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Figure 6-9 An Example BCG Matrix
The BCG Matrix, like all analytical techniques, has some limitations. For example, viewing every business
as a star, cash cow, dog, or question mark is an oversimplification; many businesses fall right in the
middle of the BCG Matrix and thus are not easily classified. Furthermore, the BCG Matrix does not reflect
if various divisions or their industries are growing over time; that is, the matrix has no temporal qualities,
but rather it is a snapshot of an organization at a given point in time. Finally, other variables besides
relative market share position and industry growth rate in sales, such as the size of the market and
competitive advantages, are important in making strategic decisions about various divisions.
Another example BCG Matrix is provided in Figure 6-9 . As you can see, Division 5 had an operating loss
of $188 million as indicated by its red shading. The remaining pie slices add up to over 100 percent
profits to account for negative net income associated with Division 5 (This is a different way to portray
divisional losses in a BCG matrix analysis).
Figure 6-9 Full Alternative Text
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Figure 6-10 The Internal-External (IE) Matrix
The Internal-External (IE) Matrix
The Internal-External (IE) Matrix positions an organization’s various divisions (segments) in a nine-cell
display, as illustrated in Figure 6-10 . The IE Matrix is similar to the BCG Matrix in that both tools involve
plotting a firm’s divisions in a schematic diagram; this is why both tools are forms of portfolio analysis.
In both the BCG and IE Matrices, the size of each circle represents the percentage of revenues or number
of stores each division contributes, and pie slices reveal the percentage of operating profits contributed
by each division. But there are four important differences between the BCG Matrix and the IE Matrix, as
follows:
1. The x- and y-axes are different.
2. The IE Matrix requires more information about the divisions than does the BCG Matrix.
3. The strategic implications of each matrix are different.
4. The IE Matrix has nine quadrants versus four in a BCG Matrix.
Source: Based on: The IE Matrix was developed from the General Electric (GE) Business Screen Matrix. For a description of the GE Matrix, see Michael Allen, “Diagramming GE’s Planning for What’s WATT,” in R. Allio and M. Pennington, eds., Corporate Planning: Techniques and Applications l par; New York: AMACOM, 1979.
Figure 6-10 Full Alternative Text
For the above reasons, strategists in multidivisional firms often develop both the BCG Matrix and the IE
Matrix in formulating alternative strategies. A common practice is to develop a BCG Matrix and an IE
Construct and apply the Internal-External (IE) Matrix.LO 6.6
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Figure 6-11 An Example IE Matrix
Matrix for the present, and then develop projected matrices to reflect expectations of the future. This
before-and-after analysis can be quite effective in an oral presentation, enabling students (or strategists)
to pave the way for (justify or give some rationale for) their recommendations across divisions of the
firm. Also, commonly a BCG Matrix will be developed by region and an IE Matrix by product, or vice versa.
The IE Matrix is based on two key dimensions: (1) the IFE total weighted scores on the x-axis and (2) the
EFE total weighted scores on the y-axis. Recall that each division of an organization should construct an
IFE Matrix and an EFE Matrix for its part of the organization, but usually in performing case analysis,
strategic-management students simply estimate divisional IFE and EFE scores, rather than prepare those
underlying matrices for every division. Regardless, it is the total weighted scores derived from the
divisions that allow construction of the corporate-level IE Matrix. On the x-axis of the IE Matrix, an IFE
total weighted score of 1.0 to 1.99 represents a weak internal position; a score of 2.0 to 2.99 is
considered average; and a score of 3.0 to 4.0 is strong. Similarly, on the y-axis, an EFE total weighted
score of 1.0 to 1.99 is considered weak; a score of 2.0 to 2.99 is average; and a score of 3.0 to 4.0 is
strong. Circles, representing divisions, are positioned in an IE Matrix based on their (x, y) coordinate.
Despite having nine cells (or quadrants), the IE Matrix has three major regions that have different strategy
implications, as follows:
REGION 1—The prescription for divisions that fall into cells I, II, or IV can be described as grow and
build. Intensive (market penetration, market development, and product development) or integrative
(backward integration, forward integration, and horizontal integration) strategies can be most
appropriate for these divisions. This is the best region for divisions, given their high IFE and EFE
scores. Successful organizations are able to achieve a portfolio of businesses positioned in Region
1.
REGION 2—The prescription for divisions that fall into cells III, V, or VII can be described as hold and
maintain strategies; market penetration and product development are two commonly employed
strategies for these types of divisions.
REGION 3—The prescription for divisions that fall into cells VI, VIII, or IX can be described as harvest
or divest.
An example four-division IE Matrix is given in Figure 6-11 . As indicated by the positioning of the four
circles, grow and build strategies are appropriate for Divisions 1, 2, and 3. But Division 4 is a candidate
for harvest or divest. Division 2 contributes the greatest percentage of company sales and thus is
represented by the largest circle. Division 1 contributes the greatest proportion of total profits; it has the
largest-percentage pie slice.
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Figure 6-12 The IE Matrix
Figure 6-11 Full Alternative Text
An example five-division IE Matrix is given in Figure 6-12 . Note that Division 1 has the largest revenues
(as indicated by the largest circle) and the largest profits (as indicated by the largest pie slice) in the
matrix. It is common for organizations to develop both geographic and product-based IE Matrices to
more effectively formulate strategies and allocate resources among divisions. This latter idea minimizes
the limitation of these matrices being a “snapshot in time.”
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Figure 6-12 Full Alternative Text
Important NOTE: Whenever a particular company is known, such as in doing case analysis or in the real
world, be more specific with proposed strategies rather than using generic terms in regards to resultant IE
Matrix strategies. Couch your strategies in quantitative and divisional terms to the extent possible. (This
is true also with strategies derived from the BCG, SPACE, GRAND, and even SWOT analyses; specificity is
golden—avoid vagueness)
BUS 485B - STRATEGIC AUDIT PARAGRAPH STRUCTURE
TEMPLATE – Sections V (SWOT) to VIII
1. Follows is a template which shows the paragraphing structure for your SA.
2. It follows the structure in the text, but has new different paragraph structures for Paragraphs V, VI, VII, and VIII.
3. The un-titled sub-paragraphs shown here are not indicative of a minimum or a maximum number of un-titled sub-paragraphs. You should construct your un-titled sub-paragraphs you need based on your written discussion and analysis. Just follow this paragraphing and sub-paragraphing format as you build your SA.
4. Your SA should be in single spaced form with consistent appropriate margins, indentations, and spacing between paragraphs. Use Portrait page mode for your SA text – do not use Landscape page mode for your SA text. Use font size 10-12. Use single spaced format 1.0 – do not use format 1.15.
5. There are three Exhibits. Exhibit 8 should be included in the Excel document called FirmNane-5YFinancials.xlsx that was already created in BUS485A.
6. In addition to this Word document, submit your Excel document with the 5-year financial information.
“AMAZON” Strategic Audit
Student:
Yyyyy Yyyyyyyy
National University
Month, Year
Professor BUS 485B – NNN AAAAA
TABLE OF CONTENTS
V. Analysis of Strategic Factors
A. Situational Analysis (use SFAS (Exh.3) to create SWOT- Exhibit 7)
1. Strengths and Opportunities
2. Strengths and Threats
3. Weaknesses and Opportunities
4. Weaknesses and Threats
B. Review of Current Mission and Objectives
1. Mission
2. Objectives
VI. Strategic Alternatives and Recommended Strategy
A. Strategic Alternatives
1. Strategic Alternative #1 – No Change Alternative
a. Corporate Strategy
b. Supporting Business Strategy
c. Supporting Functional Strategies
d. Corporate Scenario
e. Pros
f. Cons
2. Strategic Alternative #2 – Growth Alternative
a. Corporate Strategy
b. Supporting Business Strategy
c. Supporting Functional Strategies
d. Corporate Scenario
e. Pros
f. Cons
3. Strategic Alternative #3 – Retrenchment Alternative
a. Corporate Strategy
b. Supporting Business Strategy
c. Supporting Functional Strategies
d. Corporate Scenario
e. Pros
f. Cons
B. Recommended Strategy (see Pro Forma Exhibit 8 in 5-Year Financials)
1. Recommended Strategic Alternative
2. Decision Criteria
3. Justification/Rationale
VII. Implementation (see Implementation, Evaluation and Control Plan, Exhibit 6)
A. Corporate Directional Strategy
B. Supporting Business Strategy
C. Supporting Functional Strategies
VIII. Evaluation and Control (See Implementation, Evaluation and Control Plan, Exhibit 6)
A. Evaluation Plan at 3 Strategic Levels
B. Control Measures at 3 Strategic Levels
References
Exhibit 3 - SFAS
Exhibit 6 - Implementation, Evaluation and Control Plan
Exhibit 7 - TOWS Matrix
Exhibit 8 - Pro Forma Income Statements - - Included in 5-Year Financials-Excel
Strategic Audit II
V. Analysis of Strategic Factors
0. Situational Analysis (use SFAS to create SWOT - Exhibit 7)
1. Strengths and Opportunities
a.
b.
c.
2. Strengths and Threats
a.
b.
3. Weaknesses and Opportunities
a.
b.
c.
4. Weaknesses and Threats
a.
b.
c.
B. Review of Current Mission and Objectives
1. Mission
2. Objectives
a.
b.
c.
d.
VI. Strategic Alternatives and Recommended Strategy
0. Strategic Alternatives
1. Strategic Alternative #1 – No Change Alternative
a. Corporate Directional Strategy (describe details)
b. Supporting Business Strategy (describe details)
c. Supporting Functional Strategies (describe details per function)
(1)
(2)
(3)
(4) etc
d. Corporate Scenario (Describe the details of your scenario, predictions, assumptions, and estimates of the future, outcomes, parameters, results, competition, trends, profits, costs, sales, GDP, inflation, revenues, market share, etc etc….what you consider important to your scenario)
(1)
(2)
(3) etc
e. Pros
(1)
(2)
(3) etc
f. Cons
(1)
(2) etc
2. Strategic Alternative #2 – Growth Alternative
a. Corporate Directional Strategy
b. Supporting Business Strategy
c. Supporting Functional Strategies
(1)
(2)
(3)
(4)
d. Corporate Scenario
(1)
(2)
(3)
e. Pros
(1)
(2)
(3)
f. Cons
(1)
(2)
3. Strategic Alternative #3 – Retrenchment Alternative
a. Corporate Directional Strategy
b. Supporting Business Strategy
c. Supporting Functional Strategies
(1)
(2)
(3)
(4)
d. Corporate Scenario
(1)
(2)
(3)
e. Pros
(1)
(2)
(3)
f. Cons
(1)
(2)
B. Recommended Strategy
1. Strategic Alternative Recommended. Name the one you selected
2. Decision Criteria. Name, spell out, and discuss your decision criteria.
3. Rationale / Justification. Discuss how you made the decision. Discuss, analyze, compare and contrast your 3 strategic alternatives based on your decision criteria. You should use your calculations from your 3 pro forma income statements to support your decision rationale / justification.
VII. Implementation (Discuss and describe the details of your implementing plans and actions for the programs, budgets and procedures and the who, what, when, and how details of the implementing plans for your one recommended strategic alternative. You should use all of the lines - corporate, business and functionals - from your Exhibit 6 to identify your discussion/analysis areas.)
A. Corporate Directional Strategy
1.
2.
3.
B. Supporting Business Strategy
1.
2.
C. Supporting Functional Strategies
1.
2.
3.
4.
VIII. Evaluation and Control (Discuss and describe the who, what, when, how, and metrics details of the evaluation and control plans for your one recommended strategic alternative. Like Para VII, you should use all of the lines – corporate, business, and functionals - from your Exhibit 6 to identify your discussion/analysis areas. Don’t forget to discuss metrics)
A. Evaluation Plan at 3 Strategic Levels
1.
2.
B. Control Measures at 3 Strategic Levels
1.
2.
