...6. Evaluating new markets 6.1 Criteria for evaluating new markets Criteria for evaluating the geographical market in general Criteria for evaluating industry markets inside the geographical market Key figures Key figures Development of population Development of GDP Development of GDP per capita Development of quantities in total and per sub-market Development of prices in total and per sub-market Development of market volume in total and per sub- market Legal restrictions for economic activities Possible legal forms Conditions for profit repatriation Conditions for sales (e.g. local production) Operations risks Society Political system Ethnic and religious groups Languages Demographic structure Cultural distance Political risks Market system Players Flows of products and services Flows of information Producers and traders Sub-markets National and international competitors Wholesalers and retailers Competitive intensity Infrastructure Customers Telecommunications infrastructure Health care system Link between customer segments and sub-markets; industry segments Demand similarity Traffic infrastructure Customer segments © 2012 R. Grünig/D. Morschett 6. Evaluating new markets 6.2 Process for evaluating new markets 1. Producing an initial list of potential new markets 2. Eliminating the less attractive markets = usual ...
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...of interest in comparing potential investments with other possible or existing kind of investments. The method involves dividing the expected profits from the potential investment by the expected expenditure in order to arrive at the rate of return. Evaluating capital investments is an essential task for Johnson Controls Inc. in order to understand the viability of its capital budget before venturing into the emerging markets. Evaluating investments helps the company determine if the investments in question are worthwhile. Johnson Controls Inc. may have many investment opportunities in the emerging market but it must measures the potential of each opportunity preferably in isolation and make comparison of each in order to select the a few or just one that maximizes the value of the firm and reduce the potential risk. For example, Johnson Controls Inc. might be trying to determine if venturing into the emerging market will require buying new equipment or using the existing ones. The company might also be interested in determining if there is need to invest in research and development before venturing into the emerging market with a new or existing product. The company can therefore supplement its traditional methods of evaluating investments (such as payback period) with Net Present Value (NPV) and Internal Rate of Return (IRR) as well as Multiple Techniques. Net Present Value (NPV) The Net Present Value evaluates the investments by analyzing cash flows. The first concept of...
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...chapter 9. Evaluating new production and sourcing locations 9.1 Labor costs in manufacturing industries in different countries Norway Belgium Switzerland West. Germany Denmark Finland France Austria Luxemburg Sweden Netherlands Ireland Italy USA Japan UK Spain East Germany Canada Greece Slovenia 43.64 38.59 37.14 36.05 35.08 33.76 33.31 33.20 33.09 32.88 32.75 29.62 27.40 22.95 22.86 22.21 21.87 21.11 21.01 16.44 13.18 South Korea Malta Portugal Czech Rep. Croatia Slovakia Estonia Hungary Poland Lithuania Latvia Turkey Russia Romania Belarus Bulgaria China Ukraine Modavia Georgia Phillippines 11.49 10.27 10.03 8.86 7.89 7.80 7.30 6.94 6.04 5.45 5.25 4.33 3.61 3.39 2.67 2.44 2.25 1.81 1.74 1.65 1.33 Data in EUR per hour, 2009 (adapted from Institut der Deutschen Wirtschaft, 2010) © 2012 R. Grünig/D. Morschett 9. Evaluating new production and sourcing locations 9.2 Total costs of Electrolux for products sourced in different regions Chest-freezers for US market USA China Washing machines for EU market Mexico Production Country = Logistics = Direct labour & overhead Western Europe China Eastern Europe Production Country = Materials & components (Electrolux, 2005) © 2012 R. Grünig/D. Morschett 9. Evaluating new production and sourcing locations 9.3 Components of procurement cost + + + + = Purchasing cost...
