I.From what perspective are you analyzing the case? A. Strategic Management / Business Policy Whereas, the process of analyzing, decision making, and implementing strategic actions raises good questions including but not limited to the following: 1. Why do some entity succeed and others fail? 2. Why some firms are higher performers than others? 3. What information is needed in the strategic planning process? B. Top Management Committee Whereas, the top management is responsible for identifying deeprooted problems and giving solutions for them. Also, they make decisions for the whole company and raises good questions including but not limited to the following: 1. How do competing values and beliefs by the top management affect strategic decision making? 2. What skills and capabilities are needed by the top management to implement a strategy effectively? II. What is/are the: A. Major Problem There is no strategic plan. They don’t know where they want to go and where they should be. B. Secondary Problems A. B. Production / Manufacturing 30% waste factor in production To reprocess or not the waste? Low finished goods and raw materials inventory Marketing / Distribution They don’t have any forecast West Coast distributors act like customers instead of employees Not competitive when it comes to market shares in the industry Few salesmen and distributors 1|Page debt/equity ratio is presently 1.C. What is/are the objectives of the top management committee? To develop a strategic plan for the company. while the industry average is over 8%. Financial Low turnover of accounts receivables Not very liquid in terms of cash and accounts receivables Very liberal credit terms Poor financial ratios (e. but it does hurt especially when the company is giving such liberal credit terms.5 12% of the sales volume is coming from the West Coast distributors. To characterize the Ajax Company as highly customer oriented. To maintain current sales volume To achieve growth through acquisition. got some equipment suited for their production. Ajax has a market share of 2. return on equity.e. active operational management is provided by other than shareholders. What are: A. have a bunch of really very good people working for them. The company’s before tax profit on sales is 4%. Ajax Company have the best delivery time in the industry. Facts of the case Ajax is professionally managed.g. a quality producers.) III. return on assets. i. etc. Ajax’s before tax return on equity is 7. IV.9% of the total sales. Ajax still has a good credit position but 75% of their accounts receivables are now on 90 days and that’s hurting their cash. debt/equity ratio.7%. before tax return on assets is 3%. 2|Page . The company’s top fifty customers account for 80% of their sales. good community neighbors. Matching Empire’s 20% trade discount is probably necessary. The company is a single-plant manufacturer of special wiring serving many markets. The top four companies (Empire. the top 35 direct customers account for 50% of their sales. WTH & Co. Joe Thompson and Tom Rogers make up the executive committee. lack of synchronization among all these production elements (Materials. Since there is no production schedule. B. during process or sourcing causes delays on production and idle personnel and machinery. 3|Page . Of the Company’s 700 active customers.) account for 70% of the total sales.. The manager could not determine pricing strategies because he doesn’t have any forecast which led to a low gross/net profit margin ratio. The top management just focus on their department or division and not on the overall company which is very vital in an organization. Company profits have grown from 1% before taxes five years ago to about 4% currently. Second Best. Overproduction causes consumption of raw materials that otherwise could be used on actually demanded products. Sales are made by both direct factory salesmen and by distributor salesmen. It also causes inadequate use of personnel. plus product and material accumulation in the production floor that difficult the manufacturing process and inventory. The top management is just contented with the reports submitted to them and they thought that they don’t need a strategic plan for them to express the ownership dreams and visualize successful results. Tools. There are 30 companies in the industry. Inc. Employing just few salesmen and distributors would not increase the sales volume in a way the top management is expecting it to be. and P & F. Your assumptions The top management committee were not on the same track regarding where they should be heading and so they collide with each other. Inc. Bill Smith. The Company is operating at capacity with present mix. The Company fields a sales force of 14 direct salesmen as well as sell to four distributors on the West Coast. Persons).. Strategic planning is very vital for an organization.can cause a slowdown in a firm's operations if the plan is extensive . etc. the production may open bigger problems which has a greater impact in the finance. Poor management performance as well as poor budgeting can be indicated by the poor financial ratios of Ajax Company. and vice versa.time consuming with regards to developmental process . distribution. identifies weaknesses and develops ways to increase profits can get top management and senior staffs to plunge into new situations can stimulate the perspective and creativity in decision-making DISADVANTAGE/S . V. Alternative Solutions to the Major Problem ALTERNATIVE Making a Tactical and Operational Planning ADVANTAGE/S help management find inefficiencies in its operations allow companies to benefit from the input of its employees management can take the necessary steps to make corrections in a shorter period of time able to analyze the effect of its operations on profit dissects a company's financial position.possibly lead to a decrease in profits - - - Formalizing a Strategic Learning Agenda - - - - can overly constrains managerial discretion in a dynamic environment greater chance of conflict between individual 4|Page . Since Ajax Company. doesn’t have a plan. It has a domino effect in all aspects of the firm. marketing. - learners decision-making takes more time Improvising a Strategic Plan - - costly to perform the process is very complex low rate of successful implementation. - - VI. 5|Page . Why? IMPROVISING A STRATEGIC PLAN is the best alternative because: Strategic planning is critical to business success. It is the company’s road map to achieving competitive advantage.