REFERENCES
1
2
EXHIBIT 6
IMPLEMENTATION, EVALUATION & CONTROL PLAN
For Recommended Strategic Alternative #_ – Title of Strategic Alternative goes here
EXHIBIT 7
TOWS MATRIX on
EXHIBIT 8
PRO FORMA INCOME STATEMENT ON XXXXXX
Included in 5-Year Financials
For Strategic Alternative #1 – Title of Strat Alternative goes here
(Dollar amounts in millions)
PRO FORMA INCOME STATEMENT ON XXXXXX
Included in 5-Year Financials
For Strategic Alternative #2 – Title of Strat Alternative goes here
(Dollar amounts in millions)
PRO FORMA INCOME STATEMENT ON XXXXXX
Included in 5-Year Financials
For Strategic Alternative #3 – Title of Strat Alternative goes here
(Dollar amounts in millions)
TOWS MATRIX on OLALLIEBERRY PIE COMPANY (OPC)
Internal Factors (from IFAS)
|
External Factors (from EFAS) |
Strengths (S) S1 Competent Senior Leadership S2 Supplier Relationships S3 Product Quality and Uniqueness
|
Weaknesses (W) W1 Management Information System W2 Corporate Marketing
|
|
Opportunities (O) O1 Growing Market in Western States O2 International Growth Opportunities O3 Aging U.S. Population/Demographics
|
S/O Strategies · Expand into international arena by forging strategic alliances (Use S1, S3 to gain O2). · Leverage Quality Marketing campaign to increase sales (Use S3 to gain O3).
|
W/O Strategies · Implement Online Sales business with customer friendly and responsive web-based systems (Focus on W1, W2 to gain O3). · Develop and field ERP system (Focus on W1to gain O1, O2). |
|
Threats (T) T1 U.S. Competition T2 Imports from China
|
S/T Strategies · Contest competition advances by implementing Lean programs (S1, S2, S4, S5 to min T1) · Form strategic alliances with Chinese importers (use S1, S2 to min T2) |
W/T Strategies · Rollout re-designed and enlarged product marketing program (Overcome W1, W2 to min T1). · Invest in downstream supply chain infrastructure improvements (improve W1 to minimize T1). · Modernize MIS/ERP to improve competitiveness (improve W1 to reduce T1 and T2). |
2 of 1
PART I
| Welcome to the Free Excel Student Template Version 18.1 | |||||||||
| Dear Student, | |||||||||
| By using this Template, you hereby agree to the Copyright terms and conditions. This Template should save you considerable time and allow for your presentation to be more professional. Do not mistake this Template for doing all of the work. Your assignment is to analyze and present strategies for the next three years. You will still need to do the research and enter key internal and external information into the Template. The Template does not gather or prioritize information. It does however assimilate information you enter in a professional way and does many calculations for you once that critical information is entered. Refer to the David & David textbook for conceptual guidelines for developing all matrices and analyses included in this Template. Best of luck with your project. This Template is designed for Textbook editions 17ed and 18th. | |||||||||
| Instructions for Using the Template | |||||||||
| 1 | Please read all Template instructions below carefully before you start each new section of this Template. Only type in the green boxes. Refer to the David, David & David textbook for conceptual guidelines for every matrix and analysis in this Template. | ||||||||
| 2 | This Template is organized into three primary parts: Part I, Part II, and the respective data output pages for your respective matrices. All data entered will be entered into Part I or Part II. Part I consists of data entry in developing matrices, where Part II consists of data entry for your financial information, including ratios, financial statements, and projected financial statements. Blue buttons are provided for navigating within and to Part I, yellow buttons are for navigating within and to Part II, orange buttons are for navigating to the respective matrices and pink buttons are for navigating to your financial output tables. The navigation buttons along the top of Part I and Part II may not be visible for Apple users but all other features should work without any problems. | ||||||||
| Strengths and Weaknesses | |||||||||
| 1 | Enter into the Template exactly 10 strengths and 10 weaknesses, no more and no less. Your factors should be detailed and actionable rather than vague. For example, the strength: "Sales up nicely" is too vague and not actionable; "Sales were up 15% on women's apparel in China during 2018" is stated far better. Always be thinking in terms of divisions when writing strengths and weaknesses. Note women's apparel could be a division for Nike. All divisions do not need to be treated equally; allow more coverage for divisions with more revenue and those most pertinent to your strategic plan. | ||||||||
| 2 | Weights reveal how important a factor is to being successful in the industry. All weights are "industry-based." A factor of 0.10 for example is 5 times more important than a factor of 0.02 for being successful in the industry. Do not be afraid to include factors with lower weights though. To have a factor make your top 10 list (10 strengths for example out of the 100s the firm likely has), justifies its importance, yet it still may be relatively a lot less important to the industry than others factors you include. Also, be mindful with respect to what industry your firm operates. A moderate priced casual hamburger restaurant may have more in common with a moderate priced chicken restaurant than with McDonalds (cheaper fastfood). Automatically considering McDonalds, Burger King, and Wendy's as the "industry" just because they all sell hamburgers may not be appropriate. Here, casual moderated priced restaurants may serve better as the "industry." After entering in the weights, check to make sure the sum of your weights equals 1.0 for your internal factors. Also, arrange your strengths with highly weighted factors listed first; arrange your Weaknesses also with highest weighted factors listed first. | ||||||||
| 3 | In contrast to weights that are industry-based, ratings are company-based and reveal how well your firm is performing. Use the coding scheme given below for ratings in an IFE Matrix: If your strengths are being cut off, simply drag your cursor between the two row numbers on the left to widen the row. | ||||||||
| 1 = "the response is poor" | |||||||||
| 2 = "the response is average | |||||||||
| 3 = "the response is above average" | |||||||||
| 4 = "the response is superior" | |||||||||
| Strengths | Weight | Rating | |||||||
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| Weaknesses | Weight | Rating | |||||||
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| 9 | |||||||||
| 10 | |||||||||
| Total Weight (Must Equal 1.00) | 0.00 | ||||||||
| Opportunities and Threats | |||||||||
| 1 | Enter into this Template exactly 10 opportunities and 10 threats, no more no less. Your factors should be detailed and actionable rather than vague. Keep in mind both opportunities and threats should be external in nature. Ask yourself "Does the firm have control over this factor?" If the answer is yes, then it cannot be an opportunity or threat. For example, as a clothing retailer you may have an opportunity to "start selling clothes in China." This is not an opportunity for two reasons: 1) the firm has internal control over doing business in China, and 2) the statement is a strategy. The underlying opportunity may be "Women in China spent 20% more on athletic apparel in 2018." Note how this opportunity is specific, actionable, divisional, and external (we cannot control the culture or demand for female athletic apparel). All divisions do not need to be treated equally, allow more coverage for divisions with more revenue and those most pertinent to your strategic plan. | ||||||||
| 2 | Weights reveal how important a factor is to being successful in the industry. Read over the #2 tip under strengths and weaknesses above since the same logic applies for the external factors. After entering in the weights, check to make sure your sum of weights equals 1.0 for all 20 external factors. List factors according with highest weight items first. | ||||||||
| 3 | Ratings again are company-based and reflect how well the firm is addressing the particular factor. Use the coding scheme given below for ratings in an EFE Matrix. If your opportunities are being cut off, simply drag your cursor between the two row numbers on the left to widen the row. | ||||||||
| 1 = the response is poor" | |||||||||
| 2 = "the response is average" | |||||||||
| 3 = "the response is above average" | |||||||||
| 4 = "the response is superior" | |||||||||
| Opportunities | Weight | Rating | |||||||
| 1 | |||||||||
| 2 | |||||||||
| 3 | |||||||||
| 4 | |||||||||
| 5 | |||||||||
| 6 | |||||||||
| 7 | |||||||||
| 8 | |||||||||
| 9 | |||||||||
| 10 | |||||||||
| Threats | Weight | Rating | |||||||
| 1 | |||||||||
| 2 | |||||||||
| 3 | |||||||||
| 4 | |||||||||
| 5 | |||||||||
| 6 | |||||||||
| 7 | |||||||||
| 8 | |||||||||
| 9 | |||||||||
| 10 | |||||||||
| Total Weight (Must Equal 1.00) | 0.00 | ||||||||
| Competitive Profile Matrix (CPM) | |||||||||
| 1 | To perform the CPM, enter up to 12 critical success factors. You may use some of the ones listed below if you like but try to use ones that are more pertinent to your company. For example, if your case is Delta Airlines, perhaps include on time arrival, extra fees, and frequent flyer points as factors, rather than the canned factors below. In a CPM, factors do not need to be overly specific, but they should be divisional in nature to the extent possible. If Pepsi Co. is your firm, your factors should be about the firm's soda business, Frito Lay business, bottling business, etc. (Pepsi Co competes in a lot more than just soda) rather than just general "advertising." Advertising for what division (business) are you referring to? Frito Lay's advertising, soda marketing, etc. All divisions do not need to be treated equally; allow more coverage for divisions with more revenue and those most pertinent to your strategic plan. | ||||||||
| 2 | After entering in your critical success factors, enter in a weight for each factor; weights are industry-based. Be sure to check the bottom of the "Enter Weight Below" column, to make sure your sum weight is equal to 1.00. It is okay for some factors to receive a low weight and a factor or two to receive a high weight of say 0.20. | ||||||||
| 3 | After entering in your weights, type the name of your company and two other competitors in the corresponding boxes. | ||||||||
| 4 | After entering in the weights and identifying your company and two rival firms, then enter in a Rating (company-based) in the "Enter Rating Below" column for each organization. DO NOT ASSIGN THE COMPANIES THE SAME RATING; TAKE A STAND; MAKE A CHOICE. In a CPM, use the coding scheme provided below for ratings. | ||||||||
| 1 = "the response is poor" | |||||||||
| 2 = "the response is average" | |||||||||
| 3 = "the response is above average" | |||||||||
| 4 = "the response is superior" | |||||||||
| Enter 12 Factors Below | Weight | Your Firm | Rival | Rival | |||||
| Enter Ratings Below | |||||||||
| Advertising | |||||||||
| Domestic Market Penetration | |||||||||
| Customer Service | |||||||||
| Product Variety | |||||||||
| International Market Penetration | |||||||||
| Employee Dedication | |||||||||
| Financial Profit | |||||||||
| Customer Loyalty | |||||||||
| Market Share | |||||||||
| Product Quality | |||||||||
| Top Management | |||||||||
| Price Competitiveness | |||||||||
| 0.00 | |||||||||
| Boston Consulting Group (BCG) Matrix | |||||||||
| 1 | This Template allows for up to 5 divisions. If your company has more than 5 divisions, combine the divisions with the least amount of revenue into division 5, and mention the adjustment to the class during your presentation, or simply focus on the 5 divisions your 3-year plan centers around; check with your professor. <See your firm's Form 10K or Annual Report to find divisional information, and those documents of your rivals> It is excellent to develop a BCG/IE by geographic region, and construct another one by product (if you have the data). | ||||||||
| 2 | In each division, enter a name, followed by the dollar amount in revenues for that division. Do not include M or B for millions or billions, but do drop off zeros. For example, for $100,000,000, you could enter $100,000 or $100, just be consistent. | ||||||||
