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Chapter 1.2. A Model for Strategic Planning, Analyzing Cases and Decison Making
Strategic Creative Analysis (SCAN) is a
process for strategic planning, decision making and analyzing case
studies. SCAN is also useful for marketing planning and personal
career planning. A description of the process follows, keyed to
Exhibit 1.
(Scroll down if you want to jump to the Forest and Forest Case Study and/or its analysis.)
1. Find and List Actual Objectives and Strategies
To start SCANning an actual situation or a case study, find, list and
number the objectives and strategies of the organization or individual,
as you find them. Objectives and strategies are statements that
start with the word "To," followed by a verb in the infinitive, stating
results someone is trying to achieve, such as:
Examples of Organization Objectives Examples of Individual Objectives
1. To increase sales revenues.
1. To get a raise in pay.
2. To increase market share.
2. To get a new job.
3. To reduce costs.
3. To make a career change.
4. To reduce expenses.
4. To start a new business.
5. To improve company image.
5. To get a promotion.
6. To market a new product.
6. To get a transfer.
Note A: You are discovering the objectives being pursued.
Do not prescribe objectives or strategies at this point in the
analysis. You will do that later.
2. Rank the Objectives and Strategies
A SCAN analysis, or SCANalysis, depends on the objective
selected. Therefore, it is extremely important for you to select
this objective carefully, to avoid having to repeat the analysis
because you discover later that you were pursuing the wrong
objective.
To discover the Top Rank Objective (TRO) of the person or organization,
select an objective from the list you prepared in Step 1, that appears
to be the ultimate goal of all their efforts. Draw a box and
write in the objective you have chosen. Then ask: "Why are they
pursuing this objective?" Look for an answer to this question
only in the list you prepared for Step 1. If you find an answer
to the question, draw another box above the first box and write in the
higher ranking objective. Connect the boxes with a vertical
line. Ask "Why are they pursuing this objective?" about the
new top objective and repeat the same steps. Keep asking "Why"
and drawing and filling in boxes until you cannot find an answer to the
"Why" question. The objective in the top box at this point is the
Top Rank Objective, or TRO.
Ask: "How are they pursuing this objective?" to rank the
objectives and strategies remaining on the list. See Example,
"Forest and Forest" case study, Exhibit 2.
The conclusion is that by repeatedly asking "Why are you (they)
pursuing this objective?" we get to the Top Rank Objective, and that is
exactly what SCAN requires because it would be regrettable to do a
lengthy analysis and then find out that we were not pursuing the top
rank objective that applied to the given situation.
You may encounter a case study that does not present a clearly stated
top rank objective. Then, you should infer a TRO, based on
strategies described in the case. See the Forest and Forest case
study for an application of the SCAN process.
Note B: If you can't fit all the objectives and strategies into
one logical structure, you may be looking at a situation where a
company or an individual is pursuing conflicting objectives.
Develop two analyses and select one of the TRO's for your analysis.
3. Select An Objective, usually the TRO
Usually, you will work with the Top Rank Objective. Two
exceptions are possible: (1) In a case study, work with a lower ranking
objective, if that objective is the focus of the information
presented. (2) In a real situation, work with a lower level
objective, if that is the objective of greatest importance to the
decision-maker at the time.
4. Discover SWOTs with Respect to the Selected Objective
Strengths = attributes of the organization that help to achieve the objective.
Weaknesses = attributes of the organization that impede achieving the objective.
Opportunities = outside conditions that help to achieve the objective.
Threats = outside conditions that impede achieving the objective.
See SWOT Diagram at Ch 1 Exh 3.
In identifying SWOTs, always think of the selected objective. A
particular factor is relevant only with reference to a specific
objective. For example, a large cash balance is a strength if the
objective is expansion. If the objective is to discourage a
hostile take-over, a large cash balance is a weakness. If I am
very tall, that's a strength if my objective is to be a basketball
star. Great height is a weakness if my objective is to be a
jockey in horse-racing.
Note C: If you find that key information is missing, specify the
questions you want answered. Get the answers or make explicit
assumptions.
5. Is the Selected Objective Attainable, in view of the SWOTs?
Ask this question: "In view of the SWOTs, can the organization achieve
the selected objective?" If the Strengths and Opportunities are
greater than the Weaknesses and the Threats, continue to Step 6.
