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" FERNDALE FASHIONS LTD "
(A Strategic Management Business Simulation)
Written by Ben Leppington, CIM, RPA
Copyright (c) 1992 All rights reserved
STUDENT MANUAL
CONTENTS
Preface (i)
Chapter 1
Introduction 1
On line History 1
Chapter 2 DECISION MAKING FEEDBACK 2
Feedback on your decisions immediate 2
Feedback on your decisions month end 2
Chapter 3 USING THE MODULES 2
[FINANCE] 3
A/R and A/P Management and Policy 3
Balance Sheet 3
Changes in financial position 3
Debt 3
Line of credit 3
Short term loans type #1 4
Short term loans type #2 4
Mortgages 4
Misc. credit 4
Investment 4
Short term investments type A 4
Short term investments type B 4
Short term investments type C 4
Bonds 4
Preferred Stocks 4
Income statement 5
Ratios 5
Print statements 5
[MARKETING] 5
Franchise fee 5
Product prices 6
Promo 6
Television 6
Radio 6
Printed Media 6
Projections 6
[PRODUCTION] 7
Capacity 7
Equipment 7
View equipment 7
Buy equipment 7
Sell equipment 8
Inventory 8
Output 8
Suppliers 10
[PERSONNEL] 10
Bonus/Raises 10
Demotions 11
Discipline 11
Feedback 11
Fire 11
Hire 11
Promote 12
View 12
Records 12
Organizational Chart 12
[OTHER] 13
Advance using date 13
Competitor profile 13
Customer profile 13
Economic and Environment profile 13
History of the company 13
Mini-Cases 14
Supplier profile 14
Chapter 4 GETTING STARTED 14
Read the on-line histories and profiles 14
Determine the corporate goals 14
Prepare a SAP 15
Prepare a ETOP 15
Identify and lay out your strategy 15
Begin the implementation process 15
Examine results and modify implementation or strategy 16
Completion of the Simulation 16
APPENDIX
Installing the Program onto a hard drive A1
Creating data disks A1
Products to Produce worksheet (Form #1) A1
Sales Revenue and Production Costs worksheet (Form #2) A2
Proforma Income Statement worksheet (Form #3) A3
Proforma Balance Sheet worksheet (Form #4) A3
Proforma Statement of Changes worksheet (Form #5) A3
Management Decision Journal (Form #6) A4
ETOP (Form #7) A4
SAP (Form #8) A4
Strategic Planning worksheets (Forms #9 - #12) A4
President's Annual Report to CEO (Form #13) A5
Financial Ratios A5
Forms 1-13 (blank)
PREFACE
This software program is for students of management and those
who will be interested in strategic management. It provides the user
with a hands on feel for some of the variables involved with managing a
business. The intent of the program is to provide an environment where
instant feedback is given in direct response to your decisions.
Theoretical recommendations normally used with text book case studies
of some fictitious or real company cannot be tested or applied with the
old fashion text book method. With 'Ferndale Fashions Ltd' you can now
test your theories and get instant feedback as to whether your
decisions were correct or not. You also get the real challenge of
being responsible for every aspect of the company.
Unlike other management simulation software, 'Ferndale
Fashions Ltd' was designed as a single user program. I believe that
whenever a software program calls for a group to make decisions, a sort
of group-think mentality becomes apparent. Another danger to members
of a group participatory simulation software program, is the individual
who is the more domineering or boastful of the group. This leader will
convince the others that his decisions are the correct ones. This
leaves some of the participants out in the cold and not satisfied with
their simulation experience on a personal level. There is plenty of
time and opportunity in life to learn how to work together as part of a
cohesive team. I take the position that early on in a student managers
development and especially with case studies, you need to see a direct
cause and effect response from your own decisions, not those of someone
else. A manager needs to learn their own style of management and it is
nice to experiment with your own ideas. This simulation program is the
ideal environment for such experimentation and serves as a safe place
to exercise your new management knowledge and skills.
This program represents many months of hard work and every
effort has been made to make the program FUN! I have endeavored to
take the simulation to a level of detail that will get you right into
it. The many thousands of algorithms required to make the program as
close to real life as possible was a challenge. The program cannot
duplicate real life of course and if it could no one would be able to
afford it's sales price or have the room to store the boxes full of
data bases required to duplicate every possible occurrence that would
face a manager over the course of a year. The program will give you
control of and allow you to cover the basics of management ie:
planning, organizing, directing, scheduling, staffing, asset control
and more. Also, even though this simulation takes place using a
clothing manufacturing plant, the decision making process and strategic
planning involved is transferable toward many businesses.
The simulation involves the user being hired on as President
of the two year old company by the CEO and owner of the firm. You will
have full control over every aspect of the company including finance,
marketing, production and staffing for a period of one year. The
organization of your decisions will be of prime importance, as if you
forget something or neglect warning signs, as in the real world, there
will be a price to pay for your mistake. You may be challenged by
this program and your decisions will have immediate and or long term
consequences. You will also be faced with a monthly mini-case from
within the simulation and these mini-cases will test your management
skills, ethics, social responsibility and judgement capabilities. You
(i)
will be tempted to stray from your original goals and strategies as new
opportunities or threats present themselves to you. You have been
hired to turn this struggling, cash-flow poor company around within one
year. Can you do it? Do you have the right stuff? I want you to feel
on the one hand the excitement and power of being a manager as well as
the fear of what a bad decision can do on the other hand. But most of
all I want you to have fun and enjoy using this simulation program.
What is the best strategy? There are many successful good
strategies, one will not necessarily be better than another. A
successful strategy is one that follows a strategic management system.
Correct interpretation and evaluation of the environment, economy and
the threats or opportunities it presents with a matching of the
company's internal strengths and capabilities within that environment
will be of prime importance. With every decision you make, think about
whether that decision is in line with the corporate objectives of the
company. A hap hazard approach coupled with poor planning is a sure
way to put the company into bankruptcy. Addressing the true causes for
the company's current problems early on in the simulation will help a
great deal, failure to identify what these problems are and the correct
approach to their resolution will cost you plenty, you may even have
your first management failure before the next 12 months are up. If
you do have a management failure don't feel bad, not everyone is a
winner the first time out on the track. If you learn something from
your failures, YOU are not a failure. Most successful people have
experienced failure many, many more times than they have experienced
success.
The instructor, if this program is used as a college training
exercise, will collect all printable reports or statements for the
completed 12th month of operations as well as the completed worksheets
that come with the program (located in the appendix). The instructor
should then examine your work and check to see that you have indeed
used a strategic management approach towards the simulation and have
documented your decisions in the journal. The higher the retained
earnings on the 12th month the better your performance. Or, the
higher the net income is the better. This does not mean that your
decisions should be bottom line effect only? As, you will be penalized
for making decisions that are unethical, immoral and that are not in
the best interests of society. As an example, if you decide to
sacrifice the environment in order to receive higher revenues, you will
be penalized based on the seriousness of the situation. You will also
receive bonus points for making good decisions. Bonus/Penalty scores
will be shown at the end of each mini-case's completion. You can use
the [SHIFT] + [PRINT] key combinations to get a screen print of the
scores.
So, to provide an easy method of determining an overall
better strategy over one that is solely bottom line profit oriented.
You will add the net effect of the bonus/penalty points to
your net income as follows. Multiply the net value of the total
bonus/penalty points by 10,000 and add this value to your net income.
Ie: If your net bonus/penalty score is negative 10. Multiply -10 *
10,000 = -100,000, so, you would deduct $100,000 from your net
income figure for the year.
(ii)
CHAPTER 1
INTRODUCTION.
Welcome to the 'Ferndale Fashions Ltd' business management
simulation. You are indeed privileged to be in a position to
experience this relatively new method of management training using a
computer to facilitate instant feedback on your decisions. The user of
the program will be given the opportunity to make decisions and see how
they impact on the company.
You will see how each component of a company with all of
it's operating departments work together and how they are dependant
upon one another during the implementation process.
In this simulation, I have designed the program to look at
as many variables as practical to create real reactions. As an
example variables involved with sales volume determination include the;
economy, availability of replacement goods, your products price,
quality of goods produced, how much you spend on advertising, your
salesman's ability to close sales, your capacity to produce and or
service the sale, time requirements, demand for your product and a few
others. Within the simulation as a whole there are thousands of
comparisons and algorithms used to provide the "realness" of the
program. Not everything can be examined and included within the
program, but I feel the net results provided by the program in response
to the decisions and strategy you use will be appropriate for the
purpose intended.
It is a good idea to evaluate the current situation with the
company. Determine what the strategy should be, make all of the
desired changes right away and then hold many of the variables
constant while playing with a few others. It is easier to measure
which changes are working when just a few variables are changed or
experimented with at a time. By changing just a few at a time you can
see which revenue and expense elements are providing the desired
results.
In brief, your company is only two years old and has grown
at a very fast rate. A garment manufacturer that uses a franchise
distribution system to move their products. Please read the on-line
history files available to learn more about Sara Ferndale, the company's
history, the economy/environment, customer profiles and more.
The program itself is menu driven and is easy to use. Drop
down menus are available for Finance, Marketing, Production, Personnel
and one called Other which contains the on-line history files and of
course other options. Within some of these drop down menus, sub-menus
are available for certain options.
The first thing you should read is the install procedure to
place the program on your hard drive as well as create a master working
data disk to store your data files. Install procedures can be found in
the Appendix. The second item to read would be the history files and
the various profiles that are available on-line.
1
ON-LINE HISTORY AND PROFILES:
The history of the company as well as profiles of the;
competition, customers, economy and suppliers are all available on-
line. They can be found by selecting the [OTHER] option from the main
menu of the program. Use the information provided within these files
to aid in the preparation of your strategic plans. There should be
enough information within the history and profiles in order to identify
company goals and objectives as well as to prepare a SAP (strategic
advantage profile) for the company and to prepare an ETOP
(environmental threat/opportunity profile). Read these files first
then prepare the SAP & ETOP, before you make any decisions.