| 3 | After completing Step 2 in developing a BCG, enter in the dollar amount in revenues for the top rival firm for each division. Note, the top rival may be you and in this situation enter in your company's revenue for that division. Also, note the top rival may be different for different divisions. For example, if your firm is Avon, Avon's top rival in its lipstick division may be Revlon, but for nail polish, the top rival in the industry may be L'Oréal, and in makeup, Avon may be the market leader. There is no need to label the top rival by name, but you could mention in class as part of your presentation. Be sure to enter in all numbers in the same $ format you used in Step 2 above. If you do not have a perfect apples to apples comparison, (possibly a rival firm combines lipstick and makeup, where your firm separates the two) then estimate as best you can and make note in your presentation. | ||||||||
| 4 | Finally, enter in the industry growth rate (IGR) for each division. Generally, taking the top 2 or 3 rivals for each division (along with your firm), adding their numbers together for the current year and the previous year and using the equation (Current Year - Previous Year) / Previous Year is sufficient to estimate guess of the industry growth rate. This is because generally the top 3 players dominate an industry. Note, using this process also weights larger firms more, which is exactly what you desire. Do not use total revenues; instead, use divisional revenues. Division industry growth rates (IGR) must be between -0.20 and 0.20. If outside these ranges, simply use -0.20 or 0.20 and mention during your presentation. | ||||||||
| 5 | Everything is calculated and positioned for you (Other than Industry Growth Rate in Step 4) including the Relative Market Share Position (RMSP). The BCG matrix in this Template does not produce pie slices to show profits. You may wish to discuss divisional profits in your presentation. | ||||||||
| Enter in division names below (If less than 5, leave the other spaces blank and no circles will appear) | Your Firm's Division Revenues | Top Firm in Industry Division Revenues | Division Market Growth Rate (Step 4) | Relative Market Share Position | |||||
| NA | |||||||||
| NA | |||||||||
| NA | |||||||||
| NA | |||||||||
| NA | |||||||||
| Internal - External (IE) Matrix | |||||||||
| 1 | This Template allows for up to 5 divisions. If the company has more than 5 divisions, combine the divisions with the least amount of revenue into division 5, and mention the adjustment to the class during your presentation, or simply focus on the 5 divisions that your 3-year plan centers around; check with your professor. | ||||||||
| 2 | Company wide EFE and IFE scores are automatically entered once you complete the EFE and IFE Matrices. | ||||||||
| 3 | Enter in estimated EFE and IFE Scores for your respective divisions. | ||||||||
| 4 | This Template's IE matrix does not produce pie slices to show profits. | ||||||||
| Enter The Name Of Your Firm | |||||||||
| Enter in division names below. If less than 5, leave the other spaces blank and no circles will appear. Remember you could use divisions by geographic region for the BCG and by product/service type for the IE (or vice versa). | Your Firm's Division Revenues | Estimated IFE Score | Estimated EFE Score | ||||||
| SPACE Matrix | |||||||||
| 1 | Include up to five factors to assess each SPACE axis: Financial Position (FP), Stability Position (SP), Competitive Position (CP), and Industry Position (IP) and the corresponding rating each factor should receive. | ||||||||
| 2 | You may use the factors provided here, but try to determine key factors related to your company and industry in the same manner you did with the CPM. The calculations are done automatically and the rating scale is provided below. | ||||||||
| 3 | Enter in the estimated FP, SP, CP, and IP numbers for up to two competitors. Or, instead of a competitor, you could show the estimated SPACE values for your firm after your proposed recommendations are implemented, ie a Before and After analysis. Or you could do both, just cut and paste the SPACE into PowerPoint then refill in the new data. It is important you fill in all information or Excel will place a circle(s) at the origin of the SPACE since the default will be (0,0) plot, which is the origin. | ||||||||
| FP and IP | |||||||||
| Positive 1 (worst) to Positive 7 (best) | |||||||||
| CP and SP | |||||||||
| Negative 1 (best) to Negative 7 (worst) | |||||||||
| Enter The Name Of Your Firm | |||||||||
| Ratings | |||||||||
| Financial Position (FP) | |||||||||
| Current Ratio | |||||||||
| Debt to Equity | |||||||||
| Net Income | |||||||||
| Revenue | |||||||||
| Inventory Turnover | |||||||||
| Industry Position (IP) | |||||||||
| Growth Potential | |||||||||
| Financial Stability | |||||||||
| Ease of Entry into Market | |||||||||
| Resource Utilization | |||||||||
| Profit Potential | |||||||||
| Ratings | |||||||||
| Competitive Position (CP) | |||||||||
| Market Share | |||||||||
| Product Quality | |||||||||
| Customer Loyalty | |||||||||
| Variety of Products Offered | |||||||||
| Control over Suppliers and Distributors | |||||||||
| Stability Position (SP) | |||||||||
| Rate of Inflation | |||||||||
| Technological Changes | |||||||||
| Price Elasticity of Demand | |||||||||
| Competitive Pressure | |||||||||
| Barriers to Entry into Market | |||||||||
| Your firm's X-axis | 0.0 | ||||||||
| Your firm's Y-axis | 0.0 | ||||||||
| Estimated FP | |||||||||
| Estimated IP | |||||||||
| Estimated CP | |||||||||
| Estimated SP | |||||||||
| Competitor 1's X-axis | 0.0 | ||||||||
| Competitor 1's Y-axis | 0.0 | ||||||||
| Estimated FP | |||||||||
| Estimated IP | |||||||||
| Estimated CP | |||||||||
| Estimated SP | |||||||||
| Competitor 2's X-axis | 0.0 | ||||||||
| Competitor 2's Y-axis | 0.0 | ||||||||
| Perceptual Map | |||||||||
| 1 | In this Template's Perceptual Map, you may include for up to 10 product categories. | ||||||||
| 2 | Enter in the X axis and Y axis dimensions. For example, if developing a map for frozen foods your X axis could range from "low calorie" to "high calorie," while the Y axis ranges from "low cost" to "high cost." | ||||||||
| 3 | Enter in the products you wish to compare (up to 10); in the example, these products would be different brands of frozen foods available for purchase. After entering in the products, rate each factor on a scale of 1 to 9. In our example, extremely low calorie would receive a score of 1 or 2, and likewise extremely high calorie should receive a score of 8 or 9. | ||||||||
| 4 | To enhance this analysis, you could mentally draw a line (or two lines) of best fit (through products) and identify areas along the line that do not have (in this example) frozen food products near the line. In this analysis, blank areas of the map are typically the most advantageous for new product creation. Any products that fall well above or below the line, may be over or under serving customers and should be examined closely. Do not blindly follow this rule of thumb however since, for example, a very expensive product may be well off the projected best fit line and yet serve its small customer base quite well. You may with this Template wish to develop several perceptual maps changing your X and Y dimensions. For example, if you are a large food processor, you could examine frozen foods on dimensions other than the ones used here, or you could examine dairy products or any other related products. Simply cut and paste your existing map into Power Point then enter your data for a new map. | ||||||||
| Enter The Name of the Dimensions on the X-axis | |||||||||
| Enter The Name of the Dimensions on the Y-axis | |||||||||
| Enter in up to 10 products | X - axis Rating | Y - axis Rating | |||||||
| Grand Strategy Matrix | |||||||||
| 1 | The Grand Strategy Matrix allows for entry of your firm and up to 5 divisions | ||||||||
| 2 | Rank the X axis from 1 (Extremely Weak Competitive Position) to 9 (Extremely Strong Competitive Position) | ||||||||
| 3 | Rank the Y axis from 1 (Extremely Slow Market Growth) to 9 (Extremely Rapid Market Growth) | X-axis score | Y-axis score | ||||||
| SWOT | |||||||||
| 1 | Click on the SWOT Hyperlink below and add your SLOWEST, and WT Strategies. | ||||||||
| QSPM | |||||||||
| 1. | To perform a QSPM, enter two strategies in the corresponding green boxes below. These two strategies should be derived from your BCG, IE, SPACE, GRAND, and SWOT. In your oral or written project, you will need to provide a recommendations page(s) on your own with the expected cost of each recommendation, ie after performing the QSPM. The recommendations page is followed by an EPS/EBIT Analysis to reveal where best to obtain the needed capital (debt vs equity). You should have multiple recommendations, including perhaps both strategies included in the QSPM, and other strategies for the firm - but no firm can do everything that would benefit the firm due to limited resources. | ||||||||
| 2. | In developing a QSPM, after entering in your strategies, then rate each strategy based on the strengths, weaknesses, opportunities, and threats (factors). Do not give two strategies the same rating for a particular strength, weakness, opportunity, or threat. (the exception is if you enter 0 to signify a factor "not impacting the choice between strategies" then you MUST enter 0 for both strategies. For example, if Strategy 1 deserves a rating of 4 on a given factor, but that factor has little to do with Strategy 2, just assign a rating of 1 to Strategy 2. (Note QSPM's will have 0's across about one half of the rows). Across each row in performing QSPM analysis, use the rating scale below for AS scores. | ||||||||
| 0 = Not applicable | Strategy One | Strategy Two | |||||||
| 1 = Not attractive | |||||||||
| 2 = Somewhat attractive | |||||||||
| 3 = Reasonably attractive | |||||||||
| 4 = Highly attractive | |||||||||
| AS Ratings | AS Ratings | ||||||||
| Strengths | |||||||||
| 1 | 0 | ||||||||
| 2 | 0 | ||||||||
| 3 | 0 | ||||||||
| 4 | 0 | ||||||||
| 5 | 0 | ||||||||
| 6 | 0 | ||||||||
| 7 | 0 | ||||||||
| 8 | 0 | ||||||||
| 9 | 0 | ||||||||
| 10 | 0 | ||||||||
| AS Ratings | AS Ratings | ||||||||
| Weaknesses | |||||||||
| 1 | 0 | ||||||||
| 2 | 0 | ||||||||
| 3 | 0 | ||||||||
| 4 | 0 | ||||||||
| 5 | 0 | ||||||||
| 6 | 0 | ||||||||
| 7 | 0 | ||||||||
| 8 | 0 | ||||||||
| 9 | 0 | ||||||||
| 10 | 0 | ||||||||
| AS Ratings | AS Ratings | ||||||||
| Opportunities | |||||||||
| 1 | 0 | ||||||||
| 2 | 0 | ||||||||
| 3 | 0 | ||||||||
| 4 | 0 | ||||||||
| 5 | 0 | ||||||||
| 6 | 0 | ||||||||
| 7 | 0 | ||||||||
| 8 | 0 | ||||||||
| 9 | 0 | ||||||||
| 10 | 0 | ||||||||
| AS Ratings | AS Ratings | ||||||||
| Threats | |||||||||
| 1 | 0 | ||||||||
| 2 | 0 | ||||||||
| 3 | 0 | ||||||||
| 4 | 0 | ||||||||
| 5 | 0 | ||||||||
| 6 | 0 | ||||||||
| 7 | 0 | ||||||||
| 8 | 0 | ||||||||
| 9 | 0 | ||||||||
| 10 | 0 | ||||||||
| You have completed Part 1. | |||||||||
Click The Blue Buttons Below to Navigate Part 1 More Efficiently
Strengths
/xl/drawings/drawing1.xml#'PART%20I'!B13Perceptual Maps
/xl/drawings/drawing1.xml#'PART%20I'!B255Weaknesses
/xl/drawings/drawing1.xml#'PART%20I'!B39Opportunities
/xl/drawings/drawing1.xml#'PART%20I'!B55Threats
/xl/drawings/drawing1.xml#'PART%20I'!B81SWOT
/xl/drawings/drawing1.xml#'PART%20I'!B311CPM
/xl/drawings/drawing1.xml#'PART%20I'!B99IE Matrix
/xl/drawings/drawing1.xml#'PART%20I'!B155BCG Matrix
/xl/drawings/drawing1.xml#'PART%20I'!B131SPACE Matrix
/xl/drawings/drawing1.xml#'PART%20I'!B181GRAND
/xl/drawings/drawing1.xml#'PART%20I'!B294QSPM
/xl/drawings/drawing1.xml#'PART%20I'!B317View IFE Matrix
/xl/drawings/drawing1.xml#'IFE%20'!A1View IFE Matrix
/xl/drawings/drawing1.xml#'IFE%20'!A1HOME
/xl/drawings/drawing1.xml#'PART%20I'!A2View EFE Matrix
/xl/drawings/drawing1.xml#'EFE%20'!A1View EFE Matrix
/xl/drawings/drawing1.xml#'EFE%20'!A1View CPM Matrix
/xl/drawings/drawing1.xml#CPM!C2View CPM Matrix
/xl/drawings/drawing1.xml#CPM!C2BCG
/xl/drawings/drawing1.xml#BCG!B5BCG
/xl/drawings/drawing1.xml#BCG!B5IE
/xl/drawings/drawing1.xml#IE!B2IE
/xl/drawings/drawing1.xml#IE!B2SPACE
/xl/drawings/drawing1.xml#SPACE!B2SPACE
/xl/drawings/drawing1.xml#SPACE!B2Perceptual Map
/xl/drawings/drawing1.xml#'Perceptual%20Map'!B2Perceptual Map