If the Weaknesses and the Threats are greater, return to Step 3 and
select another objective and conduct a new SWOT discovery (Exhibit
1). If you were working with two or more objectives (Note B,
above), decide now which objective should be pursued.
6. Creative Step: Derive Many Strategies from the SWOTs (10 Minimum)
Create many strategies, so that you may have a chance of finding some
really good ones. Focus on strategies aimed at achieving the
selected objective by deriving your strategies from the SWOTs, which
originated from the selected objective. Ask these 4
questions, repeatedly: "How can we . . .
a. Use the Strengths?
b. Stop the Weaknesses?
c. Exploit the Opportunities?
d. Defend against the Threats?"
Emphasize the Strengths and Opportunities. Focus on the Strengths
that differentiate this organization from its competitors. Do not
overlook the Weaknesses and Threats that might threaten the survival of
the organization.
Note D: To maximize the quality of your created strategies, use
outside sources of information. Look up relevant books, journals,
newspapers and other printed resources. Contact knowledgeable
people and seek their advice. Keep track of the sources of
outside information as this may be crucial in persuading other people
to accept your conclusions.
Note E: Deriving strategies from SWOTs is structured
brainstorming. Therefore, observe brainstorming customs to
encourage creativity. "Piggybacking" on other people's ideas is
invited. Save criticisms for a later phase of the
analysis.
6a. Second Creative Step (Optional): Draw a HOST Diagram
( HOST = Hierarchy of Objectives Strategies and Tactics)
At this point you have an excellent
understanding of the case. You may use this knowledge to expand
the creative phase. The method is to draw a diagram similar in
structure to the one shown below in the Forest and Forest case analysis in the section on Ranking
Objectives and Strategies. See Ch 1 Exh 2.
In ranking objectives and strategies, you work upward and downward in
seeking the Top Rank Objective. In the HOST Diagram, you
start at the top because you have already determined the Top Rank
Objective. You work downward and sideways by asking How? and How Else? to develop new strategies for achieving the TRO.
7. Develop Action Programs (3 Minimum)
Develop Action Programs for the more attractive strategies, covering:
1. Name of the strategy.
2. Benefits to be expected from implementing this program.
3. Actions: What will be done?
4. Responsible persons: Who will be in charge of the program?
5. Timing: When will the
program start? When will it be completed?
6. Location(s): Where will the program be implemented?
7. Resources:
What will be needed: people, money, information, other resources?
8. Control System: How will progress be measured and reported?
9. Rewards for performance, if any.
10. Contingency plans: What will be done if results fall short?
8. Evaluate Programs and Select the Best Ones
Ask the following questions about each program and
recommend the most effective programs for achieving the selected
objective:
a) Are the required resources available?
b) What risks or bad side effects are involved?
c) Is there a better way of achieving the selected objective?
d) Do the Action Programs help each other?
e) Should this Action Program be implemented? If yes, when?
9. Monitoring Implementation
In real life uses of SCAN, you should monitor implementation in three
ways: SWOTs, results and the SCAN process. Monitor SWOTs
because attributes of the organization and outside conditions change
over time. If the SWOTs have changed enough, the SCAN process
should be repeated to see whether current programs are still the best
available.
Monitor results through the organization's control systems: revenues,
market share, costs, expenses, etc. Some programs may require
additional monitoring systems. Compare actual results to planned
results and implement contingency plans, if required.
You should also monitor the SCAN process. As you use it, you may find ways to improve it.
How to Get Top Grades on SCAN Hand-Ins
A. Before you begin writing, study the sample case and analysis shown in this Chapter.
B. Cover steps 1 to 4 of the SCAN process for Mini-SCANs.
C. Cover steps 1 to 8 of the SCAN process for Full SCANs.
D. Number all the pages.
E. In Part 1 "List Actual Objectives and Strategies," label every line
and show page and paragraph numbers in ( ).
F. In Part 4 "Discover SWOTs,"
1. State the Selected Objective in the title of Part 4.
2. Number the SWOTs and show page and paragraph numbers in ( ).
G. In Part 6 "Create Many Strategies,"
1. Label the strategies.
2. Show the SWOTs from which they are derived in ( ).
3. Create 10 or more strategies.
4. Use outside sources and cite these sources.
H. In Part 7,
Develop at least 3 Action Programs. Show all 10 headings in each
Action Program.
I.
