of resources which will cause changes in the organization structure. The new organization structure is provided in appendix – I. A scuffle the structure is essential as new positions and people have to be allotted for increasing the presence in the internet. The role of top management is very essential in providing support, guidance and commitment to the new areas of business. The top management with its effective leadership can influence the human resource to contribute the best to tide over the threats faced by the organization. For the development of ebusiness the financial requirements and the projections for the coming years is given in Appendix II. The additional capital required for financing the increase in operations is assumed to be done through long term debts and additional capital investment. The time schedule for the activities is shown in appendix – III. CONCLUSION The plan for developing business in the coming year is submitted and the key points to be focused is: 1. Increasing the product and services offered through alliances/ partnerships 2. Increasing the operations through ebusiness by increasing networking to support B2B and B2C operations 3. Development of website to provide a platform for our products and services and corporate communications 4. Controlling administrative and operational cost through alliances/ partnerships, networking and controlling administrative costs. Though all these strategic management activities represent a change in our operations, systems and policies it will be effective only if all the people in the organization from top to bottom understand their role, commitment and priorities. These plans when put into action will help our company to gain footage in the global market and thereby profits and growth can be achieved. Hence, we are changing our course of action from being dormant to a proactive organization. APPENDIX - I APPENDIX II Projected income statement and balance sheet(Amount in Millions USD) Projected income statement Previous year Current year Projected year Sales 100 102 106 Cost of goods sold 70 72 75 Gross margin 30 30 31 Selling expense 9 10 15 Administrative expenses 6 9 5 Earning before interest and taxes 15 11 11 Interest 3 4 3 Taxes 6 7 7 Net income 6 Nil 1 Dividends 2 Nil Nil Retained earnings 4 Nil 1 Projected balance sheet Assets Cash 5 5 5 Accounts receivable 2 3 3 Prepaid expenses 20 17 15 Total current assets 27 25 23 Furnishings 3 3 3 Computers 20 25 25 Office electronics 2 2 2 Total fixed assets 25 30 30 Less: depreciation 5 7 7 Fixed assets after depreciation 20 23 23 Copyrights 25 25 35 Total assets 45 48 58 Liabilities Accounts payable 10 12 13 Notes payable 5 6 6 Total current liabilities 15 18 19 Long term debt 26 26 30 Additional paid in capital Nil 4 8 Retained earnings 4 0 1 Total liabilities 45 48 58 APPENDIX – III REFERENCES 1. David R. Fred, (2007), Strategic Management – Concept and cases, New Delhi, Prentice Hall. 2. Rarick Charles and Vitton John, (1995), “Mission statements Make cents,” Journal of Business Strategy, 16: 11 Read More