CHAPTER 2
DECISION MAKING FEEDBACK:
Immediate feedback:
The program has been designed to show the effect of some
decisions immediately. This feedback would include certain obvious
moves such as buying a piece of equipment, investing in stock or bonds,
hiring/firing staff, bonuses, raises, securing debt and more.
Basically, most decisions that are not sale volume related will
automatically be reflected into the various financial statements
immediately. As an example, if you purchased a piece of equipment, cash
would be credited and the equipment asset account would be debited
immediately. Revenue (sales) and expense calculations (depreciation)
will not be shown until you use the Advance Date option.
Monthly feedback:
By using the Advance Date option located within the OTHER
main menu selections, the program will look at all of the decisions and
changes you have made for the month as well as the default positions of
every aspect of the company and calculate the revenue/expense items for
the month. You can print out any of the available financial statements
for any period at any time as well as view a current set of financial
statements, ratios etc on your video monitor.
CHAPTER 3
USING THE MODULES:
Pressing the cursor arrow direction keys will move and high-
light the main menu options. While a main menu option is highlighted,
you can drop down an options menu by pressing [ENTER]. The first option
on the drop down menu will then be highlighted. Using the up/down cursor
arrow direction key will scroll and highlight the options. When
an option is highlighted, you can select this option by pressing the
[ENTER] key. Sub-sub-menu options can be selected by pressing the option
number only or by pressing the option number following by pressing the
[ENTER] key. This latter procedure usually is required when option
numbers are greater than a single digit. Ie: to select option 14 you
would type in a 1 and a 4 and then press the [ENTER] key. Any sub-menu
2
that has more than 9 options available will require this procedure.
[FINANCE]
ACCOUNTS RECEIVABLE/PAYABLE MANAGEMENT:
You have complete control over the company's receivable and
payable policies. Unlike other simulation programs, I have allowed a
real world flexibility concerning what policies you would like to use
for these very important aspects of the company. You have complete
freedom to set policy for both a down payment requirement with sales
as well as when the balance due is expected. For an example, if you
want to set company policy that requires a 10% down payment with sales
orders and the balance to be received in 1, 2 or 3+ months from the
date of sale, you can. The same applies to accounts payable. You can
create policy only during the first month. Once set, it will be used
for the duration of the simulation! Be careful with your
payable policy, if the company is too delinquent or your payable become
too high the suppliers will cut you off! Franchise fees and the bulk
stock ($34,970 ea) that is sold to a new franchisee will be collected
immediately and are not governed by the A/R policy.
BALANCE SHEET:
From the FINANCE main menu option, selecting Balance Sheet
from the pull down menu will display the current year-to-date balance
sheet on your video monitor. To see past period balance sheets, you
will need to print them out using the print option of the main menu.
STATEMENT OF CHANGES IN FINANCIAL POSITION:
Selecting this option will display the current changes in
financial position statement.
DEBT:
Selecting this option will bring up a sub-menu which
displays 6 options and include Line of Credit, Short Term Loan type 1,
Short Term Loan type 2, Mortgage, misc. forms of credit available and
exit. To secure credit the bank will examine your financial statements
and make a decision based on your current credit worthiness. If your
ratios are not up to par or if your overall financial condition is too
risky, they will reject your application for credit. The monthly
payment on these loans will be automatic by the program and will vary
depending upon the amount and type of loan. Each type of loan carries
a different lending rate and is based as a percentage over prime. The
prime rate for the life of the simulation is set at 10%. Once a loan
has been secured, it cannot be paid out early. The lender requires a
repayment period of at least one year.
Line of Credit:
You can make arrangements with the bank for a $500,000 line
of operating credit at any time during the simulation. If your cash
balance ever reaches a negative number of -$200,000 YOU WILL GO
BANKRUPT !! and the simulation will end. The bank draft will hedge
your cash balance by 1/2 a million dollars and will buy you some time.
If your cash balance is positive, a repayment of overdraft used will be
made when using the Advance Using Date option.
3
S/T Loan type #1:
You can apply for a loan up to $100,000. The interest
charged is set at 3% above prime and some plant equipment will need to
be pledged as collateral. Repayment of principle and interest will be
automatic and monthly with 10% on principle and the balance of the
payment will comprise the interest.
S/T Loan type #2:
You can apply for an unlimited amount of money with #2
Loans. Whether you get what you apply for will depend upon your
current credit rating. Interest will be set at 4% above prime and
repayment of principle is the same as type #1 loans.
Mortgage:
You can mortgage the company's buildings and land. The bank
will lend up to 75% of the appraised value. Interest will be set at 2%
above prime and the monthly payment will be $3,446 with only $346 going
towards principle each month. Misc. Credit:
You can secure various forms of non-secured credit ie:
company credit cards etc. The maximum amount that can be secured is
$50,000 and this credit is easy to get. No collateral is required.
The interest rate on this form of credit is 22% per annum with a 10%
repayment of the outstanding balance plus interest required each month.
INVESTMENT:
Selecting this option will bring up a sub-menu that
displays 6 options; S/T investments type A-C, Bonds, Corporate Stocks
and exit. The investments available range from 6% below prime interest
bearing 100% Government of Canada insured and guaranteed investments to
a 2% below prime interest bearing 40% chance of loosing your investment
type. All investments are not locked in and can be cashed-in at any
time by using a negative number. Investment type A:
This investment type pays interest at 6% below prime and is
fully guaranteed by the Government.
Investment type B:
This investment type pays interest at 5% below prime and is
guaranteed by the Government at a rate of 60% of your total investment.
Investment type C:
This investment type pays interest at 4% below prime and is
not guaranteed by the Government. However, these investments are very
safe and the likelihood of loss is very low.
Bonds:
This includes numerous types of bonds available on the
market and are considered safe investments. No government insurance or
guarantee is available on these bond investments. Bonds will pay
interest at 3% below the prime rate.
Corporate Stocks:
This investment includes all types of preferred and common
stocks available on the market. A stock broker will decide where your
money is to be directed and what your portfolio will consist of. These
investments are highly volatile and you have a 40% chance of losing all
or part of your investment on any given month. The revenues received
4
from stock investments are compared to the prime rate and will pay on
average the highest rate of interest which is just 2% below the prime
rate or 8% per annum.
INCOME STATEMENT:
Selecting this option will display a year-to-date income and
expense sheet. To see past period income statements you will need to
print them out using the Print option.
RATIOS:
Selecting this option will display 4 columns of ratios. The
first column is for the year 1990. The second column is for the year
1991. The third column is the current year-to-date ratios. The forth
column is the Industry Standard ratios. The main category of ratios
include those for; liquidity, leverage, activity and profitability.
PRINT STMTS:
This option is used to print out the Balance, Income,
Statement of Changes in Financial position statements as well as the
year-to-date ratios. You will be presented with a sub-menu for the
Balance and Income statements and have the option of selecting the
year-to-date statements or you can print a statement for any previous
month. The Changes and Ratio statement is restricted to the year-to-
date default. Also, if you want to print any of the other reports or
listings contained within the other main menu options simply hold down
the [SHIFT] key and press the [PRINT] key while the report is up on the
video display monitor. You will receive a screen print of whatever is
currently displayed on the screen.
[MARKETING]
DISTRIBUTION:
Selecting this option will merely display a short text
indicating Ferndale's distribution method.
FRANCHISE:
Selecting this option will bring up a sub-menu; view, price,
graphic and exit options are available.
View:
Selecting this sub-menu option will display the franchises
sold to date. The address, town and province as well as which salesman
sold the outlet, including the franchise fee collected will be shown.
Price:
Selecting this sub-menu option will allow you to set the
franchise fee the company wants for selling an outlet license to the
franchisee. The franchise fee can be changed at any time and once set,
will act as a default price until changed. It is important to note
that when a franchise is sold approx. $35,000 (wholesale price value)
of product inventory is also sold to the new franchisee. This volume
is controlled by the program and you have no control over that. You do
have control over the price each garment is sold for however.
5
Graphic:
Selecting this sub-menu option will graphically display the
locations of all franchises sold to date on a map of the western
provinces. It's not high tech graphics, so don't get too excited.
PRICE:
Selecting this option allows you to set the prices for the
eleven different product categories the company manufactures and sells
to the franchisees. The price can be changed any time and once set, it
will act as a default price until changed. The display will also show
a complete break-down of the products costs to produce including
material costs, labour to produce the item, your wholesale price and
the franchises retail price, which is based on your wholesale prices.
PROMO:
Selecting this option will bring up a sub-menu that provides
three main advertising mediums; television, radio and printed media.
You can use one or a mix of all mediums and each medium will sell air
time or ad space at different rates. This option will "book" your ad
or air time but will not automatically charge your cash account for the
ads. You will pay for the advertising when the month has been rolled
over using the Advance Date option from the [OTHER] main menu option.
The simulation program will provide instant feedback for the booked
advertising however and if the projections option is viewed the booked
advertising will be taken into consideration for these projections.
The promo values are zeroed out after the Advance Date has been
executed, so you must evaluate your advertising and book new air-time
or ad space each month. The bookings of the previous month will not be
used as a default for future periods. You must re-book each month.
PROJECTIONS:
Selecting this option will display the marketing departments
projected sales of both potential franchise outlet sales as well as
individual franchise product sales volume. Total demand for franchise
outlet sales that could be sold is based on numerous factors including
the level of advertising expense, economy, franchise fee, number of
sales people, salespeople's skill level etc. While the actual
projected franchise outlet sales (as shown on the righthand side of the
screen) will be restricted by one additional element. This extra
element is the time constraints required to actually complete an outlet
sale and construct the leasehold improvements etc. The maximum number
of franchises that can be sold in any month by a single salesperson is
two.
You may wish to play with the variables and elements that
influence marketing and try to match the marketing mix to that of the
companies capabilities. A balancing act of these elements will produce
optimal performance. Spending too much on advertising for example can
be a waste of money. Advertising creates interest in Ferndale's
products and to a lessor degree for it's franchise outlets as a
business opportunity. An over abundance of franchise outlet interest
is wasted if you do not have the salespeople required to close the
outlet sale or the capacity to produce the products that could be sold
6
due to the extra interest created through advertising.