Computer-print your paper. Hand-written or printed papers will
not be read.
J. Appearance counts, a lot.
K. After you
have printed the final version of your paper, compare it to the example
shown in this Chapter. Make all changes necessary and print the
real final version of your paper.
Forest & Forest Motor and Control Company Case Study
In March 1991, David Forest, President; Steven
Michaels, Sales Manager and Laura Marden, Marketing Manager of Forest
& Forest were reviewing the current situation of the company while
preparing plans for its future. Their immediate concerns were:
company organization, sales management and marketing management.
(This case is based on real events, although all the names have been
changed. The only aim of this case study is to provide
instructional materials.)
Company Background
Forest & Forest Motor and Control Company was
started as a repair shop for electric motors by David Forest's father
in 1928. Twenty years later, having survived the Depression of
the 1930's and the war of the 1940's, the business diversified
successfully into the distribution of new and reconditioned electric
motors. David Forest started working for his father part-time in
1952, while he was still in grade school. Eleven years later,
when David was 22 years old, his father became seriously ill and David
quit school and started running the business full time.
Under David Forest's direction, the company
diversified again, into distribution of variable speed controls for
electric motors. Sales and profits grew steadily. In 1990,
sales were $16 million and after tax profits were $700,000.
The company was wholly owned by David Forest and his
wife, Doris Forest, who worked part-time as the company
controller.
Their son-in-law, Steven Michaels, 29 was the Sales
Manager. Previously, he had been Marketing Assistant and
part-time student at New York University, where he had obtained an MBA
degree in Finance. His undergraduate degree was in liberal arts.
Laura Marden, the Marketing Manager had been with
the company for a year and a half, having returned to paid employment
after raising three children and obtaining an MBA degree in Marketing
Management from Pace University.
Organization
The company employed 50 people, as shown below:
Outside sales representatives 12
Inside sales representatives 13
Office workers
7
Warehouse
workers
15
Repair shop
workers
3
The outside sales representatives worked from the
head office in Long Island City and branches in Newark, Hartford,
Buffalo, Cleveland, Chicago and Dallas.
In describing his concerns about organization, David
Forest said: "I am not a good executive. I get involved in
all the details of the business. Every morning I read all the
mail and I respond personally to all the complaints that come in from
customers. Whenever an employee wants to complain about
something, he or she comes to me, or calls me long distance, on company
time, using a company telephone.
"Until now, I have been involved mostly in
operations: order processing, the repair shop, receiving, shipping,
inventory control and expediting. Lately, I am becoming more
interested in marketing. I'm looking for an Operations
Vice-President, but I can't seem to find a good person at a salary I'm
willing to pay. I draw $240,000 myself and I can't see paying an
Operations Vice-President more than $90,000 to $100,000.
"Our son-in-law, Steven needs to grow a lot
more. I tried to give him the whole responsibility for marketing,
but he couldn't handle it. So, I made him Sales Manager and hired
Laura to help out with advertising, marketing research and marketing
planning.
"I would like to step back a little bit during the
next five years, but also I would like to see our business double
during the next three years. The opportunities are there, we run
a tight ship and we have an excellent reputation for quality.
"My biggest concern is with organization. We
have done well enough until now, but if we are to grow, we have to
become more professional. Take our new product for example, the
Polaris motor control. We saw an opportunity because many of our
motor customers were going elsewhere for the controls. (Motor
controls are devices for regulating the speed of electric motors.
Controls are used in pumping fluids at various rates, for
example.) We could not always satisfy their needs with the
Monarch brand of motor control that we buy from one of our suppliers.
"We retained a designer for $50,000 to develop a
superior control to be manufactured for us by a reliable firm in New
Jersey. As it turned out, the first thousand controls had many
problems, most of them caused by improper design. By trial and
error, we solved all the problems. Unfortunately, we had, and
still have, problems selling the Polaris, although we have a superior
product now. We have 5,000 units coming in next month from the
factory and I'm worried about how we will convert them into cash.
"Speaking of cash, as our business has slowed down
due to the recession, we have a new worry. Our inventories have
risen and we owe half a million dollars to the bank, which is costing
us $4,000 a month for interest.
"Another thing is that I can't break the habit of
getting involved in everything. I have had a big sign made:
‘David's job is not to do, but to decide!' I'm not sure that the
sign is accomplishing anything."
