Software Applications and Information Systems

Software Applications and Information Systems A software application and an information system is vital for any company to manage its business. An unbelieveable amount of information and procedures that is made within a company, both the application and system relieves a company of a huge amount of paperwork. By aquiring a software application the accounting, marketing, and human resources department can keep track of many different areas within their department. The information system helps to manage all information coming in and going out.

An excellent software application is the Formtran application. This application works in all departments, accounting, human resources, and marketing. This application is known for being the fastest data collector. For accounting the application offers compliance, consistency, and effciency. This provides help with purchase orders, credit memos, invoices, physical inventor forms, fixed asset forms, capital expenditure requests, and check requests (Formtran, 2010).

The software provides a system that helps with certification testing, applicant tracking, charitable fund drives, emplyee satisfaction, pre-emplyment testing, time sheets, training, and pay roll forms (Formtran, 2010). The marketing and sales part of the application gives a company easy acess to the data needed. This includes contest enrollments, customer comment cards, award claim forms, expense reports, focus group surveys, product registration, sales call reports, sales force testing, and warranty cards (Fortran, 2010).

Information systems help accounting departments by maintaining records that control the movement of funds within the company and produces finanical statements. Information systems for accounting will manage cash flow, loans, securities trading, and check processing. Human resources information systems help with placement, recruitment, compensation, career development, and evaluations of the employees within a company. The different examples is applicant tracking, training and skills, positions, benefits, and personnel record keeping.

Marketing and sales use the system for marketing functions and sales support with keeping track of all movement with goods and services between producers and customers. Target points are telemarketing, point-of-sale, order processing, and slaes support. Basically the system for marketing and sales covers the improvement of customer service, maintaining customer data, total and record purchase transactions with the required packing list (Kelly, 2008). Software applications and information systems are a vital part to running a business today.

These applications and systems help a company run smoother and more organized. In today’s world most all company’s use computers to run their business. Customers and employees expect to have answers in a reasonable time, and the applications and systems provide everyone with the information in a respectful time frame. The employees of the different departments (accounting, human resources, and marketing) tasks are made easier with the capability of the applications and systems.

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Benefits of a Marketing Plan for Small Business

Research Topic 5: “I’ve got a small business with only 3 full-time staff. Marketing Planning’s no real practical use to me! Besides, I can’t afford the time and/or the money to do it” The writing of a marketing plan is extremely important step in the functioning of an effective and successful business. A marketing plan will give a snapshot of where the business currently stands, where the business hopes and wants to be and what needs to be done to achieve this. This is crucial if the business wants to grow or maintain its current level of profit.

It could even be helpful if a business needed to down-size. Marketing plans can be as detailed as required, and as such are useful tools for large corporations and small businesses alike. The creation of marketing plans can be quite daunting without previous experience, and this is one reason why many small businesses don’t create a plan. Ross Cameron, of Cameron Research Group states “…there appeared to be a large number of small business owners who were not interested in growing. It is possible this is because many small business owners don’t know how to grow” (Hartnett and Keisler 2008, p. ) Many of the smaller businesses don’t understand the benefit of creating a marketing plan, and therefore avoid creating one. One benefit of creating a marketing plan is in analyzing the current situation. Particularly in small businesses, the ability to step back and take an external view of the business is often difficult for an owner, as that time can be put to use elsewhere, and the results of a can often be confronting (Hartnett and Keisler 2008). Most successful entrepreneurs of the world are able to view and analyze the business from the outside.

Another benefit of producing a marketing plan is the potential for “greater co-ordination of effort” (Overton 2007). In having a clearly defined plan for the direction of the business, as well as an idea of how to get there, all of the employees can be focused towards that same goal. A business that has no marketing plan can potentially have employees pulling the business in many different directions, as the goal is not clear. Producing a marketing plan can also help measure the success of any efforts put in to improve the business.

In creating a marketing plan, it is best to quantify the desired achievement. For example, if a business wanted to improve its sales by 25% over the course of a twelve month period and this goal is identified within the marketing plan, then it can be reviewed after twelve months (or at intervals during this period). The results of the review measures the effectiveness of the marketing plan. If sales figures have grown by 25% or more, then it is seen as successful. If sales grew by under 25%, or worse, declined, then the marketing plan has not been as effective as it should be.

The measurement of success of a marketing plan can also be used as a benchmark to set future marketing plans. Using the perceived effectiveness or not of the previous marketing plan, can be a useful tool for looking forward. It can inspire a business to set higher growth in sales figures, or to set the benchmark lower, to enable a sales figure that is a little bit more achievable, based on the previous marketing plan (Overton 2007). A marketing plan can also help a business by looking at its strengths, weaknesses, opportunities and threats (also known as a SWOT analysis).