/xl/drawings/drawing1.xml#'Perceptual%20Map'!B2SWOT
/xl/drawings/drawing1.xml#SWOT!A2QSPM
/xl/drawings/drawing1.xml#QSPM!B2GRAND
/xl/drawings/drawing1.xml#GRAND!B2GRAND
/xl/drawings/drawing1.xml#GRAND!B2QSPM
/xl/drawings/drawing1.xml#QSPM!B2PART II
| Preliminary Financial Data | |||||||||||||||||||
| 1 | Enter in your preliminary financial data below for your company. This data is used to construct financial statements, financial ratios, and much more. | ||||||||||||||||||
| Income Statement Information | |||||||||||||||||||
| Enter all as Dollar Amounts. Make sure the oldest year is entered into Column 1 throughout this Template. You may NOT Change this sequence as the preset equations will not adjust. | Read the Note to the left CAREFULLY | ||||||||||||||||||
| Reporting Date | |||||||||||||||||||
| Revenue | |||||||||||||||||||
| Cost of Goods Sold | |||||||||||||||||||
| Operating expenses | |||||||||||||||||||
| Interest Expense | Note: If receiving interest credit, enter as NEGATIVE number | ||||||||||||||||||
| Non-recurring Events | Note: If NEGATIVE enter as negative number. Generally this line is for "discontinued operations" and 90% of the time you will enter 0 | ||||||||||||||||||
| Tax | Note: If receiving a tax credit, enter as NEGATIVE number | ||||||||||||||||||
| Balance Sheet Information | |||||||||||||||||||
| Current Assets | 12/31/99 | 12/31/99 | |||||||||||||||||
| Cash and equivalents and Short Term Investments | |||||||||||||||||||
| Accounts Receivable | |||||||||||||||||||
| Inventory | |||||||||||||||||||
| Other Current Assets | |||||||||||||||||||
| Long Term Assets | |||||||||||||||||||
| Property, plant & equipment | |||||||||||||||||||
| Goodwill | |||||||||||||||||||
| Intangibles | |||||||||||||||||||
| Other Long-term Assets | |||||||||||||||||||
| Current Liabilities | |||||||||||||||||||
| Accounts Payable | |||||||||||||||||||
| Other Current Liabilities | |||||||||||||||||||
| Long Term Liabilities | |||||||||||||||||||
| Long-term Debt | |||||||||||||||||||
| Other Long-term Liabilities | |||||||||||||||||||
| Equity | |||||||||||||||||||
| Common Stock | |||||||||||||||||||
| Retained Earnings | |||||||||||||||||||
| Treasury Stock | Note: Enter as negative number | ||||||||||||||||||
| Paid in Capital & Other | |||||||||||||||||||
| Company Valuation | |||||||||||||||||||
| 1 | Enter in the corresponding data below for your firm, and for a rival firm if you desire. The rival can be a firm you wish to acquire or simply just to compare to your case company. | ||||||||||||||||||
| Stockholders' Equity | 0 | Note: Determined after you complete the preliminary section. | |||||||||||||||||
| Net Income | 0 | Note: Determined after you complete the preliminary section. | |||||||||||||||||
| EPS | ERROR:#DIV/0! | Note: Determined after you complete the preliminary section and enter in # shares outstanding below. | |||||||||||||||||
| # Shares Outstanding | Note: Using Current # shares outstanding is okay or # of shares outstanding (issued) on the last day of the fiscal year. | ||||||||||||||||||
| Stock Price | Note: Current Stock price is fine, or the closing price on the last day of the fiscal year. | ||||||||||||||||||
| Goodwill & Intangibles | 0 | Note: Determined after you complete the preliminary section. | |||||||||||||||||
| Rival Firm's Name | |||||||||||||||||||
| Stockholders' Equity | |||||||||||||||||||
| Net Income | |||||||||||||||||||
| EPS | |||||||||||||||||||
| # Shares Outstanding | |||||||||||||||||||
| Stock Price | |||||||||||||||||||
| Goodwill & Intangibles | |||||||||||||||||||
| EPS/EBIT Analysis | |||||||||||||||||||
| 1 | Enter in the corresponding data below for your firm. | ||||||||||||||||||
| 2 | If you notice little to no change in EPS with stock vs debt financing, the total amount of your recommendations is likely too low. Unless of course, you are recommending defensive strategies where you are not acquiring substantial new capital. | ||||||||||||||||||
| Pessimistic | Realistic | Optimistic | |||||||||||||||||
| EBIT | |||||||||||||||||||
| EPS/EBIT Data | |||||||||||||||||||
| Amounted Needed | Note: This number is the total cost of your recommendations. | ||||||||||||||||||
| Interest Rate | Note: Enter as a decimal. | ||||||||||||||||||
| Tax Rate | Note: Enter as a decimal. | ||||||||||||||||||
| Shares Outstanding | 0 | Note: Enter in under Company Valuation on this page. | |||||||||||||||||
| # New Shares Outstanding | ERROR:#DIV/0! | Note: Calculated automatically | |||||||||||||||||
| Stock Price | $0.00 | Note: Enter in under Company Valuation on this page. | |||||||||||||||||
| Combination Financing Data | |||||||||||||||||||
| Percent Equity Used to Finance | Note: Enter as a decimal. | ||||||||||||||||||
| Percent Debt Used to Finance | Note: Enter as a decimal. | ||||||||||||||||||
| Total Equity and Debt | 0.00 | Note: Must equal 1.0. Check the two line items above. | |||||||||||||||||
| Projected Financial Statements | |||||||||||||||||||
| 1 | Start with the income statement and work your way from top to bottom. Take extreme care to read and understand all notes provided by each line item. See Chapter 8 in the David & David textbook for examples and guidelines in developing projected financial statements. | ||||||||||||||||||
| 2 | After completing the income statement, begin the balance sheet starting with the "dividends to pay" line near the bottom; finish the equity section of the balance sheet first, then work your way up the statement to the liabilities section, then onto the assets, using the top row (Cash) as the plug figure. A detailed note beside the cash line item explains further. | ||||||||||||||||||
| 3 | Take care to read all notes to the right of the line items. Consult Chapter 8 of the David & David textbook for excellent explanations and tips for constructing projected statements. | ||||||||||||||||||
| Percentages in the Projected Income Statement will be multiplied by the most recent year. For example, if you enter in 10% for projected revenues in projected year 2, the Template will use the equation (1.10 x projected year 1 revenues) = projected year 2 revenues. For line items in the projected income statement requesting dollar amounts, please read the note below for the balance sheet. The calculations work the same way as described there. | |||||||||||||||||||
| Projected Years (earliest to latest) | |||||||||||||||||||
| Income Statement | Historical Numbers (see notes) | ||||||||||||||||||
| Projected Reporting Date | Historical Percent Notes Below. Enter your data in the EXACT same format as the Notes describe. | ||||||||||||||||||
| Revenues | ERROR:#DIV/0! | Historical Note: Difference the two most recent years of data. Enter percent increases you expect based on your recommendations. Do not blindly use the historical number provided. Enter as percent. | |||||||||||||||||
| Cost of Goods Sold | ERROR:#DIV/0! | Historical Note: Percent of Sales in the most recent year. Use a similar percent across all three projected years unless you believe COGS to sales percent will change drastically. Enter as percent. | |||||||||||||||||
| Operating Expenses | ERROR:#DIV/0! | Historical Note: Percent of Sales in the most recent year. Use a similar percent across all three projected years unless you believe Operating Expenses to sales percent will change drastically. Enter as percent. | |||||||||||||||||
| Interest Expense | $0 | Historical Note: Dollar amount of interest paid in the most recent year. Enter in the NEW NET dollar amounts of interest you will forecasted for each year. If your most recent interest payment was $500 and you plan on a $20 net increase in interest for projected year 1, simply enter in $20 for year one. If financing through debt, the number is more likely to increase more than if financing through equity. Enter as dollar amount. If you anticipate less interest expense than the year before, enter as a negative number. | |||||||||||||||||
| Tax | ERROR:#DIV/0! | Historical Note: Tax Rate in most recent year. You can likely use the same tax rate throughout unless you expect a large increase/decrease in revenues and subsequently EBT. Enter as percent. | |||||||||||||||||
| Non-Recurring Events | 0 | Historical Note: Dollar amount of Non-Recurring Events for each year, this number is not cumulative. Safe to forecast this number as $0 in ever year. Enter as dollar amount. | |||||||||||||||||
| Scroll Down for Balance Sheet | |||||||||||||||||||
| Work from the bottom of the Projected Balance Sheet to the top | |||||||||||||||||||
| Projected Years (earliest to latest) | |||||||||||||||||||
| Balance Sheet (Start at the bottom) | Historical Dollar Amount Paid | The projected Balance Sheet is designed for you to enter in the NET ADDITIONAL DOLLAR VALUES (for PPE, Goodwill, and Intangibles). The Template will add these values to the existing numbers. For Example, if you are adding $1,000 in inventory in projected year 1, (but you estimate your firm used $800 of its existing inventory from the prior year) just enter in $200 ($1,000-$800) in the corresponding box and the Template will use the equation ($200 + most recent historical year Inventory number) = projected year 1 inventory. | |||||||||||||||||
| Read the message to the right, then start at the bottom with dividends. | |||||||||||||||||||
| Assets | 12/31/99 | 12/31/99 | 12/31/99 | ||||||||||||||||
| Cash and Equivalents | $0 | $0 | $0 | $0 | Historical Note: If your cash number appears too high or low, consult Chapter 8 of the textbook for more information. Also, compare your projected ratios to historical ratios. You may need to make adjustments to your recommendations and/or your projected statements. It is rare for any firm to have acceptal projected statements after the first attempt. | ||||||||||||||
| Accounts Receivable | ERROR:#DIV/0! | Historical Note: Percent of revenues in the most recent year. Use a similar percent across all three projected years unless you believe the current assets to revenues percent will change drastically. Enter as percent | |||||||||||||||||
| Inventory | ERROR:#DIV/0! | ||||||||||||||||||
| Other Current Assets | ERROR:#DIV/0! | ||||||||||||||||||
| Property Plant & Equipment | $0 | Historical Note: The values are for the most recent year reported. Enter in the net new (not cumulative) dollar amounts for each item for each forecasted year (Except for the Cash and Equivalents line). If you are purchasing $200 of Property, Plant & Equipment in Projected Year 1, simply enter $200 into the first projected year. If you plan to also reduce existing PP&E by $300, then you would enter in a negative $100 into Projected Year 1 (assuming you still plan to purchase the other $200). Take care with each line time, it is not how fast you get the numbers entered. Reread the hints in red writing a few lines above. | |||||||||||||||||
| Goodwill | $0 | ||||||||||||||||||
| Intangibles | $0 | ||||||||||||||||||
| Other Long-Term Assets | ERROR:#DIV/0! | Historical Note: Percent of revenues in the most recent year. Use a similar percent across all three projected years unless you believe the other long-term asets to revenues percent will change drastically. Enter as percent | |||||||||||||||||
| Liabilities | 12/31/99 | 12/31/99 | 12/31/99 | ||||||||||||||||
| Accounts Payable | ERROR:#DIV/0! | Historical Note: Percent of revenues in the most recent year. Use a similar percent across all three projected years unless you believe the current liabilities to revenues percent will change drastically. Enter as percent. | |||||||||||||||||
| Other Current Liabilities | ERROR:#DIV/0! | ||||||||||||||||||
| Long-Term Debt | $0 | Historical Note: The values are for the most recent year reported. Enter in the net new (not cumulative) dollar amounts for each item for each forecasted year. For example, if you do not plan to take on any additional long term debt in Projected Year 1, but do plan to pay off $1,000 in debt in Projected Year 1, enter in ($1,000) in Projected Year 1 long term debt column. | |||||||||||||||||
| Other Long-Term Liabilities | ERROR:#DIV/0! | Historical Note: Percent of revenues in the most recent year. Use a similar percent across all three projected years unless you believe the other long-term liabilities to revenues percent will change drastically. Enter as percent. | |||||||||||||||||