Sales Management
In discussing the sales force, Steven Michaels
identified two concerns: sales compensation of the outside sales force
and lack of success in selling Polaris. He expressed the
following views regarding these issues.
"The present system consists of a base salary plus 4
percent commission on all new business. This has never been
changed. Two examples will illustrate the problem:
"Mike Rogers, Southeast Regional Sales Manager gets
a salary of $52,000. He started in 1988 with sales volume of
$300,000 per year. In 1991, his six state territory will generate
about $2.2 million in sales, or $1.9 million over the starting
amount. According to the present formula, he will be paid 4
percent of $1.9 million, or $76,000 plus his salary of $52,000 or a
total of $128,000.
"Bob Walker, Applications Specialist in the
Northeast Region receives a salary of $48,000. He provides
outside technical support in upstate New York, mostly in the Buffalo
area. He also has two major accounts on which he spends about
five percent of his time. He gets 3 percent commission on these
two accounts, which he visits six times each year, seeing only
purchasing people. For these two accounts, his commission is
$20,000 a year. For his technical support work, he gets 1 percent
of all new business in his area. In 1990, this came to
$40,000. His total compensation was $108,000.
"Another problem is that our compensation contracts
are different with each sales rep and are so complicated in some cases
that they lend themselves to various interpretations. In case of
dispute, I give in to the sales rep, because I know that if he's
unhappy, he'll go directly to David Forest, and David always sides with
the employees.
"Rather than have a flat commission paid from day
one, I would like to see a system in which no commission is paid until
a certain percent increase in sales is achieved. Beyond that, a
commission higher than 4 percent could be paid.
"Any change that is proposed would have to include a
phase-in of the new structure over possibly two or three years.
The key point is that the sales force must not feel that they are
short-changed. On the other hand, the company should not pay a
lot of money to sales reps unless they achieve real growth in sales
every year.
"Another problem is exemplified by the Polaris
introduction. The only incentive for our sales reps to sell it is
the 4 percent commission. If they feel they can earn the same
commission more easily and quickly by selling a well-known established
product, why should they invest time in selling Polaris?
"Furthermore, the changes that we made in the
product during the introductory shake-out made it difficult for sales
reps to give presentations on this product because they are afraid that
they might not be able to answer all the questions. Also, Polaris
is priced a few dollars higher than competing controls and our sales
reps are not confident that they can justify the difference. It
would help a lot if we just cut the price. There is enough gross
profit there!"
Marketing Management
According to Laura Marden, Marketing Manager, the
company had never prepared a marketing plan before her arrival. A
sales analysis from the plan document she had just completed is shown
below.
Sales Analysis for the Year 1990
Sales Gross Profit
Products and Services $000's $000's %
Purchased Products 12,372 4,682 38
Manufactured Products 2,168 1,108 51
Modifications
1,282 700
55
Repairs
178
118 66
Totals
16,000 6,608 41
The plan also showed that advertising expenditures for 1990 were as follows:
Polaris, $192,000; Other, $240,000; Total, $432,000.
In commenting on this, Laura said: "When we brought
out Polaris, I recommended that we price it at $79, as compared to $73
for the Monarch product, to emphasize the higher quality of
Polaris. Then, when we got off to a slow start in selling
Polaris, Steven wanted to cut the price to help move it. I
insisted that if we did that, it would be very difficult to convince
customers that we had a quality product. I pointed out that all
the technological innovators marketed quality and service, not low
price.
"To help Polaris catch on, I recommended that a
large part of our ad budget be allocated to Polaris. Of course, I
don't expect that in our markets, advertising alone will carry the
day. Our sales force will have to get out there and push
Polaris. So far, they haven't done this.
"Steven repeatedly brings up the idea of a price cut
on Polaris. I am sure that from a long-range point of view, that
is not the way we should go. Anyway, I challenged him to produce
some reliable estimates of actual sales that his men could make at a
lower price that they cannot make at the present price. This is
what he brought in:
"For very large orders of 100+ units, our price is
$55 per unit. Steven says he can sell 600 units at that
price. If we reduced the price to $45 per unit, in quantities of
100, or more, he could sell 1500 units. Our variable cost is $30
per unit. Of course, once we cut the price, it would be difficult
to raise it very quickly. I know that David Forest is concerned
with cash recovery because of the inventory situation and the big bank
loan. On the other hand, we have a better product than Monarch
and we should not have to cut the price to close sales."