By evaluating your goals and insuring that you have the
physical capacity to meet those goals together with a marketing mix
that is sound, your goals will be realized.
One item to note on the franchise outlet sales volume demand
projections (as shown on the lefthand side of the screen) that may
throw you off, is that projected demand for franchise outlet sales is
influenced by the number of and skill level of salespeople you have on
staff. The reason why demand does not remain the same no matter how
many salespeople you have, is due to the fact that salespeople perform
marketing/advertising activities that are in addition to your regular
advertising campaigns. These franchise salespeople are by no means
just order takers, they must work hard to help create demand for the
franchise outlets. Advertising creates interest, but salespeople close
sales and create real demand not just interest. That is why the
"CURRENT STRATEGY COULD SELL" projections will decline or increase in
relation to the number of salespeople on staff. The "CURRENT STRATEGY
COULD SELL" projection will never be lower than the "FERNDALES'S
ABILITY TO SELL" projection, but it can be higher. In other words, the
only difference between the franchise outlet demand projection and the
company's ability to sell that many outlets is due to the time
constraint element.
[PRODUCTION]
CAPACITY:
Selecting this option will display a line of text that will
tell you what the current capacity to produce is based on the equipment
held by the company. This is not to say that you will produce this
amount as if you have fired your Production manager or some other event
will cause your actual production capability to be reduced. Also, the
capacity to produce for each piece of equipment will decline over time
due to wear and usage. The value of this decline is based on the level
of depreciation for each piece of equipment.
EQUIPMENT:
Selecting this option will bring up a sub-menu. The sub-
menu will display 4 options; view equipment, buy equipment, sell
equipment and exit. You have complete control over the assets of the
company and can buy and sell equipment as desired.
View equipment:
This option will display a list of all the company's plant
equipment, it's capacity, it's purchase cost and it's book value.
Buy equipment:
This option lets you buy equipment on the open market.
Equipment for sale will show it's type, capacity and cost values are
displayed. No credit is available through the equipment seller, so you
must pay for the purchase immediately. That is not to say that you
cannot get a loan from the bank first then go back and buy the piece of
equipment.
7
Sell equipment:
This option allows you to sell existing equipment. The
amount that you can sell the equipment for will be for the purpose of
this simulation, based on the current book value for a particular piece
of equipment. So, no gain or loss will be realized on the sale of
assets. Certain assets can not be sold and you will be informed of
this if you try to sell them. Selling equipment may be advantageous if
a replacement can be purchased that will provide a greater capacity for
less money invested. Careful analysis of current equipment verses
those available for sale will be required to make an informed decision.
INVENTORY:
Selecting this option will display the setting for minimum
inventory levels for each product, raw materials inventory as well as
the actual level of inventory you have on hand right now. This option
also provides you with a means of setting a minimum inventory level to
maintain at all times. Minimum inventory levels provide a buffer
between production time requirements and delivery lag time of raw
materials. For the purposes of this simulation, you will not want to
keep too much money tied up in inventory as stock will be sold down
only to the level of the "minimum stock on hand" that you select.
Most Japanese manufacturers try to keep inventory levels down to the
absolute minimum with unusually high inventory turnover ratios.
OUTPUT:
Selecting this option will enable you to provide instruction
to the Production Department. You will, on a monthly basis fill out a
"Products to Produce" order form. This will let the production
department know how much raw material to buy and how many individual
products to produce for the month. You will use the projections
received from the marketing department in order to fill out this
production order. You have complete control over how much to produce
and a careful look at your cash, accounts payable, accounts receivable,
sales projections, inventory levels and how many new franchises will be
sold that month will help you make informed decisions. Once you have
completed the order form, the program will tally up the costs for raw
material purchases and provide you with an option to modify the order
or proceed to file the order with the production department. The
prices used to calculate the raw material costs will depend upon which
supplier you have decided to use that month. The program will warn you
that it will use the currently selected supplier to fill the order and
provide you with an escape route to go back and change suppliers if you
wish. If you, for some strange reason, forget to place a "Products to
Produce" order with the Production Department in any given month, the
program will provide you with a remingder to do so. The raw material
and finished product inventory levels will change in accordance with
your ability to do the job. The actual stock items that are sold with
a new franchise are:
Pants: Mens 150
Pants: Womans 250
Pants: Boys 140
Pants: Girls 160
Shirts:Unisex 400
8
Skirts 100
Jackets: Mens 80
Jackets: Womans 90
Jackets: Boys 50
Jackets: Girls 40
Handbags 30
-----------
1,490 garments
It is important to remember these quantities when placing your monthly
"Products to produce order". You will need to not only calculate the
monthly volumes required for existing franchises, but will have to add
the extra garments listed here to your order. New franchises that will
be sold in the current month will not be included when calculating the
total sales volumes for the current month. Instead, you must multiply
the projected sales volumes available by the number of current existing
franchise outlets, then add the bulk inventory that is sold with each
new franchise together with the regular volumes.
As an example, suppose that the marketing department has
indicated that 8 franchises will be sold this month (Use the
[MARKETING] main menu then select the sub-menu [Projections] ) and you
currently have 32 franchises outlets (not including the 8 that will be
sold this month). You will calculate a "Products to produce order" as
follows:
Individual # of Total Bulk Products
Product Franchise Existing For Sale To
Volume Franchises Franchises Volumes Produce
Pants: Mens 90 X 32 = 2880 + 1200 = 4080
Pants: Womans 151 X 32 = 4832 + 2000 = 6832
Pants: Boys 98 X 32 = 3136 + 1120 = 4256
Pants: Girls 112 X 32 = 3584 + 1280 = 4864
Shirts:Unisex 254 X 32 = 8128 + 3200 = 11328
Skirts 65 X 32 = 2080 + 800 = 2880
Jackets: Mens 43 X 32 = 1376 + 640 = 2016
Jackets: Womans 48 X 32 = 1536 + 720 = 2256
Jackets: Boys 29 X 32 = 928 + 400 = 1328
Jackets: Girls 23 X 32 = 736 + 320 = 1056
Handbags 17 X 32 = 544 + 240 = 784
----- ----- -------- ------ ---------
Total Units 930 32 29,760 11,920 41,680
So, from the summary above it has been established 41,680
units of clothing will have to be recorded on the Products to Produce
Order form to meet the products needs for the current month. A
"Products to Produce Order Form" can be found in the Appendix. Just
photocopy as many copies as you need.
You will also have to make sure that you can produce 41,680
units by checking your company's capacity (use the [PRODUCTION] main
menu and select the [Capacity] sub-menu). If the Capacity is lower
than the volume being ordered, you need to purchase some more
equipment. If you cannot afford to buy more equipment, you will have
lost sales.
9
SUPPLIERS:
Selecting this option will provide you with an option to
select raw material purchases from three separate sources. You can use
one or all three at the same time for various raw materials. The only
restriction is that you can only use one supplier for each type of raw
material purchased. IE: use supplier #1 for material A, supplier #2
for material B, Supplier #2 for material C and supplier #3 for material
D. Or use any supplier for all the material types that you require.
The quality of each fabric that the supplier sells is also displayed
and is an important component. Suppliers will know through credit
checks how much you own other suppliers so don't be fooled into
thinking that you can charge up purchases for three months with one
supplier and then change suppliers to begin a new cycle of credit
purchases. Generally, the suppliers will grant credit for purchases up
to a maximum of $1,000,000. If you owe more than a million dollars to
raw material suppliers in total and your accounts payable policy states
that you will pay suppliers in say two months, forget it, you will be
cut-off from any further purchases until the account is made current.
Don't let your payables get out of hand or you will lose an entire
months worth of sales due to poor accounts payable management. This
will not make your creditors, franchisees or Sara Ferndale very happy.
[PERSONNEL]
BONUS/RAISES:
Selecting this option will provide you with a means to give
deserving managers a bonus or a raise in pay. Depending upon the value
of the bonus or raise the manager will be made more happy with their
job and the company. It is important to note that if a particular
manager is unhappy due to an underlying cause, bonuses and pay raises
will act as a temporary fix or a band-aid solution towards the
employees declining unhappiness. If the true problem with the employee
is not known, bonuses and raises will prevent the manager from quiting,
but it will cost more to keep them happy using bonuses or raises over
the long haul. Simply select the record number of the manager to be
given a bonus or raise and enter the dollar value of the bonus or
raise. It is difficult to simulate non numeric value rewards such as
intrinsic rewards, so the program does not contain any. I am not
suggesting that a monetary reward is the only or best method to
motivate or reward an employee for a job well done or to increase an
employees overall happiness with the company. If an employee is
incompetent within their job, the stress from their inability to cope
with their position will remain no matter how many raises or bonuses
you give them. The program uses dollar values to deal with bonuses and
raises to overcome an employees declining happiness values, but a
promotion may also cure what's ailing an individual who has a high
skill level and is in a lower level managerial position or is being
paid a wage which is too low. Promoting an employee may be the wrong
decision for someone who is incompetent in their current position. How
can you determine what is wrong with an employee? The Feedback option
will provide memos sent to you by the employees. By examining the memo
which will be presented in short one line condensed versions, you can
tell what the problem is. The value of bonuses are recorded to the
ledger account Bonus and Benefits immediately.
10
Demote:
Selecting this option will enable you to demote an employee.
Demotions are not always a negative thing to do to someone. If an
employee is incompetent within their position, a demotion will
alleviate the long term stress that is causing their unhappiness and
cause only a temporary increase in their present unhappiness until they
readjust to the new position, which they are capable of handling.
However, if in the example above, a demotion is deferred too long, the
added stress of the demotion will push them over the edge and the
employee might quit.
knowing the signs of when an employee is in over their head will help
you to realize when a demotion is preferred over added bonuses or pay
raises to try to cheer up an incompetent over stressed employee.