| Equity | 12/31/99 | 12/31/99 | 12/31/99 | ||||||||||||||||
| Common Stock | 0 | Historical Note: The values are for the most recent year reported. Enter in the new (additional, not cumulative) Dollar amounts for each Item for each forecasted year. If you change Treasury Stock, you may need to make an adjustment to Paid in Capital. Enter Treasury Stock as a negative number. Read over Chapter 8 of the David, David and David textbook. | |||||||||||||||||
| Treasury Stock | 0 | ||||||||||||||||||
| Paid in Capital & Other | 0 | ||||||||||||||||||
| Retained Earnings | 0 | 0 | 0 | 0 | Historical Note: The Retained Earnings value is for the most recent year reported. The new additional (not cumulative) Retained Earnings are calculated automatically. | ||||||||||||||
| Total Dividends to Pay | START HERE | Start HERE. Enter the total dollar amount you wish to pay in dividends each forecasted year. If none, enter 0. This line is not cumulative, it does not add the value to any existing value for dividends. For example, if the firm paid $1,000 in dividends and you wish to stop dividend payments, enter $0 in projected year 1 box. If you wish to increase dividends by 10% enter $1,100 into projected year 1 box. Check on your own to see historically what the firm was paying. | |||||||||||||||||
Preliminary Financial Data
/xl/drawings/drawing2.xml#'PART%20II'!B2Income Statement
/xl/drawings/drawing2.xml#'Financial%20Statements'!B5Balance Sheet
/xl/drawings/drawing2.xml#'Financial%20Statements'!B18Company Valuation
/xl/drawings/drawing2.xml#'Company%20Valuation'!B3Rival Firm Valuation
/xl/drawings/drawing2.xml#'Company%20Valuation'!B14Company Valuation
/xl/drawings/drawing2.xml#'PART%20II'!B71EPS/EBIT Analysis
/xl/drawings/drawing2.xml#'PART%20II'!B107Projected Financial Statements
/xl/drawings/drawing2.xml#'PART%20II'!B139HOME
/xl/drawings/drawing2.xml#'PART%20II'!A2Balance Sheet
/xl/drawings/drawing2.xml#'Financial%20Statements'!B18EPS/EBIT Analysis
/xl/drawings/drawing2.xml#EPS_EBIT!C4IFE
| IFE Matrix | ||||
| 1 | If data is missing here, recheck "Part I" | |||
| 2 | Check to make sure your text is not cut off in the matrix. Double click (or drag) between the Cell Numbers. | |||
| 3 | To transfer into Word or Power Point, highlight the matrix, then paste special as "picture" | |||
| Strengths | Weight | Rating | Weighted Score | |
| 1 | 0 | 0.00 | 0 | 0.00 |
| 2 | 0 | 0.00 | 0 | 0.00 |
| 3 | 0 | 0.00 | 0 | 0.00 |
| 4 | 0 | 0.00 | 0 | 0.00 |
| 5 | 0 | 0.00 | 0 | 0.00 |
| 6 | 0 | 0.00 | 0 | 0.00 |
| 7 | 0 | 0.00 | 0 | 0.00 |
| 8 | 0 | 0.00 | 0 | 0.00 |
| 9 | 0 | 0.00 | 0 | 0.00 |
| 10 | 0 | 0.00 | 0 | 0.00 |
| Weaknesses | Weight | Rating | Weighted Score | |
| 1 | 0 | 0.00 | 0 | 0.00 |
| 2 | 0 | 0.00 | 0 | 0.00 |
| 3 | 0 | 0.00 | 0 | 0.00 |
| 4 | 0 | 0.00 | 0 | 0.00 |
| 5 | 0 | 0.00 | 0 | 0.00 |
| 6 | 0 | 0.00 | 0 | 0.00 |
| 7 | 0 | 0.00 | 0 | 0.00 |
| 8 | 0 | 0.00 | 0 | 0.00 |
| 9 | 0 | 0.00 | 0 | 0.00 |
| 10 | 0 | 0.00 | 0 | 0.00 |
| Total IFE Score | 0.00 | 0.00 |
Return to Part I
/xl/drawings/drawing3.xml#'PART%20I'!B26EFE
| EFE Matrix | ||||
| 1 | If data is missing here, recheck "Part I" | |||
| 2 | Check to make sure your text is not cut off in the matrix. Double click (or drag) between the Cell Numbers. | |||
| 3 | To transfer into Word or Power Point, highlight the matrix, then paste special as "picture" | |||
| Opportunities | Weight | Rating | Weighted Score | |
| 1 | 0 | 0.00 | 0 | 0 |
| 2 | 0 | 0.00 | 0 | 0 |
| 3 | 0 | 0.00 | 0 | 0 |
| 4 | 0 | 0.00 | 0 | 0 |
| 5 | 0 | 0.00 | 0 | 0 |
| 6 | 0 | 0.00 | 0 | 0 |
| 7 | 0 | 0.00 | 0 | 0 |
| 8 | 0 | 0.00 | 0 | 0 |
| 9 | 0 | 0.00 | 0 | 0 |
| 10 | 0 | 0.00 | 0 | 0 |
| Threats | Weight | Rating | Weighted Score | |
| 1 | 0 | 0.00 | 0 | 0.00 |
| 2 | 0 | 0.00 | 0 | 0.00 |
| 3 | 0 | 0.00 | 0 | 0.00 |
| 4 | 0 | 0.00 | 0 | 0.00 |
| 5 | 0 | 0.00 | 0 | 0.00 |
| 6 | 0 | 0.00 | 0 | 0.00 |
| 7 | 0 | 0.00 | 0 | 0.00 |
| 8 | 0 | 0.00 | 0 | 0.00 |
| 9 | 0 | 0.00 | 0 | 0.00 |
| 10 | 0 | 0.00 | 0 | 0.00 |
| Total EFE Score | 0.00 | 0.00 |
Return to Part I
/xl/drawings/drawing4.xml#'PART%20I'!B68Return to Part I
/xl/drawings/drawing4.xml#'PART%20I'!B66CPM
| CPM Matrix | |||||||||
| 1 | If data is missing here, recheck the "Part I" page. | ||||||||
| 2 | Check to make sure your text is not cut off in the matrix. Double click (or drag) between the Cell Numbers. | ||||||||
| 3 | To transfer into Word or Power Point, highlight the matrix, then paste special as "picture" | ||||||||
| Your Firm | Rival | Rival | |||||||
| Critical Success Factors | Weight | Rating | Score | Rating | Score | Rating | Score | ||
| Advertising | 0.00 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | ||
| Domestic Market Penetration | 0.00 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | ||
| Customer Service | 0.00 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | ||
| Product Variety | 0.00 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | ||
| International Market Penetration | 0.00 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | ||
| Employee Dedication | 0.00 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | ||
| Financial Profit | 0.00 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | ||
| Customer Loyalty | 0.00 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | ||
| Market Share | 0.00 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | ||
| Product Quality | 0.00 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | ||
| Top Management | 0.00 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | ||
| Price Competitiveness | 0.00 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 | ||
| Totals | 0.00 | 0.00 | 0.00 | 0.00 |
Return to Part I
/xl/drawings/drawing5.xml#'PART%20I'!D99BCG
| BCG | ||||||||
| 1 | If data is missing here, recheck the "Part I" page and read step 3. | |||||||
| 2 | Highlight the entire matrix (not just the inside box), and then paste as paste special picture. | |||||||
| 3 | If you do not see your circle, either you did not enter in the information or you entered a number for the "Top Firm in the Industry Revenues" smaller than your firm. This number can only be larger or the same (if your firm's division is the largest revenue generator in the industry). It is also possible your bubble is behind another bubble if the information was close to the same, this is unlikely however. | |||||||
| Please Scroll down for the BCG Matrix and Table | ||||||||
| Relative Market Share Position | ||||||||
| High 1.0 | Low 0.0 | |||||||
| Industry Sales Growth Rate | ||||||||
| High 0.20 | ||||||||
| Low -0.20 | ||||||||
| Division | Your Firm's Division Revenues | Top Firm in Industry Division Revenues | Industry Sales Growth Rate | Relative Market Share Position | ||||
| 0 | $0 | $0 | 0.00 | NA | ||||
| 0 | $0 | $0 | 0.00 | NA | ||||
| 0 | $0 | $0 | 0.00 | NA | ||||
| 0 | $0 | $0 | 0.00 | NA | ||||
| 0 | $0 | $0 | 0.00 | NA | ||||
NA
NA
NA
NA
NA
Question Marks
Stars
Cash Cows
Dogs s
Return to Part I
/xl/drawings/drawing6.xml#'PART%20I'!D132Return to Part I
/xl/drawings/drawing6.xml#'PART%20I'!B144IE
| IE | ||||||||
| 1 | If data is missing here, recheck the "Part I" page and read step 3. | |||||||
| 2 | Highlight the entire matrix (not just the inside box), and then paste as paste special picture. | |||||||
| 3 | If you do not see your circle, either you did not enter in the corresponding EFE or IFE information. It is also possible your bubble is behind another bubble if the EFE and IFE information was close to the same. | |||||||
| Scroll down for IE Matrix and Table | ||||||||
| THE IFE TOTAL WEIGHTED SCORES | ||||||||
| Strong | Weak | |||||||
| 4.0 | 1.0 | |||||||
| High | ||||||||
| 4.0 | ||||||||
| THE EFE WEIGHTED SCORES | ||||||||
| Low | ||||||||
| 1.0 | ||||||||
| Division | Firm's Division Revenues | Estimated IFE Score | Estimated EFE Score | |||||
| 0 | $0 | 0.0 | 0.0 | |||||
| 0 | $0 | 0.0 | 0.0 | |||||
| 0 | $0 | 0.0 | 0.0 | |||||
| 0 | $0 | 0.0 | 0.0 | |||||
| 0 | $0 | 0.0 | 0.0 | |||||
Return to Part I
/xl/drawings/drawing8.xml#'PART%20I'!B171SPACE
| SPACE | ||||||||||||||
| 1 | If data is missing here, recheck the "Part I" page and read step 3. | |||||||||||||
| 2 | Highlight the entire matrix (not just the inside box), and then paste as paste special picture. Be sure to also include the table below the chart also in your presentation. | |||||||||||||
| 3 | If you do not see your bubble either you did not enter in the information or, it is also possible your bubble is behind another bubble if the X and Y information were close to the same. | |||||||||||||
| 0 | 0 | 0 | ||||||||||||
| X Axis | 0.0 | 0.0 | 0.0 | |||||||||||
| Y Axis | 0.0 | 0.0 | 0.0 | |||||||||||
| Internal Analysis: | External Analysis: | |||||||||||||
| Financial Position (FP) | Stability Position (SP) | |||||||||||||
| Current Ratio | 0 | Rate of Inflation | 0 | |||||||||||
| Debt to Equity | 0 | Technological Changes | 0 | |||||||||||
| Net Income | 0 | Price Elasticity of Demand | 0 | |||||||||||
| Revenue | 0 | Competitive Pressure | 0 | |||||||||||
| Inventory Turnover | 0 | Barriers to Entry into Market | 0 | |||||||||||
| Financial Position (FP) Average | ERROR:#DIV/0! | Stability Position (SP) Average | ERROR:#DIV/0! | |||||||||||
| Internal Analysis: | External Analysis: | |||||||||||||
| Competitive Position (CP) | Industry Position (IP) | |||||||||||||
| Market Share | 0 | Growth Potential | 0 | |||||||||||
| Product Quality | 0 | Financial Stability | 0 | |||||||||||
| Customer Loyalty | 0 | Ease of Entry into Market | 0 | |||||||||||
| Variety of Products Offered | 0 | Resource Utilization | 0 | |||||||||||
| Control over Suppliers and Distributors | 0 | Profit Potential | 0 | |||||||||||
| Competitive Position (CP) Average | ERROR:#DIV/0! | Industry Position (IP) Average | ERROR:#DIV/0! | |||||||||||
Return to Part I
/xl/drawings/drawing10.xml#'PART%20I'!B1820 0 1 0 0 10 0 1
FP
SP
CP
IP IPIP
Defensive
Conservative
Aggressive
Competitive
GRAND
| GRAND | |
| 1 | If data is missing here, recheck the "Part I" page and read Step 3. |
| 2 | Highlight the entire matrix (not just the inside box), and then paste as paste special picture. |
| 3 | If you do not see your circle, either you did not enter in the corresponding information or it is also possible your bubble is behind another bubble if the axis information was close to the same. |
Return to Part I
/xl/drawings/drawing11.xml#'PART%20I'!B2991 1 1 1 1 1Quadrant II
Quadrant I
Quadrant III I
Quadrant IV
Rapid Market Growth
Slow Market Growth
Strong Competitive Position
Weak Competitive Position
Perceptual Map
| Perceptual Maps | |||||||||||
| 1 | If data is missing here, recheck the "Part I" page and read Step 3. | ||||||||||
| 2 | Highlight the entire matrix (not just the inside box), and then paste as paste special picture. | ||||||||||
| 3 | If you do not see your circle, either you did not enter in the corresponding information or it is also possible your bubble is behind another bubble if the axis information was close to the same. | ||||||||||
| 0 | |||||||||||
| 0 | 0 | ||||||||||
| 0 | |||||||||||
Return to Part I
/xl/drawings/drawing12.xml#'PART%20I'!B256Financial Statements
| 1 | Complete Part II to Construct the Financial Statements. | ||||||
| Income Statement | 12/31/99 | 12/31/99 | Percent Change | ||||
| Revenue (Sales) | $0 | $0 | NA | NA | |||
| Cost of Goods Sold | 0 | 0 | NA | NA | |||
| Gross Profit | 0 | 0 | NA | NA | |||
| Operating Expenses | 0 | 0 | NA | NA | |||
| EBIT (Operating Income) | 0 | 0 | NA | NA | |||
| Interest Expense | 0 | 0 | NA | NA | |||
| EBT | 0 | 0 | NA | NA | |||
| Tax | 0 | 0 | NA | NA | |||
| Non-Recurring Events | 0 | 0 | NA | NA | |||
| Net Income | 0 | 0 | NA | NA | |||
| Balance Sheet | 12/31/99 | 12/31/99 | Percent Change | ||||
| Assets | |||||||
| Cash and Short Term Investments | $0 | $0 | NA | NA | |||
| Accounts Receivable | 0 | 0 | NA | NA | |||
| Inventory | 0 | 0 | NA | NA | |||
| Other Current Assets | 0 | 0 | NA | NA | |||
| Total Current Assets | 0 | 0 | NA | NA | |||
| Property Plant & Equipment | 0 | 0 | NA | NA | |||
| Goodwill | 0 | 0 | NA | NA | |||
| Intangibles | 0 | 0 | NA | NA | |||
| Other Long-Term Assets | 0 | 0 | NA | NA | |||
| Total Assets | 0 | 0 | NA | NA | |||
| Liabilities | |||||||
| Accounts Payable | 0 | 0 | NA | NA | |||
| Other Current Liabilities | 0 | 0 | NA | NA | |||
| Total Current Liabilities | 0 | 0 | NA | NA | |||