Forest & Forest Case SCANalysis
I. List of Actual Objectives and
Strategies (references to pages and paragraphs in the case study
presentation are shown in parentheses).
A. To hire an Operations Vice-President (7, 2).
B. To have Steven Michaels improve his performance (7, 3).
C. To double the business in the next three years (7, 4).
D. To perform Marketing functions (7, 2).
E. To generate a more professional environment (7, 5).
F. To capture
sales lost to competing suppliers of motor controls (7, 5).
G. To diversify into production and marketing of Polaris (7, 5).
H. To sell the 5,000 units of Polaris coming in (7, 6).
I. To reduce interest payments of $4,000 a month (7, 7).
1. To reduce bank loan from the $500,000 level (7, 7).
J. To focus
David Forest more on decision making and less on doing (7, 8).
K. To set up a
simpler, more motivating and more economical sales compensation plan
(pages 7 and 8).
L. To cut the price of Polaris (Steven) (9, 3).
M. To prepare a marketing plan (Laura) (9, 3).
N. To allocate a large part of ad budget to Polaris (9, 3).
O. To have the sales force push Polaris (9, 4).
P. To avoid price cut on Polaris (Laura) (9, 5).
II. Ranked List of Objectives and Strategies, outline format and "boxes and lines" format.
A. To double the business in the next three years.
1. To generate a more professional environment.
a) To hire an Operations
Vice-President.
b) To perform Marketing functions (advertising,
marketing research, marketing planning).
c) To have Steven Michaels
improve his performance.
d) To focus David Forest more on decision making and
less on doing.
e) To prepare a marketing
plan (Laura).
2. To capture sales lost to competing suppliers of
motor controls.
a) To diversify into production and marketing
of Polaris.
3. To set up a simpler, more motivating and
economical sales compensation plan.
4. To reduce interest payments of $4,000 a month.
a) To reduce bank loan from the $500,000 level.
5. To sell the 5,000 units of Polaris coming in.
a) To cut the price of
Polaris (Steven).
b) To have the sales force push
Polaris.
c) To allocate a large part of ad budget to
Polaris.
d) To avoid price cut on Polaris
(Laura).
Ch 1 Exh 2 displays the same information in graphic form.
III. Selecting An Objective. The Top Rank
Objective, "To double the business in the next three years," will be
used for the next step of this SCANalysis.
IV. SWOTs with Respect to: "To double the business
in the next three years." (page and paragraph references in
parentheses).
A. Strengths.
1. In business since 1928 (6, 2).
2. David Forest has 28 years of experience as head of
the company (2, 2).
3.
Sales and profits have grown steadily (6, 3).
4. Sales and profits were $16 million and $700,000 in
1990 (6, 3).
5. David Forest responds personally to all customer
complaints (7, 1).
6. David Forest wants to get involved in marketing
(7, 2).
7. "We run a tight ship," David Forest (7, 4).
8. "We have an excellent reputation for quality,"
David Forest (7, 4).
9. "Manufactured Products," "Modifications" and
"Repairs" have Gross Profit margins greater than 50% (9, 1).
B. Weaknesses.
1. Steven Michaels has no experience or education for
his position of Sales Manager (6, 5).
2. Laura Marden is short on marketing experience (6,
6).
3. David Forest says that he is not a good executive
(7, 1).
4. Employees feel free to complain directly to David
Forest (7, 1).
5. David Forest can't find a good Operations Vice
President at the salary he wants to pay (7, 2).
6. Company is having trouble selling Polaris (7, 6).
7. David Forest is worried about converting 5,000
Polaris into cash (7, 6).
8.
Inventories increased too much during the business
recession with resulting interest cost of $4,000 a month (7, 7).
9. David Forest can't break the habit of getting
involved in everything (7, 8).
10. The sales compensation system . . .
a) Pays out too much money (pages 7 and
8).
b) Is too complicated
(pages 7 and 8).
c) Does not motivate sales reps to sell Polaris (8,
7).
11. Sales reps
do not present Polaris because they do not know it well (8, 9).
12. Polaris is priced higher than competing products
(9, 3).
13. The company does not appear to have historical
trend data (page 9).
14. They spent
$192,000 advertising Polaris and they have trouble selling it (pages 8
and 9).
15. There is a
conflict between Steven and Laura regarding pricing policy on Polaris
(pages pages 8 and 9).
