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Preparing a Two-Year Plan Guidelines Dr. Ellen A. Drost MGMT497.

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Presentation on theme: "Preparing a Two-Year Plan Guidelines Dr. Ellen A. Drost MGMT497."— Presentation transcript:

1 Preparing a Two-Year Plan Guidelines Dr. Ellen A. Drost MGMT497

2 Title Page Title= Two Year Plan Company name Professors name World and Team number List names of group member Each member signs report to verify their contribution to the report Date

3 Format Double-spaced, one-inch margins, 12-pitch font, pages INCLUDING exhibits Table of contents –Include page numbers –Include exhibits and/or appendix Number every page –Including exhibits and/or appendix Include Peer Evaluation Form

4 Contents and Grading 1.Introduction (5%) 2.Organization (5%) 3.Objectives and Industry Analysis (15%) 4.Strategies (15%) 5.Sales forecast (15%) 6.Production plan (15%) 7.Financial statements (25%) a.Pro-forma assumptions (5%) b.Income statements, balance sheets and cash flow statements (15%) c.Pro-forma analysis (5%) 8.Overall appearance of report (5%)

5 Introduction and Organization Introduction –Overview of content of plan –Briefly describe your company –DO NOT include product descriptions Organization –Describe your organization structure –Include executive titles for each team member –Include roles and responsibilities of each team member –Do not include fictitious resumes –Include organization chart

6 Objectives and Industry Analysis Provide tables and graphs (note that the table requirement is NOT stated in syllabus, but is required in Dr. Drosts 2-year report) indicating the performance of each company in the industry over the past 8 quarters for sales in dollars, sales in units (required by Dr. Drost), net income, ROA, ROE, and stock price. Provide consolidated (i.e. all four areas together) quarterly and total columns, where applicable, for each year Use actual quarterly historical data through Y4Q4 for your analysis. Discuss overall trends and performance of your company relative to competitors and to industry averages for each of the above indicators Explain your method

7 Quarterly Consolidated Industry Sales for Year 3 by Company in dollars Company/ Quarter QUARTER 1 QUARTER 2 QUARTER 3 QUARTER 4 TOTAL Company 1100, ,000 Company 2100, ,000 Company 3100, ,000 Company 4100, ,000 Total400,000 1,600,000 Please note that the above forecast does not include seasonal cycles

8 Quarterly Consolidated Industry Sales for Year 3 by Company in units* Company/ Quarter Quarter 1Quarter 2Quarter 3Quarter 4TOTAL Company 110,000 40,000 Company 210,000 40,000 Company 310,000 40,000 Company 410,000 40,000 Total40, ,000 Please note that the above forecast does not include seasonal cycles

9 Quarterly Consolidated Industry Net Income for Year 3 by Company in dollars Company/ Quarter QUARTER 1 QUARTER 2 QUARTER 3 QUARTER 4 TOTAL Company 120,000 80,000 Company 220,000 80,000 Company 320,000 80,000 Company 420,000 80,000 Total80, ,000 Please note that the above forecast does not include seasonal cycles

10 Quarterly Industry ROE for Year 3 by Company in Percentages Company/ Quarter QUARTER 1 QUARTER 2 QUARTER 3 QUARTER 4 Average Company 110% Company 210% Company 310% Company 410% Average10% Please note that the above forecast does not include seasonal cycles

11 Quarterly Industry ROAs for Year 3 by Company in Percentages Company/ Quarter QUARTER 1 QUARTER 2 QUARTER 3 QUARTER 4 Average Company 15% Company 25% Company 35% Company 45% Average5% Please note that the above forecast does not include seasonal cycles

12 Quarterly Industry Stock Prices for Year 3 by Company in Dollars Company/ Quarter QUARTER 1 QUARTER 2 QUARTER 3 QUARTER 4 Average Company 1$10.00 Company 2$10.00 Company 3$10.00 Company 4$10.00 Average$10.00 Please note that the above forecast does not include seasonal cycles

13 Objectives and Industry Analysis Show both Preliminary and Final Weighting Factors Explain why you selected these weights and explain any changes between the Preliminary and Final Weights. For each of the six performance measures in the weighting factors provide quantified financial objectives for years 5 and 6. State how much and when for each objective so that they can be measured unambiguously. For example: Net Income $5,000,000 for year 5 Net Income $8,000,000 for year 6 Stock Price, $15.00 at the end of year 5 and $25.00 at the end of year 6.