DISCIPLINE:
Just as you can give bonuses and pay raises you can give
discipline to an unruly employee. Select this option and identify the
employee to receive the discipline. Enter the value of the discipline
to be given and press enter. In the same way that rewards are given a
monetary value even though the reward could be intrinsic, discipline is
recorded in monetary values as well. The discipline could be intrinsic
as well, without a true monetary value, but program restrictions
require that a monetary value be used for all disciplinary action. The
value of such discipline is credited against the Bonus and Benefits
expense account.
FEEDBACK:
Selecting this option will provide you with current feedback
from your managers. The feedback takes the form of condensed memo's
that come straight to the point. It is important to monitor the memo's
to get a feel for who is in the right position and what action needs to
be taken to address each individual memo. It is important to read your
managers memo's every month.
FIRE:
Select this option to fire a manager. It is unlikely that
you would want to fire very many of the existing staff members, but if
you view it as a logical decision that is required, the option to do so
is available to you.
HIRE:
Select this option to hire new staff members. There is a
cross section of salesman, production managers, garment designer,
marketing experts, financial managers, personnel manager etc. You can
select likely candidates from a list. This list shows their
background, skill levels and the asking salary they would want to come
on board and work for Ferndale. You are free to adjust their pay scale
up or down once they are hired. Depending upon their qualifications,
11
practical experience and skill level, you could successfully re-
negociate a new salary with them. But, if the new salary does not
compensate fairly for those above mentioned attributes compared to the
industry standard, they will become unhappy and you will have to deal
with that.
PROMOTE:
Selecting this option will enable you to give an employee a
promotion. When a manager is promoted, they will move up the ladder
one step. The wage and remuneration package will automatically be
given to the promoted individual based on the industry average for such
positions. Ferndale has not promoted anyone since the inception of the
company, so the wages paid to the current managers are considerably
lower than the industry standard. If you promote anyone they will
receive a considerable pay increase.
Ferndale has identified the following levels of management and provides
enough steps to keep highly skilled managers on the company's payroll
for a long time:
Vice-President
General Manager
Assistant Manager
Supervisor
Once someone has been promoted and have gone from $30,000 per year to
say $50,000 per year, you can still adjust their salary downwards.
Although to do so would cause unhappiness in the individual. A
balanced "fit" between the employee and the job is required. The
minimum skill level required to be a supervisor is 5 with one
additional point required to be comfortable within the job. So, a Vice
President would need a skill level of at least 8 and preferably 9 to be
comfortable within the job. Anyone who has a skill level that is lower
than the requirement for the job will become unhappy. Anyone who has a
higher skill level than their current position demands will also be
unhappy. If this decline in happiness is allowed to continue the
happiness value shown in the employees record will continue to decline.
Sure, bonuses and pay raises will temporarily increase well being and
happiness levels, but if the value indicated for the employees
happiness drops too low, they will give warning and quit their jobs.
VIEW RECORDS:
This selection will bring up a sub-menu; view records or
view the organizational chart.
View Records:
The view records will display information on each manager
individually. The record is basically a payroll record that shows
their address, experience, skill level, and annual salary level etc.
You can flip through them one at a time.
Org. Chart:
The organizational chart is just a graphical representation
12
of where the managers fit within the company. Only those with general
manager statis will be shown along with specialty positions that are on
par with GM's statis, ie: a clothes designer or personnel manager if
hired would be depicted on the organizational chart.
[OTHER]
ADVANCE DATE:
Use this option to advance the using date ahead to the
beginning of a new month and to have the program assess and calculate
the months transactions based on the decisions you have made for the
month. When you first begin using the simulation, you are on January 1
1992. You can make all the decisions you want, which basically sets
the defaults for the way you want the month to proceed. Once you are
happy with the decisions you have made, you will advance the using date
which will execute the operations for the entire month integrating the
decisions you have made for that month. All revenue and expense
accounts concerned with the accrual operations during the month will be
calculated and posted when the "Advance Date" option is executed. You
will given a WARNING screen when this option is chosen from the menu
and you will have the opportunity to escape at that point. If you do
not escape from the WARNING screen, the monthly roll over and
calculations will be made. You cannot go back and rework a month once
it has rolled over into a new month. There are a lot of calculations
being performed during the Advance Date process and it might take a few
minutes to complete the process. You will not be allowed to advance
the using date until you have completed the required monthly mini-case.
COMPETITORS:
This is one of the environmental historical text profiles
available on-line. These profiles are useful in preparing strategic
plans and general information about the industry. These text files are
in point form, making them brief and concise.
CUSTOMERS:
Another on-line text profile that you should read and can go
back to for reference during the course of the simulations.
ECONOMY:
Yet another on-line text profile that you should read.
HISTORY:
This is an on-line text file, which outlines briefly the
history of Sara Ferndale and the company's progress up to the time of
your being hired on as the new Vice President. This is a must read
file.
13
MINI-CASES:
Once each month, you are required to make decisions
involving a min-case. You must complete a decision on the monthly case
in order to advance the using date forward into the next month. The
mini-cases involve certain opportunities or possible threats as well as
other items that managers could face. Each case has an exit to think
about option that will afford you the time you need to evaluate the
case and the consequences of the various options that are presented to
chose from. Some cases will have more options available than others
and you may not agree with any of the possible options that are
available, so try to pick one that will produce the desired result even
if you don't agree with the reason presented with the option.
Your selection of an option to handle the mini-case will be
graded. You will receive bonus points for good decisions or penalty
points for not so good decisions. Bad decisions that are solely bottom
line or profit orientated that have the possibility to hurt the
environment or others will be penalized. At the end of each min-case a
Bonus/Penalty summary screen will be shown.
The general approach is to make all the decisions you want
to make for the month then proceed to do the mini-case and finally
advance the using date to finish the month off.
SUPPLIERS:
This is another on-line text file which profiles the raw
material suppliers available.
CHAPTER 4 GETTING STARTED
The first step of course is to install the program files
onto your hard drive and make a master data disk as outlined in the
Appendix. Then read the history/profile text files within the program.
Read the on-line History files:
You will need to read the history and profiles for;
competitors, customers, economy, suppliers and the company's history in
order to get a feel for the industry and the company that operates
within this industry. The information contained within the profiles
and history are used to prepare a SAP and ETOP, which is discussed in
detail below.
Determine the company goals:
Without goals the company will be like a ship floating
aimlessly towards no particular destination. Failure to identify
company goals is a plan for disaster. As without goals you have no
base to build from. How do you know what implementation process to use
if you don't even know what you want? How can you determine if anyone
is doing a good job if there are no quotas to be filled? What business
are you really in?
You will need to write a short paragraph that describes
concisely what business this company is in. You will need to write
14
down the corporate goals you wish to achieve with this company. Be
specific with the goals ie: to increase sales by 50% during this year.
To ensure that 30 more franchises are sold this year. To increase net
after tax profits by 10% this year.
You may need to downsize or upgrade these initial goals once
you have completed the strategic management planning process and when
the feedback is received through the implementation process. These
first round goals are at least a starting point.
Prepare a SAP (Strategic Advantage Profile):
The company you will be managing has within it's structure
certain advantages or strengths. You must be able to identify and
evaluate a company's strengths and weaknesses in order to take
advantage of environmental opportunities or to avoid certain threats
that will influence your company's destiny. If you do not know the
strengths and weaknesses, you will not be in a position to recognize
how your company will be affected by the environment. This will cause
you to make bad decisions and will eventually lead to bankruptcy.
Other problems with committing the company to a contract that the
company simply cannot meet can be avoided if you know it's strengths
and weaknesses. A SAP would examine such internal factors as;
corporate resources, personnel, finance and accounting, production,
operations management, R & D, marketing and distribution.
Prepare a ETOP (Environmental Threat/Opportunity Profile) :
The ETOP examines such external factors such as;
Socioeconomic, Technological, Competitors, Suppliers and any
Governmental implications that may affect the company.
Identify and lay out your Strategy:
Once you have identified your company's mission or
objectives, examined it's internal strengths and weaknesses and compare
that to the environmental threats and opportunities, you are now ready
to identify HOW you are going to accomplish the company goals. How are
you going to achieve these goals? The implementation part of strategic
planning is the usual planning, organizing, staffing, control
directing, schedualing, budgeting, reporting etc that is normally
associated with management. Use the strategy worksheets found in the
appendix to identify your strategies.
Begin the implementation process:
This company already has an implementation process in place,
but is it a correct process? After you have evaluated the SAP and ETOP
together with the CEO's objectives for the company, you may want to
adjust certain aspects of the current implementation process to better
meet the objectives of the company. Prepare projections for
the entire year and break this annual projection down into monthly
projections. Know in advance how much equipment you will need to buy
along the way, know how many franchises can be sold and plan for it.
Know ahead of time how your going to deal with a cash crunch etc.
15
Examine actual performance and modify implementation or strategy:
To remain efficient and on track, the individuals in charge
of strategic planning will periodically evaluate operations feedback
against corporate goals to see if the implementation process or the
goals themselves need to be adjusted. Unrealistic goals that have been
made with little thought towards the company's strengths/weaknesses or
real ability will cause wide gaps between the goal and the actual
performance. Modify your implementation process or strategy:
Upon evaluating the current implementation process over a
period of time, you will know if the current strategy is working or
not. Gaps within certain aspects of the company will be noticed.
These gaps if negative will need to be addressed. The hard part is
knowing which variable within the company is the weak link. Not giving
enough time for an implementation change to bring about the desired
results is also a danger. Positive gaps can also be a problem if the
other implementation factors are not adjusted upwards to handle the
situation. Ie: if sales potential is greater than your ability to
produce product, you will lose profits and have an unhappy sales force.
Some links of the company chain may be very strong while others that
are weak will hold the company back. Learning to identify gaps and the
reasons for them together with a balancing of implementation chains or
departments to work together harmoniously and to the maximum of their
ability is the key to successful management.
Completion of the Simulation:
Once you have completed the mini-case for the last month of
operations (December) and have used the Advance Date function, you have
completed the simulation. The only remaining task to perform, is to
print-out the final financial statements for the month of December.