In providing this analysis, a business has a better viewpoint from which to build upon. Analysis of strengths provides important information about what the business does well in its operations. For example, it could be how the business differs from its competitors, or what makes the business more successful than others in certain aspects. For instance, this could mean that the employees of the business are better trained or motivated than at rival businesses, the business has higher valued intellectual property, or various other reasons.

Similarly, the analysis of weaknesses provides information and comparisons with other businesses to enable better decision making and potential improvements. The analysis of opportunities and threats document how the business could be impacted in the future, for better or for worse. Opportunities enable a business to look at future growth potential, future trends in the marketplace, opportunities to take advantage of competitor’s weaknesses, or any other factor that may or may not have been identified in the strengths or weaknesses.

Threats are basically negative opportunities and can be current or future factors that may possibly have a negative impact on the business. In drawing up the strengths, weaknesses, opportunities and threats (SWOT) for the business, and similarly for its competitors, the business can have a greater understanding of its current situation, and moving forward, a greater understanding of any potential hurdles or windfalls that may impact the business (positively or negatively). This in turn provides a better platform from which to determine the way forward, and to provide a plan to achieve the goal of the business successfully.

One of the main benefits gained by creating a marketing plan is the actual documenting of the businesses goals and direction. By having a plan in hard copy, and having all employees working towards the same goals and in the same direction, the business is more likely to succeed in reaching those goals. A marketing plan is also beneficial in setting a budget for effective marketing. A marketing plan will allow the business to look at its target objectives and determine the amount of money to be spent on that goal.

Stephanie Paul (2010) insists that a marketing plan is “…Often considered the most effective budgeting method…” and that many experts believe that it is definitely the most logical way of setting a marketing budget. Similarly, a budget can also help create realistic strategies when looking at objectives from a budgeting aspect. “Understanding the return on investment on a marketing activity enables you to determine whether to keep them running or stop them and try something else…” (Murphy 2009) Many small businesses feel that they don’t have time to develop arketing plans and strategies, but a marketing plan can be as thorough as the business needs it to be. In the case of most small businesses, the owner of the business inevitably works “in” the business, and has very little time to work “on” the business. However, a marketing plan doesn’t have to take up a lot of time. Whilst a large business may need hundreds of pages for a marketing plan, many small businesses can create effective marketing plans using as little as “half a dozen pages” (How to Create a Marketing Plan)

McDaniel (2003) states “Developing a marketing plan is free and can be as simple as a time line of when to order business cards, networking opportunities, organizational meetings, speaking engagements and deadlines for publications”. The article also goes on to quote Ronelle Genser of Genser International Consulting “…there are three secrets to marketing. Commitment, Investment (not just money but of time, energy, and talent, as well), and consistency. ” A marketing plan would be difficult without these aspects (McDaniel 2003) Around 98% of small business owners state that marketing is the hardest part of their job…” (McDaniel 2003). As seen above, a marketing plan can be effective at any scale, and should be a necessary tool for succeeding in business. For addressing the issue of time management in preparing a marketing plan for a small business, How to Create a Marketing Plan suggests taking “a couple of months to write the plan, even if it’s only a few pages long…” In conclusion, there are many benefits for writing a marketing plan, even for the time-poor owner of a small business.

It enables the business owner to analyze the past and the present, as well as plot and plan the future direction of the business, the money spent on that plan and measuring the effectiveness of past, current and future plans. These are all practical uses of marketing plans, and for the basis of successful businesses, whether they are large multi-national corporations, or a small home business with few or no employees. Bibliography Hartnett R. , Keisler, K. , 2008, Small Business, Big Opportunity: Winning the right customers through smart marketing and advertising, Second edition, Sensis, Melbourne

How to Create a Marketing Plan, 2010, Entrepreneur, viewed 2nd April 2010, Murphy, D. , 2009, Marketing Budget – Where do I start? , Vista Consulting, viewed 2nd April 2010, Overton, R. , 2007, Marketing Simplified, An introduction to marketing, eBOOK version, Martin Books, EBL EBook Library, viewed 2nd April 2010 Paul, S. , 2010, Cost of Marketing: What Is the Average Budget? , LegalZoom, viewed 2nd April 2010, < http://www. legalzoom. com/business-management/promoting-your-business/cost-marketing-what-is>

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Soft Drinks Sales New Strategies

Sales of soft drinks declined in the US in 2006 for the first time in more than two decades. Many beverages manufacturers became successful in the past and they are still at the top, but they can lose their power unless they do something to reverse the trend. In this article we’ll try to find new ways to help soft drinks manufacturers to face their biggest challenge of the century. To begin with, it would be a good idea to follow a stretching marketing strategy by producing a new line of soft drinks which would have been positioned as healthy and not fattening.

