SM_Second Hourly Slides (1).pdf

7/27/2019 SM_Second Hourly Slides (1).pdf

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External and Internal Audit / Assessment

I/O View

-Industrial Organization View

-External factors are more important

RBV View

-Resource Based View-Internal factors are more important


2/14

External Assessment- Porters 5 Forces Model

PotentialDevelopment of

Substitute Products

Bargaining Power ofSuppliers

Potential Entry of NewCompetitors

Bargaining Power ofConsumers

Rivalry amongcompeting firms


3/14

Porters 5 Forces Model- LMH and PEST

L M H

P

E

S

T


4/14

External Assessment- CPM Matrix

Wal-Mart KMart JC Penny

Critical

Success

Factors

Weight Rating Weigh

ted

Score

Rating Weigh

ted

Score

Rating Weigh

ted

Score

Market

share

0.20 4 0.80 1 0.20 2 0.40

Price 0.30 4 1.20 2 0.60 3 0.90

Financial

position

0.10 4 0.40 1 0.10 3 0.30

Product

quality

0.20 2 0.40 2 0.40 4 0.80

Consumer

loyalty

0.20 4 0.80 2 0.40 3 0.60

Total 1.00

3.60 1.70 3.00


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External Assessment- EFE Matrix

Key External Factors Weight Rating Weighted Score

Opportunities

Consumers want ease of shopping 0.08 4 0.32

Internet shopping growing 0.10 3 0.30

Kmart and other stores struggling 0.20 4 0.80

Similar shopping patterns worldwide 0.05 3 0.15

Retail sales expected to increase 0.05 3 0.15Environment conscious consumers 0.04 1 0.04

Elderly population growing 0.04 3 0.12

Asian market virtually untapped by retail 0.06 3 0.18

European market untapped by retail 0.07 3 0.21

Threats

Regulation of Wal-Mart pharmacies 0.10 3 0.30

Small towns do not want entry of Wal-Mart 0.02 3 0.06Bad media exposure for Kathie Lee brand 0.04 3 0.12

Variety of competition nationally, regionally,

and locally

0.05 3 0.15

Substitute products more easily because of

intense competition

0.10 2 0.20

TOTAL 1.00 3.10


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Internal Assessment

1. Functional Areas (MKT, FIN, HR)

2. Core Competency

3. Value Chain Management

4. Strategic Cost Management

5. Financial Ratios


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Internal Assessment- Financial Ratios

Company Industry Sector S&P 500

Valuation Ratios

P/E Ratio (TTM) 28.65 26.53 28.90 24.01

P/E High - Last 5 Yrs 59.13 54.59 48.47 45.41

P/E Low - Last 5 Yrs 27.15 24.03 16.09 16.26

Beta 0.80 0.86 0.96 1.00

Price to Sales (TTM) 0.98 0.93 2.80 3.33

Price to Book (MRQ) 5.76 4.89 3.89 4.29

Price to Tangible Book (MRQ) 7.45 6.16 6.60 7.56

Price to Cash Flow (TTM) 19.65 17.39 17.03 17.32

Price to Free Cash Flow

(TTM)59.59 54.00 33.11 28.97

% Owned Institutions 36.40 54.34 50.48 64.19

Dividends

Dividend Yield 0.90 0.98 2.14 2.04

Dividend Yield - 5 Yr Avg 0.50 0.69 1.43 1.48

Dividend 5 Yr Growth Rate 18.36 -1.81 -0.89 6.48

Payout Ratio (TTM) 17.71 16.24 15.54 26.78


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Internal Assessment- IFE Matrix