After the program has completed calculations using the
Advance Date option, the program will show a screen that will indicate
that you are finished and will provide you with a reminder that you
still need to print off the financial statements. The program will
then bring you back to the main-menu, where you can print the
statements immediately or you can defer this task until another day.
The program has a built in termination procedure that will
prevent you from entering any further data or using any of the program
modules except for the view or print statements options contained
within the Finance module. When the simulation is over it's really
over. You can begin a new simulation starting from scratch by using
one of the backup copies of the original Student Master Data Disk.
16
APPENDIX
Installing the Program on a Hard Drive:
The program comes in an archived self-extracting file, which
can be copied into any hard-drive directory or subdirectory.
If you are viewing this using an Ansi text reader or reading
it hardcopy, you obviously have self-extracted the files. There is
another self-extracting archive file called PROGRAMS.EXE, which contains
all the program files and data files. This file will be de-compressed
when you use the INSTALL.BAT file. Make sure to read the file 1STREAD.DOC
which explains the install further.
Create back-up copies of the original data disk:
Use the Master Student Data Disk to make several copies of
the data disk. The purchaser of the program is allowed to make as many
copies of the data disk as desired, however only one copy of the
program can be used per machine. The main purpose of having numerous
copies of the data disk is for back-up and to provide the student with
the opportunity to restart the simulation from scratch should they want
to try the simulation more than one time. This would be desirable
should the unfortunate student go bankrupt after only three months into
the simulation. To make back-up copies of the Master Data Disk, place
the original in drive A: and a blank formatted disk in drive B: then
type in the DOS command DISKCOPY A: B: or you can use COPY *.* A: B:
(consult your DOS book for further instructions)
Products To Produce Worksheet (Form #1):
Use this worksheet to determine the total volume of units to
produce for each individual product. From the marketing main-menu,
select the sub-menu called [Projections]. Make a hard copy of the
figures shown on the screen by pressing down and holding the [SHIFT]
key while tapping the [PRINT] key. This will print a hard copy of what
is currently shown on the screen. Remember that the volumes shown from
this projection are range sales volumes for a single franchise and
must be multiplied by the total number of currently existing
franchises. You must determine the exact volume to use from the range.
Transfer the volumes received from the screen-print over to
column #1 'Individual Franchise Volume' onto Form #1. Next, write down
the number of currently existing franchise outlets into column #2. Now
complete column #3 by, multiplying the volume shown in column #1 by the
number of existing franchises as shown in column #2. To complete
column #4 'Bulk Sales', you will need to complete the lower section of
Form #1 called 'New Franchise Bulk Sales Volume'. From the upper
righthand portion of the on-screen print-out, enter the number of
projected franchise outlets that will be sold this month into column #2
of this lower section. Complete column #3 'Total Bulk Sales Volumes'
by multiplying column #1 by column #2 (Volumes sold with each new
franchise X # of franchises that will be sold this month). You are now
ready to transfer these bulk sales volume figures up to column #4 on
Page A1
the upper portion of Form #1. To calculate the values for column #5
'Volume To Produce', simply add column #3 with column #4 (Total Volume
For Franchises + Bulk Sales Volume).
You have now projected the total product volumes that need
to be produced for this month. The actual volumes that can be produced
will of course be limited to the company's actual capacity to produce.
Sales Revenue and Production Costs Worksheet (Form #2):
Use this worksheet to project your revenue and production
expenses for the month. From the 'Products To Produce' worksheet
(Form #1), copy the total product volumes that you have decided to
produce for the month into column #1 of the Revenue and Expense
worksheet (Form #2). Next, go to the bottom of Form #2 and complete
the three columns, which are the material cost per unit, labour cost
per unit and the selling price per unit. This information can be found
by selecting [MARKETING] from the main-menu and selecting [Product]
from the sub-menu. Complete column #2 of Form #2 by multiplying the
volume to produce figure for each product by the corresponding material
cost per unit shown in column #1 of the lower portion of the form.
Proceed to complete column #3 of Form #2 by multiplying the volume to
produce figure for each product by the corresponding labour cost per
unit shown in column #2 of the lower portion of the form. Column #4
total production costs is calculated, simply by adding the monetary
values of column #2 and column #3 together (Total Material Costs +
Total Labour Costs). The final column #5 total sales revenue is
calculated by multiplying the volume to produce figure for each product
by the corresponding selling price per unit shown in column #3 of the
lower portion of the form.
You now have completed Form #2 and have projected the
monthly revenue and production expenses. Whether these projected
figures will be correct will depend upon the actual demand and the
company's capacity to produce.
The actual costs of materials posted to expense will be in
relation to the actual sales made, as the material costs are
capitalized and held in the inventory account until sold. However, the
labour costs associated with making the products will be expensed out
whether the product is sold or not. So, labour costs will not be
capitalized and included in the inventory account values. Labour costs
will vary in relationship to the capacity of the company. If the
company has the capacity to create the volume of products ordered, the
labour costs for all products produced will be expensed immediately
and the cost of raw materials used will be transferred from the Raw
materials inventory into the Finished product inventory. If the
company does not have the capacity to produce the volume of products
ordered, the raw materials will be purchased and kept in raw materials
inventory, thus no corresponding labour is expensed nor are there any
expenses recognized for the excess products that were ordered but could
not be produced. The material costs for the excess is held in the raw
materials inventory.
Page A2
Proforma Income Statement Worksheet (Form #3):
Use this worksheet to project the revenue and expenses for
the company each month. The information required to complete the
income and expense projection can be found in numerous areas including
other worksheets you have prepared and data available from the various
departments. The impact of revenue and expenses generated from mini-
cases will need to be recorded on the back of your decision journal
Form #6 in order to incorporate the impact onto your projections.
A guide to help you find the required information is shown below:
ACCOUNT WHERE INFORMATION CAN BE FOUND
Sales Form #2
Franchise Fees [MARKETING] > [Projections]
Interest Income Form #6 and [FINANCE] > [Investment]
Raw Materials Used Form #2
Direct Labour Form #2
Fashion Design Wages If you hired a fashion designer [PERSONNEL]
Franchise Sales Wages [PERSONNEL] > [View Records]
Franchise Services $8,000 for each new outlet sold + 2% of sales.
or $10,000 min if no product and outlet sales.
Administrative Wages [PERSONNEL] > [View Records]
Bonus & Benefits Form #6
Marketing Form #6 and [MARKETING] > sub-options
Interest Form #6 and [FINANCE] > [Debt] > sub-options
Depreciation Previous Balance Sht or [PRODUCTION] >
[Equipment] > [View] for current book value.
Buildings = 5% per year, Equip = 20% per year.
1/2 year rule does not apply in the simulation
Overhead & Other 15% of sales or $10,000 min if no product sale
Income Tax Paid Out 40% of Profit. Losses will receive a refund.
Proforma Balance Sheet Worksheet (Form #4):
Use this worksheet to project what the year-to-date balance
sheet will be for the month-end. Use the previous month's balance
sheet together with completed Form #6 and Form #3 to provide
information necessary to complete Form #4.
Proforma Statement of Changes Worksheet (Form #5):
Use this worksheet to project your year-to-date cash flow.
Use completed Form #4 to complete this form. A good understanding of
the impact a decrease or an increase in a particular balance sheet
account will have, is needed in order to know whether the change has a
source or a use effect upon the cash account.
Given the presentation limitations of the Changes Statement,
when an increase is projected for an account that is presented as
"Decrease in account name", simply write this number as a negative
number. The same is true for the reverse, where a projected change is
a decrease and the Changes Statement has presented the account as
"Increase in account name", simply write this number as a negative
number as well.
Page A3
Once the form has been completed, simply add up all the
positive numbers and subtract all the negative numbers. The ending
number you are left with added to the beginning cash on 91/12/31 should
be your ending cash balance for the month. Remember not to let your
cash balance exceed -500,000 or you will go bankrupt!
Management Decision Journal (Form #6):
Use this form to document all of your decisions each month
as you progress through the simulation. You will need 12 copies of
this and the other forms, so please photocopy as many as you need.
It is important to document your decisions in order to know
what impact your decisions are having and what decisions you made when.
There is a lot of detail in this simulation and you will not remember
everything, like how much did you spend on Television ads 4 months ago
or who received a raise and for how much, or when product Y was priced
at X was there a 5% or 10% drop in demand? It will also help to
explain unexpected or forgotten revenue and/or expenses that arise from
the decisions you made with previous mini-cases.
Environmental Threat Opportunity Profile (ETOP) Worksheet (Form #7):
Use this form to prepare your analysis of the external
environment. The principles involved with preparing an ETOP are beyond
the scope of the objectives for this simulation. Consult a Strategic
Management text to learn about this step in the art of SM.
Strategic Advantage Profile (SAP) worksheet (Form #8):
Use this form to prepare your analysis of the internal
environment. What strengths or weaknesses does the company have and
how can you use the strengths and correct or avoid activities that are
dependant upon those weaknesses. The principles involved with
preparing a SAP are beyond the scope of the objectives for this
simulation. Consult a Strategic Management text to learn about this
step in the art of SM.
Strategic Planning Worksheets (Forms #9 - #12):
There are 4 separate worksheets included for you to prepare
your strategies, policy, implementation and feedback procedures within
this simulation. Each page will cover one of the company's departments
and should be completed before continuing on with the actual
simulation software program. An example of completed form follows:
┌───────────────────────────────────────────────────────────────────┐
│ Student Name: STRATEGY WORKSHEET PAGE 2 │
├───────────────────────────────────────────────────────────────────┤
│ STRATEGY FOR THE COMPANY MARKETING Form #10 │
├───────────────────────────────────────────────────────────────────┤
FRANCHISE UNITS SOLD OBJECTIVE: To sell 50 more outlets this year.
What is the plan to implement this objective: Hire two more sales-
people, increase ad cost by 40% and equipment expenditures by 95%.
What procedures will you use to implement the plan: Secure and
allocate the required funds for; staff, capital equipment and
Page A4
advertising space while remaining solvent at all times.
What methods of control and feedback will you use: Have the Marketing
Dept. prepare multiple projections each month and evaluate progress.
