Forces in the industry analysis, etc.

2. New entrants
Threat of new
entrants
Suppliers Intensity of Buyers
rivalry
Bargaining among Bargaining
power of current power of
suppliers competitors buyers
Substitutes
Threat of substitutes

3.  Threat of new entrants. Factors such as economies of scale, brand loyalty, and capital
requirements determine how easy or hard it is for new competitors to enter an industry.
 Threat of substitutes. Factors such as switching costs and buyer loyalty determine the degree to
which customers are likely to buy a substitute product.
 Bargaining power of buyers. Factors such as number of customers in the market, customer
information, and the availability of substitutes determine the amount of influence that buyers have
in an industry.
 Bargaining power of suppliers. Factors such as the degree of supplier concentration and
availability of substitute inputs determine the amount of power that suppliers have over firms in the
industry.
 Current rivalry. Factors such as industry growth rate, increasing or falling demand, and product
differences determine how intense the competitive rivalry will be among firms currently in the
industry.

4.  An analysis of the organization’s strengths, weaknesses, opportunities, and threats.
 The internal environmental factors analyzed for strengths and weaknesses are management,
mission, resources, systems process, and structure.
 The external environmental factors analyzed for opportunities and threats are customers,
competitors, suppliers, labor force, shareholders, society, technology, the economy, and
government.

5. Strengths-S Weaknesses-W
Leave Blank
List Strengths List Weaknesses
SO Strategies WO Strategies
Opportunities-O
Use strengths to take advantage of Overcome weaknesses by taking
List Opportunities
opportunities advantage of opportunities
WT Strategies
Threats-T ST Strategies
Minimize weaknesses and avoid
List Threats Use strengths to avoid threats
threats

6.  A strategy tool that guides resource allocation decisions on the basis of market share and
growth rate of SBUs.
High Low
Market share
High
Question
Stars
Anticipated growth rate
(growth strategy) marks
(growth strategy)
Dogs
Cash cows (turnaround and
(stability strategy) retrenchment
strategies)
Low

7.  Cash cows(low growth, high market share)
Businesses in this category generate large amounts of cash, but their prospects for future growth
are limited.
 Stars(high growth, high market share)
These businesses are in a fast-growing market, and hold a dominant share of that market. Their
contribution to cash flow depends on their need for resources.
 Question marks(high growth, low market share)
These businesses are in an attractive industry but hold a small market share percentage.
 Dogs(low growth, low market share)
Businesses in this category do not produce, or consume, much cash. However, they hold no
promise for improved performance.

8.  Managers should “milk” cash cows for as much as they can, limit any new investment in them, and
use the large amounts of cash generated to invest in stars and question marks with strong potential
to improve market share.
 Heavy investment in stars will help take advantage of the market’s growth and help maintain high
market share. The stars, of course, will eventually develop into cash cows as their markets mature
and sales growth slows.
 The hardest decision for managers is related to the question marks. After careful analysis, some
will be sold off and others turned into stars.
 The dogs should be sold off or liquidated as they have low market share in markets with low growth
potential.

9. Product life cycle stages over time
Sales
Introduction stage Growth stage Maturity stage Decline stage
Changing strategies over time
Turnaround and
Growth strategy
retrenchment strategy
Growth strategy Analyzing strategy Stability strategy
Prospecting or analyzing
Prospecting strategy (New firms enter the Defending strategy
strategy
market)
(To develop new products)
Portfolio analysis changes over time
Question marks Stars Cash cows Dogs

10. Work breakdown structure(WBS)
Work breakdown structure for consumer market study project
Consumer market study
Jim
Questionnaire Report
1.0 2.0
Susan Jim
Design Responses Software Report
1.1 1.2 2.1 2.2
Susan Steve Andy Jim
Identify target Print questionnaire Develop software Input response data
consumers Prepare mailing Test software Analyze results
Develop draft labels Prepare report
questionnaire Mail questionnaire &
Pilot-test get responses
questionnaire
Finalize
questionnaire
Develop test data

11. Responsibility matrix
Responsibility matrix for consumer market study project
WBS Item Work Item Andy Jim Susan Steve
Consumer market study P
1.0 Questionnaire P
1.1 Design P
1.2 Responses S P
2.0 Report P
2.1 Software P S
2.2 Report P

12. Gantt Chart Days
Activity Person responsible 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140
Identify target consumers Susan
Develop draft questionnaire Susan
Pilot-test questionnaire Susan
Finalize questionnaire Susan
Print questionnaire Steve
Prepare mailing labels Steve
Mail questionnaire & get responses Steve
Develop data analysis software Andy
Develop software test data Susan
Test software Andy
Input response data Jim
Analyze results Jim
Prepare report Jim
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140

13. Network diagram for consumer market study project(activity-in-the-box format)
Prepare
mailing labels
5 Steve 2
Review Mail
Identify target Develop draft Pilot-test comments & Print questionnaire Input Analyze
Prepare report
consumers questionnaire questionnaire finalize questionnaire & get response data results
questionnaire responses
1 2 1 6 1 1 1 1
1 Susan 3 2 Susan 3 Susan 4 Susan 5 6 Steve 9 Steve Jim 7 Jim 8 Jim
0 0 0 5 1 2 3 0
Develop data
analysis Test software
software
1 1
7 Andy Andy 5
2 0
KEY: Activity
description
Develop Activity Duration
software test
data number estimate
8 Susan 2 Person
responsible

