Creating a Company Business Plan and Strategic Management - Case Study Example

?Strategic Management (Fujifilm Case Study) Table of Contents Table of Contents 2 0 Introduction 3 2.0Marketing Projection 4 3.0Operational Projection 8 4.0 Financial Projection 9 5.0 Implementation 12 6.0 Conclusion 13 7.0 References 14 8.0 Bibliography 16 1.0 Introduction The paper intends to provide the CEO of Fujifilm with strategic consultation in order to develop corporate level as well as business level strategies for the growth of the company. This company was first set up in 1934 as Fuji Photo Film Co. Ltd. The company gradually expanded its business operations and diversified from photo film manufacturing to various other products. There are several product lines of Fujifilm and these are of technologically much advanced (Gavetti & Et. Al., “Fujifilm: A Second Foundation”). The paper deals with the business plan of the company for the future five years. The marketing projection is done by taking into consideration the entire products of Fujifilm and its market growth in the past years. The operational estimation is conducted by considering the set marketing plan. The outer and inner environment of the company and the competitors’ strength as well as weakness facilitates to estimate the operational prediction. The financial analysis is done by examining the marketing and operations of the company and their performance along with income statement of the previous years. The paper also covers the process of implementation of major objectives in order to achieve success. Finally, the paper is completed with a brief conclusion. 2.0 Marketing Projection The sales projection relates to the estimation of potential sales of a company at a certain time period. The sales projection of Fujifilm’s products and services can be prepared for the coming five years. The marketing projection of Fujifilm for successive five years from present scenario is based on several factors. There may be external or internal factors that affect sales projection (Sane Jose State University, “Process for Sales Projection”). The marketing and sales of the product of Fujifilm have helped to increase its market share and proper planning will enhance its growth in the coming years. The various factors that are responsible for Fujifilm’s future projection are seasonability aspect prevalent in business, comparative situation of the economy, fashions of new products, changing population and productivity, income of consumer, present market share, innovative product lines, inventory shortage, recent trend in sales and price changes among others (Sane Jose State University, “Process for Sales Projection”). The various marketing products of Fujifilm are ‘electronics products’, ‘highly functional materials’, ‘medical imaging’, ‘life science’, ‘graphic arts’, ‘optical devices’ and ‘documents’. These products are expanding globally and are in huge demand in market. To maintain its demand in future, the company needs to develop various marketing techniques. The market share of LCD FUJITAC in global market is 80% and for WV film it acquires 100%. Thus, in the coming years the growth will be high as a result production capacity need to be raised (Fujifilm, “Highly Functional Materials”). To enhance production as well as growth it needs to develop innovative marketing techniques. The diagnostic materials acquired the top market share; therefore it must be provided prior importance. Due to recession, gradually revenue from medical imaging has lowered down. The forecasting can be done by taking into consideration the various aspects of customers and market and their demand for more innovative products (Fujifilm, “Highly Functional Materials”). The three sections of products that are manufactured in the company throughout the year are imaging solution, information solution and document solutions. The business growth of these products under these sections varies considerably. By examining the revenue of business trend from the year 2007 to 2011, it is possible to predict the revenue from the business for the future five years (Fujifilm, “Business Field”). Source: (Fujifilm, “Business Field”). In case of imaging solution, the main products are ‘color films’, ‘color paper’, ‘FDi services’, ‘photofinishing equipments’ and ‘electronic imaging’. The demand for these products rose in 2007 but gradually it has declined. For increasing the demand and productivity of these products for the succeeding five years the company by incorporating high technology can attract the market share and increase revenue. The more innovative technology and increase in product line in this section may increase the business revenue. It can be predicted that from the present business revenue of 325.8 billions of Yen, the revenue may raise upto 355.4 in the first year, 402.8 in the second year, 425.7 in third year, 450.9 in the fourth year and 510.5 in the fifth year (in Billions of Yen) (Fujifilm, “Business Field”). The information solution involves various products of ‘medical systems’ and ‘life sciences’, ‘graphic arts’, ‘flat panel display materials’, ‘recording media’ and ‘office along with industry products’. These products of Fujifilm are in huge demand but due to several factors of market environment the growth was not steady. The medical systems and