Insure the Production Dept. has the capacity to produce the bulk and
ongoing sales necessary for each new outlet sold.
Annual Report To The CEO (Form #13):
This is a three page questionnaire containing 42 questions.
You are required to complete this report on separate paper and submit
it to your instructor along with a balance sheet, income statement,
statement of changes and ratio print-outs. You may also be required to
hand in your completed worksheets if requested by your instructor as
back-up.
Financial Ratios:
As most of these ratios will be found in several of your
college texts, no re-iteration will be made within this student manual.
One of the goals of your financial plan should be to strive for ratios
that are in line with that of the Industry Standard. However, given
that most business entities are unique in some way, Industry Standards
are not always applicable to your company. For example if you owned a
flower shop that also sold glassware or numerous other products besides
flowers, you would not be able to compare yourself to the industry
standard digit for digit. Also, if your company ventures into vertical
/horizontal or backward/forward integration activities, your
performance will also be different than that of the industry. So,
don't rely solely on ratios to provide performance evaluation, rather
use multiply analysis tools to evaluate your company's performance over
time.
Page A5
┌──────────────────────────────────────────────────────────────────────────┐
│Student Name: For the month of: │
├──────────────────────────────────────────────────────────────────────────┤
│ PRODUCTS TO PRODUCE ORDER FORM Form #1 │
├─────────────────┬────────────┬────────────┬────────────┬───────┬─────────┤
│ │ │ │ │ │ │
│ PRODUCT │ INDIVIDUAL │ # OF │ TOTAL │ BULK │ VOLUME │
│ │ FRANCHISE │ EXISTING │ FOR │ SALES │ TO │
│ │ VOLUME │ FRANCHISES │ FRANCHISES │ │ PRODUCE │
├─────────────────┼────────────┼────────────┼────────────┼───────┼─────────┤
│ Pants: Mens │ │ │ │ │ │
├─────────────────┼────────────┼────────────┼────────────┼───────┼─────────┤
│ Pants: Womans │ │ │ │ │ │
├─────────────────┼────────────┼────────────┼────────────┼───────┼─────────┤
│ Pants: Boys │ │ │ │ │ │
├─────────────────┼────────────┼────────────┼────────────┼───────┼─────────┤
│ Pants: Girls │ │ │ │ │ │
├─────────────────┼────────────┼────────────┼────────────┼───────┼─────────┤
│ Shirts: Unisex │ │ │ │ │ │
├─────────────────┼────────────┼────────────┼────────────┼───────┼─────────┤
│ Jackets: Mens │ │ │ │ │ │
├─────────────────┼────────────┼────────────┼────────────┼───────┼─────────┤
│ Jackets: Womans │ │ │ │ │ │
├─────────────────┼────────────┼────────────┼────────────┼───────┼─────────┤
│ Jackets: Boys │ │ │ │ │ │
├─────────────────┼────────────┼────────────┼────────────┼───────┼─────────┤
│ Jackets: Girls │ │ │ │ │ │
├─────────────────┼────────────┼────────────┼────────────┼───────┼─────────┤
│ Handbags │ │ │ │ │ │
├─────────────────┼────────────┼────────────┼────────────┼───────┼─────────┤
│ TOTALS │ │ │ │ │ │
└─────────────────┴────────────┴────────────┴────────────┴───────┴─────────┘
NEW FRANCHISE BULK SALES VOLUME WORKSHEET
┌─────────────────┬────────────┬────────────┬────────────┐
│ Products │ Volume │ # Of New │ TOTAL │
│ That Are │ Sold With │ Franchises │ BULK │
│ Sold With │ Each New │ That Will │ SALES │
│ Each New │ Franchise │ Be Sold │ VOLUMES │
│ Franchise │ │ This Month │ │
├─────────────────┼────────────┼────────────┼────────────┤
│ Pants: Mens │ 150 │ │ │
├─────────────────┼────────────┼────────────┼────────────┤
│ Pants: Womans │ 250 │ │ │
├─────────────────┼────────────┼────────────┼────────────┤
│ Pants: Boys │ 140 │ │ │
├─────────────────┼────────────┼────────────┼────────────┤
│ Pants: Girls │ 160 │ │ │
├─────────────────┼────────────┼────────────┼────────────┤
│ Shirts: Unisex │ 400 │ │ │
├─────────────────┼────────────┼────────────┼────────────┤
│ Skirts │ 100 │ │ │
├─────────────────┼────────────┼────────────┼────────────┤
│ Jackets: Mens │ 80 │ │ │
├─────────────────┼────────────┼────────────┼────────────┤
│ Jackets: Womans │ 90 │ │ │
├─────────────────┼────────────┼────────────┼────────────┤
│ Jackets: Boys │ 50 │ │ │
├─────────────────┼────────────┼────────────┼────────────┤
│ Jackets: Girls │ 40 │ │ │
├─────────────────┼────────────┼────────────┼────────────┤
│ Handbags │ 30 │ │ │
└─────────────────┴────────────┴────────────┴────────────┘
┌──────────────────────────────────────────────────────────────────────────┐
│ Student Name: For the Month of: │
├──────────────────────────────────────────────────────────────────────────┤
│ │
│ SALES REVENUE AND PRODUCTION COSTS WORKSHEET Form #2 │
│ │
├────────────────┬────────┬─────────┬─────────┬──────────────┬─────────────┤
│ │ VOLUME │ TOTAL │ TOTAL │ TOTAL │ TOTAL │
│ PRODUCT │ TO │MATERIAL │ LABOUR │ PRODUCTION │ SALES │
│ │ PRODUCE│ COSTS │ COSTS │ COSTS │ REVENUE │
├────────────────┼────────┼─────────┼─────────┼──────────────┼─────────────┤
│Pants: Mens │ │ │ │ │ │
├────────────────┼────────┼─────────┼─────────┼──────────────┼─────────────┤
│Pants: Womans │ │ │ │ │ │
├────────────────┼────────┼─────────┼─────────┼──────────────┼─────────────┤
│Pants: Boys │ │ │ │ │ │
├────────────────┼────────┼─────────┼─────────┼──────────────┼─────────────┤
│Pants: Girls │ │ │ │ │ │
├────────────────┼────────┼─────────┼─────────┼──────────────┼─────────────┤
│Shirts: Unisex │ │ │ │ │ │
├────────────────┼────────┼─────────┼─────────┼──────────────┼─────────────┤
│Skirts │ │ │ │ │ │
├────────────────┼────────┼─────────┼─────────┼──────────────┼─────────────┤
│Jackets: Mens │ │ │ │ │ │
├────────────────┼────────┼─────────┼─────────┼──────────────┼─────────────┤
│Jackets: Womans │ │ │ │ │ │
├────────────────┼────────┼─────────┼─────────┼──────────────┼─────────────┤
│Jackets: Boys │ │ │ │ │ │
├────────────────┼────────┼─────────┼─────────┼──────────────┼─────────────┤
│Jackets: Girls │ │ │ │ │ │
├────────────────┼────────┼─────────┼─────────┼──────────────┼─────────────┤
│Handbags │ │ │ │ │ │
├────────────────┼────────┼─────────┼─────────┼──────────────┼─────────────┤
│TOTALS │ │ │ │ │ │
├────────────────┴────────┴─────────┴─────────┴──────────────┴─────────────┘
├────────────────┬─────────┬─────────┬─────────────┐
│ │ MATERIAL│ LABOUR │ SELLING │
│ │ COST PER│ COST PER│ PRICE PER │
│PRODUCT │ UNIT │ UNIT │ UNIT │
├────────────────┼─────────┼─────────┼─────────────┤
│Pants: Mens │ │ │ │
├────────────────┼─────────┼─────────┼─────────────┤
│Pants: Womans │ │ │ │
├────────────────┼─────────┼─────────┼─────────────┤
│Pants: Boys │ │ │ │
├────────────────┼─────────┼─────────┼─────────────┤
│Pants: Girls │ │ │ │
├────────────────┼─────────┼─────────┼─────────────┤
│Shirts: Unisex │ │ │ │
├────────────────┼─────────┼─────────┼─────────────┤
│Skirts │ │ │ │
├────────────────┼─────────┼─────────┼─────────────┤
│Jackets: Mens │ │ │ │
├────────────────┼─────────┼─────────┼─────────────┤
│Jackets: Womans │ │ │ │
├────────────────┼─────────┼─────────┼─────────────┤
│Jackets: Boys │ │ │ │
├────────────────┼─────────┼─────────┼─────────────┤
│Jackets: Girls │ │ │ │
├────────────────┼─────────┼─────────┼─────────────┤
│Handbags │ │ │ │
└────────────────┴─────────┴─────────┴─────────────┘
┌──────────────────────────────────────────────────────────────────────────┐
│ Student Name: For the Month of: │
├──────────────────────────────────────────────────────────────────────────┤
│ PRO-FORMA INCOME STATEMENT Form #3 │
│ │
│ │
│ REVENUE: │
│ │
│ Sales _____________________ │
│ │
│ Franchise Fees _____________________ │
│ │
│ Interest Income _____________________ │
│ │
│ TOTAL REVENUE ===================== │
│ │
│ EXPENSES: │
│ │
│ Raw Material Used _____________________ │
│ │
│ Direct Labour _____________________ │
│ │
│ Fashion Design Wages _____________________ │
│ │
│ Franchise Salesman Wages _____________________ │
│ │
│ Franchise Services _____________________ │
│ │
│ Administrative Wages _____________________ │
│ │
│ Bonus and Benefits _____________________ │
│ │
│ Marketing Expenses _____________________ │
│ │
│ Interest Expenses _____________________ │
│ │
│ Depreciation Expenses _____________________ │
│ │
│ Overhead & Other Expenses _____________________ │
│ │
│ TOTAL EXPENSES ===================== │
│ │
│ NET PROFIT _____________________ │
│ │
│ Income Tax Paid Out _____________________ │
│ │
│ INCOME (LOSS) AFTER TAX ===================== │
│ │
│ │
│ │
│ │
│ │
│ │
│ │
│ │
│ │
│ │
│ │
└──────────────────────────────────────────────────────────────────────────┘
┌──────────────────────────────────────────────────────────────────────────┐
│ Student Name: For the Month of: │
├──────────────────────────────────────────────────────────────────────────┤
│ PRO-FORMA BALANCE SHEET Form #4 │
│ │
│ ASSETS: │
│ │
│ Cash __________________ │
│ │
│ Accounts Receivable __________________ │
│ │
│ Short term Investments __________________ │
│ │
│ Raw Material Inventory __________________ │
│ │
│ Finished Product Inventory __________________ │
│ │
│ Land __________________ │
│ │
│ Building __________________ │
│ │
│ Accum. Deprec. Building __________________ │
│ │
│ Equipment __________________ │
│ │
│ Accum. Deprec. Equipment __________________ │
│ │
│ TOTAL ASSETS ================== │
│ │
│ LIABILITIES: │
│ │
│ Bank Overdraft __________________ │
│ │
│ Accounts Payable __________________ │
│ │
│ Bank Loans __________________ │
│ │
│ Revolving Credit __________________ │
│ │
│ Current Portion L/T Debt __________________ │
│ │
│ Mortgage __________________ │
│ │
│ L/T Shareholders Loan __________________ │
│ │
│ TOTAL LIABILITIES __________________ │
│ │
│ │
│ EQUITY: │
│ │
│ Common Shares __________________ │
│ │
│ Retained Earnings __________________ │
│ │
│ Revenue after Tax __________________ │
│ │
│ TOTAL EQUITY __________________ │
│ │
│ TOTAL LIABILITIES AND EQUITY ================== │
│ │
│ │
└──────────────────────────────────────────────────────────────────────────┘
┌──────────────────────────────────────────────────────────────────────────┐
│ Student Name: For the Month of: │
├──────────────────────────────────────────────────────────────────────────┤
│ PRO-FORMA STATEMENT OF CHANGES IN FINANCIAL POSTION WORKSHEET │
│ For The Period January 1, 1992 to________________ (YTD) │
├──────────────────────────────────────────────────────────────────────────┤
│ OPERATING ACTIVITIES: │
│ │
│ Cash provided by operations: │
│ Net Income after tax _____________________ │
│ Add: Items not requiring cash outflow: │
│ Depreciation expenses _____________________ │
│ Decrease in accounts receivable _____________________ │
│ Decrease in Inventory _____________________ │
│ Less: Items not providing cash inflow: │