Key Internal Factors Weight Rating Weighted

ScoreStrengths

Customer oriented 0.250 4 1.00

SAMS Club customers able to buy in bulk 0.100 4 0.40

Supercenters offer one-stop shopping 0.100 4 0.40

Satisfaction guaranteed programs promoting

customer goodwill

0.025 3 0.08

Buy from local merchants when possible 0.025 3 0.08

Stock ownership and profit sharing with

employees

0.025 4 0.10

Leads industry in information technology 0.025 4 0.10

Ongoing development of its employees 0.100 4 0.40

Strong community involvement 0.025 3 0.08

WeaknessesNo formal mission statement 0.012 2 0.02

Membership only for SAMS Club 0.100 2 0.20

Keep poor-performing employees on hand 0.100 1 0.10

Old-fashioned store policies 0.013 2 0.03

Few women and minorities in top management 0.100 1 0.10

TOTAL 1.00 3.19


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STRATEGY

In the animal kingdom, the

rule is, eat or be eaten;

in the human kingdom, defineor be defined.

- Thomas Szasz


10/14

STRATEGY

Strategy is more than a science; it is the

application of knowledge to practical life,

the development of thought capable of

modifying the original guiding idea in thelight of ever-changing situations; it is the

art of acting under the pressure of the

most difficult conditions.

- Helmuth Von


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STRATEGY

The word strategy comes from the Greekword strategos, meaning literally the leader

of the army.

Strategy hence is the art of generalship, of

commanding the entire war effort, deciding

what formulations to deploy, what terrain to

fight on, and what maneuvers to use.

The greatest strategist was Sun-tzu; author

of Chinese classic, The Art of War


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STRATEGIES- 12 Moves / 4 Shakes

Forward Integration IntegrationStrategies

Backward Integration

Horizontal Integration

Market PenetrationIntensive

StrategiesMarket DevelopmentProduct Development

Concentric DiversificationDiversification

StrategiesConglomerate Diversification

Horizontal DiversificationRetrenchment

Defensive

StrategiesDivestiture

Liquidation


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TOWS Matrix (aka SWOT)Strengths Weaknesses

1. Customer oriented

2. SAMs Club consumers able to buy inbulk

3. Supercenters offer one-stop shopping

4. Satisfaction guaranteed programs

promoting customer goodwill

5. Buy from local merchants when possible

6. Stock ownership and profit sharing with

employees

7. Leads industry in information technology

8. Ongoing development of its employees

9. Strong community involvement

1. No formal mission statement

2. Membership only for SAMS Club3. Keep poor-performing employees on

hand

4. Old-fashioned store policies

5. Few women and minorities in top

management

Opportunities S-O Strategies W-O Strategies

1. Consumers want ease of shopping

2. Internet shopping growing

3. Kmart and other stores struggling

4. Similar shopping patterns worldwide

5. Retail sales expected to increase

6. Environment conscious consumers

7. Elderly population growing

8. Asian market virtually untapped by retail

9. European market untapped by retail

1. Advertise more for shopping online (S8,

O2)

2. Expand internationally because of similar

shopping patterns (S3, O4, O8)

1. Improve employment techniques to hire

and keep the best-performing employees

(W3, W5, O6)

Threats S-T Strategies W-T Strategies

1. Regulation of Wal-Mart pharmacies

2. Small towns do not want entry of Wal-

Mart

3. Bad media exposure for Kathie Lee

brand

4. Variety of competition nationally,

regionally, and locally

5. Substitute products more easily because

of intense competition

1. Buy from local merchants to promote

unity in the community (S5, T4)

2. Build more Supercenters for the

increased demand for one-stop shopping

(S3, T4)

1. Allow consumers to buy in smaller bulk

without having membership to SAMS

Club (W2, T5)


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TOWS Matrix (aka SWOT)

S-O Strategies W-O Strategies

1. Advertise more for shopping

online (S8, O2)

2. Expand internationally

because of similar shopping

patterns (S3, O4, O8)

1. Improve employment

techniques to hire and keep

the best-performing

employees (W3, W5, O6)

S-T Strategies W-T Strategies

1. Buy from local merchants to

promote unity in thecommunity (S5, T4)

2. Build more Supercenters for

the increased demand for

one-stop shopping (S3, T4)

1.Allow consumers to buy in

smaller bulk without havingmembership to SAMS

Club (W2, T5)

Documents

SM_Second Hourly Slides (1).pdf