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...Client Understanding Paper It is very important that our clients understand how we evaluate their financial and accounting information. As an accountant, I am responsible for evaluating my client’s financial paper. In this paper, I will be discussing how my client’s financial papers will be evaluated. I will do so by analyzing the following topics: adjusting lower cost of market inventory on valuation, capitalizing interest on building construction, recording gain or loss on asset disposal, and adjusting goodwill for impairment. The Financial Accounting Standard Boards (FASB) established the guidelines and the General Accepted Accounting Principles (GAAP) that should be followed when preparing and evaluating any financial and accounting statements. Adjusting lower cost of market inventory on valuation There are different methods used to evaluate inventory. When evaluating inventory, it is best to pick a method that will work well for the company in which you are evaluating. Inventory are tangible personal property, which are held for sale in the ordinary course of business, are in the process of production for sale, or are to be consumed in the production of goods to be available for sale (Schroeder, Clark, & Cathey, 2005). According to Schroeder, Clark, and Cathey (2005) it is important to valuate inventories for two major reasons. First, inventories generally represent a major section of current assets; therefore, they have a major impact on a company’s working capital and...
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...Suggest a methodology to supplement the traditional methods for evaluating the capital investments of Johnson Controls in the emerging markets to reduce risk providing a rationale of how risk will be reduced. Johnson Controls, Inc. (JCI) was founded in 1885 by Warren Johnson, who was the inventor of the first electric room thermostat. This company was based out of Milwaukee, Wisconsin and is now a global leader in the building and automotive industries. It has more than 1300 locations worldwide, over 170,000 employees, and is traded on the New York Stock Exchange under the symbol JCI. The company is made up of three major sections: Building Efficiency, Automotive Experience, and Power Solution. They are innovative and committed to sustainability all while accelerating into the global market. A methodology that Johnson Controls, Inc could use to help in evaluating capital budget investments is the discounted payback method. This method could be very useful for this company especially with all its different business aspects. The discounted payback method is considered to be the “period required to recover the initial cash investment in a project to equal the discounted value of expected cash inflows” (Bhandari, 1986, p. 18). This is the approach where the present values of cash inflows are cumulated until they equal the initial investment.” (http://www.answers.com/topic/discounted-payback-period) You see the discounted payback period takes into account the time value...
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...objective”. The Marketing process is the method of evaluating openings, choosing the proposed customer, addressing the consumer needs and wants, describing the price, product, place and promotion and addressing the marketing campaign. Marketing process takes major responsibility to control overall marketing strategy. In marketing process, you need to decide which customers you will serve in your target audience by segmenting the market and then you have to position your products to that targeted customers. Nevertheless, for ascertaining the most effective and most advantageous marketing process you should slot in marketing study, designing, ways of carrying out and assuring. The marketing process has 4 key steps that lead to a successful advertising campaign. These steps are: Analyzing marketing opportunities: The first step on the marketing process is analyze the market opportunities and availing these opportunities to satisfy the customer’s requirements to have competitive advantage. The Marketing research is an indispensable marketing tool. Researching the market allows the company to gather information about their customers, competitors and any environmental changes to determine the market opportunities. Once the market opportunities have been analyzed then modern marketing practice calls for dividing the market into major market segments, evaluating each segment, and selecting and targeting those market segments that the company can best serve. Selecting...
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...Corporate Strategy Diversification Maryam Nasiriyar maryam.nasiriyar@esc-rennes.fr Key Strategic Choices Business level (CA) Cost Leadership (Volume) Differentiation Focused (Niche) Corporate level (CA) Expansion within the same industry versus Diversification Vertical Integration along the value chain or Outsourcing Internationalization Learning Objectives 1.Understand when and how business diversification can enhance shareholder value. 2.Gain an understanding of how related diversification strategies can produce cross-business strategic fit capable of delivering competitive advantage. 3.Become aware of the merits and risks of corporate strategies keyed to unrelated diversification. 4.Gain command of the analytical tools for evaluating a firm’s diversification strategy. ’ When to Diversity A firm should consider diversifying when: • It can expand into businesses whose technologies and products complement its present business. • Its resources and capabilities can be used as valuable competitive assets in other businesses. • Costs can be reduced by cross-business sharing or transfer of resources and capabilities. • Transferring a strong brand name to the products of other businesses helps drive up sales and profits of those businesses. Testing Whether Diversification Will Add Value The Attractiveness Test: • Are the industry’s returns on investment as good or better than present business(es)? The Cost of Entry Test: • Is the cost of overcoming entry barriers...