Many companies introduced new products of the same line less fattening such as Fanta Zero or Pepsi Light, but consumers identify the brands of these products with fat and unhealthy drinks. However, if these manufacturers created new brands with names like Bio or Nature, a specific market segment would be directly targeted and sales would stop their decline. In addition, soft drinks companies could follow a different promotion strategy so that their products would look more fashionable and more modern.

By doing this, companies would compensate their sales decrease in one segment by increasing their market share in another one. New consumers would be the ones who drink something while they are in bars or discos and new competitors would be alcohol drinks companies. This promotion strategy could consist of advertisements which relate soft drinks with nightlife with new slogans like “Welcome to the Coke side of night”. Furthermore, product placement in James Bond movies would be a great idea.

If Bond changed its Martini for a coke many people would start to see soft drinks with different eyes. To conclude, we should remember that classic soft drinks market is still profitable and new strategies should try to avoid damaging classic products image. Also it’s necessary to point out that soft drink manufacturers will never be as powerful as they were before as long as consumers are demanding everyday more sophisticated and concrete products.

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Disruption in the C-Suite

Seeking a quick bite in the terminal before catching my next flight on a business trip, I recently found myself stopping at a place I wouldn’t have considered a year ago — McDonald’s. I scanned the menu and ordered a grilled chicken sandwich. A tasty meal and probably better for me than a hamburger or many of the other selections in the airport food court. My marketing mind then kicked in and I realized I had literally bought into the improved brand appeal resulting from the fast-food chain’s focus on new menu items and better food quality. And that the architect of this repositioning is , who took over as CEO after two years as the company’s lead marketer.

Easterbrook is a poster child for an interesting change in corporate America: the emergence of chief marketing officers (CMOs) as CEO candidates. Other large companies where marketers have assumed the top job the last few years include Audi USA, Campbell’s Soup, Jive Software, Mercedes-Benz USA and Royal Dutch Shell. Not long ago, CMOs were generally stuck too far in a corner to be considered for the corner office. Sure, the CMO has always been responsible for important items on the corporate agenda brand awareness, product marketing, demand generation, etc. However, many found themselves boxed into narrowly defined roles and were thought to lack the diverse skills needed for a higher position.

How the world has changed. The CMO job description has dramatically shifted in recent years as companies focus on digital transformation, top-line growth and customer engagement. Today’s CMO typically has more responsibility and influence than ever and is likely to have stronger ties across the organization beyond marketing to sales, product marketing, corporate strategy and IT. As Gartner’s Kirsten Newbold-Knipp put in an interesting , “In the B2C world, marketing’s responsibility has grown from brand awareness to market share to end-to-end customer experience in short order. While this same trend is playing out in B2B, it’s even more poignant a shift. The customer buying journey for B2B brands is growing increasingly marketing heavy with buyers doing more research and getting further down their decision path before they engage with sales. That’s manifested itself in a shift of responsibility with CMOs who once owned a simple lead count now measured on pipeline or even shared revenue targets.”

Contrast that with 10 or 20 years ago, when the number-one factor in evaluating a company’s success seemed to be its operational efficiency rather than better understanding and engaging with the customer. In that climate, left-brain leaders like the CFO ended up in the catbird seat. The CMO was a chief marketing officer in the most fixed sense, leading siloed branding and communications efforts. Put another way, companies were run more from the back of the house by the Excel spreadsheet jockeys than from the front by the creative PowerPoint types. Changing customer behavior, though, now requires the CMO to better understand the entire customer lifecycle, how to use data to drive measurable business results and work across functions to explore opportunities company wide.

The overriding strategic imperative for every company today is “brand, demand, expand.”  Grow brand awareness.  Generate leads and impact the bottom line. Retain customers and make them your biggest advocates. This reality has made CMOs more attractive to companies looking for creative CEOs who “get” that brand, always important, is now a full-throttle, all-consuming endeavor on which a company’s future rides.

It also doesn’t hurt that other aspects of today’s CEO role play well to CMOs’ strengths. Communication skills, for example. The days are long gone when the CEO was a Wizard of Oz-like presence on the top floor, whom shareholders or employees heard from in an end-of-the-year letter, quarterly email or occasional media interview. The model now is the highly visible CEO, doing frequent webcasts or live Q&A sessions with employees, present on social media, etc.