| Long-Term Debt | 0 | 0 | NA | NA | |||
| Other Long-Term Liabilities | 0 | 0 | NA | NA | |||
| Total Liabilities | 0 | 0 | NA | NA | |||
| Equity | |||||||
| Common Stock | 0 | 0 | NA | NA | |||
| Retained Earnings | 0 | 0 | NA | NA | |||
| Treasury Stock | 0 | 0 | NA | NA | |||
| Paid in Capital & Other | 0 | 0 | NA | NA | |||
| Total Equity | 0 | 0 | NA | NA | |||
| Total Liabilities and Equity | 0 | 0 | NA | NA |
Return to Part II
/xl/drawings/drawing14.xml#'PART%20II'!B2SWOT
| SWOT | |
| SO Strategies | |
| 1 | |
| 2 | |
| 3 | |
| 4 | |
| ST Strategies | |
| 1 | |
| 2 | |
| 3 | |
| 4 | |
| WO Strategies | |
| 1 | |
| 2 | |
| 3 | |
| 4 | |
| WT Strategies | |
| 1 | |
| 2 | |
| 3 | |
| 4 |
Return to Part I
/xl/drawings/drawing15.xml#'PART%20I'!B296QSPM
| QSPM | ||||||
| 1 | If data is missing here, recheck the "Part I" page. | |||||
| 3 | Check to make sure your text is not cut off in the matrix. Double click (or drag) between the Cell Numbers. | |||||
| 0 | 0 | |||||
| Strengths | Weight | AS | TAS | AS | TAS | |
| 1 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 2 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 3 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 4 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 5 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 6 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 7 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 8 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 9 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 10 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 0 | 0 | |||||
| Weaknesses | Weight | AS | TAS | AS | TAS | |
| 1 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 2 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 3 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 4 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 5 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 6 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 7 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 8 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 9 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 10 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 0 | 0 | |||||
| Opportunities | Weight | AS | TAS | AS | TAS | |
| 1 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 2 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 3 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 4 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 5 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 6 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 7 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 8 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 9 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 10 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 0 | 0 | |||||
| Threats | Weight | AS | TAS | AS | TAS | |
| 1 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 2 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 3 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 4 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 5 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 6 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 7 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 8 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 9 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| 10 | 0 | 0.00 | 0 | 0.00 | 0 | 0.00 |
| TOTALS | 0.00 | 0.00 | ||||
Return to Part I
/xl/drawings/drawing16.xml#'PART%20I'!B317Company Valuation
| 1 | Complete Part II to Construct the Company Valuation | |
| 0 | ||
| Stockholders' Equity - (Goodwill + Intangibles) | $0 | |
| Net Income x 5 | $0 | |
| (Share Price/EPS) x Net Income | ERROR:#DIV/0! | |
| Number of Shares Outstanding x Share Price | $0 | |
| Method Average | ERROR:#DIV/0! | |
| Rival Firm's Name | ||
| Stockholders' Equity - (Goodwill + Intangibles) | $0 | |
| Net Income x 5 | $0 | |
| (Share Price/EPS) x Net Income | ERROR:#DIV/0! | |
| Number of Shares Outstanding x Share Price | $0 | |
| Method Average | ERROR:#DIV/0! |
Return to Part II
/xl/drawings/drawing17.xml#'PART%20II'!B71EPS_EBIT
| 1 | Complete Part II to Construct the EPS/EBIT Charts | |||||||||||||||
| Common Stock Financing | Debt Financing | |||||||||||||||
| Pessimistic | Realistic | Optimistic | Pessimistic | Realistic | Optimistic | |||||||||||
| EBIT | $0 | $0 | $0 | $0 | $0 | $0 | ||||||||||
| Interest | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||
| EBT | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||
| Taxes | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||
| EAT | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||
| # Shares | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | 0 | 0 | 0 | ||||||||||
| EPS | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ||||||||||
| Amount Needed | $0 | |||||||||||||||
| Interest Rate | 0% | |||||||||||||||
| Stock | 0% | Debt | 0% | Tax Rate | 0% | |||||||||||
| Pessimistic | Realistic | Optimistic | # Shares Outstanding | 0.0 | ||||||||||||
| EBIT | $0 | $0 | $0 | Additional Shares Outstanding Needed | NA | |||||||||||
| Interest | 0 | 0 | 0 | Stock Price | $0.00 | |||||||||||
| EBT | 0 | 0 | 0 | |||||||||||||
| Taxes | 0 | 0 | 0 | |||||||||||||
| EAT | 0 | 0 | 0 | |||||||||||||
| # Shares | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | |||||||||||||
| EPS | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! |
Return to Part II
/xl/drawings/drawing18.xml#'PART%20II'!B107Retained Earnings Table
| Complete Part II to Construct the RE Table | ||||||
| Dividend Information | Balance Sheet Information | |||||
| Steps | 1 | 2 | 3 | 4 | 5 | |
| Year | Current Year's Net Income | Less Current Year's Dividends Paid | New RE | Plus Prior Year's RE | Current Year's Balance Sheet RE | |
| 12/31/99 | $0 | $0 | $0 | $0 | $0 | |
| 12/31/99 | $0 | $0 | $0 | $0 | $0 | |
| 12/31/99 | $0 | $0 | $0 | $0 | $0 |
Projected Statements
| 1 | Complete Part II to Construct the Projected Financial Statements. | ||||
| Projected Income Statement | 12/31/99 | 12/31/99 | 12/31/99 | ||
| Revenues (Sales) | $0 | $0 | $0 | ||
| Cost of Goods Sold | 0 | 0 | 0 | ||
| Gross Profit | 0 | 0 | 0 | ||
| Operating Expenses (Operating Income) | 0 | 0 | 0 | ||
| EBIT | 0 | 0 | 0 | ||
| Interest Expense | 0 | 0 | 0 | ||
| EBT | 0 | 0 | 0 | ||
| Tax | 0 | 0 | 0 | ||
| Non-Recurring Events | 0 | 0 | 0 | ||
| Net Income | 0 | 0 | 0 | ||
| Projected Balance Sheet | 12/31/99 | 12/31/99 | 12/31/99 | ||
| Assets | |||||
| Cash and Equivalents | $0 | $0 | $0 | ||
| Accounts Receivable | 0 | 0 | 0 | ||
| Inventory | 0 | 0 | 0 | ||
| Other Current Assets | 0 | 0 | 0 | ||
| Total Current Assets | 0 | 0 | 0 | ||
| Property Plant & Equipment | 0 | 0 | 0 | ||
| Goodwill | 0 | 0 | 0 | ||
| Intangibles | 0 | 0 | 0 | ||
| Other Long-Term Assets | 0 | 0 | 0 | ||
| Total Assets | 0 | 0 | 0 | ||
| Liabilities | |||||
| Accounts Payable | 0 | 0 | 0 | ||
| Other Current Liabilities | 0 | 0 | 0 | ||
| Total Current Liabilities | 0 | 0 | 0 | ||
| Long-Term Debt | 0 | 0 | 0 | ||
| Other Long-Term Liabilities | 0 | 0 | 0 | ||
| Total Liabilities | 0 | 0 | 0 | ||
| Equity | |||||
| Common Stock | 0 | 0 | 0 | ||
| Retained Earnings | 0 | 0 | 0 | ||
| Treasury Stock | 0 | 0 | 0 | ||
| Paid in Capital & Other | 0 | 0 | 0 | ||
| Total Equity | 0 | 0 | 0 | ||
| Total Liabilities and Equity | 0 | 0 | 0 |
Return to Part II
/xl/drawings/drawing19.xml#'PART%20II'!B139Ratios
| 1 | Complete Part II to Construct the Ratios | |||||||||||
| Historical Ratios | Projected Ratios | |||||||||||
| 12/31/99 | 12/31/99 | 12/31/99 | 12/31/99 | 12/31/99 | ||||||||
| Current Ratio | ERROR:#DIV/0! | ERROR:#DIV/0! | Current Ratio | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ||||||
| Quick Ratio | ERROR:#DIV/0! | ERROR:#DIV/0! | Quick Ratio | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ||||||
| Total Debt-to-Total-Assets Ratio | ERROR:#DIV/0! | ERROR:#DIV/0! | Debt-to-Total-Assets Ratio | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ||||||
| Total Debt-to-Equity Ratio | ERROR:#DIV/0! | ERROR:#DIV/0! | Debt-to-Equity Ratio | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ||||||
| Times-Interest-Earned Ratio | NA | NA | Times-Interest-Earned Ratio | NA | NA | NA | ||||||
| Inventory Turnover | ERROR:#DIV/0! | ERROR:#DIV/0! | Inventory Turnover | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ||||||
| Fixed Assets Turnover | ERROR:#DIV/0! | ERROR:#DIV/0! | Fixed Assets Turnover | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ||||||
| Total Assets Turnover | NA | NA | Total Assets Turnover | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ||||||
| Accounts Receivable Turnover | NA | NA | Accounts Receivable Turnover | NA | NA | NA | ||||||
| Average Collection Period | ERROR:#DIV/0! | ERROR:#DIV/0! | Average Collection Period | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ||||||
| Gross Profit Margin % | ERROR:#DIV/0! | ERROR:#DIV/0! | Gross Profit Margin % | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ||||||
| Operating Profit Margin % | ERROR:#DIV/0! | ERROR:#DIV/0! | Operating Profit Margin % | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ||||||
| ROA % | ERROR:#DIV/0! | ERROR:#DIV/0! | ROA % | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! | ||||||
| ROE % | ERROR:#DIV/0! | ERROR:#DIV/0! | ROE % | ERROR:#DIV/0! | ERROR:#DIV/0! | ERROR:#DIV/0! |
Return to Part II
/xl/drawings/drawing20.xml#'PART%20II'!A1
Juniper Networks – A Sample Strategic Planning Analysis
Table of Contents
|
Introduction |
4 |
|
Current Vision Statement |
4 |
|
Proposed Vision Statement |
4 |
|
Current Mission Statement |
4 |
|
Proposed Mission Statement |
5 |
|
Current Status of Industries |
5 |
|
Overview of the Firm |
8 |
|
Competitive Profile Matrix (CPM) |
9 |
|
Financial Statements and Historical Ratios |
10 |
|
Internal and External Factor Evaluations |
14 |
|
Proposed Strategies Developed from SWOT Matrix |
18 |
|
Strategic Position and Action Evaluation (SPACE) |
19 |
|
Boston Consulting Group Matrix (BCG) |
21 |
|
Internal-External Matrix |
22 |
|
Grand Strategy Matrix |
24 |
|
Quantitative Strategic Planning Matrix |
25 |
|
Recommendations |
28 |
|
Explanations for Recommendations |
29 |
|
Organizational Chart |
31 |
|
Proposed Organizational Chart |
32 |
|
Perceptual Map |
33 |
|
Firm Valuation |
34 |
|
EPS-EBIT Analysis |
35 |
|
Projected Financial Statements |
39 |
|
Projected Financial Ratios |
41 |
|
Retained Earnings Table |
42 |
|
Epilogue |
42 |
|
|
|
|
|
|
Introduction
Founded in 1996, Juniper Networks designs, develops, and sells products and services for high-performance networks to enable customers to build scalable, reliable, secure and cost-effective networks for their businesses while achieving agility and improved operating efficiency through automation. Juniper Networks is headquartered in Sunnyvale, California and incorporated in Delaware. Company common stock is traded on the New York Stock Exchange under the abbreviation JNPR. Juniper Networks currently employs over 10,000 employees in 109 offices across 47 countries. Annual revenue as of 2019 was $4.45 billion.
Current Vision Statement
We exist to solve the world’s most difficult problems in networking technology. We bring simplicity to networking with products, solutions, and services that connect the world.
Proposed Vision Statement
We exist to make the technology needed to power communications simply through innovative engineering, meeting the needs of today and the future.
Current Mission Statement
A company of innovators, we believe that creating simplicity through engineering is the highest form of innovation. From our first release, the ground-breaking M40 router, to today’s end-to-end advancements in network security, automation, performance, and scale, our drive to move beyond the constraints of complexity has expanded the reach of networks everywhere. We’ve enabled our customers to connect to everything and empower everyone in ways that have literally changed the world.
In the profusion of new technologies such as IoT, big data, and multi-cloud, complexity is the new hard problem. And complexity is on the wrong side of progress.
With the strength of our resolve, we’ll champion the evolution of the cloud and once again change the world.
Simple is our obsession.
Simple is powerful.
And simple always starts with engineering.
