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Chapter 1.2. A Model for Strategic Planning, Analyzing Cases and Decison Making

Chapter 1.3 Forest & Forest Case

Chapter 2. Influencing / Persuading

Chapter 3. Negotiating / Conflict Resolution

Chapter 4. Networking / Self Marketing

Chapter 5. Entrepreneuring / Venturing

Chapter 6. Business Plan Outline

Chapter 7. HBS Case Method Deprives Students of An Authentic Learning Experience

Chapter 8. Improving Your Ability to Recognize Business Opportunities

Chapter 9. Why Business Schools Need to Know What MBAs Want to Learn and How to Find Out

Chapter 10. What do MBAs Want and What Do They Get?

Chapter 11. Applying Services Marketing Concepts to the Administration of A Business School

Chapter 12. A Model of the Business School as A Developer of Achievers

Chapter 13. Obtaining More Options in Your 401(k) or 403 (b) Retirement Plan

Chapter 14. Breathe Slowly - Reduce Your Blood Pressure

Chapter 15. The Body Mass Index (BMI) Is Wrong



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.


    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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