C. Opportunities.
1. "The opportunities (for growth) are there," David
Forest (7, 4).
2. Professional help is available for designing new
products (7, 6).
3. Reliable manufacturers are available for producing
new products (7, 6).
4. There is a market for 1500 Polaris at $45 a unit
(9, 6).
D. Threats.
1. Many of their motor customers are going elsewhere
for the controls (7, 5).
2. The $50,000 Polaris designer did not do a good job
(7, 8).
3. There was a business recession (7, 7).
V. Is the Selected Objective Attainable?
Since historical and trend data
are not given, it is difficult to judge whether the business can be
doubled as that would require an annual growth rate of 26 per cent per
year. Therefore, the objective is restated as: "To increase the
business over the next three years." The same SWOTs apply.
VI. Creating MANY Strategies. SWOTs in ( )s. Text references in italics.
A. Replace Steven Michaels with a qualified Sales Manager (W1).
B. Direct Steven Michaels to attend Sales Management Seminars (W1).
C. Direct Steven Michaels to join
a professional Sales Management organization and to exchange
information with members (W1).
D. Hire a Sales Management consultant (W1).
E. Replace Laura Marden with an experienced Marketing Manager (W2).
F. Direct Laura Marden to attend Marketing Management Seminars (W2).
G. Direct Laura Marden to join a
professional Marketing Management organization and to exchange
information with members (W2).
H. Replace the Marketing Manager with a Sales Trainer (W2, W11).
Benefits of
sales training are very substantial. It is not clear that the
Marketing Manager has the potential to make a comparable
contribution. For specifics
on sales training see, for example, P. Kotler and G. Armstrong,
Principles of Marketing, 9th edition, Prentice-Hall,
Upper Saddle River, NJ, 2001, pages 592-593.
I. Encourage David Forest to attend Executive Development seminars (W3).
J. Encourage David Forest to
discuss Operations VP salaries with head-hunters and other company
presidents (W5).
K. Cut Polaris price as recommended by Steven Michaels (W6, W7, W12, O4).
"Price
Adjustment Strategies" and "Price Changes" in Chapter 11 of P. Kotler
and G. Armstrong, "Principles of Marketing," pages 403 to 415.
L. Evaluate opportunities for
selling Polaris at higher and lower prices and various quantity
discount structures (W6, W7, W12, O4).
M. Seek out additional vendors of controls (W6, W12, O4).
N. Train sales reps on selling Polaris (W6, W7, W11).
O. Implement a less costly sales compensation plan (W10).
P. Implement a less complicated sales compensation plan (W11).
Q. Implement a sales compensation
plan that motivates sales reps to sell Polaris (W12). Kotler and
Armstrong pages 593 to 597.
R. Develop historical trend data
to discover the faster growing and more profitable segments of the
business (W13). Kotler and Armstrong, Appendix 1.
S. Cut advertising expenditures on Polaris (W14).
T. Define precisely the opportunities for growth (O1).
U. Find competent product designers (O2, T2).
V. Develop new products and
services well suited to marketing during a recession, such as repairs
and reconditioned motors and controls (T3).
Kotler and
Armstrong, Ch. 9 on new product development, pages 335 to 361.
VII. Developing Action Programs.
A. Program for increasing Polaris profitability.
1. Name: "The Polaris Program."
2.
Benefits to the Company: Make a success of the
Polaris project: increase market share, profits and cash flow.
3. Actions:
a) Cut the ad budget.
b) Motivate and train the sales
force.
(1) Provide a
$5 bonus for every Polaris sold.
(2) Develop
training materials and conduct training.
(a) Document benefits that Polaris provides.
(b) Relate benefits to unique
features of Polaris.
(c) Discover questions asked by
customers.
(d) Discover objections raised by
customers.
(e) Develop persuasive answers to
questions and objections.
(f) Develop brochures for sales
representatives.
(g) Run training seminars with
role playing.
c) Evaluate pricing. Obtain
reliable estimates of sales at various price levels, taking into
account the effect of the bonus and training.
4. Responsible persons: Steven Michaels and
Laura Marden.
5. Timing: Start now. Complete within six
to eight weeks.
6.
Locations: Company headquarters and the field.
7.
Resources: Michaels and Marden, outside
consulting help, printing of brochures and other materials.
Estimated total expense $10,000.
