Transcript Welcome! [www.skidmore.edu]

Welcome to the
Spring 2013
MB107 Executive Presentation
Orientation
Find your team number
and sit together with your team.
We’ll get started soon!
Orientation Meeting Agenda
• What is Company X?
• Who’s who in the MB107 Program
• What is the Executive Presentation?
• Dry Run and EP Specifics
• Analysis and Strategy Development
• Financial Target: Economic Logic and Financial Estimates
• Team Dynamics & Project Timeline
• Student Perspective
• The EP day
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You are now junior executives
working for this company…
3
http://www.youtube.com/watch?v=dTJCinYtrxE
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Best Buy Companies, Inc.
Not everything you think it is!
Your job?
You must come up with a strategy
to move Best Buy Co., Inc.
forward in the next 3 years.
The Bottom Line?
YOUR TARGET IS
TO ADD 10%
TO THEIR OPERATING PROFIT
BY YEAR-END 2016
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Who’s Who in MB107 Program
MB107 Faculty Coordinator – Professor Caroline D’Abate
MB107 Faculty – Professors Mark Youndt and Cathy Hamilton
MB240/316 Coaching and Leadership Faculty – Professor Tancredi
MB107 Staff – Nancy Walker, Tyler Orfao ’13, Rebecca McCourt ‘14
MB107 Coaches – Enrolled in MB240/316 and Volunteer coaches
Management and Business Faculty – Experts are available
Seek them out for specialized questions (marketing, financials, presentations,…)
Reference Librarian – Barbara Norelli, Social Science Librarian
http://libguides.skidmore.edu/MB107
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What is the Executive Presentation?
Outcome: Strategic Plan for Best Buy




Strategic recommendation
Financial analysis & projections
Detailed plan for marketing, operations,
and implementation
Briefly describe what other options
you considered and why your chosen
strategic path is the right course of action
Formal and Professional Presentation
 Your Role: Junior Executives of Best Buy
 Your Audience: Senior Executives from Best Buy (actually executives
from across the country and various industries)
 Presentation Format:
-Formal Presentation 20-25 minutes – visual aids/hand-outs encouraged
-Question and Answer 10-15 minutes
-Senior Exec Evaluation/Consensus 10 minutes (students leave room)
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-Feedback Session 5-7 minutes (you will receive a team grade)
Dry Run and EP Specifics
Dry Runs are Tues/Wed/Thurs nights (March 19, 20, 21)
•Each team has been assigned a one-hour time slot on one of these evenings
•Presentation in front of 3-4 student execs and MBD faculty
•At the very least, you must have:
•A solid situation analysis
•A clear strategic recommendation
•A good plan for implementation
•Basic financials
•Basic PowerPoint
•Solid preparation will yield quality feedback
•Use feedback to refine and enhance presentation for the EP day (April 26th)
•Bring your iPhone, Flip, DVD recorder, or other device to film the dry run for your
own review (if needed, contact Media Services to borrow a recording device)
Presentation Day – Friday, April 26th at the Courtyard Marriott
•Assignment sheet outlines main tasks (Do not ignore it!)
•You must update the case to April 26th (Look for 2013 annual report in early April) 9
Dry Run & EP Specifics:
Executives’ Evaluation
Some key concerns

Do you have a good understanding of Best Buy’s situation?

Have you identified the key challenges? Will your strategy address those
challenges?

