Amazon Strategic Audit

Strategic Factors

Weight

Rating

Weighted Score

S

H

O

R

T

I

N

T

E

R

M

E

D

I

A

T

E

L

O

N

G

Comments

S1 Competent Senior Leadership

.10

4.5

.45

X

This SF was chosen because of its significant positive impact on corporate performance in sales, costs, and industry leadership. Affect on the top line future sales revenue is estimated at 25%($100M-$150M/YR). Top management adds significant benefit to OPC’s profit posture and stockholder satisfaction. Senior Leadership is considered a core competency. This SF is weighted very high at .10 as leadership is very important to survival in the world economy. OPC is rated high at 4.5 as an industry leader with a highly competent management team.

S2 Supplier Relationships

.075

4.5

.3375

X

X

X

I selected this SF because it is a core competency and directly impacts OPC’s low raw material cost structure and high quality product. Suppliers work seamlessly with OPC Operations to deliver quality raw materials in a highly efficient just-in-time logistics system. Resource and production costs are maintained at a level about 20% below the industry average; saving OPC about $20-$40M/YR in the future. Weight is relatively mid-level as this core competency is important to OPC’s survival and competitive position. Rating is 4.5 as OPC is performing at a level high above the industry norm.

S5 Corporate Culture

.15

5.0

.75

X

This SF is important because it is a distinctive competence that reverberates throughout the entire organization and provides a 20-30% cost and productivity advantage for OPC over its competitors. Future advantage is estimated at $125M-$200M/YR in cost savings. Maintaining the positive corporate culture is essential to survival in the increasingly competitive environment. Weight is second highest at .15 because of the importance of culture to the future survival of OPC. Rating is highest at 5.0 because OPC is the indisputable industry leader.

W1 Management Information System (MIS)

.10

2.0

.20

X

X

I selected this SF because OPC’s MIS is outdated and behind times since they have not invested in a new enterprise resource planning (ERP) system. This weakness could have a very negative impact on future revenues and costs, 30-40% of sales ($120M-$160M/YR), since a modern MIS is not in use. Competitors have invested in modern ERP systems. Weight is relatively high at .10 as this is very important to corporate survival. Rating is low at 2.0 since OPC has fallen behind its competition.

W4 Financial Position

.05

2.0

.10

X

This SF is important because OPC’s financial position has deteriorated over the recent past year as its ROI has fallen from 15% to 7% and the debt to asset ratio has ballooned. Stockholders are concerned. This recent poor financial position is a very important SF for OPC’s future as such a position may put OPC in a non-competitive position in the marketplace, stock market and bond market. Future cost to OPC may include higher borrowing costs of $10M-$30M/YR and/or reduction in sales of $20M-$30M/YR. Weight is relatively low at .05 since it is not as important as other SF but financial integrity and balance are important to survival. Rating is low as OPC is not executing up to industry standard.

O2 International Growth Opportunities

.20

2.5

.05

X

X

This SF was selected because of its very significant potential impact on profit growth. Successful expansion into overseas markets could potentially result in doubling the size of OPC to a firm with $800M in sales per year and increase profits from $50M to $100M per year. This SF is weighted highest at .20 since expanding internationally is vital to the survival of OPC in light of worldwide competitors and markets. I rated this low at 2.5 since OPC does not have any international experience or markets at this time.

O4 Internet Availability

.10

2.0

.20

X

X

I chose this SF because the expansion of Internet availability to more and more U.S. families is an important SF for all food companies to take advantage of. With consumers’ online orders expected to increase at a yearly rate of 20% across all consumer goods, OPC has an outstanding opportunity to take advantage of this trend. We can expect internet sales to become 25% of our sales revenues or about $100M per year in the next 5 years. Internet sales also could boost our market share from 50% to 70% in the western states. This SF could have a very significant impact on sales and on survival so the weight is relatively high at .10. OPC scores well below industry standard here at 2.0 because their Internet marketing/sales process is not well developed.

T1 U. S. Competition

.10

4.0

.40

X

X

I selected this SF because strong competition from the Raspberry Pie Company (RPC) and others threaten OPC’s market share and sales. RPC has increased its marketing efforts in the western states. Potential loss of market share from 50% to 40% or lower would directly result in sales revenues being reduced by $160M-$200M/YR. This is weighted high at .10 as OPC survival depends on maintaining its market share against competition. Rated high at 4.0 as OPC market share has been maintained with an aggressive marketing program in the western states

T2 Imports from China

.075

2.5

.1875

X

This SF is important because strong worldwide competition is starting to come from Chinese imports to the west coast. These low-cost, high-quality products threaten to take away 10-20% of OPC’s west coast market share and reduce sales by $40-80M per year. This is weighted relatively mid-level at .075 since losing that amount of sales revenues would threaten the survival of the firm. This SF is rated low at 2.5 because OPC has not countered the emergence of Chinese competition with a new marketing effort.

T3 Increasing Government Regulation

.05

4.0

.20

X

X

X

I selected this SF because government regulations on labor use, raw material quality, environment protection and financial reform are placing an increasing additional future cost burden on OPC of about 18% of sales($72M/YR). Compliance costs are hurting the bottom line significantly. These costs are potentially fatal for the survival of OPC unless relief is obtained. Weighted at a relative value of .05 since other SF are considered more important. This SF rating is high at 4.0 because OPC is an industry leader in lobbying operations to reduce government regulation.

Total Scores:

1.00

2.875