14 Strategies State the mission and strategy of your firm –business level strategy Discuss your specific functional strategies for: Marketing, such as price, advertising, R&D Operations, such as new product introductions, quality and feature levels, new lines and/or plants Finance, such as CDs, dividends, issuing/buying back stocks and bonds, financing of plants/lines Include specifics about each variable you control in the game Tables and charts are recommended Be specific, provide a detailed outline An effective strategy is quantified and guides decision making Use your decision input sheet as a guide to discuss/write- up your functional strategies Discuss your decision models and decision making process

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17 Sales Forecast (Y5 & Y6) Prepare quarterly consolidated (i.e. all four areas together) sales forecasts in units and dollars for the entire INDUSTRY as a whole and for your COMPANY, specifically, for Y5Q1 through Y6Q4, by quarter with yearly totals. Present and discuss how the forecasts are computed and outline all the model equations used. Detailed regression analysis charts must be included in appendix. In the body of the text provide a summary chart indicating the consolidated quarterly sales forecasts in both units and dollars for the industry as a whole and for your company, specifically. Show price and exchange rate assumptions If you plan to introduce new models, the forecast must show each different model as separate line item Include your detailed regression analysis charts in the appendix

18 Example of Quarterly Company Sales Forecast by Area Year 5 (in dollars) Quarter/ Area Merica 1 in dollars Merica 2 in dollars Merica 3 in dollars Foreign Area in dollars* TOTAL Quarter 1 25, ,000 Quarter 2 25, ,000 Quarter 3 25, ,000 Quarter 4 25, ,000 Total100, ,000 Exchange rate assumption: $1 = 10 foreign currency Please note that the above forecast does not include seasonal cycles

19 Example of Quarterly Company Sales Forecast by Area Year 5 (in units) Quarter/ Area Merica 1Merica 2Merica 3Foreign Area TOTAL Quarter 1 2,500 10,000 Quarter 2 2,500 10,000 Quarter 3 2,500 10,000 Quarter 4 2,500 10,000 Total10,000 40,000 Please note that the above forecast does not include seasonal cycles

20 Example of Quarterly Industry Sales Forecast by Area for Year 5 (in dollars) Quarter/ Area Merica 1Merica 2Merica 3Foreign Area TOTAL Quarter 1100, ,000 Quarter 2100, ,000 Quarter 3100, ,000 Quarter 4100, ,000 Total400,000 1,600,0 00 Please note that the above forecast does not include seasonal cycles

21 Example of Quarterly Industry Sales Forecast by Area for Year 5 (in units) Quarter/ Area Merica 1Merica 2Merica 3Foreign Area TOTAL Quarter 110,000 40,000 Quarter 210,000 40,000 Quarter 310,000 40,000 Quarter 410,000 40,000 Total40, ,000

22 Example of Quarterly Consolidated Sales Forecast for Company and Industry for Year 5 (in dollars) QuarterCompanyIndustry% of industry Quarter 1100,000400,00025% Quarter 2100,000400,00025% Quarter 3100,000400,00025% Quarter 4100,000400,00025% Total400,0001,600,00025%

23 Example of Quarterly Consolidated Sales Forecast for Company and Industry for Year 5 (in units) QuarterCompanyIndustry% of industry Quarter 110,00040,00025% Quarter 210,00040,00025% Quarter 310,00040,00025% Quarter 410,00040,00025% Total40,000160,00025%

24 Production Plan Provide a quantitative quarterly production plan for each of your factories for Year 5 and Year 6. –Expected beginning and ending inventory in each area –Provide a summary consolidated production plan (showing total units per quarter), in a table in the body of text, as follows: starting inventory + total units produced – unit sales forecast = ending inventory Where produced and shipped Business Plan Game template Include table showing changes in plant capacity for each quarter Plant and equipment additions –Lines, shifts, OT (over time) for each quarter in each area with a plant List your assumptions in developing your production plan ( i.e. over time, second shifts, number of lines, safety stocks, etc.) Discuss decision-making process and models used

25 Financial Statements 1.Pro-forma assumptions State each of the assumptions used in calculating your pro- formas at the beginning of your Financial Statements. For example: advertising expense = 1 % of quarterly sales; dividends = $0.05 per share every quarter. These assumptions should be the same as in the Strategy section of your Two-Year Plan. 2.Income Statements, Cash Flow Statements and Balance Sheets Provide quarterly consolidated statements (i.e. all four areas together) for Y 3 through Y6 expressed in dollars. You must remember that Y5 and Y6 are pro-forma. (Please note that financial statements by geographical area are not required and count as additional info., only) 3.Pro-forma Analysis 1.For each of six measures of performance (CWFs), compare your pro-forma results with the Goals/Objectives from section 3, above. This analysis tests whether your plan works For example, compare your Net Income from section 3 (objective) to your pro-forma Net Income. State the difference and discuss what you think attributed to the difference.

26 Example of Consolidated Pro-Forma Income Statement (this example indicates only a limited number of items from an Income Statement) YEAR 5 (in dollars) ITEMQUARTER 1 QUARTER 2 QUARTER 3 QUARTER 4 TOTAL Net Sales400,000 1,600,000 Total Sales400,000 1,600,000 Cost of Goods Sold 285,000 1,140,000 Income Before Tax 115, ,000 Less Tax 35, ,000 Net Profit 80, ,000


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