In this new corporate environment, it’s no surprise that more CMOs see themselves as future CEOs. According to a 2014 Forrester , approximately 40 percent of B2B marketers and 41 percent of B2C marketers viewed themselves on a path to CEO roles. When the analyst firm performed a similar survey in 2011, most of the marketing executives wanted to become consultants or get a job at a larger company instead of rising to a higher position. To be sure, CMOs eyeing the top spot still face some bias. They must convince corporate boards that they have the broad strategic chops, management experience and cross-organization breakthrough thinking to run a company.

In my mind, many of today’s CMOs can safely check off these boxes. They usually run organizations of several hundred or thousand people and are responsible for big budgets (often the largest P&L in the company). They may have never managed sales, but have owned demand generation targets and work closely with sales. They are data-driven in a time when marketing has become as much science as creative endeavor. The best have hit home runs that truly have changed the game for their companies. They have gained more diverse skills than CMOs at any other time in history.

Again, look no farther than McDonald’s. The company used to focus mostly on supply chain efficiency — it was pretty much like any large manufacturing company in that way. Then, consumers’ tastes changed and McDonald’s was caught flat-footed because it wasn’t sufficiently in touch with its customers. With a marketer at the helm, the chain has had success recasting its brand.

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The Frito-Lay Cracker Jack case

Table of contents

            This paper is being written to analyze the Frito-Lay Cracker Jack case.  This case is about the acquisition by the company Frito-Lay of Borden Food’s caramel popcorn brand Cracker Jack.  The case facts extensively details company information of Frito-Lay, Borden Foods and the brand Cracker Jack.  It also discusses efforts already undertaken by Frito-Lay in its bid to acquire the brand from Borden Foods.  There are already extensive discussions on these types of information.  The task at hand is meant to analyze the intended sale from a marketer’s point of view using the worksheet provided by Kerin and Peterson (2007) in their book on Strategic Marketing Problems.

In order to do an adequate case study analysis using the worksheet, we answer the specific topics with 5 questions in mind.  These are as follows:

  1. Why is Borden selling Cracker Jack?
  2. Why is Frito-Lay considering purchasing Cracker Jack?
  3. What would a SWOT analysis of Cracker Jack look like from Frito Lay’s perspective?
  4. How will Frito-Lay likely market Cracker Jack?
  5. What is a fair market price for the sale?

The reasons why Borden and Frito-Lay are selling and buying the Cracker Jack brand would be discussed in our discussion on the Nature of the Industry and Market of which both companies belong.

The SWOT analysis of Cracker Jack from Frito-Lay’s perspective will be tackled successively in “The Organization”.  The SWOT analysis is simply an assessment of the strengths, weaknesses, opportunities and threats facing the Cracker Jack brand when it is acquired by Frito-Lay.  It would be a combination of the pertinent company and brand details of Frito-Lay, the acquiring company and Borden Foods, the selling company.

The question regarding Marketing strategies of Cracker Jack under Frito Lay and the suggested price for fair market value will be discussed under the headers “Plan of Action” and “Potential Outcomes”.  Buying the brand and properly marketing it is a distinct plan of action by Frito-Lay with distinct outcomes depending on the methods used.

Nature of the Industry, market and buyer behavior

In starting any case analysis discussion on industry, it is noteworthy and important to distinguish the particular industry where the company or companies involved are part of.  We would briefly state the profile of the companies and proceed onwards.

Frito-Lay is a division of Pepsi-Co. Inc. It is a highly profitable enterprise with an operating profit of $1.63 billion of net sales in 1996.  It is also an integral part of Pepsi-Co.  Frito-Lay contributes 31 percent of Pepsi Co’s net sales and 60 percent of its operating profit.

The company is also a growing company with an annual growth rate of 13 percent for the 5-year period from 1991-1996.  (Kerin, 1999, p. 237)

Borden Foods with its brand Cracker Jack is one of the two industry leader in the Ready to Eat caramel popcorn category.  It is owned by Kohlberg Kravis Roberts & Co which purchased the company for $1.9 billion dollars in 1994.  It was widely known for its dairy products before it divested from such an industry.  Today, prior to any acquisition, Borden Foods makes pasta, soup mixes, and bouillons, snack foods, consumer adhesives, and industrial adhesives, coatings and resins. It’s recorded net sales is $5.8 billion dollars. (Kerin, 1999, p. 241)

From the nature of these two companies, it is easy to recognize that they are involved in different industries.  Frito-Lay is a part of Pepsi-Co which is in turn also involved in the Beverage or Soft Drinks Industry.  Borden Foods on the other hand is involved in food and even in industrial supply industry.