Proposed Mission Statement
Our employees continue to build on a legacy of innovation (9) centered on meeting the ever-changing needs of our customers (1). We seek to provide the flexible, automated, and secure solutions (2) necessary to connect devices of all types to one another (4) with simplicity through innovative engineering (7). We have been the first to deliver needed products and advancements since our founding, and we will continue to ethically deliver products (6) for the future that ensure our continued work (5) of enabling our customers to connect to everything and empower everyone (3) in ways that will continue to literally change the world. (8) [94 words]
(1) Customers
(2) Products or services
(3) Markets
(4) Technology
(5) Survival, growth and profitability
(6) Philosophy
(7) Distinctive competence
(8) Public Image
(9) Employees
Current Status of Industries
Juniper Networks is primarily involved in the Telecommunication Networking Equipment Industry. This industry manufactures wired (voice and data) telecommunications equipment, including telephone switching systems, telephones and answering machines, data bridges, routers, modems and gateways. In addition, over the past 10 years, the industry has increasingly focused on manufacturing internet protocol-based telecommunications and networking equipment. (IBISWorld report 33421). The forecast for this U.S. industry is future decline as other countries continue to build capacity to deliver the same products at a lower price.
The Telecommunication Networking Equipment Industry is found in the “Decline” section of the Indicative Industry Life Cycle indicating shrinking economic importance:
Juniper Networks is also involved in the Software Publishing industry, primarily through their creation, distribution, and service of the Junos Operating System which powers their hardware offerings. Software publishers disseminate licenses to customers for the right to execute software on their own computers. Operators in this industry market and distribute software products and may also design the software, produce support materials and provide support services. Rising private investment in computers and software stimulated demand from businesses, while rising disposable income levels encouraged consumers to spend on software as well. Moreover, new internet-based solutions and the increasing popularity of mobile devices have triggered an explosion of mobile software applications. From 2020 to 2025, industry revenue is estimated to rise at an annualized rate of 6.4% to $293.1 billion. In 2020, the industry is anticipated to endure subdued revenue growth of only 1.9%, as the COVID-19 (coronavirus) outbreak reduces consumer spending and private investment levels.
Software publishers are often highly profitable despite the prevalence of software piracy, ongoing litigation and an expensive workforce. Over the past five years, publishers have focused on strategic acquisitions and product development, with large software publishers regularly acquiring smaller operators with specialties in high-growth, niche markets. Additionally, most operators have switched to the software-as-a-service (SaaS) model to stabilize cash flows. This model makes it more affordable to buy software products, enticing smaller and cash-strapped companies to make purchases while also facilitating easy scalability and frequent software updates.
Projections of the industry from 2020 to 2025 suggest the growing ubiquity of software in daily activities and the rise of predictive analytics and artificial intelligence software will benefit the industry by expanding software publishers' product offerings and potential markets. For example, connected cars, smart appliances and automated logistics services are all expected to continue integrating with the daily activities of US consumers and businesses. Mobile computing devices are also providing new platforms on which operators can compete, while cloud computing is opening a wider array of software possibilities for mobile phones and tablets that are no longer hampered by low storage capacities. Additionally, demand for security software to protect data is expected to rise, especially after high-profile cybercrimes gripped the nation in recent years. Altogether, revenue is expected to rise at an annualized rate of 2.4% to $329.9 billion over the five years to 2025.
The Software Publishing Industry is firmly in the “Quantity Growth” quadrant of the Indicative Industry Life Cycle indicating smaller growth of economic importance spread across many new companies:
Overview of the Firm
Juniper Networks is at a pivotal point in its history. Many investments that have been years in the making are ready to begin seeing returns such as completing a stock buyback program, paying down debt, all while expanding its portfolio of offerings. However, key metrics such as Net Revenue and Net Income have continued to decline, and Juniper Networks faces competitors with significantly more resources in a difficult and competitive environment. The following pages will detail the position of Juniper Networks and formulate strategies for the future.
Competitive Profile Matrix (CPM)
Below is a Competitive Profile Matrix for Juniper Networks comparing the firm to two of its primary rival firms: Arista Networks and Cisco.
Juniper Networks is not performing poorly in the market overall, but it’s composite 2.07 CPM Matrix compared to Cisco’s 3.82 and Arista Networks’ 3.05 indicates that its rivals are performing better on the variables critical to the telecommunication manufacturing industry. Finding a distinct, competitive advantage that separates it from the companies in the upper echelon of the industry has thus far alluded the firm. With its two primary competitors consistently delivering on critical success factors more successfully, Juniper Networks must evaluate its strategic plan to adjust its current trajectory.
Financial Statements and Historical Ratios
What quickly stands out from an analysis of the financial statements is the downturn in revenue and net income. The firm has made recent strategic decisions to expand its product portfolio, reduce debt, and increase its dividend payout in the past three years. This is an ambitious set of goals, but those investments have yet to yield the necessary results to Total Revenue and Net Income. The primary issue facing the firm at this time is a trend of shrinking revenue in its largest division: Product. Juniper Networks needs these recently acquired assets to quickly begin yielding appropriate returns.
On the positive side, the firm enjoys above average standings on debt ratios related to the industry, as well as an operating margin three times above the industry average. They facilitate this by primarily outsourcing the manufacturing of the equipment, allowing them to hold down costs. This strategy is not without its drawbacks, as those manufacturers may shift to other vendors with no long term contracts and are subject to supply chain issues that Juniper can do little to resolve. Tariffs and other foreign policy decisions made by the leaders of the countries in which these manufacturers exist can also cause the price per unit to increase, leading to ambiguity in the margins and harming financial planning.
The next three years will be critical for Juniper Networks. The strategy of deep investment in the product portfolio along with a reputation as a shareholder centric firm necessitate the market respond to their offerings quickly if they are to be successful. Finding capital from other sources is possible, but less desirable as the risk of this firm is currently higher than its primary competitors due to the revenue trends and equity positions of the firms.
Internal Factor Evaluation (IFE) and External Factor Evaluation (EFE) Matrices
The Internal Factor Evaluation (IFE) Strengths for Juniper Networks are as follows:
The Internal Factor Evaluation (IFE) Weaknesses for Juniper Networks are as follows:
The External Factor Evaluation (EFE) Opportunities for Juniper Networks are as follows:
The External Factor Evaluation (EFE) Threats for Juniper Networks are as follows:
Some key points to note: A key weakness of Juniper Networks relates to a 2015 FBI investigation around an international and embarrassing security breach that was never publicly resolved. This weakness is directly related to a key opportunity of consumer expectations of privacy and security combined with a key threat of the increasing annual corporate security breaches.
Long term, the U.S. Telecommunications industry is in decline and Juniper Networks does not have the resources to continue to attempt to do so many things for so many types of customers. A distinctive competence must be identified, pursued, and achieved. The Software Publishing Industry is growing and represents a set of intriguing opportunities that will be discussed in the strategic plans listed below.
Proposed Strategies Developed From SWOT Matrix
Strength-Opportunity (SO) Strategies
Weakness-Opportunity (WO) Strategies
Strength-Threat (ST) Strategies
Weakness-Threat (WT) Strategies
The best strategies for continued growth of Juniper Networks will be discussed in the Recommendations section below. But one strategy listed above should occur regardless of any other decision that will be made. That strategy is the Weakness-Opportunity Strategy of achieving a 3rd party certification for outstanding security practices and auditing. With security breaches increasing every year and security being the top concern of consumers per industry surveys, Juniper Networks must publicly address the 2015 security breach and subsequent FBI investigation. This certification would position them to positively communicate their proficiencies in this area, with validation from an external, unbiased party. This will address a key weakness, capitalize on an emerging opportunity, and ensure a growing threat is mitigated.
Strategic Position and Action Evaluation (SPACE) Matrix
The SPACE Matrix further illustrates Juniper Network’s need to solidify a sound strategy moving forward. Juniper Networks does have the resources to use its internal strengths to take advantage of external opportunities, overcome internal weaknesses, and avoid external threats. However, Juniper Networks is also very close to the very center of the matrix, indicating that near future events could quickly remove that flexibility and force them into more undesirable choices. That could quickly cause Juniper shift strategies out of necessity rather than careful and measured planning.
BCG Matrix
The BCG Matrix continues the theme of an inflection point for Juniper Networks. The Product division is just below the industry average in sales growth rate, and is toward the bottom of market share. Coupled with an overall declining industry, this is a concerning position.
Both the Product and Service Divisions need to focus on increasing Market Share, but Juniper Networks may lack the resources to do that in both divisions without significant costs due to restructuring or debt. Market share increase will only be seen by achieving a competitive advantage above other firms in the space. The trajectory of the Software Publishing Industry likely makes the Service Division the better choice for future development.
Internal-External (IE) Matrix
Juniper Networks’ two divisions are primarily positioned to suggest the firm’s focus should be on Market Penetration and Product Development. But the placement of these divisions are very close to requiring an alternative strategy, and these underlying stories will be discussed in the following paragraphs.
Product: The placement of this division illustrates the difficult choices facing Juniper Networks in the near future. Current positioning suggests that Juniper Networks must choose between one of two paths. The first would primarily be concerned with increasing market share via market penetration and developing the product to either dominate in cost or differentiation. In considering the results of the SWOT analysis and industry trends, Juniper Networks would be best serviced to focus on product differentiation of connecting all devices through a centralized solution if this strategy is chosen. The second strategy would suggest the firm refocus this division’s core business and become less diversified. This would cause Juniper Networks to divest from less profitable portions of the product division, such as routing, and focus on the growing industry trend of cloud computing.
Service: The placement of this division illustrates its relative strength in the market. With the proper internal focus, this could be shifted into an intensive growth strategy including a focus on market penetration, market development, or product development. Doing this would mean that even if external forces outside of the firm’s control were to impact the division it would still remain in a favorable position with similar goals for long-term success. This would primarily be done through leveraging the Junos Operating System similarly to a company like Redhat, making the Linux distribution of JunosOS available to other vendors. The strength of the software would be turned to delivering an integrated solution for wearables and connected homes through 5g and cloud compatible software and infrastructure.
Grand Strategy Matrix
The Grand Strategy Matrix shows the divisional positions of the firm relative to two evaluative dimensions: 1) Competitive Position and 2) Market (Industry) Growth. It is helpful to understanding the attractiveness of available strategies available to the firm.
Juniper Networks Product Division represents the primary industry of the firm, and its placement on the Grand Strategy Matrix speaks to a need for bold action. Unfortunately, Juniper Networks does not have the high cash flow levels characteristically present with a strongly positioned firm with a favorable competitive position in a growing market, meaning a new and correct strategy is paramount to their continued success.
In contrast, the Service firm is in a more favorable position of a rapidly growing market, but an evaluation of their present approach to the market is needed to increase Juniper’s competitive position. Juniper Networks must determine why they are ineffective and how they can change to improve competitiveness.
A consistent theme has appeared in all matrices and analyses of Juniper Networks relative to their markets. The Product Division is responsible for the majority of the revenue, but it represents a declining industry and Juniper Networks has thus far been unable to create a clear, distinctive product related advantage to separate itself in the market. The revenue for this division has declined for three years in a row. By contrast, the Service Division has a growing share of the revenue having increased for three years in a row. It is also in a growing industry, less dependent on manufacturers and supply chains that are either outside of the firm’s control or raise the operating costs of production. All of the analyses done have resulted in two distinct strategies for Juniper Networks that will be discussed in the section below.
Quantitative Strategic Planning Matrix (QSPM)
Two proposed strategies stood out as potentially beneficial for the long-term success of Juniper Networks: 1. A shift away from being primarily involved in the Telecommunications Industry into the Software Publishing Industry over the next 5 years.
This would be accomplished by refocusing the core of the product division away from routing and switching technologies. Those resources would be redeployed to:
a. Grow the service division’s offering of the Junos OS, making it available to all vendors instead of a proprietary offering only available on Juniper’s hardware.
b. Focus on the Cloud product line across all customer verticals and divisions.
c. Development and domination of the Product Division’s security technologies to be embedded into all offerings.
2. A focus on Cloud solutions and technologies, divesting from other portions of the portfolio to fund and power this effort.
This strategy would move away from routing technologies in the product division which have shown a steady decline for the firm and focus on growing industrial trends. Those resources would be redeployed to:
a. Focus on the Switching and Cloud product lines across all customer verticals and divisions.
b. Development and domination of the Product Division’s security technologies to be embedded into all offerings.
Long-term success is best found in the decision to shift Juniper Networks primarily into the Software Publishing Industry with a composite score of 4.25. The shift to Software Publishing, with a focus on licensing and servicing the Junos OS on other platforms with a focus on Cloud and 5g technologies, wearables, and connected homes would place the firm in a strategic position to capitalize on long-term industry trends and growth while removing it from long-term risks and declines. An alternative strategy would involve a narrowed focus on specific products and services, particularly Cloud solutions, with a composite score of 2.80. Juniper Networks is in a desirable position to perform this transition by properly employing a series of strategic initiatives that will be discussed in detail in the Recommendations section to follow.
