Foundations in BusinessBUSI 20173

Strategic Plan Assignment

Each team will write a Strategic Plan for your Foundation business that is due April 2nd. Your plan will contain a summary of your strategy for the next 8 years.

Before you begin writing your business plan, consider four core questions:

1. What service or product does your business provide and what needs does it fill? 2. Who are the potential customers for your product or service and why will they

purchase it from you? 3. How will you reach your potential customers? 4. Where will you get the financial resources for your business?

Strategic plans may be generated in many different formats. Much depends on the target audience to whom the plan is designed to appeal. For example, a strategic plan designed to inform employees of the company’s long-tem strategic intents may be written differently from one intended to appeal to bank lenders and venture capitalists. Regardless of format, there are four major phases to business planning:

1. Determine the current state of the industry and the market Situation Analysis - Identify SWOT (Strengths, Weaknesses,

Opportunities, and Threats)2. Set forth a strategic vision for your company.3. Determine the specific tactics within each of the company’s functional

elements that you believe will best support the strategic vision. R&D Marketing Production Finance

4. Monitor progress by establishing benchmarks and conducting competitor analysis comparisons.

The following is an outline for your strategic plan with questions that you should be answering as the executive team:

Cover Page (with team member names listed)

1. Company Description What is important to you in business? To whom will you market your products? What factors will make the company succeed? What do you think your major competitive strengths will be?

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o Vision, Mission and Values Statements o Strengths, Weaknesses, Opportunities and Threats (SWOT) – is a tool for

auditing an organization and its environment. It’s the 1st stage of planning and helps marketers to focus on key issues. (for additional information see appendix 1.0)

2. Strategic Summary Summarize the fundamentals of your business:

What is your overall Corporate Strategy? Who are your customers? What will your product strategy be?

High tech, Low tech, both? What is your marketing plan?

Pricing Promotion Sales

Sales Forecast Projected Profit and Loss (using excel). You will include a

forecast for sales as described in appendix 2. You can make this a separate appendix to your plan or include it as part of your marketing plan.

What is your production plan? Capacity considerations (Overtime/no overtime) Automation?

How will you finance your growth and success? What financial measurements will you use to determine how well you are

doing?

Strategic Plan Expectations:

This assignment must be a typed, single spaced, (2-3 pages) document with any included attachments and appendices. Create a footer in your document and center a statement of confidentiality there (ie. XXX Confidential, where XXX is your company name). A printed copy is due in class on the due date referenced above. You must also submit a softcopy (MS Word, not PDF) of your plan in the Strategic Plan TCU Online dropbox. Only one copy per team should be submitted to the dropbox. Multiple copies submitted to the dropbox per team will result in a penalty to your final score.

Grading will include both objective and subjective components. The objective portion will focus on 1.technical errors – misspelling, incorrect word choice, structure of sentences and paragraphs, unnecessary font changes etc., and 2. the Excel quality including appropriate use of formulas and formatting. The subjective portion will focus on understanding of the simulation, clarity of the writing, meeting the needs of the target audience for the strategic plan.

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The Sales Forecast and Projected Profit & Loss components:1. must be created using Excel (using Excel functionality – don’t just plug numbers

into the spreadsheet)2. appropriate tables and charts must be copied into the written business plan3. the team Excel file must be submitted via email to j.mathis@tcu.edu before

class on the day the written document is due. 4. For additional help and guidance, see the link on the schedule called Spreadsheet

Template.

Grading for the Excel content will be based upon the effective use of Excel as a management tool, use of formulas, charts (including appropriate titles legends, and formatting of date), and overall visual clarity of the content. Assumptions should be documented in the Excel file and included as appropriate in the plan.

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Appendix 1.0

SWOT Analysis:

SWOT analysis is a framework for generating strategic alternatives from a situation analysis. It is applicable to either the corporate level or the business unit level and frequently appears in marketing plans. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Because it concentrates on the issues that potentially have the most impact, the SWOT analysis is useful when a very limited amount of time is available to address a complex strategic situation.

SWOT ProfileThe internal and external situation analysis can produce a large amount of information, much of which may not be highly relevant. The SWOT analysis can serve as a filter to reduce the information to a manageable quantity of key issues. The SWOT analysis classifies the internal aspects of the company as strengths or weaknesses and the external situational factors as opportunities or threats. Strengths can serve as a foundation for building a competitive advantage, and weaknesses may hinder it. By understanding these four aspects of its situation, a firm can better leverage its strengths, correct its weaknesses, capitalize on golden opportunities, and deter potentially devastating threats.

