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

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

3. Include Peer Evaluation Form
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
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. Drost’s 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 dollars1 2 3 4
TOTAL
Company 1
100,000
400,000
Company 2
Company 3
Company 4
Total
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*
TOTAL
Company 1
10,000
40,000
Company 2
Company 3
Company 4
Total
160,000
Please note that the above forecast does not include seasonal cycles

9. Quarterly Consolidated Industry Net Income for Year 3 by Company in dollars1 2 3 4
TOTAL
Company 1
20,000
80,000
Company 2
Company 3
Company 4
Total
320,000
Please note that the above forecast does not include seasonal cycles

10. Quarterly Industry ROE for Year 3 by Company in Percentages1 2 3 4
Average
Company 1
10%
Company 2
Company 3
Company 4
Please note that the above forecast does not include seasonal cycles

11. Quarterly Industry ROAs for Year 3 by Company in Percentages1 2 3 4
Average
Company 1 5%
Company 2
Company 3
Company 4
Please note that the above forecast does not include seasonal cycles

12. Quarterly Industry Stock Prices for Year 3 by Company in Dollars1 2 3 4
Average
Company 1
$10.00
Company 2
Company 3
Company 4
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

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)
Merica 1
in dollars
Merica 2
Merica 3
Foreign
in dollars*
TOTAL
Quarter 1
25,000
100,000
Quarter 2
Quarter 3
Quarter 4
Total
400,000
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)
Merica 1
Merica 2
Merica 3
Foreign
TOTAL
Quarter 1
2,500
10,000
Quarter 2
Quarter 3
Quarter 4
Total
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)
Merica 1
Merica 2
Merica 3
Foreign Area
TOTAL
Quarter 1
100,000
400,000
Quarter 2
Quarter 3
Quarter 4
Total
1,600,000
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 1
Merica 2
Merica 3
Foreign Area
TOTAL
Quarter 1
10,000
40,000
Quarter 2
Quarter 3
Quarter 4
Total
160,000

22. Example of Quarterly Consolidated Sales Forecast for Company and Industry for Year 5 (in dollars)
% of industry
Quarter 1
100,000
400,000
25%
Quarter 2
Quarter 3
Quarter 4
Total
1,600,000

23. Example of Quarterly Consolidated Sales Forecast for Company and Industry for Year 5 (in units)
% of industry
Quarter 1
10,000
40,000
25%
Quarter 2
Quarter 3
Quarter 4
Total
160,000

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)
Pro-forma Analysis
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)
ITEM
QUARTER 1 2 3 4
TOTAL
Net Sales
400,000
1,600,000
Total Sales
Cost of Goods
Sold
285,000
1,140,000
Income Before
Tax
115,000
460,000
Less Tax
35,000
140,000
Net Profit
80,000
320,000