Recommendations
Explanations for Recommendations
1. Estimation for an initial certification provided from FedRAMP (Federal Risk and Authorization Management Program) certification costs. For Juniper Networks, this is the desired accreditation to pursue. Verification costs range between $250,000 and $750,000 depending on the compliance deficiencies encountered. An allocated $750,000 is used to yield a conservative cost structure. Subsequent allotments gathered from the cost of similar 3rd party verification programs such as PCI-1 or SOC-2 Compliance.
2. Revenue for routing related products decreased 25.5%, or $566.3 million from 2017 to 2019. With the U.S. telecommunications industry in decline, divesting from this product line to reinvest in the more profitable sections. Routing products represent 36% of total revenue, or $1,623.2 million in 2019. Corporate revenue totaled $4,445.4 million overall. Following the pattern of a former divestiture of the firm from a product in 2014, a planned three year transaction will be pursued with $500 million due in the years 1 and 2, with the remainder $800 million due for year 3.
3. Rebranding a company is projected to cost 10-20% of a company’s marketing budget, on average. As this would be a shift to a new industry, a 20% cost, or $435 million of total operating expenses (totaling $2,174.6 million in 2019) will be allocated for this purpose assuming that all departments will require resources to make this change. The majority of this will be allocated for the first year with residual money budgeted for the two years following.
4. Service Provider revenue suffered a 12% decline from 2018 to 2019 for the firm. Industry projections include a downturn in demand from Service Providers for the next 5 years. This customer vertical currently comprises 41.1% of net revenues, or $1,827.8 million in 2019. This means that it cannot be simply abandoned but must be strategically transitioned and focused to meet specific needs in the Service Provider Market. Operating expenses dedicated to this vertical are estimated at the amount of revenue applied to the Total Operating Expenses, or $891.5 million in 2019. Expenses dedicated to this vertical would be redirected to fund Cloud development efforts over time. Expected transition of Service Provider related Operating Expenses result in 10%, 15%, and 20% for the next three years, respectively. Those resources are expected to yield growth of the Cloud vertical of 10%, 20%, and 25% in the next three years, respectively. For Service Providers that need more than Juniper Networks offerings will provide, Finding a strategic partner who can deliver quality products for this vertical and receiving a referral fee would result in offsetting revenue to the decline.
5. Sales and Marketing Operating Expenses totaled $939.3 million in 2019. Using estimates of marketing rebranding, 20% of the total marketing budget should be allocated to launch such a campaign, totaling $187.9 million.
6. A CSO, or Chief Strategy Officer, would be an additional member of the executive leadership team, and would serve two primary purposes. The first is to strategically facilitate the transition from a primary telecommunications firm to a primary software publishing firm. The second would be to ensure an overall strategic approach to success the firm is lacking today. Cost is based on the estimated salary of this position in California.
7. Public Relations Firms can cost up to $20,000 per month through retainer fees. This budget would assume that the firm would contract the best PR firm available on retainer for three years. (12 months x 20,000, per year)
8. Payment of Dividends for 2019 totaled $260.1 million. Estimates for this recommendation were reached by increasing that amount and subsequent years by 2% annually.
9. Average salary for software engineers in California is $123,000 annually. This is an assumed team of 20 people, with a 25% assumption per person of benefits. ((123,000 x 20) x 1.025)
10. By extending the time to bill to the industry average, Juniper Networks would make its product more desirable to Enterprise clients who may be facing a downturn in revenue due to COVID-19 impacts. Juniper Networks had a Days of Receivables that was one-third of the industry average. Extending this would let the billing cycle for Juniper Networks match the industry average and avoid a competitive disadvantage.
Organizational Chart
Below is the current organizational chart for Juniper Networks:
The individuals in the organizational chart are as follows:
1) Rami Rahim - Chief Executive Officer and Director
2) Anand Atherya - Executive Vice President and Chief Development Officer
3) Manoj Leelanivas - Executive Vice President and Chief Product Officer
4) Brian Martin - Senior Vice President, General Counsel and Secretary
5) Kenneth Miller - Executive Vice President and Chief Financial Officer
6) Thomas Austin - Vice President, Corporate Controller and Chief Accounting Officer
It is helpful to recall that one of the weaknesses for Juniper Networks was the internal rating of its leadership team. This stems in part from a structure that promotes ambiguity in separating product strategy, under the control of the Chief Product Officer (CPO) from engineering strategy, under the control of the Chief Development Officer (CDO). Juniper Networks lacks a Chief Operating Officer to centralize these strategies in an integrative approach.
This organizational chart suffers from dual, and in some cases, triple titles for executives. Juniper Networks should seek to clarify the roles associated with the executives by having clear titles that convey the scope of that executive’s responsibility. Yet another critique of this group would also recognize a lack of gender diversity with none of the chief officers being female. In considering a reorganization of the leadership team, this should be addressed.
Proposed Organizational Chart
The following chart is proposed to facilitate the transitions listed in the recommendations as well as continued success.
The transition from a primary focus on the Telecommunications Manufacturing Industry into a primary focus on the Software Publishing Industry will take a concerted approach among all product teams. To facilitate this, the heads of the Engineering and Product Teams have been moved underneath a Chief Operating Officer. The titles Chief Product Officer and Chief Development Officer have also been retitled as Presidents of the two clarified divisions of the company. An excellent candidate for the COO role is Anna Johnston, a Principal Engineer for Juniper Networks and Adjunct Professor of Cryptography at Johns Hopkins University. This will ensure that both divisional presidents report to a well credentialed, security minded individual, while also bringing gender diversity to the executive leadership team.
Furthermore, there should be a continued effort of strategic alignment between all branches of the company based on strategic planning and market understanding. The Chief Strategy Officer will fulfill that role, presenting pertinent information to the Executive Leadership Team and ensuring each part of the company is delivering on the chosen strategy. It is highly recommended that highly qualified female candidates be considered for this role as well, further introducing gender diversity into Juniper Network’s Leadership Team.
In addition to the above changes, the General Counsel and Secretary has been serving as an interim CHRO (Chief Human Resources Officer) for more than two years. Given his job description as listed in the financial statements, this is a fitting title and interim positions should not last for several years. Other positions were clarified and dual titles removed. The proposed C-level executives are as follows:
Chief Executive Officer (CEO)
Chief Financial Officer (CFO) Chief Human Resources Officer (CHRO)
Chief Operating Officer (COO)
Chief Accounting Officer (CAO)
Chief Strategy Officer (CSO)
Perceptual Map
The following perceptual map is based on an analysis of a firm’s flexibility to respond to industry changes and product revenue growth.
The ability to respond to technological changes is a critical component of the Telecommunications Manufacturing Industry. At this time, Juniper simply does not have the resources to respond to these changes in a timely manner compared to other firms in the market. Furthermore, when reviewing product revenue growth, Juniper Networks has one of the lowest positions in the competitive market for the last three years. This perceptual map continues to illustrate that Juniper Networks’ next strategic plan is critical to its long-term success. It cannot continue to remain in this competitive position with positive expectations.
A second perceptual map illustrates the same companies in the industry on a different set of axes. Each company has cast a vision in the public marketplace that it wishes to achieve. Independent firms that judge and rate such companies have stated where these companies fall on the completion of that vision, and how likely they are to execute that vision given the strengths and weaknesses of the companies themselves. A company with fewer resources and poor management would be less likely to execute on the stated vision of the company. Juniper Networks remains firmly entrenched as a question mark in the minds of the industry as can be seen by the positioning in the middle of the matrix. While it is possible Juniper Networks can accomplish its stated goals, it is just as likely that they could fail to achieve those goals.
Firm Valuation
The closest competitor to Juniper Networks is Arista Networks. Many other competitors are much larger corporations with varied business units, but Arista’s portfolio closely resembles that of Juniper Networks and the two firms have also been listed as leaders in the industry by independent rating companies.
The true difference in the evaluations begins to take place with the metrics involving the share price. Juniper Networks stock price of $22.61 per share is less than one-tenth of Arista Networks $283.16 per share. Juniper Networks needs to take a strategic approach to raising its share price. Recommendations 5 and 8 listed above directly deal with this need to raise the valuation of the firm.
EPS-EBIT Analysis
The strategy for Juniper Networks relies on reducing the firm’s product diversification. This includes divesting the routing products and using those funds to grow the Software and Services division. No additional capital will be needed, given current projections, resulting in no difference between the choices of equity and debt financing.
Furthermore, the strategy of the firm also includes increasing the price of the stock through an aggressive marketing campaign. Equity Financing would align with that goal much better than Debt Financing. Juniper Networks is in a place where it could use debt leverage to grow, but the preference with the current strategy would be to grow equity through releasing treasury stock into the market at a premium from the purchase price. This makes Equity Financing the best choice for funding the future endeavors of the firm.
As noted previously, the recommendations include divesting from the routing products to fund the transition from Telecommunications Manufacturing to Software Publishing and Service. Should the board not approve the divestment yet desire to pursue the industry change and implement the other recommendations the cost of all other recommendations would be $1.45 billion. As it is possible that an alternative strategy could be requested, that figure was used with the EPS/EBIT analysis with the following results:
Equity Financing remains the preferable option under this scenario as well, with improved Earnings Per Share for years one and two. Debt financing would become as preferable as Equity in year three, given no other changes. This would suggest that the firm is at an appropriate level of debt leverage and would be better suited to explore Equity Financing through Common Stock. As this strategically aligns with other goals and projected outcomes, Equity Financing is the clear choice for Juniper Networks at this time.
Projected Financial Statements
Should the firm follow the given recommendations it will be divesting itself of a product associated with a shrinking industry to more fully invest in products related to a growing industry. This will also capitalize on the strengths of the firm while minimizing the weaknesses. The below tables represent the projected results of these recommendations:
Treasury Stock will continue to decline as the shares are released to sell at premium. The Retained Earnings (Accumulated Deficit) balance will continue to improve due to the increased revenue stream.
Projected Financial Ratios
Among the weaknesses listed for Juniper Networks was the ROA and ROE % ratios. These were well below the industry average for the firm in the historical ratios, and had trended to severe declines in recent years. These have now risen to match the industry leaders for these ratios. As planned, the Average Collection Period did rise as the firm promotes a longer pay cycle for Enterprise clients as a strategic advantage.
Retained Earnings Table
A significant weakness of Juniper Networks is the size of its Accumulated Deficit (Negative Retained Earnings). The recommendations given, as planned, have increased dividend payouts while simultaneously reducing the accumulated deficit. These figures are exactly what the firm needs to see to experience long-term growth and success. The increased dividends, plus a stronger financial position of the firm, should cause the stock price to rise and the valuation of the firm to approach that of its closest competitors.
Epilogue
The recommendations given in this report can be broken down into a two-pronged strategy for Juniper Networks: 1. Simplify organizational structure and product offerings
Juniper Networks needs to simplify its organizational structure and product offerings. While Juniper Networks is known for making quality products it struggles to capture market share necessary to achieve sustainable growth. It has a diverse portfolio of options, but this diversification has not yielded the expected return. Juniper Networks’ product portfolio currently reflects a reality of doing many things well, but nothing they produce is considered the best in class.
2. Transition primary industries
The U.S. Telecommunication Manufacturing Industry continues to decline as international firms with lower operating costs enter the market. This industry is ever-changing and fast paced. New technologies and advancements can appear quickly, and many firms have significant cash reserves on hand to either be a “fast-follower” or simply purchase new companies or patents and incorporate their technological advancements into the firm’s portfolio. The ability to adjust quickly is critical to success in this space, and Juniper Networks lacks this ability compared to its principle competitors.
Juniper Networks also produces and distributes the JUNOS Operating System, a distribution of Linux that they only provide on equipment they also manufacture. The Software Publishing Industry is growing, and numerous opportunities on the horizon for the market play to Juniper’s strengths as a service organization. The Service Division of Juniper outperforms the Service Division of many of its principal rivals relative to growth and total percentage of company revenue. There is no reason that Juniper could not offer this software distribution to any manufacturer, and build it with the engineering and skill necessary to connect devices of all kinds to one another simply through innovation as the company states it wishes to do.
These plans are complementary, and the firm has what it needs to accommodate these plans and successfully change itself into a company with promising growth. It need not completely abandon hardware production to achieve this, and in fact it cannot hope to do that and continue funding its business. A transition to another primary industry takes time and expertise, and they must begin that journey as quickly as possible to ensure success. Juniper Networks reveals itself to be a question mark through multiple analyses, squarely stuck between potential growth and potential failure with too many uncertainties for investors to trust. As long as this remains true, Juniper Networks continue to underperform in relation to investor related metrics compared to the others in this industry. These recommendations align the growth of the marketplace with Juniper’s strengths to give the best opportunities for success. With its solid foundation to build on, Juniper Networks can become the leader of software solutions that power the future.
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