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Scott Farmer Consulting How to stay afloat. Agenda External and Internal Environment Alternatives Analysis and Recommendations Implementation Plan Financial.

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Presentation on theme: "Scott Farmer Consulting How to stay afloat. Agenda External and Internal Environment Alternatives Analysis and Recommendations Implementation Plan Financial."— Presentation transcript:

1 Scott Farmer Consulting How to stay afloat

2 Agenda External and Internal Environment Alternatives Analysis and Recommendations Implementation Plan Financial Forecasting

3 Degree of Rivalry Threat of Substitutes Buyer Power Supplier Power Barrier to Entry LowHighMedium Moderate to Highly Competitive Environment LowHighMedium LowHighMedium LowHighMedium LowHighMedium Porters Five Forces

4 Mission, Vision, and Strategic Direction Consistent in building boats that customers will value Performance and appearance Using expertise in wood and classic boats Blue Waters does not have its strategy explicitly communicated Mission, Vision and Strategic statements are not available

5 Developing a Strategy A mission and vision statement helps to direct the mentality and goal congruence of management and employees Helps identify gap between performance and target and ways to close the gap Overarching targets the firm wants Considering the internal and external environment Long term goals are developed from the overarching goals Short term goals are developed through long term goals

6 Industry Key Success Factors Innovative Designs and Technology High Quality and Performance Experienced Shipbuilders Eco-efficiency Marketing

7 Sources of Competitive Advantage Quality Wooden Boats/Good Reputation Environmentalism Skilled/Experienced Workers Blue Water Classics

8 Key Risks Declining Market Poor cost control Retiring Employees

9 Alternatives Considered Strategic Alternatives: 1. Switch to Manufacturing Aluminum Boats and Place Government Bid 2. Maintain status quo of Manufacturing Wooden Boats 3. License Manufacturing of Sykes Class Sloop using fiberglass Operational Alternatives 4. Construct a New Storage Shed 5. Increase Prices (Boats and Repair Charges) 6. Install New Information Technology (IT) System 7. Implementation of Balanced Score Card

10 Strategic Alternatives: 1. Switch to Manufacturing Aluminum Boats and Place Government Bid Alternatives Considered Complete overhaul of labour force, yard and business strategy Build new reputation No guarantee of government bid

11 Strategic Alternative: Maintain Status Quo of Manufacturing Wooden Boats Pros Target niche market Environmentally friendly Established market reputation Supplement other departments Cons Declining wooden boat market Senior employees set to retire soon Lack of employee training facilities Leverage on competitive advantage of reputation Focus on key success factor of environmental friendliness

12 Strategic Alternative: Licence Manufacturing of Sykes Class Sloops Pros Blue Water only yard with mould Continue to supplement repairs and fittings divisions Target emerging sloop market Cons Expired Intellectual Property on mould Boston manufacturer may not produce to Blue Water standards Focus on competitive advantage of Blue Water Classics Overcome unfair trade policies

13 Operational Alternative: Construct New Storage Shed Pros Target larger market and wait list customers Good reputation in market Cons Assuming labour and materials available Require hiring new employees Leverage on competitive advantage of reputation

14 Operational Alternative: Increase Prices – Boats and Repair Charges Implement Balanced Score Card Install New IT System Pros Earn full potential Create benchmarks and targets Cons Customers unwilling to pay more if prices increased No external experience of Balance Score Card and IT System Focus on key success factors of marketing, innovation and technology

15 Firm Value Calculated using a discount rate of 6% (government loan rate available to the company) -> does not matter too much as both projects use the same discount rate Aluminum + Government Bid Provide a higher firm value Have a greater uncertainty about the operating cash flow that is sustainable (i.e. projects renewed every 2 years) Stay with Wood, Construct the Shed, & License Manufacture the Syke Lower firm value when projected into the future Less risky as no major change

16 Firm Value 16

17 RECOMMENDATION Strategic Alternatives: 1. Switch to Manufacturing Aluminum Boats and Place Government Bid 2. Maintain status quo of Manufacturing Wooden Boats 3. License Manufacturing of Sykes Class Sloop using fiberglass Operational Alternatives 4. Construct a New Storage Shed 5. Increase Prices (Boats and Repair Charges) 6. Install New Information Technology (IT) System 7. Implementation of Balanced Score Card

18 Sensitivity Analysis -Current charge out rate: $25 -Industry average rate: $42 -Raising the charge out rate by as little as $3 significant increases in NI Charge-Out Rate Sensitivity Charge-Out Rate Additional Income

19 Sensitivity Analysis -Canoes and Sykes Sloop priced below competition -Can still price both much lower then the competition and still substantially increase revenue -Risk – customers may not appreciate price hike Price Additional Income

20 Sensitivity Analysis - Can the expected 25 units actually be sold? Number of Boats Sold Expected Profit

21 Implementation Plan Continue producing wooden boats Target Marketing Niche market

22 Implementation Plan License production of the Sykes Sloop in Fiberglass Low cost to implement Greater production capacity

23 Implementation Plan Build a new shed increase indoor storage capacity accommodate customers on the waiting list

24 Implementation Plan Implement an IT System Need to acquire hardware Off the shelf software Training for Roselle

25 Balanced Scorecard Sample

26 Financial Perspective Return on Investment Net Income Profit Per Unit Sales Growth Learning and Growth Apprenticeship program % of employees trained Hours of training Customer Perspective Customer Satisfaction # of complaints or concerns # of returns or fixes needed to correct orders # of jobs - New customer jobs - Returning customer jobs Wait time for custom jobs Positive Recognition in the media Internal Perspective Employee Satisfaction Employee Turnover Unit costs for jobs

27 Timeline for Implementation Action Responsibil ity CostStart DateFinish Date Strategic Implementations License Sloop Manufacture John Sykes$ 2,000March 1, 2002Ongoing Operational Implementations Market Research David Hamilton $ 2,000March 1, 2002Ongoing Marketing Campaign Roselle Deveau $ 8,000April 1, 2002Ongoing Construct New ShedJohn Sykes$15,500+June 1, 2002August 31, 2002 Install IT System Roselle Deveau $ 2,000March 15, 2002Ongoing Balanced ScorecardDavid Hamilton $ 1,000October 1, 2002Implementatio n complete by fiscal year 2003

28 Future benefits from price increases, improved costing system, balance scorecard and marketing

29 Questions?


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