Internal AnalysisThe SWOT analysis summarizes the internal factors of the firm as a list of potential strengths and weaknesses. Factors should be evaluated across the organization in areas such as:

Company culture Operational capacity Company image Brand awareness Organizational structure Market share Key staff Financial resources Access to natural resources Exclusive contracts Position on the experience curve Patents and trade secrets Operational efficiency

To carry out a SWOT Analysis, answer the following questions:

Strengths:

What advantages does your company have? What do you do better than anyone else?

What unique or lowest-cost resources do you have access to?

What do people in your market see as your strengths?

What factors mean that you "get the sale"?

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Consider this from an internal perspective, and from the point of view of your customers and people in your market. Be realistic: It's far too easy to fall prey to "not invented here syndrome". (If you are having any difficulty with this, try writing down a list of your characteristics. Some of these will hopefully be strengths!)

In looking at your strengths, think about them in relation to your competitors - for example, if all your competitors provide high quality products, then a high quality production process is not a strength in the market, it is a necessity.

Weaknesses:

What could you improve? What should you avoid?

What are people in your market likely to see as weaknesses?

What factors lose you sales?

Again, consider this from an internal and external basis: Do other people seem to perceive weaknesses that you do not see? Are your competitors doing any better than you? It is best to be realistic now, and face any unpleasant truths as soon as possible.

External AnalysisAn opportunity is the chance to introduce a new product or service that can generate superior returns. Opportunities can arise when changes occur in the external environment. Many of these changes can be perceived as threats to the market position of existing products and may necessitate a change in product specifications or the development of new products in order for the firm to remain competitive. Changes in the external environment may be related to:

Customers Social changes Competitors New technology Market trends Economic environment Suppliers Political and regulatory environment

To carry out a SWOT Analysis, answer the following questions:

Opportunities:

Where are the good opportunities facing you?

What are the interesting trends you are aware of?

Useful opportunities can come from such things as:

Changes in technology and markets on both a broad and narrow scale Changes in government policy related to your field

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Changes in social patterns, population profiles, lifestyle changes, etc.

Local events

A useful approach for looking at opportunities is to look at your strengths and ask yourself whether these open up any opportunities. Alternatively, look at your weaknesses and ask yourself whether you could create opportunities by eliminating them.

Threats:

What obstacles do you face? What is your competition doing that you should be worried about?

Are the required specifications for your job, products or services changing?

Is changing technology threatening your position?

Do you have bad debt or cash-flow problems?

Could any of your weaknesses seriously threaten your business?

Strengths:What do you do well? What unique resources can you draw on? What do others see as your strengths?

Weaknesses:What could you improve? Where do you have fewer resources than others? What are others likely to see as weaknesses?

Opportunities:What good opportunities are open to you? What trends could you take advantage of? How can you turn your strengths into opportunities?

Threats:What trends could harm you? What is your competition doing? What threats do your weaknesses expose you to?

Appendix 2.0 Sales Forecast and P&L Examples:

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The Sales Forecast and Projected Profit and Loss components; 1. must be created using Excel, 2. appropriate tables and charts must be copied into the written business plan, and 3. the team Excel file must be submitted via email to j.mathis@tcu.edu before class on the day the written document is submitted. Late submission of any portion of this assignment will be penalized as noted in the class syllabus. Use the Spreadsheet Template file found on the schedule for guidance on this portion of the assignment.

Utilize your Practice Round 1 FastTrack for 2019 actual data Develop your Sales Forecast for the next 3 years

Example Data

Round: 1Dec. 31, 2019

Selected Financial Statistics

 Andrews Baldwin Chester Digby Erie Ferris

ROS 5.2% 4.6% 5.4% 6.5% 3.8% 7.3%Turnover 2.08 1.61 1.42 1.63 1.41 1.77ROA 10.9% 7.4% 7.6% 10.6% 5.4% 13.0%Leverage 1.5 1.9 1.9 1.9 1.9 1.9ROE 16.9% 14.1% 14.2% 19.8% 10.2% 25.0%Emergency Loan $0 $0 $0 $0 $0 $0Sales $50,008,525 $48,980,365 $41,363,253 $50,297,693 $39,833,623 $44,110,449EBIT $4,799,499 $4,737,100 $4,672,970 $6,316,310 $3,574,131 $6,062,078Profits $2,623,271 $2,249,123 $2,216,443 $3,268,006 $1,516,483 $3,224,967Cumulative Profit $5,108,458 $4,734,310 $4,701,629 $5,753,193 $4,001,669 $5,710,154SG&A / Sales 11.9% 9.4% 7.4% 9.8% 7.4% 9.8%Contrib. Margin % 24.1% 21.6% 22.5% 24.6% 20.3% 26.1%