Is it implementable? Have you convinced them that it can work? Have you
convinced them that it’s the right course of action?
You will be evaluated on your presentation’s substance,
professionalism and effectiveness, and teamwork
Ultimate goal is reliable, consistent, valid, and accurate assessments
of your strategic plan and presentation. We give them clear evaluation
criteria (you’ll see the evaluation form beforehand). But remember…
This is real-world
Human perception is involved
Subjective judgments are being made
Imperfection is the rule rather than the exception
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Best Buy may be a household name, but it’s
got its share of problems.
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Showrooming
trend (same
store sales
dropped 4%
in last 9 mos
of 2012)
Rivals: Amazon,
Newegg.com,
Amazon,
Walmart,
Radioshack,
Mobile phone
service
providers
No growth in
revenues,
economydriven, and
holiday
seasonality
Different
consumer
trends &
shopping
behavior in
different
regions
Turnover at
the top
Cut costs: we
have 3 times
the employees
as Google,
and only 2%
of its mkt cap
Consumers
are
increasingly
discerning
about price,
service,
convenience
Worry
List
International
unit
stumbling
The
shrinking
value of our
brand name
Supplier
relations - Five
suppliers
represent 40%
of the
merchandise
sold
Sources: Case; 2012 Annual Report;
Foley, Int’l business times, 1/23/13)
Breakdown of BBY’s sales
13
Moving forward…
“In the future, we expect to see a reduction in the number of
large-format stores, a reduction in square footage for certain of
our large-format stores and a continuation of the growth in smallformat Best Buy Mobile stores.”
(Annual report, 2012)
Acquired cloud-like mindSHIFT for $175mill (focusing on
small/mid-sized business IT services)
Expanding Geek Squad to eBay and Target stores
By end 2012,
had closed all large-format Best Buy
branded stores in China, Turkey,14UK
Moving forward…domestic vs internat’l
Domestic
International
Increase our retail points of
presence
Focus on best opportunities for
profitable growth
Decrease our overall store square
footage
Five Star in China
Increase our flexibility in a multichannel environment
Small-format Carphone Warehouse
and Phone House stores in Europe
Remodel existing key stores in test
markets with new “Connected
Store” format
Increase the number of small-format
Best Buy Mobile stand-alone stores
Close 50 or so large-format Best
Buys
Explore options for downsizing
other branded store
(2012 Annual Report)
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Future Direction Overall
(see Annual Report p. 34)
Multi-year cost reductions
US store formal improvements
Growth initiatives
Improved customer experience
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Analysis and Strategy Development
Q: Where should I start?
A: Read the case, the annual report, any/all reports and
articles linked on the MB107 website, and stay current on any
“new” news or reports on Best Buy
Analyze Best Buy’s current situation to identify the major issues.
Two “Key Slides” to include in your presentation:
1. The key challenges/opportunities/issues facing Best Buy
are…
2. Our strategy addresses these by… (explain how)
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Analysis and Strategy Development
Start with Situational Analysis
This leads to Strategy Development
External Analysis
•General/Macro-environment
•Porter’s 5 forces
•Industry life cycle
•KSFs
•Value chain
•Competitor analysis
•Strategic group mapping
•Market segmentation
•Rivals’ profiles
Internal Analysis
•Mission/vision
•SWOT
•Core/distinctive competencies
•Competitive advantage
•Internal value chain
Select Optimal
Strategy (5 elements)
Strategic
Options
•Arenas
•Vehicles
•Differentiators
•Staging
•Economic logic
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Analysis and Strategy Development:
Your strategic recommendation must be comprehensive
Arenas
• Which product categories?
• Which market segments?
• Which geographic areas?
• Which core technologies?
• Which value chain emphasis?
Economic Logic
Staging
•Speed of expansion: fast,
slow, moderate?
•Sequence of initiatives:
methodical or ad hoc?
•Action steps
•Lowest costs via scale advantages?
•Lowest costs via scope and
replication advantages?
•Premium prices due to
unmatchable services?
•Premium prices due to proprietary
product features?
Vehicles
• Internal Development?
• Joint Ventures?
• Licensing/Franchising?
• Acquisitions?
Differentiators
• Image?
• Customization?
• Price?
• Styling?
• Product Reliability?
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Financial Target – Best Buy
Refer to the MB107 Financial Template Guide (word doc)
• Utilize case data, Best Buy’s 2012 Annual Report, Best Buy’s 2013 Q3
earnings release, upcoming 2013 annual report (early April??)
• Recent company events/presentations
• Analyst estimates (e.g., Yahoo Finance, Mergent Online, Passport GMID
industry reports, Datamonitor Industry Profiles, First Research reports)
• Project Best Buy’s operating income (without the effect of your strategic
recommendation) out through 2016 (this is the projected baseline)
• Your strategic recommendation must contribute an additional 10% to Best
Buy’s operating income by year-end 2016
Refer to the Financial Template (excel)
– Step 1 tab – Best Buy’s historical financials 2010-2012 (you’ll need to
update to 2013 when available)
– Step 2 tab - Calculate baseline financial projections for 2013 -2016
using cost/revenue assumptions (do research to determine
assumptions)
– Steps 3-5 tab - Demonstrate the impact of your strategy on the 20
projected financials (show how they earn the extra 10%)
Financial Target – Best Buy
Recent Quarter
Fiscal Year Ended
Revenue
27-Feb
26-Feb
2010
2011
$49,243
100.0%
3-Mar
$49,747
100.0%
3-Nov
2012
$50,705
2012
100.0%
Domestic - US
-
-
$37,615
74.2%
International
-
-
$13,090
25.8%
$10,753
100.0%
Cost of goods sold
$37,201
75.5%
$37,206
74.8%
$38,132
75.2%
$8,167
76.0%
Gross profit
$12,042
24.5% $12,541
25.2%
$12,573
24.8%
$2,586
24.0%
$9,622
19.5%
$10,029
20.2%
$10,242
20.2%
$2,538
23.6%
$52
0.1%
$138
0.3%
$39
0.1%
$36
0.3%
$1,207
2.4%
SG&A expenses
Restructuring charges
Goodwill impairment
-
-
Total operating expenses
