BUS/475 4,200 - 5,250 word Business Model & Strategic Plan PLUS 350-word Execuive Summary

Business Model and Strategic Planning

Robin B. McGarrah

BUS/475

October 8, 2014

Daniel Greene

University of Phoenix

Business Model and Strategic Planning

Strategic planning is a key element in building a business. It gives the direction of the business by providing the strategic objectives of the business. It is also crucial in analyzing the future strategic plans that are in line with the company’s goals and objectives, thus providing the strategies for the future growth of the business. It is the duty of the strategic planners to compare different moves that the company can take in the future. They develop strategies to provide the best direction to suit the company’s goals including mission, vision, and values. DuPont’s Power Protection and Safety Center applies various strategic objectives that are the governing elements of the division, and in line with the DuPont’s mission, vision, and values.

Financial Perspective

The Power Protection and Safety Center division will be able to acquire 10% market share at the first year. However, the market will be able to improve by 4% per year, in the first 3 years. It will be the tenet of the division to embrace the changing technology in order to ensure efficient and timely customer service. It will make sure that the total costs are regulated to increase revenue, but still ensure that the safety and personal protective equipment is sold at a lower price than competitors are. The direct costs for the personal protective equipment will be set at 30% for the first three years, while the variable costs will be set at 10% for the first three years. It will be possible to offer fair prices with such costs, thus ensuring an improved growth in the market share. The division will generate revenue through sales of personal protective equipment at its store to be able to give the customers a uniform message. It will expect revenue of 30 % in the first year from sales, as well as improvement of profit margin by 5% per year, for the next three years.

The division’s profit after deduction of all costs will be 20% in the first year; as well, the division expects an increase of 3% per year, in the next three years for each year. It will have superior promotional activities that will help in improving the total number of customers than its competitors; they will include use of the website, social media, and traditional media sources. The risks that the division may face include fire and theft. The division will acquire insurance to cover for both risks. The building will also contain fire extinguishers to be used in case of fire emergency. The division assumes that the next two to three years, there will be improved economic conditions that will keep rising. Therefore, in such years there will be growth in the business (Bing, 2004).

Customer Value Perspective

The division will have a variety of customers. The division intends to provide quality and brand personal protective equipment for both men and women at fair prices. The customers will be 10% of the markets share for the first year, and then increase 4% per year in the next three years. In addition, because of adoption of new technology, the division will own a website that will be expected to attain 1% of the customers per year as from the second year. The online customers will be expected to increase by 1% per year from the third to fifth years. The division will aim at retaining the customers; it will be the culture of the division for sales representatives to greet customers when they arrive as well helps them in shopping. They will also be offered a glass of juice to enjoy as they shop.

However, to create customer satisfaction, the division will aim at providing after sale service as well as discounts. In addition, the products will be delivered on time. The discounts will include; buy five, get one free; buy four, get one, half price; and 10% off every purchase of $100 or more. The division will also aim at improving value by offering quality products. There will be distinctive packaging as compared with the competitors. The division will ensure that the products are highly designed and offered at cheaper prices. The risk that may be experienced is the loss of customers’ data. The division will ensure the data is saved in the software as well as in Compact Disks and Flash Disks. The division assumes that the working population will increase every year, thus an increase of customers every year for the next three years (Batt, 2002).

Internal Operations Perspective

It will be the culture of the division to measure performance in order to ensure that the employees are working towards the goals that align with the department’s mission, vision, and values (which also align with those of the company). Therefore, the manager will create files for each employee and ensure every process of the employee is recorded and discussed in the quarterly meetings. The decision-making will involve stakeholders and shareholders. However, to improve the production and lower costs; the division aims to use the machines that can produce at the minimum short-run average total cost. The division aims to improve the production by 5%, 8%, and 15% respectively for the next three years. However, to keep the business on track, the return on investment will be calculated after every three months. The division will highly incorporate new technology in order to improve production, sales, and marketing. The division will mainly concentrate on redesigning the products to meet the market needs. The risk that is expected is failure to cover operational costs from the business. However, to reduce such risk, the division will also open various stores in small towns. The assumption is that there will be appropriate pool of skilled labor in the division (Carrigan, 2000).

Learning and Growth

The division will start with five salaried employees: the manager, the accountant, and three sales representatives. The employees will work 40-60 hours per week and performance bonuses will be available. The employees will be able to benefit from one week of paid vacation every year as well as paid national holidays. The division will be highly specialized with talented employees. The rate at which the employee will leave the company is 1% every year for the next three years. The division will retain employees with 60% and above as indicated in the performance curve; the retention rate will be 90% for the next three years. The division strategic capability is based on its brand identity being rare, while its innovation will be outstanding as compared to similar companies. The division will have great financial support from the DuPont headquarters.

The culture of the division is to employ talented employees who will work hard, even when there is no one inspecting their activities. However, with the current technological changes, the division will adapt to ensure workplace innovation, which is the DuPont way. There will be use of data and accounting software in the stores. The manager will also be able to use software to record employees. Some of the risks that may arise are challenges that will be posed to employees due to growth, such as control and management capacities. These challenges may create internal problems and even risk damaging customer relationships. However, such risks will be avoided through daily checks and balances as well as research and development. It is assumed that there will be low competition from similar companies, thus growth is projected to increase by 4% for the first three years (Carmeli & Tishler, 2004).

Balance Scorecard (Norton & Russell, 2005).

Scorecard Four Balanced Areas for Measure	Strategic Objective	Measure	Metric	Targets
				Year 1	Year 2	Year 3
Financial	Improve revenue	Improve the overall profit margin of the company	Margin	↑5%	↑5%	↑5%
Customers	Grow the business through the customers	Increase the number of customers served by the business	Market share	↑4%	↑4%	↑4%
Operation or Process	Increase production at low costs	Use of machines that produce at minimum short-run average total cost	Product development process	↑5%	↑8%	↑15%
Learning and Growth	Improve strategies that help in improving productivity	Retain the employees at 50% and above as shown in the performance	Retention rate of talented employees	>90%	>90%	>90%

References

Batt, R. (2002). "Managing customer services: Human resource practices, quit rates, and sales growth " Academy of Management Journal 45(3): 587-597.

Bing, J. W. (2004). "Metrics for Assessing Human Process on Work Teams." International Association for Human Resource Information Management Journal 8(6): 26-31.

Carmeli, A. & A. Tishler. (2004). "The Relationship between intangible organizational elements and organizational performance." Strategic Management Journal 25(13): 1257-1278.

Carrigan, L. (2000). "Braking for Growth." Retrieved from http://www.echoinggreen.org/resource/orgdev/carr1.htm.

Norton, D. & Russell, R. (2005). “Balanced scorecard report.” Harvard Business School Publishing. Retrieved from http://reporting.talent20.co.za/Harvard/HMM10/strategy_execution/resources/b0505a.pdf

Bing, J. W. (2004). "Metrics for Assessing Human Process on Work Teams." International Association for Human Resource Information Management Journal 8(6): 26-31.