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...channel members as well as how these criterions apply to the car audio manufacturer. A) Importance of choosing appropriate channel members The channel members a company chooses will clearly affect all other marketing decisions. Distribution decisions can allow a product to have a standing in the market. The 2 intermediaries chosen should be united with the product itself. (The Importance of Distribution, 2013) There are many functions that intermediary channel members are more competent to perform. Channel members have the ability to add value to the car audio manufacturers’ product. Choosing appropriate channel members will allow them to make their product more accessible to consumers and available when they are needed. It will also insure their product is where people want it. Choosing the appropriate channel members will give the manufacture the opportunity to ensure the best customer service is provided throughout the sales process as well as after the purchase has been made. Choosing the appropriate Intermediaries can also help to lower the cost by creating routine transactions. When transactions are more routine costs are reduced. (Distribution Channels, 2013) B) Criteria for evaluating Intermediaries - List The car audio manufacture has chosen to use two distribution channels, the first channel will move their product to auto makers who will then install the audio system in new cars and the second...
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...positioning. 2. Understand bases for segmenting consumer markets. 3. To know how to identify attractive market segments. 4. To understand how to position products to gain competitive advantage. Topics for Discussion: 1. Steps in market segmentation, targeting and positioning 2. Bases for segmenting consumer markets 3. Evaluating and selecting market segments 4. Choosing a positioning strategy 5. Developing a positioning statement 6. Communicating and Delivering the Chosen Position Introduction Companies are recognizing that they cannot serve all buyers in the marketplace. There are various types of customers with different needs and buying behavior. Rather than competing in the entire market (mass marketing) companies identify parts of the market that they can serve well and profitably (market segmentation and targeting). Let’s Define the Terms Market Segmentation – dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes Target Marketing – the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter Market Positioning – arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. Bases for Segmenting Consumer Markets 1. Geographic – dividing a market into different geographical units such as nations, states...
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...considering opportunities and potential markets for an organization. Doing so would not only allow marketers to identify their audience and target, but also identify their expectations, wants, and needs. (Gok and Hacioglu 2010) Researching prices competitors charge for like-products will allow marketers to compare and strategize. They need to ensure that pricing is fair in comparison to what the consumer is receiving, as well as appealing. To improve the organization, it is extremely important and essential that marketers seek feedback -both positive and critical - as well as taking into consideration any ideas consumers provide. Marketers must also strategically decide how they will advertise, to whom, the location and time. After all, the ideal result of market research is to ensure the satisfaction of consumers. (Dickinson, Herbst and O’Shaughnessy 1986) Marketing strategies are developed in a process in which results in an organization successfully putting their product/service on the market to be available to consumers. The marketing mix is composed of four factors; product/service, place, price and promotions. (Reid 1980) The ‘product/service’ factor involves identifying the product/service you want to sell or provide. When evaluating this factor, a marketer would consider what a consumer wants to satisfy their needs. The ‘place’ factor involves identifying where your product/service will be available to consumers. When evaluating this factor, a marketer will consider...
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...6. 4 Customer Growth Processes Growth Objectives (1) Create cross market by offering online ordering based on international pizza appetite that will drive the revenue growth. (2) Strengthen the customer evolution by improving the pizza delivery service on the right time. (3) Offering healthy Pizza menu to the customer as value added satisfaction to improve customer development. (4) Providing PULSE system to ensure the quality of pizza offering in order to achieve the customer growth. Growth Objectives (1) Create cross market by offering online ordering based on international pizza appetite that will drive the revenue growth. (2) Strengthen the customer evolution by improving the pizza delivery service on the right time. (3) Offering healthy Pizza menu to the customer as value added satisfaction to improve customer development. (4) Providing PULSE system to ensure the quality of pizza offering in order to achieve the customer growth. Customer Management Process Customer Management Process Acquisition Acquisition Retention Retention Growth Growth Selection Selection 6.4.1 Define the objectives in Customer Growth Processes. No | CLS & BLS | Growth Objective | | | Ensure Quality | Cross Sell Customer | Enhance Relationship | Solution Selling | | CLS | | | | | 1 | Increase Domino’s online ordering traffic to cater growing international appetite for fast food. | - | (1) | - | - | 2 | Developing pizza delivery targeting consumers...