life science products of the company can be sold to emerging markets where high-tech equipments are needed in medical health centers. The other products of information solution can be improved to acquire market share. It can be forecasted that from the present sales revenue, the growth from emerging as well as emerged market may raise upto 950.4 billion Yen in the first year. In the second year, there may be rise of 1,001.5 billion Yen and rise of 1,045.8 billion Yen in the third year, 1,110.4 billion Yen in the fourth year and 1,155.6 billion Yen in the fifth year (Fujifilm, “Business Field”). The products of document solutions are office products, production services, office printers and global services. Due to the extreme competition and slow economic growth, the demand for these products has slowed down. There was growth in the past few years but gradually the growth has lowered down. However, in the coming years the economic growth may facilitate for more demand of the products. It can be estimated that the demand will rise if the product line of document solutions are marketed in emerging markets apart from the existing markets where the product has its demand. The forecasted sales growth in the first year can be 1,100.5 billion Yen, 1,175.8 billion Yen in the second year, 1,210.5 billion Yen in the third year, 1,255.9 billion Yen in the fourth year and 1,310.5 billion Yen in the fifth year (Fujifilm, “Business Field”). Porter’s Five Forces The analysis of Porter’s five forces may facilitate Fujifilm to estimate their competition as well as profitability in coming years. The five forces of Porter are ‘bargaining power of supplier’, ‘bargaining power of customers’, ‘threat of new entrants’,’ threat of substitute’ and ‘competitive rivalry between existing layers’. The suppliers’ bargaining power becomes high when there are no substitutes of existing supplier (Recklies, “Introduction”). The company may face challenges from customers both from emerging and developed markets. In the emerging market, the customers may be price sensitive and in emerged market the customers are much acquainted with the operating cost and may switch to another product if possible. There is a growth of huge competition in the electronic goods in the market and the level of competitors is also rising. Therefore, there may be probability of entry of new competitors with new brand. In present scenario more companies are entering the electronic goods market with innovative technology. The new competitors may enter the market with products similar to that of Fujifilm. As a result, there is a chance of threat and increase in competition of similar category of products. The company may also face challenges with the existing players in the market that manufactures same types of goods as that of Fujifilm. This hinders the growth of the market and minimizes the revenue from business (Recklies, “Introduction”). 3.0 Operational Projection The company after analyzing the market strategies and the factors of both external as well as internal environment, strength as well as weakness of competitors, adopted certain operational strategies for further processes. The operational strategy developed by different business sectors varies considerably. The company Fujifilm, in order to maintain its success throughout the year, must adopt exclusive operating style and make regular review of the operations. However, to maintain standard of operations, Fujifilm should implement either six sigma or ‘lean manufacturing technique’. This will result in maximizing the assets for business operations (Walden University, “Fundamental Business Strategies”). The operational strategy is prepared by focusing on the competitive priorities such as cost and quality of resource with an intention to fulfill the long-term plan of Fujifilm. It can set comparatively low price as compared to that of competitors. Therefore, the main role of operational strategy is to use those resources that may facilitate to spend less in operations and can reduce the market prices of their products. Moreover, low cost strategy with competitive price may probably lead to high profit margins. The resources that will be utilized by the company for its operational purpose of products should be of high quality (Media Wiley, “Competitive Priorities”). The customers demand products with superior quality, uniformity and high performance. Thus, in order to develop such standard products the company needs to maintain both cost as well as resources. The different types of resources that are used in production purpose must be sustained in terms of quality and skill. The delivery of the product is also included in operational strategy. On time delivery of products to customers will increase the company’s competitive advantage. It can be estimated that to increase production and growth of market share, it is required to acquire more resources and raw materials for the end products (Media Wiley, “Competitive Priorities”). 