In relation to our topic of acquisition efforts regarding Cracker Jack, both companies are involved in the Snack Food Industry.  More particularly the companies are or will be engaging in the Ready-to-eat (RTE) popcorn segment.

Frito-Lays is already a provider of “low-fat and no-fat” snacks.  These snacks include Baked Lay’s potato crisps, Baked Tostitos tortilla chips, and Rold Gold pretzels.  Frito-Lay’s US snack food business ps every aspect including food production and distribution.  This means they are involved not only in agricultural production but also stocking retailer shelves.  The company has extensive distribution capabilities.  (Kerin, 1999, p. 238)

Borden Foods as already mentioned is an industry leader in the RTE popcorn segment.  Its competitors in the RTE popcorn segment can be divided into national brand firms, seasonal/specialty firms, regional firms, and private label firms. Its main competitor is the national brand firm of International Home Foods, Inc.  Their leading RTE popcorn brand is named Crunch ‘n Munch. (Kerin, 1999, p. 240)

Borden is selling Cracker Jack because its focus and resources are no longer centered towards the snack industry.  The company wants to focus on its pasta business and expand into grain-meals that require a significant resource investment.  As a result of their company’s strategic assessment, Borden Foods announced in 1997 that they would divest from Cracker Jack, along with Borden Brands North America and Borden Brands International. (Kerin, 1999, p. 242)

Frito-Lay, on the other hand, is considering the purchase of Cracker Jack because it fits the company’s growth plan.  For growth, the company devised three criterions to qualify their choice.  They want to expand into new products.  They want to capitalize Frito-lay’s extensive distribution capabilities.  Last, they want to acquire “opportunistic acquisitions” made by divesting companies because of corporate restructuring. (Kerin, 1999, p. 239)

Acquisition of the Cracker Jack brand fits all three criterions.

Cracker Jack is a new product for Frito-Lay.  It will provide the company entry into the RTE caramel popcorn segment of the snack industry.  Cracker Jack’s future profitability is also entwined with better distribution efforts.  Borden Foods initially planned a direct-store-delivery method but opted not to push through because of steep resource requirements. (Kerin, 1999, p. 249)  Frito-Lay already has extensive distribution capabilities which would go well with this problem.  Lastly, Cracker Jack is a worthwhile brand with a deep heritage.  It is an “opportunistic acquisition” as Borden Foods is divesting itself for the purpose of focusing into different industries to which it is currently involved.

The Organization

The Organization to be described would be the Cracker Jack division if and when Frito Lay acquires it.  This organization would be in-charge of a well-known brand under a sizeable corporation which is part of Pepsi Co. Inc. The following paragraphs would describe the strength, weaknesses, opportunities and threats to this organization.

The key strength of this organization would be the Cracker Jack Brand.  The brand has a deep heritage with the American populace.  It is one of the most recognized consumer food brands in the country.  The brand name enjoys a 97 percent awareness among persons between the ages 15 and 60.  It also has a 95 percent brand name awareness among heavy users of caramel popcorn. (Kerin, 1999, p. 243)

The key weakness of this organization would be the birth pains in incorporating the Cracker Jack Brand with Frito-Lays.  The current Cracker Jack SKUs has 32 kinds.  This is large for Frito-Lay’s whose extensive distribution capabilities are used to handling lesser number of kinds.  This weakness would have to be addressed head on by the key management put in by Frito-Lays. (Kerin, 1999, p. 255)

The key opportunity of this organization would be taking advantage of the extensive distribution capabilities of Frito-Lays. The company employs 17,500 salespeople. It is the largest store-door-delivery sales force in the world.  They make 750,000 sales and delivery calls on approximately 350,000 retail store customers each week. (Kerin, 1999, p. 238) On the other hand, Borden Foods had trouble with the Cracker Jack Brand because of rising prices in distribution and trade and promotion expenses.  If Frito-Lays can efficiently use its distribution capabilities, it would significantly affect sales to increase.

The key threat of this organization would be its primary competitor International Home Foods Inc.  This competitor produces a highly profitable brand known as Crunch and Munch.  It has recorded net sales of $942 million in 1996.  It is a definitive market share leader in the RTE popcorn segment of the snack food industry. (Kerin, 1999, p. 241)

Plan of Action and Potential Outcomes

The recommended plan of action for Frito-Lays to take would be to acquire and market Cracker Jack as its own.  This is in light of the financial and logistical capabilities of Frito-Lays.  As has been earlier mentioned acquisition of Cracker Jack fits squarely with the growth avenues sought after by Frito-Lays.  It is a brand that will help the company venture into a new product category.  It is a fit into Frito-Lays extensive distribution capabilities.  Lastly, it is an “opportunistic acquisition” in light of Borden Foods company reorganization.