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...Analysis Dilemma of incremental analysis [Author Name] General Foods is a large corporation organized by Product lines. Corporation was planning to introduce a new product Super – a new instant dessert, based on flavored, water-soluble, agglomerated powder. Super would be offered in four flavors although chocolate was estimated to account for 80% of total sales. The requested capital investment for Super was $200,000, and its production would take place after modifying an existing building, where Jell-O was manufactured and by using available capacity of Jell-O agglomerator. Cost for the key machine was not included in the project. On the basis of test market experience, once the product is introduced, it was expected to capture a 10% of dessert market share, 80% of which would come from growth in total dessert market share and 20% of which would come from erosion of Jell-O sales. There are basically four categories of capital investment project proposals at General Foods corporation: (1) safety and convenience; (2) quality; (3) increase profit; and other. Super project was considered into third category, as a profit-increasing project. Crosby Sanberg, a manager of financial analysis at General Food Corporation calculated return on investment in three different ways of on Super Project. The first technique was Incremental basis, which projected Super project would have an attractive return of 63% in 7 years, which in-turn could directly identify with the decision to product...
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...CHAPTER 8: LOCATION STRATEGIES TRUE/FALSE 1. FedEx chose Memphis, Tennessee, for its central location, or "hub," primarily because of the incentives offered by the city of Memphis and the state of Tennessee. False (Global company profile, easy) 2. Generally, the objective of the location decision is to maximize the firm's profit. False (The strategic importance of location, easy) 3. When selecting a location, service organizations typically focus on maximizing revenue, but minimizing transportation costs is also frequently an objective. False (The strategic importance of location, easy) 4. When innovation replaces cost as a firm's focus for location decisions, the presence of other state-of-the-art firms is a plus, not a negative, for the firm's competitiveness. True (the strategic importance of location, moderate) 5. The ratio of labor cost per day to productivity, in units per day, is the labor cost per unit. True (Factors that affect location decisions, moderate) 6. For a location decision, labor productivity may be important in isolation, but low wage rates are a more important criterion. False (Factors that affect location decisions, moderate) 7. Unfavorable exchange rates can offset other savings in a location decision. True (Factors that affect location decisions, moderate) 8. An example of an intangible cost, as it relates to location decisions, is the quality of education. True (Factors...
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...facing the firm in the areas of competitors, customers, suppliers, regulatory bodies, as well as socio-political circumstances. 3. Accounting provides the skills necessary to quantify in financial terms the factors that influence strategy formulation -- strengths, weaknesses, opportunities and threats --, and to develop projections of costs and benefits as financial expressions of strategy. Capital budgets are a prime example of the contribution accounting makes in strategy formulation. Further, organizational goals are often expressed in financial terms, for example, to achieve a particular level of return on investment. 4. Both NPV and IRR are discounted cash flow techniques (recognizing the time value of money) used for evaluating capital investment proposals. The NPV method uses a discount rate (usually, the firm’s cost...
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...MODULE 1: Introduction to S&L 3 Benefits of studying S&L, challenges and criticism, CPA thinking 5-6 Emergence of strategy (Ownership, globalisation, structure) 6-7 Leadership and its role, leadership vs. management, role of the accountant is S&L 8-9 Accountant’s role, financial aspects of value creation 10-12 Drivers of globalisation (competitive, techno, social, political forces) 12-15 Challenges of globalisation (Competition, distribution, macroeconomic, socioeconomic, financial, legal, physical, political, sociocultural, labour, risk) 15-16 Benefits of globalisation (cost, timing, learning, arbitrage), value of localisation 17-20 Approaches to strategy (rational vs.processual) and assumptions 21-22 Evolutionary, systemic and fuzzy approaches, implications 22-25 Strategy process, mission & vision, external & internal env. 25-27 Strategic thinking, strategic planning (3 Q’s and 3 issues), criticism, value of both 27-30 Strategic stretch and fit, strategy equation (Bendigo bank) 30-32 Levels of strategy (corporate, business, functional) 32-34 Strategic leadership, approaches to leadership (traits, behavioural, situational, transformational & transactional) 34-36 Importance of leadership (Q. 1.7) 36-39 Leadership and Ethics (questions, classical and socioeconomic views of ethics) 39-40 CSR, strategy, leadership and ethics MODULE 2: The external environment 4-5 Definition, reasons of difficulty in analysis, analysing an industry 6-13 Sources of data for analysis...
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