FOUNDATION® FAST TRACKPage 1

Top Products in Low Tech Segment

Name

Market

Share

Units Sold to

Seg

RevisionDate Stock Out

Pfmn Coor

dSize

CoordListPrice MTBF

Age Dec.3

1

PromoBudge

tSales

Budget

Customer

Aware-

ness

December

Customer Survey

Able 20% 1,084 8/21/2019 YES 5.9 14.6 $33.49 19000 2.2 $1,750 $1,750 78% 22

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Top Products in High Tech Segment

NameMarket Share

Units Sold

to Seg

RevisionDate

Stock Out

Pfmn Coord

Size Coord

ListPrice MTBF

Age Dec.31

PromoBudget

Sales Budget

Customer Aware-

ness

December Customer

Survey

Able 16% 409 8/21/2019 YES 5.9 14.6 $33.49 19000 2.2 $1,750 $1,750 78% 10

Sales Forecast Round 1

Market 2019 Actual 2020 2021 2022Low Tech Able $ 36,303 $ 31,100 $ 34,713 $ 42,339 High Tech Able $ 13,697 $ 8,813 $ 7,697 $ 6,531

Able $ 50,001 $ 39,913 $ 42,410 $ 48,870 Low Tech Africa $ - $ 4,688 $ 8,452 $ 3,136 High Tech Africa $ - $ 17,086 $ 31,349 $ 38,063

Africa $ - $ 21,774 $ 39,801 $ 41,199 Low Tech Asia $ - $ - $ 5,157 $ 3,099 High Tech Asia $ - $ - $ 11,476 $ 28,211

Asia $ - $ - $ 16,633 $ 31,310 Total Sales $ 50,001 $ 61,687 $ 98,844 $ 121,379

Forecast the number of units sold for each product within both the Low Tech and High Tech markets

o Determine your pricing strategy for each product o Calculate the total sales for each producy

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Assumptions:Round 1

2019 Actual 2020 2021 2022Units Price Units Price Units Price Units Price

Able Low Tech 1084 33.49 915 34.00 1052 33.00 1210 35.00Able High Tech 409 33.49 259 34.00 233 33.00 187 35.00Africa Low Tech 0 0 114 41.00 201 42.00 74 42.50Africa High Tech 0 0 417 41.00 746 42.00 896 42.50Asia Low Tech 0 0 0 0.00 126 41.00 74 42.00Asia High Tech 0 0 0 0.00 280 41.00 672 42.00

Notes: Able will be a LT product; Able sales in HT will decline annually; Able will grow faster than the industry (15%) after Year 2Africa will be available 4/3/2020 and will be positioned and priced to sell primarily in HT; after year 1, Africa will attain a 20% market share Africa will be aggressively repositioned annually and aggressively marketedAsia will be available in 2022 and will be positioned and priced to sell primarily in HT; after year1, Asia will attain a 15% market share Asia will be aggressively repositioned annually and aggressively marketed

Projected Profit & Loss for next 3 yearso Utilize your Sales forecast for annual Sales $$o Contribution Margin = Sales – Variable cost; therefore if you know or can

estimate your contribution margin, you can calculate variable costso Estimate your SG&A - how aggressive are your Promotion and Sales budgetso Estimate your interest based upon your financial planso Taxes are 35%

Projected Profit and Loss

2020 2021 2022Sales $ 61,687 $ 98,844 $ 121,379 Variable Costs $ 44,723 $ 69,191 $ 78,896 Contribution Margin $ 16,964 $ 29,653 $ 42,483 SG&A $ 6,169 $ 12,355 $ 18,207 EBIT $ 10,795 $ 17,298 $ 24,276 Interest $ 617 $ 988 $ 1,214 Taxes $ 3,562 $ 5,708 $ 8,072 Profit $ 6,616 $ 10,601 $ 14,990

Assumptions:2019

Actual 2020 2021 2022Contribution Margin 1 24.1% 27.5% 30.0% 35.0%SGA 1 11.9% 10.0% 12.5% 15.0%Interest 1 1.3% 1.0% 1.0% 1.0%Taxes 2 35.0% 35.0% 35.0% 35.0%

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1. Actual data from 2018 FastTrack report; 2020 - 2022 are estimates 2. Fixed Corporate Rate

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Points to consider:

1. You should try to complete your initial version of your plan in time to submit it to the writing center. But remember, the final product is your responsibility, so carefully review the document prior to the due date, even if it has been reviewed by one of the above parties.

2. You were given a handout entitled “Writing Tips”. Please review that document to insure that you are following the writing rules described there.

3. Submit all portions of the assignment by the due dates described above. Late submission will result in a penalty to the team as noted in the syllabus.

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