│ Decrease in accounts payable _____________________ │
│ │
│ Total Cash Provided by operations _____________________ │
│ │
│ │
│ INVESTING ACTIVITIES: │
│ │
│ Increase in assets _____________________ │
│ Increase in investments _____________________ │
│ │
│ Total cash used in investing activities _____________________ │
│ │
│ FINANCING ACTIVITIES: │
│ │
│ Increase in Debts _____________________ │
│ │
│ │
│ INCREASE (DECREASE) IN CASH │
│ ===================== │
├──────────────────────────────────────────────────────────────────────────┤
│ WORKSHEET │
├──────────────────────────┬────────────┬───────────────┬──────────────────┤
│ ACCOUNT │ BALANCE AT │ PROJECTED YTD │ DIFFERENCES │
│ │ 91/12/31 │ BALANCES │INCREASE DECREASE│
├──────────────────────────┼────────────┼───────────────┼────────┬─────────┤
│ Cash │ 251,000 │_______________│________│_________│
│ Accounts Receivable │ 814,000 │_______________│________│_________│
│ Short Term Investments │ 0 │_______________│________│_________│
│ Raw Material Inventory │ 184,000 │_______________│________│_________│
│ Finished Goods Inventory │ 184,000 │_______________│________│_________│
│ Land │ 234,070 │_______________│________│_________│
│ Buildings │ 200,000 │_______________│________│_________│
│ Accum. Deprec: Buildings │ 14,750 │_______________│________│_________│
│ Equipment │ 144,000 │_______________│________│_________│
│ Accum. Deprec: Equipment │ 40,320 │_______________│________│_________│
│ Bank Overdraft │ 0 │_______________│________│_________│
│ Accounts Payable │ 1,333,000 │_______________│________│_________│
│ Bank Loans │ 0 │_______________│________│_________│
│ Revolving Credit │ 0 │_______________│________│_________│
│ Current Portion Debt │ 0 │_______________│________│_________│
│ Mortgage │ 0 │_______________│________│_________│
│ L/T Shareholder Loan │ 252,000 │_______________│________│_________│
│ Common Shares │ 100 │_______________│________│_________│
│ Retained Earnings │ 370,900 │_______________│________│_________│
├──────────────────────────┼────────────┼───────────────┼────────┼─────────┤
│ TOTALS │ 0 │ │ │ │
└──────────────────────────┴────────────┴───────────────┴────────┴─────────┤
┌──────────────────────────────────────────────────────────────────────────┐
│ │
│ MANAGEMENT DECISION FORM Form #6 │
│ │
│ For the Month of _______________________ Student's Name:________________│
├──────────────────────────────────────────────────────────────────────────┤
│ FINANCE: │
├──────────────────────────────────────────────────────────────────────────┤
│ A/R Policy Percent down with order _____ Balance due in ______ Mths│
│ A/P Policy Percent down with order _____ Balance due in ______ Mths│
│ Line of Credit Amount used this month ________________________________│
│ Debt type #1 Amt borrowed this month _________ Total owing __________│
│ Debt type #2 Amt borrowed this month _________ Total owing __________│
│ Mortgage Did you mortgage the property this month? ______________│
│ Misc Credit Did you secure Misc. credit this month? ______________│
│ Investment A Amt invest. this month _________ Total invest.__________│
│ Amt of investment cashed-in this month _________________│
│ Investment B Amt invest. this month _________ Total invest.__________│
│ Amt of investment cashed-in this month _________________│
│ Investment C Amt invest. this month _________ Total invest.__________│
│ Amt of investment cashed-in this month _________________│
│ Bonds Amt of Bond this month _________ Total Bonds ___________│
│ Amt of Bonds cashed-in this month _________________│
│ Stocks Amt of Stock this month_________ Total Stock ___________│
├──────────────────────────────────────────────────────────────────────────┤
│ MARKETING: │
├──────────────────────────────────────────────────────────────────────────┤
│ Franchise Fee Fee is set at __________________ per unit this month. │
│ Product Prices Prices are [] Up _______% [] Dwn ________% this month. │
│ TV Promo Spent _______________ for ads this month. │
│ Radio Promo Spent _______________ for ads this month. │
│ Print Promo Spent _______________ for ads this month. │
│ Total Promo costs this month were:______________________│
│ Projections Franchise units sold this month will be ________________│
│ Total product sales for existing outlets _______________│
│ Total products sold with new outlets _______________│
├──────────────────────────────────────────────────────────────────────────┤
│ PRODUCTION: │
├──────────────────────────────────────────────────────────────────────────┤
│ Capacity Capacity to produce garments this month was ____________│
│ Buy Equipment Amt of new equipment purchased this month ______________│
│ Sell Equipment Book value of equipment sold this month ______________│
│ Inventory [] Decreased [] Increased Raw stock levels by ______%│
│ [] Decreased [] Increased Finish stock level by ______%│
│ Output Total garments ordered this month were __________items│
│ Actual garments produced this month were __________items│
│ Suppliers Supplier used for Material A was _______________________│
│ Supplier used for Material B was _______________________│
│ Supplier used for Material C was _______________________│
│ Supplier used for Material D was _______________________│
├──────────────────────────────────────────────────────────────────────────┤
│ PERSONNEL: │
├──────────────────────────────────────────────────────────────────────────┤
│ Bonus/Raise [] Bonus [] Raise valued @ _______ to _________________│
│ [] Bonus [] Raise valued @ _______ to _________________│
│ Demotion ___________________________ New Position _______________│
│ Disapline ___________________________ valued @ ___________________│
│ Fire ___________________ Dept ____________Position __________│
│ Hire ___________________ Dept ____________Position __________│
│ Promote ___________________ Dept ____________Position __________│
│ Mini-Case Option selected #_________ Projected impact (use back) │
└──────────────────────────────────────────────────────────────────────────┘
┌──────────────────────────────────────────────────────────────────────────┐
│ Student Name: │
├──────────────────────────────────────────────────────────────────────────┤
│ ENVIRONMENTAL THREAT OR OPPORTUNITY PROFILES (ETOP) Form #7 │
├────────────────────────────┬───┬───┬─────────────────────────────────────┤
│ ENVIRONMENTAL AREAS │ + │ - │ IMPACT OF ENVIRONMENTAL AREAS │
├────────────────────────────┼───┼───┼─────────────────────────────────────┤
│ Social or Economic │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ Technological │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ Government │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ Customers │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ Suppliers │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
├────────────────────────────┴───┴───┴─────────────────────────────────────┤
│ NOTES: │
│ │
│ │
│ (+ Indicates Opportunity and - Indicates Threat) │
└──────────────────────────────────────────────────────────────────────────┘
┌──────────────────────────────────────────────────────────────────────────┐
│ Student Name: │
├──────────────────────────────────────────────────────────────────────────┤
│ STRATEGIC ADVANTAGE PROFILE (SAP) Form #8 │
├────────────────────────────┬───┬───┬─────────────────────────────────────┤
│ COMPANY INTERNAL AREAS │ + │ - │ COMPANY STRENGTH OR WEAKNESS │
├────────────────────────────┼───┼───┼─────────────────────────────────────┤
│ Finance │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ Marketing │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ Production │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ Company Resources │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ R & D or Product Design │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
│ ├───┼───┼─────────────────────────────────────┤
│ │ │ │ │
├────────────────────────────┴───┴───┴─────────────────────────────────────┤
│ NOTES: │
│ │
│ │
│ (+ Indicates Strength and - Indicates Weakness) │
└──────────────────────────────────────────────────────────────────────────┘
┌──────────────────────────────────────────────────────────────────────────┐
│ Student Name: STRATEGY WORKSHEET PAGE 1 │
├──────────────────────────────────────────────────────────────────────────┤
│ STRATEGY FOR THE COMPANY FINANCES Form #9 │
├──────────────────────────────────────────────────────────────────────────┤
│ CASH BALANCE OBJECTIVE: │
│ │
│ │
│ What is the plan to implement this objective: │
│ │
│ │
│ What procedures will you use to implement the plan: │
│ │
│ │
│ What methods of control and feedback will you use: │
│ │
├──────────────────────────────────────────────────────────────────────────┤
│ ACCOUNTS RECEIVABLE OBJECTIVE: │
│ │
│ │
│ What is the plan to implement this objective: │
│ │
│ │
│ What procedures will you use to implement the plan: │
│ │
│ │
│ What methods of control and feedback will you use: │
│ │
├──────────────────────────────────────────────────────────────────────────┤
│ ACCOUNTS PAYABLE OBJECTIVE: │
│ │
│ │
│ What is the plan to implement this objective: │
│ │
│ │
│ What procedures will you use to implement the plan: │
│ │
│ │
│ What methods of control and feedback will you use: │
│ │
├──────────────────────────────────────────────────────────────────────────┤
│ DEBT OBJECTIVES: │
│ │
│ │
│ What is the plan to implement this objective: │
│ │
│ │
│ What procedures will you use to implement the plan: │
│ │
│ │
│ What methods of control and feedback will you use: │
│ │
├──────────────────────────────────────────────────────────────────────────┤
│ INVESTMENT OBJECTIVES: │
│ │
│ What is the plan to implement this objective: │
│ │
│ What procedures will you use to implement the plan: │
│ │
│ What methods of control and feedback will you use: │
│ │
└──────────────────────────────────────────────────────────────────────────┘
┌──────────────────────────────────────────────────────────────────────────┐
│ Student Name: STRATEGY WORKSHEET PAGE 2 │
├──────────────────────────────────────────────────────────────────────────┤
│ STRATEGY FOR THE COMPANY MARKETING Form #10 │
├──────────────────────────────────────────────────────────────────────────┤
│ FRANCHISE FEE OBJECTIVE: │
│ │
│ │
│ What is the plan to implement this objective: │
│ │
│ │
│ What procedures will you use to implement the plan: │
│ │
│ │
│ What methods of control and feedback will you use: │
│ │
├──────────────────────────────────────────────────────────────────────────┤
│ NUMBER OF FRANCHISE UNITS SOLD OBJECTIVE: │
│ │
│ │
│ What is the plan to implement this objective: │
│ │
│ │
│ What procedures will you use to implement the plan: │