14. Network diagram for consumer market study project(activity-on-the-arrow format)
6
Prepare
Review mailing Mail
Identify comments & labels questionnaire Input
target Develop draft Pilot-test finalize & get response Analyze Prepare
consumers questionnaire questionnaire questionnaire Print questionnaire responses data results report
1 1 1 1
1 2 3 4 5 7
0 1 2 3
Develop
data Test
analysis software
software
Develop
software 9
test data KEY:
Activity
description
8
Person
Event responsible Event
number number
Duration estimate

15. Work breakdown structure for the packaging machine project
Packaging machine
$100,000
Design Build Install & test
$24,000 $60,000 $16,000

16. Budgeted cost by period for the packaging machine project
Week
TBC 1 2 3 4 5 6 7 8 9 10 11 12
Design 24 4 4 8 8
Build 60 8 8 12 12 10 10
Install & test 16 8 8
Total 100 4 4 8 8 8 8 12 12 10 10 8 8
Cumulative 4 8 16 24 32 40 52 64 74 84 92 100

17. Cumulative cost
（$ in thousands）
Report period
100 KEY:
90
80 Cumulative
budgeted
70 cost(CBC)
60
Cumulative actual
50 cost(CAC)
40
30
Cumulative
20 earned value(CEV)
10
1 2 3 4 5 6 7 8 9 10 11 12
Weeks

18. Self-actualization needs
(self-development and
realization)
Esteem needs
(self-esteem, recognition, status)
Social needs
(sense of belonging, love)
Safety needs
(security, protection)
Physiological needs
(hunger, thirst)

19.  Needs were categorized as five levels of lower- to higher-order needs
 Individuals must satisfy lower-order needs before they can satisfy higher order needs.
 Satisfied needs will no longer motivate.
 Motivating a person depends on knowing at what level that person is on the hierarchy.
 Hierarchy of needs
 Lower-order (external): physiological, safety
 Higher-order (internal): social, esteem, self-actualization

20.  Self-actualization needs
Opportunities for skill development, the chance to be creative, promotion, and the ability to have
complete control over their jobs.
 Esteem needs
Merit pay raises, recognition, challenging tasks, participation in decision making, and opportunity
for advancement.
 Social needs
Opportunity to interact with others, to be accepted, and to have friends. Schedule employee parties,
picnics, trips, and sports teams.
 Safety needs
Safe working conditions, job security, and fringe benefits(medical insurance/sick pay/pensions).
 Physiological needs
Adequate salary, work breaks, and safe working conditions.

21. Financial
How should we appear to
shareholders?
External Operational
Vision and strategy
How should we appear to How do we manage our
our customers? operational processes?
Development
How will we sustain our ability to
change and improve?

22. Financial
Total costs
Cost per customer
Labor costs
Processing costs
External Total revenue Operational
Market share Revenue per customer Equipment or staff availability
Customer satisfaction Operating profit Waiting times
Customer loyalty Profit per customer Throughput times
Repurchase intentions Number of customers by type
Retention rates Number of staff by process
New customers Development On-time delivery
Number of complaints Number of suggestions Facility utilization
Type of complaints Number of improvements Number of faults
Employees involved in improvement
Teams
Staff satisfaction
Staff turnover
Number of service innovations

23. Area Ratio Calculation Information provided
Finance
Gross profit margin (sales-COGS)/sales Efficiency of operations and product pricing
Net profit margin (net profit/income)/sales Product profitability
Profitability
Return on total capital expenditures or ability of assets
Return on investment (Net profit/income)/total assets
to generate profit
Current ratio Current assets/current liabilities Ability to pay short-term debt
Liquidity Stronger measure of bill-paying ability because
Quick ratio (Current assets-inventory)/current liabilities
inventory may be slow to sell for cash
Proportion of assets owned by an organization; the
Leverage Debt to equity Total liabilities/owner’s equity lower the ratio, the more solvent the firm and the
easier it will be to get credit/funds.
Efficiency of controlling investment in inventory; the
Operations Inventory turnover Cost of goods sold/average inventory larger the number, the better, because products are
sold faster.

24. Area Ratio Calculation Information provided
Marketing
Organization’s competitive position; the larger the
Market share Company sales/total industry sales
number, the better, because it is outselling competitors.
How many presentations it takes to make one sale; the
Sales to presentation Sales completed/sales presentations made lower the number, the better, because less time is
spent making nonproductive presentations.
Human resources
No. of employees absent/total no. of Ratio/percentage of employees not at work for a given
Absenteeism
employees time period
No. of employees leaving/total no. of Ratio/percentage of employees who must be replaced
Turnover
employees in a given period, usually one year
Workforce No. of a specific group/total no. of Ratio/percentage of women, Hispanics, African-
composition employees Americans, and so on

25. Objective Ratio Calculation Meaning
Tests the organization’s ability to meet short-term
Current ratio Current assets/current liabilities
obligations
Liquidity
Current assets less inventories/current Tests liquidity more accurately when inventories turn
Acid test
liabilities over slowly or are difficult to sell
The higher the ratio, the more leveraged the
Debt to assets Total debt/total assets
organization
Leverage
Profits before interest and taxes/total Measure how far profits can decline before the
Times interest earned
interest charges organization is unable to meet its interest expenses
The higher the ratio, the more efficiently inventory
Inventory turnover Sales/inventory
assets are being used
Activity The fewer assets used to achieve a given level of
Total assets turnover Sales/total assets sales, the more efficiently management is using the
organization’s total assets
Identifies the profits that various products are
Profit margin on sales Net profit after taxes/total sales
Profitability generating
Return on investment Net profit after taxes/total assets Measure the efficiency of assets to generate profits