8.
Control System: Monitor sales of
Polaris. Set a goal of making all the sales that are currently going to competition within
one year.
9.
Rewards: Offer $5,000 bonuses to Steven and
Laura if they succeed.
10.
Contingency Plan: If the Polaris still proves to be unmarketable,
determine the reasons why and evaluate probability of success with
continuing this program. Then try cutting the price. If
nothing works, scrap Polaris.
B. Program for creating new, high ROI product/service ventures.
1. Name: "New Ventures."
2.
Benefits: Identify worthwhile business
ventures and plan for realizing them in an orderly and profitable
fashion.
3. Actions:
a) Study historical trends.
b) Study market, including the
West Coast and overseas markets.
c) Find products and services with
ready markets in business recessions.
d) Discover new sources of
products to distribute.
e) Project into the future:
investment required, sales revenues and expenses.
f) Calculate Return on Investment
for each opportunity and select the best ones.
4. Responsible Persons: Laura Marden.
5. Timing: Start after completing the Polaris
Plan. This will be an on-going responsibility for Laura Marden,
as a permanent part of her job.
6. Locations: Company headquarters and in the
field.
7. Resources: Travel expense.
8. Control System: This work should result in a
stream of new opportunities for the company to increase profitable
business.
9. Rewards: Offer Laura a 0.5% bonus of new
product or service sales that may be attributed to the opportunities
she discovers.
10.
Contingency Plan: With her MBA, Laura Marden should be able to
carry out this action program successfully. If she has
difficulties, she should take additional training by participating in
public seminars.
C. Program for increasing managerial professionalism at Forest & Forest.
1. Name: "The Executive Development Program."
2. Benefits to the Company: Increase management
effectiveness.
3. Actions:
a) Identify useful professional
organizations and public seminars.
b) Attend professional meetings
and network.
c) Attend seminars and learn and
network.
4. Responsible persons: David, Steven and Laura.
5. Timing: Start now. Continue indefinitely.
6. Locations: New York Metropolitan area -
mostly Manhattan.
7. Resources: Annual budget of $10,000.
8. Control system: Self-evaluation and peer
evaluation.
9. Rewards: Learning and contacts will provide
substantial rewards.
10.
Contingency Plan: None needed. No possibility of failure.
D. David Forest should not get
more involved in marketing at this time. He employs a Sales
Manager and a Marketing Manager and he should allow them to do their
jobs. He should give them more work to do, as outlined above in
Action Programs A and B. It is not necessary to hire an
Operations Vice President because David is doing that job already and
he is not inclined to spend enough money to hire a competent
person. Forest's tendency to read the mail and to respond to
customer complaints personally is not a weakness, even though he sees
it that way. Customers probably appreciate the personal attention
of the company's president and David is always informed of problems in
the company-customer relationship. This motivates employees to
prevent problems and enables Forest to direct corrective actions.
VIII. Evaluating Programs and Selecting the Best Ones
A. Evaluation of the "Polaris Program."
1. The required resources are available.
2. This approach is the most direct way of achieving
long term success for he Polaris motor control. The price
cut
approach suggested by Steven Michaels will provide
some quick sales but no continuing effort to insure success of the
product.
3. If this approach works, it may also be tried with
other products to help reduce the excess inventory and the accompanying
interest expense.
4. The recommended action programs are not directly
related.
5. This Action Program should be implemented as soon
as possible.
B. Evaluation of the "New Ventures Program."
1. The required resources will become available after
Program "A" is implemented.
2. This approach is less risky than the method the
company used for developing the Polaris motor control.
3. This method will help to achieve the top rank
objective.
4. The recommended action programs require the same
resources.
5. This Action Program should be implemented after
Plan "A".
C. Evaluation of the "Executive Development Program."
1. The required resources are available.
2. There are no risk or bad side effects associated
with this program.
3. This program will be very helpful to achieving the
selected objective.
4. This Action Program will help all other Action
Programs.
5. This Action Program should be implemented as soon
as possible.
D. Program D simply
requires David Forest to delay indefinitely his search for an
Operations Vice-President and to permit Steven and Laura to perform
their duties. The plan requires no new resources nor does it impact any
other programs. It should be implemented immediately.
This Page was last update:
Wednesday, February 22, 2006 at 3:56:40 PM
This page was originally posted: 8/18/2005; 11:46:43 AM.
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