$9,674
19.6%
$10,167
20.4%
$11,488
22.7%
$2,574
23.9%
Operating profit
$2,368
4.8%
$2,374
4.8%
$1,085
2.1%
$12
0.1%
Walmart: GM=24.86%; OM=5.49%
Amazon: GM=24.75%; OM=.89%
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Financial Analysis & Projections
Strategy gets the plane started, the numbers keep you in the air!
SWOT – Key Success Factors of Best Buy vs. competition
Current and Future Standing on Key Financial Variables – Margins,
Ratios, inventory turnover, profitability, etc.
Financial Projections:
Domestic/International revenues
Revenues by brand
Revenues by product category
Cost of sales and Operating costs
Don’t be afraid to lose a little money in YR1
Project three years out
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Financial Target/Economic Logic
What will account for the returns of your strategy?
Some key concerns:
Capital
- What is your funding source? How will you pay for your proposed plan?
- Operations? Investments? Financing? Cash?
Can you explain your quantitative analysis?
- Offer a coherent explanation of your finances
- Realism – Is it realistic? Feasible? You need to provide a good story
- Back it up – Use external sources to provide evidence
Explain and justify the assumptions that underlie your numbers
- Assumptions about costs (cost of goods sold, inventory, supplier relations,
distribution, facility costs, employee-related costs)
- Assumptions about growth (revenue projections, units sold, sales in
different product categories, in different regions, market share, revenue
projections)
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Team Dynamics: Your Junior Executive Team
Create SYNERGY & ride MOMENTUM
Apply individual and team GOAL-SETTING
Be ACCOUNTABLE to your team
COMMUNICATE early, often, and effectively
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Team Dynamics
MB107 Teams Fail When Team Members or Individuals:
Don’t develop competencies from the course
Use the analytical tools you’re learning in MB107
Engage in social loafing
Instead, hold each other accountable
Share the workload
Fail to take the advice of others
Instead, recognize escalation of commitment is occurring
Realize when it’s time to move on
Seek intervention when you need to
Emphasize relationships, rather than the task
Instead, look for symptoms of groupthink
Mare sure you’re not putting “getting along” ahead of
making good decisions
Don’t forget the 360-degree evaluations!
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Team Dynamics:
Your Coaches
Coaches work with your team
•They won’t do the work for you
They are facilitators, advisors, and leaders
They’re here to help you negotiate team relationships
They’ll help you stay on target
They work with you from today through to April 26th
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Team Dynamics:
Meetings
Keep a schedule that works for everyone
If your team needs a place to meet for one or two nights
during the semester, you must reserve a room.
You cannot assume that campus spaces are available.
Room reservations should be made only when you
absolutely need them and through Skidmore’s Scheduling
Office:
http://cmsauthor.skidmore.edu/odsp/scheduling-office.cfm
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Teambuilding &
Situation analysis
Alternate
strategies
Pick a Strategy &
Develop
implementation
Dry Runs
Back to the
drawing board
Financials
• Thorough analysis
• Identify the key issues…be able to back it up
• Come up with 2 alternates
• Do they address the issues?
• What to do (how, action plan, staging, vehicles)
• Why it makes sense?
• Great chance for feedback
• Be open to it…use it!
• Major revisions to analysis, diagnosis,
recommendation, and implementation plan
• Numbers to support your plan
• Revenues, expenses, profits, all the details
• How do you reach the target?
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Teambuilding &
Situation analysis
• Thorough analysis
• Identify the key issues…be able to back it up
• Come up with 2 alternates
• Do they address the issues?
Alternate
strategies
Back it up
do (how, action plan, staging, vehicles)
Pick a Strategy Substantiate
& • What toyour
• Why it makesassertions
sense?
Develop
implementation
Be able to explain:
Dry Runs
Great
chance
for you
feedback
• how• you
know
what
• Be open to it…use it!
know
• why you’re suggesting
what you’re suggesting
Back to the
drawing board
Financials
• Major revisions to analysis, diagnosis,
recommendation, and implementation plan
EVIDENCE!
• Numbers to support your plan
• Revenues, expenses, profits, all the details
• How do you reach the target?
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The Student Perspective
Tyler Orfao ’13 and Rebecca McCourt ‘14
MB107 Student Coordinators
[email protected]
[email protected]
We’re here for you!
Come to us with team problems, for team support,
for help with preparing for the dry runs or the EP, etc…
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Resources
MB107 website
Financial Template (excel
and word doc)
Your coaches
Student coordinators
Barbara Norelli
and Library Resources
MB107, Coaching, and
Leadership Faculty
All MB dept faculty
S
U
C
C
E
S
S
Tutors: SAS drop in hours
and Accounting Lab
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Resources
MB107 website
Financial Template
(excel and word doc)
Your coaches
Your team is
the most critical
Student coordinators
resource
Barbara Norelli
for success!
and Library Resources
MB107, Coaching, and
Leadership Faculty
S
U
C
C
E
S
S
All MB dept faculty
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A FEW FINAL NOTES
TO BE PROFESSIONAL, YOU MUST BE PREPARED!
– Address technology needs prior to April 26th (multi-media,
connection issues, laptop issues, multiple flash drives, etc.)
 Prepare for no Internet access at hotel – This means no
email, no datastor, no Dropbox/Cloud
 Use USB/flash drives
 Equipment /power failures – The show must go on…can
you present without PowerPoint?
– Travel arrangements – getting to/from the Courtyard Marriott
– Know the time of your presentation (it’s a tight schedule)
– Perform Library Research Assignment
– Check your Skidmore e-mail multiple times each day!
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Best Buy Companies, Inc.