The immediate cost to Frito-Lay’s would be the financial burden of effecting such an acquisition.  The company is surely able to shoulder this.  However, this would still be a significant amount.  The benefit of this plan of action would be the acquisition of a significantly American Brand with a deep heritage and extensive brand awareness.

In order to market Cracker Jack properly, Frito-Lays would have to market it using the extensive distribution capabilities of their company.  This is the initial plan to be implemented during the first years of operation.  Brand and flavor extensions should be pursued in the second and third years of Cracker Jack as a Frito-Lay brand.

The proposed snack bar method of marketing is also recommended.  Kellog’s Rice Krispies has achieved much success using this type of marketing.  It has recorded more than $100 million in supermarket retail sales over the past years.  Quaker Oats has followed suit with the launch of its Fruit and Oatmeal Cereal Bars supported by $20 million of trade and promotional advertising budget. (Kerin, 1999, p. 255)

As to line of marketing, the traditional Cracker Jack taglines are recommended.  The brand already has significant brand awareness that it needs only to be sustained.   It should focus on the Cracker Jack positioning employed for over the past 30 years which centers on Cracker Jack as a traditional fun treat. (Kerin, 1999, p. 244)

As to a fair market price for the sale, it must be noted that the figures given by the case were disguised so it cannot be used for external research.  In order to determine the value of a business we need to determine its fair market value.  This is the value of the cash, cash equivalent, or price which an asset would be traded between a willing buyer and seller, with each in command of all information necessary to value the asset and neither under any pressure to trade.

The case study recommends the use of the Discounted Cash Flow (DCF) technique.  Using this technique, fair market value is calculated by the summation of the present value of projected cash flows for a determined period plus the present value of the residual and terminal value at the end of the projection period for a business.

Using the provided values, the owner’s investment would be $24.8 million.  This is derived from Cracker Jack’s current balance sheet with Assets of $34 million and Liabilities and equity of $9.2 million dollars.

References

  1. Kerin, Roger (1999). Case. Frito-Lay Company; Cracker Jack. In Strategic Marketing Problems: Cases and Comments. USA: Prentice Hall.

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Financial and Marketing Resources

What do you understand by the term ‘value chain’? Suggest how patterns and trends in the international business activity might influence the company’s value chain over the next five years or so. Carefully explain the reasoning behind any changes you might predict. How might the future logistical operations of the company be influenced by the changes you have identified to the value chain in part above? Explain your reasoning.

Introduction This essay aims to initially introduce the reader to Michael Porter’s value chain, as well as appraise its significance in the modern business environment. This will be achieved by critically evaluating relevant literature, and implementing it to a renowned multinational company: Harley-Davidson Motorcycles. After the initial findings, an evaluation of the international corporation’s future potential will be undertaken, concluded by recommendations and forecasts that could have potential benefits for the Company.

A value chain could be considered as a picture of all the activities that a company goes through in order to provide a product or service of superior value in the eyes of a consumer and achieve competitive advantage over other companies within the same market. Michael Porter (1985) identifies this value as the amount of money that a customer is willing to pay for the product that the company is offering. Marketing, the quality of the product and any kind of information about its production process that reaches the consumer, will all be important in determining this price.

Allan Griffiths (2005) defines the value chain as the key tool that companies use in order to identify geographical locations that are strategically advantageous for outsourcing in house processes. According to Porter (1985) a value chain of a company can not be understood by looking at a firm as a whole. He argues that the value chain is the margin of two activities; Primary Activities and Secondary or Support Activities. Each activity is separated into departments managed and evaluated separately in order to understand and improve any kind of disadvantages they have against other competing companies.

Each activity of the value chain of the value chain can be improved through the flow of information. This information can be customer feedback, performance testing, performance statistics of the product or other competing products, Balance Sheets and Income Statements (Porter 1985). An illustration of Porters value chain is listed below (Figure 1) in order to understand the order of these activities.