- - structures exploration to involve more people at multiplelevels and in smaller groups involves and engages the management with the "industry" and its trends focus is placed on the important things Identifies strategic goals and strategic intent provides a road map to show where the company is going and how to get there poor performing areas can be identified and eliminated able to set more realistic objectives that are demanding. yet attainable. Best Alternative. It moves a business forward to the intended destination. It evolves over time in response to changing circumstances. g. SWOT Analysis for Ajax STRENGTHS The top management are risk-taker The plant manager run the plant effectively Good equipment that are ideally suited in their operation Good community neighbours Good relationship with employees Quality producers Best delivery time in the industry Professionally managed Offers complete product mix within the market segment and competes nationally Good credit position OPPORTUNITIES Characterize Ajax as highly customer-oriented Develop a strategic plan to succeed Employees training Use of marketing or promotional techniques to boost the business WEAKNESSES Thirty percent waste factor in production Don’t have any forecast Low finished goods and raw materials inventory Very liberal credit terms 75 % of the accounts receivable are on 90 days Poor financial ratios THREATS West Coast distributors act like customers instead of employees Competitors operating within the market segment Fortuitous events (e. It is the company’s game plan for how to please customers and how to improve financial performance. VII. natural calamities) Price increase of raw materials 6|Page . Proposals for Ajax Company 1. It helps the various work units within an organization to align themselves with common goals. PHILOSOPHY We at Ajax Company believe that we must put our customers first and strive to secure their loyalty through top quality service and we shall value our employees and seek to help them achieve their full potential. delight and nourish the customers To grow the business operation To increase efficiency as a way to increase productivity To support and foster the community To improve people skills and discipline To increase the quality of the products c.Competitor analysis 7|Page .PEST Analysis . Strategy Formulation a.Industry Analysis . fulfilling and rewarding environment for employees.SWOT Analysis . We will engross in sustainable practices and anticipate the needs of our customers. . serves and supports the community and achieves solid financial performance.2. Action Plan Activity / Program Timetable (After Top Management’s Meeting) Start Completi on January December 2014 2014 Responsibility Direct President Support All departments Analyze the Company’s internal and external environment. Vision. values long-term relationships with clients and distributors. Mission and Philosophy of Ajax VISION The Ajax Company will kindle its employees to be the best they can be. b. MISSION The Ajax Company strive to be a high performance company that attracts customers and exceeds their expectations. Goals / Objectives of Ajax To increase revenue as well as the profit and to reduce cost To satisfy. provides an enriching. We will maximize return to the investment while still maintaining quality in our products. When assessing competitors. having a huge impact on the organization’s success. If the company could not still compete with the top firms. Implementation Implementation plans then detail how the objectives are to be achieved. and employing change management procedures. Ajax’s company should prioritize this contingency plan with the following systematic process: 1. These objectives should include completion dates. Contingency Plan A. resourcing. This may require organizational changes.Identify Ajax Company’s vision mission and philosophy. Strategic Programming Review of Strategic Plan Implementation of Strategy Evaluate the strategies implemented and adjust as necessary. Also. Implementing a strategy involves organizing. self-evaluation. Additionally. Develop specific strategies and allocate resources to close the gap and achieve its desired state. consider determining what makes a competitor attractive to its customers and what your company can learn from that competitor's success.and long-term objectives are set. Set goals and strategies based on the company's competitive position. 2. implementation may 8|Page . Assess its competitors and market. merging existing ones or even switching from a geographical structure to a functional one or vice versa. 3. such as creating new units. The short. consider what your potential customer needs. and both micro-environmental and macroenvironmental. and competitor analysis—both internal and external. from production targets to how to reach out to potential new customers. It involves performing a situation analysis. The objectives can cover a variety of different areas. January 2014 January 2015 December 2014 December 2015 President Top management Middle management Top manageme nt Marketing Finance President Finance January 2015 January 2016 January 2016 January 2018 December 2015 December 2016 December 2017 December 2018 President Marketing All departments Marketing VIII. require significant budget shifts. the company should make an incremental analysis and make decisions based from it whether it should manufacture a product in-house or purchasing it from an external supplier. top management should decide which capabilities are vital to the business and protect them. impacting human resources and capital expenditure. 9|Page . C. In case of economic threats in the company. B. If the cost of the product increases dramatically.