4.0 Financial Projection The marketing and operational strategy is followed by financial projection for the future five years. The financial estimation is done based on the previous years’ record. Source: (Fujifilm, “Financial Highlights”). From the record of ‘revenue/ratio of operating income to revenue’ it is observed that there is no steady growth of income to revenue ratio in the previous years. This was the result of global recession. However, it is assumed that if the marketing strategies as recommended can be executed then it may indicate continuous growth in the coming five years. The income to revenue ratio from the current figure 6.2% is expected to increase to 6.8% in the first year, 7.4% in second year, 7.7% in the third year, 8.2% in the fourth year and 8.6% in the fifth year (Fujifilm, “Financial Highlights”). Source: (Fujifilm, “Financial Highlights”). The prediction can be done from the ‘net income attributable to FUJIFILM holdings per share’ of common stock/payout ratio. In the previous years, there was a variation in net income and in 2011 it is 131.30 Yen with payout ratio of 22.8%. Thus, the prediction can be done by the value of the previous years. In the first year, the net income may become 165.30 Yen with a percentage of 21.8, the value in second year will be 192.5 Yen with 20.1%, in third year the estimated figure is 221.5 with 16.7%, and the value in fourth year will be 245.3 Yen with the percentage of 15.1 and in the fifth year it may be 285.8 Yen with 14.0% (Fujifilm, “Financial Highlights”). This estimation may provide approximate value regarding the revenue of the company from their business in the future five years. The rise in economic intensification will assist the company to take debenture from the various financing sources with either variable or fixed cost. The shares can be sold to the shareholders for return on investment. The company can go for hire purchase for attaining the assets by paying partial price of it. The credits can be taken from suppliers with a payment term of about 30 days or even longer. The highest amount of time can be taken by the company for payment and utilization of money during short-term period so as to invest in other things. The financing sources i.e. ‘factoring’ entails company to outsource its invoice arrangement towards an outer company. The value of excellent resources facilitates the company to receive funds and payment of upcoming invoices more rapidly (Scribd, “Sources of Finance”). 5.0 Implementation The overall strategies, if implemented effectively by Fujifilm, may provide them with enhanced growth in future. The market growth of the company declined in the previous years due to recession. During this period of time the demand for electronic products also lowered down. The major objective of the company is to increase market share in all the three sectors of products. In order to achieve this objective the company can first target emerging markets to increase sales revenue. In the developed market the company can bring more variation in their products offering in all three sectors i.e. imaging solutions, information solutions and document solutions to stay ahead of competitors. In the marketing strategy, the entire estimation has been done regarding the development of existing products and to increase the product line. The operational strategy indicates about the quality and cost of the products of Fujifilm. These strategies may act as a milestone for achieving the set objectives of the company for the next five years. The Porter five forces model that have been analyzed in relation to the company also act as significant role in fulfilling the objectives of business. 6.0 Conclusion With reference to the above discussion, it can be concluded that Fujifilm is highly advanced in its technological development, however due to certain reasons the company faced decline in its growth. The marketing and operational along with financial strategies that have been adopted may increase profit along with market share. In this paper, the preparation of business plan for the next five years facilitates the company to enhance its growth margin in the electronic market. The various products of company remained in demand for a long period of time but it slowed down gradually in recent times due to recession. The growth was not continuous; therefore to maintain consistent growth of the products in the electronic market in future the company can incorporate the recommended strategies. It can be predicted that these strategies will facilitate the company to improve its market growth compared to the present scenario. 7.0 References Fujifilm. “Highly Functional Materials”. May 27, 2011. Annual Report, 2006. Fujifilm. “Business Field”. May 27, 2011. About Us, 2011. Fujifilm. “Financial Highlights”. May 27, 2011. Investor Relations, 2011. Gavetti, Giovanni. & Et. Al. Fujifilm: A Second Foundation Harvard Business School, 2007. Media Wiley. “Competitive Priorities”. May 27, 2011. Operations Strategy and Competitiveness. No Date. Recklies, Dagmar. “Introduction”. May 27, 2011. Porters 5 Forces, 2001. Sane Jose State University. “Process for Sales Projection”. May 27, 2011. Sales Projection Process, 2007. Scribd. “Sources of Finance”. May 27, 2011. Doc, 2010. Walden University. “Fundamental Business Strategies”. May 27, 2011. Management, 2010. 8.0 Bibliography Chase, Richard B. & Et. Al. Operations Management for Competitive Advantage Tata McGraw-Hill Education, 2006. Fujifilm. “For Quality of Life”. May 27, 2011. Annual Report, 2010. Helfert, Erich. A. Financial Analysis: Tools And Techniques: A Guide For Managers McGraw-Hill Professional, 2001. Read More