│ │
│ │
│ What methods of control and feedback will you use: │
│ │
├──────────────────────────────────────────────────────────────────────────┤
│ PRODUCT PRICE OBJECTIVE: │
│ │
│ │
│ What is the plan to implement this objective: │
│ │
│ │
│ What procedures will you use to implement the plan: │
│ │
│ │
│ What method of control and feedback will you use: │
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├──────────────────────────────────────────────────────────────────────────┤
│ PRODUCT QUALITY AND FABRIC COSTS OBJECTIVE: │
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│ What is the plan to implement this objective: │
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│ What procedures will you use to implement the plan: │
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│ What methods of control and feedback will you use: │
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├──────────────────────────────────────────────────────────────────────────┤
│ ADVERTISING OBJECTIVES: │
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│ What is the plan to implement this objective: │
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│ What procedures will you use to implement the plan: │
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│ What methods of control and feedback will you use: │
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└──────────────────────────────────────────────────────────────────────────┘
┌──────────────────────────────────────────────────────────────────────────┐
│ Student Name: STRATEGY WORKSHEET PAGE 3 │
├──────────────────────────────────────────────────────────────────────────┤
│ STRATEGY FOR THE COMPANY PRODUCTION Form #11 │
├──────────────────────────────────────────────────────────────────────────┤
│ EQUIPMENT AND CAPACITY OBJECTIVE: │
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│ What is the plan to implement this objective: │
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│ What procedures will you use to implement the plan: │
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│ What methods of control and feedback will you use: │
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├──────────────────────────────────────────────────────────────────────────┤
│ INVENTORY LEVELS OBJECTIVE: │
│ │
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│ What is the plan to implement this objective: │
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│ What procedures will you use to implement the plan: │
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│ What methods of control and feedback will you use: │
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├──────────────────────────────────────────────────────────────────────────┤
│ FINISHED PRODUCT OUTPUT OBJECTIVES: │
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│ What is the plan to implement this objective: │
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│ What procedures will you use to implement the plan: │
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│ What methods of control and feedback will you use: │
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├──────────────────────────────────────────────────────────────────────────┤
│ OVERALL PRODUCTION COSTS OBJECTIVE: │
│ │
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│ What is the plan to implement this objective: │
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│ What procedures will you use to implement the plan: │
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│ What methods of control and feedback will you use: │
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├──────────────────────────────────────────────────────────────────────────┤
│ CHOICE OF SUPPLIER/S OBJECTIVE: │
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│ What is the plan to implement this objective: │
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│ What procedures will you use to implement the plan: │
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│ What methods of control and feedback will you use: │
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└──────────────────────────────────────────────────────────────────────────┘
┌──────────────────────────────────────────────────────────────────────────┐
│ Student Name: STRATEGY WORKSHEET PAGE 4 │
├──────────────────────────────────────────────────────────────────────────┤
│ STRATEGY FOR THE COMPANY PERSONNEL Form #12│
├──────────────────────────────────────────────────────────────────────────┤
│ BONUS OR RAISE OBJECTIVE: │
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│ What is the plan to implement this objective: │
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│ What procedures will you use to implement the plan: │
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│ What methods of control or feedback will you use: │
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├──────────────────────────────────────────────────────────────────────────┤
│ PROMOTION OR DEMOTION OBJECTIVE: │
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│ What is the plan to implement this objective: │
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│ What procedures will you use to implement the plan: │
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│ What methods of control or feedback will you use: │
│ │
├──────────────────────────────────────────────────────────────────────────┤
│ DISAPLINE OBJECTIVE: │
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│ What is the plan to implement this objective: │
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│ What procedures will you use to implement the plan: │
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│ What methods of control or feedback will you use: │
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├──────────────────────────────────────────────────────────────────────────┤
│ FIRE EMPLOYEE OBJECTIVE: │
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│ What is the plan to implement this objective: │
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│ What procedures will you use to implement the plan: │
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│ What methods of control or feedback will you use: │
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├──────────────────────────────────────────────────────────────────────────┤
│ HIRE EMPLOYEE OBJECTIVE: │
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│ What is the plan to implement this objective: │
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│ What procedures will you use to implement the plan: │
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│ What methods of control or feedback will you use: │
│ │
└──────────────────────────────────────────────────────────────────────────┘
PRESIDENT'S ANNUAL REPORT TO CEO Form #13
FINANCE:
1) Did you modify the Accounts Receivable policy?
(If so, explain why.)
2) Did you modify the Accounts Payable policy?
(If so, explain why.)
3) Did you secure a Line of Credit with the bank?
(If so, for how many months was it used?)
4) Did you utilize any of the Short Term Loans?
(If so, how many times did you borrow money?)
5) For what purposes were the loans acquired?
6) Did you mortgage the company's land and Buildings?
(If so, why did you do this?)
7) Where you ever turned down for a loan?
(If so, how many times?)
8) How many times did you end up with a cash surplus greater than $300k
(If so, in what month did you begin making investments and why?)
9) Where you forced into liquidating any of your investments?
(If so, why were you forced to liquidate?)
10) Did you invest in the stock market?
(If so, how much money did you make and how much did you lose?)
11) What is your return on investments ratio?
(Is it better or worse than the Industry Average?)
12) What is your return on equity ratio?
(Is it better or worse than the Industry Average?)
13) Has your profit margin increased since you became President?
(Also, is it better than the Industry Average?)
14) Has your Gross margin increased since you became President?
(Also, is it better than the Industry Average?)
15) Is the company more financially secure after a year with you as the
President?
Form #13 Page 1
MARKETING:
1) How much in total did you spend on advertising?
2) How many franchises did you sell? (current # - 32):
3) What is the % for advertising expense vs franchise fees revenue?
4) In general, did your product prices go up or down? If so, Why?
5) Did you reach your sales volume targets?
6) Did you sell more franchises than you could service with product?
PRODUCTION:
1) What was your ending capacity to produce garments?
2) How many times was your capacity to produce greater than 10% over
that of your monthly output volumes?
3) Did you sell off any equipment? If so, why?
4) Did you reduce inventory levels or increase them?
5) Where you capable of meeting 100% of product demands?
6) Did you ever sell more franchises than you were capable of servicing
with ongoing product demands or the bulk volumes for new outlets?
7) Did you stick with one supplier or use several suppliers at the same
time? What was your reason for this strategy?
PERSONNEL:
1) Did you give any bonuses or raises during the simulation? To who
and why were they given?
2) Did you demote any managers? Who and why?
3) Did you provide discipline to any managers? Who and why?
4) Did you fire any managers? Who and why?
5) Did you hire any new staff members? Who and why?
6) Did you promote any managers? Who and why?
Form #13 Page 2
MINI-CASES:
1) What was your final bonus/penalty score for the mini-cases?
2) For those that you received a negative score on, why do you think
you received this score? Is there a better choice?
3) Did you take advantage of opportunities presented within a case even
though it may not have been in line with the company's original
goals? Explain why you did this in each instance.
4) What would you do if you were Ms. Ferndale concerning the offer
presented in case #12? Why?
GENERAL:
1) If you were to do this simulation again, what changes would you make
to your strategy?
2) When looking back on your original strategies, goals and objectives,
how close is the actual outcome or performance to those of the
original plan? What strategies, goals or objectives did you modify
from the original plan and why?
3) Did you consistently ask yourself "Is this decision in line with our
company goals?" and document the reasons for making each decision or
did you take the 'shoot-from-the-hip' approach more often than not?
4) What did you learn from this simulation experience? Explain.
Form #13 Page 3