There are five Primary Activities:

  1.  Inbound logistics are all the activities associated with raw materials, activities such as receiving, storing, warehousing, vehicle scheduling and returns to suppliers.
  2. Operations are all the activities that take place in order to transform raw materials into the final product such as machining, assembly, testing, equipment maintenance and packaging.
  3.  Outbound Logistics are the activities that involve collecting, storing, and distributing the completed product to buyers as well as finished goods warehousing, material handling, delivery operations, order processing and scheduling.
  4. Marketing and Sales: The use of the 4Ps of Marketing (Product, Place, Promotion, Price) and advertising in order to provide knowledge of the product to buyers as well as encouraging them to buy it.
  5. By sales we actually mean after sales services such as updates, installations, repairs, training and product adjustments in order to increase the life and value of the product. (Wall S. 2004, Griffiths A. 2005, Porter M. 1985)

There are four Secondary Activities:

  1. Firm Infrastructure is the general management, strategic management, accounting, legislations, government affairs and quality management departments.
  2. HRM: All the activities involved in recruiting, hiring, staff training and wages decision making of all types of personnel.
  3. Technology Development is all of the technological know how, the procedures as well as the technological processes of production, including technological equipment, metallurgy, electronics and mechanics.
  4. Procurement is purchasing besides raw materials and the assets of the company.

In order to fully understand the usage of the value chain to companies it would be helpful to analyze the value chain of a large multinational company, Harley – Davidson (H-D) for example, and the effects of the global economy within its value chain and its future value chain’s performance. The reason that I have chosen H-D as an example for this assessment is because it is a very famous international company, a niche business well known for its high quality products, self financed by Harley Davidson Financial Services (HDFS) and self marketed. HDFS also provides financing for motorcycle buyers and the company’s independent distributors and dealers.

The raw materials that are used through the production process of a H-D motorcycle are aluminum castings, leather, steel, forgings, steel sheets and bars, electric fuel injection systems, batteries, tyres, harnesses and electrical components and instruments. The company uses just in time inventory and manufacturing principles in order to minimize its inventories of raw materials, work in process, scrap metal and network costs.

All of the raw materials are purchased by the company which stores them in each major manufacturing location depending on the motorcycle construction process.Since H-D is an international company it has five distribution channels located in the USA, Europe, Asia, Latin America and Canada. In the USA the company distributes its finished goods at wholesale to a network of 697 independently owned H-D dealerships where they are all stored.

In Europe the company distributes its products to the European Management Team which is located in Oxford and from there to all the independent European H-D dealerships. The same policy is followed in the Asian market where all the products are sent to Tokyo and then on to the independent dealers. In Latin America, with the exception of Brazil, products are sent to the independent dealer directly from the USA. In Canada the products are distributed to a single dealer, Deeley Harley-Davidson Canada/Fred Deeley Imports Ltd.

Since 2002 H-D has focused most of its marketing campaign on the V-ROD(r) motorcycle series. The introduction of this new motorcycle model was the attempt of the company to attract a younger demographic. Harleys pricing strategy on this new line of products has been based on the used motorcycle market and the lower priced competitors. Since 1983 the company’s main promoting technique has been the Harley Davidson Owners Group (HOG). The HOG’s main advertising element is the female presence since more than 80% of H-D’s customers are males.

All H-D dealers have a small service and repair department next to the main store. This highly effective strategy is very helpful to customers and enables them to customize their own motorcycles with new parts and paintworks, as well as installations, annual motorcycle checkups and repairs and riders training programs.The Motor Company Leadership Group is responsible for government affairs, quality management and quality control. This group is made up of five members; Joan M. Bischmann, Vice President Licensing and Events, David P. Bozeman, General Manager Powertrain operations, Steven S. Philips, Vice President quality, reliability and technical services, Timothy K. Hoelter, General Manager of Government Affairs and Treasurer, and Leroy Coleman, Vice President of quality operations. Read also basic tenets listed for the strength management program of the national guard recruiting

The Vice President of Human Resources of the company is Harold A Scott. Scott uses both the geocentric and polycentric approaches of HRM. More specifically, in key positions of management his policy is to hire military veterans because in his opinion they bring more work ethic due to their training. On the other hand, when hiring staff for other company activities the company chooses to hire nationals from the hosting country because most employees that want to be involved with H-D are usually long time customers.

H-D emphasizes most of its technological development on its motorcycle’s revving noise, vibration, harness (NVH) and design. The NVH facility is run by Alex Bozmoski. He states that most of the technological process is engine testing in order to manage to keep the sound in balance with the strict domestic and international noise regulations. He also states that vibration and the harness play a very crucial part in the riding experience.

Much attention is paid during the design and manufacturing process on the distance between the harness, the foot pegs and the handlebars in order to maximize the vibration on all the operating points in order to make each ride an experience. In order to keep the engine’s sound and vibrations to a certain level the company uses CADA-X acoustic and vibration testing from LMS Engendering Innovation. LMS is a company which provides many industries such as the motorcycle and airline industries with testing facilities and machines.

