Transcript Macroenvironmental Situation

Small Business Advisory Group
Presents:
SPS Spindle Parts and Service
Marketing Strategy
Jess Bermingham
Danielle Boxer
Stephanie Hartenstein
Doug Quaranta
Adam Stuart
Yadira Vega
Genevieve Wilcox
Zak Wood
Summary
The Small Business Advisory Group of
Franklin Pierce College, has prepared a
marketing plan for Spindle Parts and
Service.
The following presentation is a brief
overview of our research, findings,
objectives, analyses and strategic plans.
Market Situation
• There are a total of 362,829 establishments in the
manufacturing industry
• This industry has annual profits of $51 billion,
which is up $12.8 billion from this same time last
year
• In New Hampshire the number of manufacturing
establishments has been steadily increasing
• One downfall is that many of these industries are
located on or near the west coast.
Macro-Environmental Situation In
America
• Trends in the furniture industry:
– The United States and Canada have a combined
furniture production of more than $33 billion dollars
– American manufacturing is maturing and changing,
towards a more technological age
– The furniture industry grows more or less in unison
with the overall economy
– Many manufacturing jobs have migrated toward
countries with lower labor costs
Lifestyle Trends
CONSUMER SPENDING AT DIFFERENT INCOME
LEVELS
Income Level
Expenditure
$10,000 -
$20,000 -
$50,000 And
15,000
30,000
Over
Food
17.7
15.8
12.6
Housing
24.8
23.0
24.9
Utilities
8.6
7.1
4.7
Clothing
5.4
5.8
5.8
17.4
19.1
17.6
Health Care
7.8
5.5
3.7
Entertainment
3.7
4.7
6.1
Other
6.3
6.7
6.6
Transportation
Macro-environment in Europe
• The macro environment in Europe is similar to ours here in
the United States. In Europe they are also trying to find
ways to cut down on pollution.
• The economy in Europe is in a slump, they are trying to
find ways to cut costs.
• These could be potentially harmful to starting a new
business in Europe.
Macro-environment in Europe
cont.
• Larger countries have more money to take on these
projects, while the smaller countries don’t have the
resources to bring in these new businesses.
• The growth of the market in these small countries can’t
handle bringing in these new businesses.
•
They cannot justify the high risk and the money that it
takes to start these companies in the small countries.
Competitive Situation in America
-Market Situation
• Very Competitive Market
• Hard to enter the market
• Knowledge of the market is very important
• High start up costs
*All of these reasons will deter new
. business into the market
Competitive Situation in America
-Competitor Outlook
• Plenty of competition located throughout
. U.S.
• The ease of shipping makes everyone in
. the industry a competitor
• Websites help companies get their name
out to prospective customers
• A high customer base and loyal customers
. are key for survival
.
Competitive Situation in Europe
• Two dynamic forces of our time:
Globalization and the online movement
• Increased International sales
• 338 million Non-English speaking Internet
users and nearly half of all Internet users live
in Asia and Europe
• In 2001-2002, analysts determined that 71%
of Internet use and 56% of E-Commerce use
came from outside the United States (2/3 of
all E-Commerce this year 2003 alone)
Competitive Situation in Europe cont’d
• Elimination of geographical barriers to
entry
• Costs associated with online website
construction
• Global Reach Program: allows a small
company to enter several online markets for
less than $695, while typical translation
costs are $50-$100 for a short page
consisting of 200-300 words
Past Product Performance
-Cost of Sales has been consistently even and have
never been higher than Sales. Because of these costs, it
has left the firm with a respectable Gross Profit- which
has never been negative.
-In March 2003, the expenses were 85.4%; May 2003
69.4%, July 28.0%, and in the most recent month, Sept.
2003, they ended with 33.1%
-Profit increased in the month July and then had a
significant decrease in the month of September.
Income Statment
140,000.00
120,000.00
Sales
100,000.00
Cost of Goods Sold
80,000.00
Gross Profit
60,000.00
Direct Expenses
40,000.00
Selling&Administrativ
e
20,000.00
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-
Operating Profit
Other Expenses
Taxes
(20,000.00)
Net Profit
(40,000.00)
(60,000.00)
Financial Analysis
• SPS has a Profit Margin Ratio of 1.88%. What does
this mean?
•The Total Assets Turnover is .55 times or 54.9%,
which is low and could be higher.
•What this number means is that SPS has $0.55 of sales
for every $1 of assets. This is interpreted as the number
of dollars in sales generated by each dollar of assets.
Cont’d
• SPS has more Liabilities than Assets. This is
represented by the Debt Ratio. Basically our
consultant team recognizes that SPS is
borrowing more then they are investing. The
firm’s Debt Ratio is…
303,660.43/238,127.00
Total Liabilities/Total Assets
127.50%
As the Debt Ratio is rather high, the Current Ratio is
satisfactory. Current Ratio is 6.1% What does this mean?
….SPS has $1.61 of assets for every dollar of debt.
S.W.O.T Analysis
Strengths:
-Clean working environment
-Cohesive management team, allowing for
efficient communication within the company
-Equipment is more specialized, giving SPS an
edge on precision jobs
-Relationship with competitor next door allows
for use of equipment without buying it, therefore
produces more
S.W.O.T. Cont’d
Weaknesses:
-High dependence on competitor next door
could backfire
-No general IT personnel, such as an ecommerce specialist
-One technician limits amount of work that
can be done at one time
S.W.O.T Cont’d
Opportunities:
-Website development
-Break into European market
-Register on the Thomas Registry. Allows for
representation along with SPS competitors
-Trends in furniture manufacturing are predicted to
grow world wide
Threats:
-Technology is constantly changing
-Acquisition of neighbor company, could bring in a
competitor; unfavorable of the current
“partnership” situation.
-Manufacturing jobs are moving south of the border
Financial Objectives
• Lower outsource to below 50%
• Increase net sales for the next fiscal year
• Lower debt (liabilities)
Marketing Objectives
• Increase market share by keeping an open line of
communication with customers, as well as gaining
new customers
• Utilize web-site links in conjunction with
companies SPS services
• Maintain a high level of customer satisfaction
• Solicit customer feedback through web-site and
other methods such as surveys
Action Plans
• Increase advertising budget by 5% ($)
• Create more press releases to send to the
local media, as well as the European market
• Create e-marketing campaigns
• Create an easily navigable website
Advantages of increasing your
advertising budget
-Remind customers of the benefits of your
product or service
-Establish and or maintain a distinct identity
-Enhance your reputation
-Attract new customers and replace lost ones
-Slowly build sales to boost you bottom line
Advantages of e-marketing
• Cost effective and if done right, can
build brand awareness and loyalty
• Typically costs a few cents per
message
• The business information that
customers provide when signing up for
an e-mail newsletter is extremely
valuable
• Response rates are strong, 5-35% while
traditional mail averages 1-3%
An Effective Website Should:
• Have a simple design and be user-friendly
• Informative and upbeat. Consistent with other
forms of media
• Be used as a selling device that promotes the
company to prospective customers
• Include a homepage with executive summary,
address, phone numbers, and e-mail address.
• Include links to other pages
• Also be used as a recruiting tool for potential
employees
How to use website to penetrate
other markets
• Decide which markets the firm would like to
target
• Build partnerships with U.S. and European Web
integrators and translation companies that have
locations in the regions where SPS plans to
conduct business
• Locate firms to assist the firm in all the various
aspects about globalizing SPS such as marketing
consultants, lawyers, after-sales support teams, etc
Thank You for your time…
Any Questions?