In 2006 the company held an amount of $2,280,217 on Finance Receivables for investments and has $5,532,150 worth of assets. (Harley Davidson Annual Report 2006) The main economic trends that have always affected and influenced H-D’s value chain are the lowering of tariffs and interest rates worldwide, the growing world economy, which has resulted in the low cost of manufacturing in Asian countries, the increasing strength of the heavyweight motorcycle industry and the decreasing loyalty of customers due to the increasing variety of brands in the industry.

Since the company is its own distributor tariffs do not affect its value chain significantly. Loyalty is also not a problem since it is a niche business and very famous for its influence and trust upon its customers. In an H-D survey on its 100th anniversary in 2004 there was not one fan that would not argue that since their first purchase from this company no other company could substitute or even reach H-D’s motorcycles high performance and top quality accessories (Harley Davidson one hundredth Anniversary, Discovery Channel August 29, 2003).

On the other hand low interest rates and competitors with low cost manufacturers in Asia play a major threat to the company’s competitive advantage. Most of these strong competitors of the company have independent financial and marketing resources that are much greater than the company’s. The company is vulnerable to interest rate fluctuations in the global marketplace. Since it is an international company it sells its products to foreign countries where they are exchanged for the those countries’ currencies. As a result the company’s earnings can be affected by fluctuations in the value of the U.S. dollar relative to foreign currency.

HDFS’s earnings are strongly affected by changes in domestic and foreign interest rates (Harley Davidson Annual Report 2006). Another reason for its vulnerability is that the HDFS has an Intercompany Borrowing agreement. This means that HDFS has a revolving credit line with the company whereby HDFS may borrow up to $210 million from the company at whatever the interest rate is at the time. Luckily although US domestic interest rates were extremely low in 2003 (1%) due to a sub prime crisis, thanks to the highly successful marketing and sales of the new V-ROD(r) motorcycles series, the company was not affected at all.In addition between 2003 and 2006 Harley Davidson’s net revenue increased by 20.23% from $4,624 million to $5,801 (Harley Davidson Annual Report 2006).

Successful marketing and sales also helped the company gain 49% of the domestic heavyweight motorcycle market, 6.1% of the European market, 16.5% of the Asian market and 38% of the Canadian market in 2006. Due to this success since December 31, 2006 HDFS has had no outstanding debts owed to Harley Davidson under this agreement (Harley Davidson Annual Report 2006). On the other hand if a similar crisis concerning domestic interest rates were to occur again in a low sales season there would be no certainty about the company’s future.

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Selecting the positioning concept

The selection of location is decided after knowing the needs of the buyers. In location scheme the marketer choose position is the first step (Mathieson, 2005). Marketing mix actions mean the label to get particular position with buyers. There are three important steps of location selection: 1-The concept placed neither on the particular label nor on the all products of the company. 2-The particular location concept of the brand may change over time. 3-If multiple concepts are used to guide location scheme, it may confuse the buyers. THE POSITIONING DECISION:

Before taking decision, one should know the location scheme of the opposing labels using quality. The main goal is to get the ideal position of the buyers in every market segment of interest. It is necessary to find out the buyers ideal location (Cravens & Piercy). DEVELOPING THE POSITIONING STRATEGY: To get the location objectives, places the marketing program components into a coordinated set of action. It includes the all activities and results of (product, distribution, rate, promotion). The experienced and management judgment takes the decision of developing the location scheme.

SCOPE OF POSITIONING STRATEGY: The location scheme is usually on a single label. The location of particular brand depends on the size of the product, qualities of the good, and consumer’s need and on the total expense of the brand. MARKETING PROGRAM DECISIONS: In marketing decisions a single segment, selective segment or extensive segments are include. If segments are not clearly defined product change scheme may be used. PRODUCT STRATEGY: In product scheme they want to create furniture, house wares and bed and bath products. They get the opportunity to their customer’s to satisfy their wants.

VALUE CHAIN STRATEGY: The seller manages the value chain from suppliers to end users. PRICING STRATEGY: The pricing strategy is very attractive. The pricing scheme should be according to the value creation and the uniqueness of the merchandise. PROMOTION STRATEGY: The sellers use a sufficient advertising and public relations policy to communicate with the buyers. COMPETITIVE ADVANTAGE: Special retailers has a quality to build label image and customer loyalty. Management constantly invested on the research of marketing and the retailers focused on the scheme of customer’s need and wants.

The present objective is to show how the constituents fit into the location scheme. The location scheme shows how the product or brand is to be located for each market target. Important decisions in designing location scheme include: -how the product will be located in the market against the opposing product? -the value chain scheme to be used -the price should be relative to the competitors pricing scheme -these components will be achieved through the advertising and sales promotion. -internet scheme, direct marketing scheme and sales force scheme shows how they are utilized in location scheme.

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