Post on 01-Apr-2015
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External and Internal Environment factors for an MNC
• Socio-Cultural• Legal• Economic• Political
- Domestic- Local- International
• Technological
• Regulators• Competitors• Suppliers• Consumers/External
Customers• Internal Customers
Political/LegalPolitical/Legal
EconomicEconomic
TechnologicalTechnological
GlobalGlobal
DemographicDemographicSocioculturalSociocultural
CompetitiveEnvironment
Industry EnvironmentIndustry Environment
Components of the General EnvironmentComponents of the General Environment
Components of the General EnvironmentComponents of the General Environment
DemographicSegment
Population size Age structure Geographic distribution
Ethnic mix Income distribution
EconomicSegment
Inflation rates Interest rates Trade deficits or surpluses Budget deficits or surpluses
Personal savings rate Business savings rates Gross domestic product
Political/LegalSegment
Antitrust laws Taxation laws Deregulation philosophies
Labor training laws Educational philosophies and
policies
SocioculturalSegment
Women in the workforce Workforce diversity Attitudes about work life
quality
Concerns about theenvironment
Shifts in work and careerpreferences
Shifts in preferences regardingproduct and servicecharacteristics
TechnologicalSegment
Product innovations Applications of knowledge
Focus of private andgovernment-supported R&Dexpenditures
New communicationtechnologies
GlobalSegment
Important political events Critical global markets
Newly industrialized countries Different cultural and
institutional attributes
External Environmental AnalysisExternal Environmental Analysis
The external environmental analysis process should be conducted on a continuous basis. This process includes four activities:
Scanning:
Monitoring:
Forecasting:
Assessing:
Identifying early signals of environmental changes and trends
Detecting meaning through ongoing observations of environmental changes and trends
Developing projections of anticipated outcomes based on monitored changes and trends
Determining the timing and importance of environmental changes and trends for firms' strategies and their management
Scanning models
• Delphi Technique• Spire Approach – Systematic Probing and
Identification of the Relevant Environment*1) fgfgf2) kk
*Klein and Newman
Environment Scanning
• Competitor Intelligence• Strategic Analysis• The SPIRE Approach (Systematic Probing and
Identification of the Relevant Environment)*- Detailed list of environment variables- Set out strategic marketing components- Facilitate interactions of different factors for any linkages
• Scenario Building* Klein and Newman, How to Integrate New Environmental Forces into Strategic Planning, “Management Review”, Volume 69, July 1980, pp.40-48
Scenario Building
• Stage 1: Analysis of the Decisions• Stage 2: Identification of Key Decision Factors• Stage 3: Identifying the Socio-Cultural Factors• Stage 4: Analysis of each of the key variables
separately• Stage 5: Selection of Scenario Logics
Franchising
Franchising
• Almost exclusively concerned with small business
• Holds at offer of Individual ownerships• Fastest growing business segment, and market
entry methods• 1851…Singer Sewing Machine Co.• Became popular after WW-II in the US• Offer: proven products, business know-ow,
financial help
Franchising: a definition
It’s a legal document, a contractual agreement between the Franchiser (Manufacturer, Wholesaler, Service Sponsor) and
the Franchisee (Retailer) to conduct a given business in accordance with prescribed operating methods, financing
systems, territorial domain, commission fees/royalty
Holder is given the benefit of Franchiser’s experience, and help in the choice of locations, financing, marketing, record
keeping, promotional techniques, brand name and standardization
Thank You
Merchandise Management
PLANNING MERCHANDISE ASSORTMENT
Merchandise Management Involves:
• Buy Merchandise• Control merchandise inventory• Price merchandise
Merchandise Buying Involves:
• Locate Vendors• Evaluate vendors• Negotiate with vendors• Place orders
Merchandise inventory control involves:
• Develop merchandise budget plans• Allocate merchandise to stores• Review open-to-buy & stock position
Pricing merchandise
• Set initial price• Adjust price
A few retail definitions
STOCK BALANCE:
A strategic decision that defines the degree to which a retailer wishes to be a specialist with a narrow range of
merchandiseOR
A generalist with many different types of merchandise.A store’s stock balance results in a trade-off amongst three
factors:- Varieties
- Assortments- Service levels
Stock balance: increasingly it is a strategic issue
Organising the buying process by categories:-
• The category• Category Management• The Category Captain
The Buying organization
• Department• Classification• Categories• SKU (Stock Keeping Units)
Setting Objective for the Merchandise Plan
• Putting Margin, Sales, and Turnover together:
• GMROI- Gross Margin Return On Investment
• Measuring Inventory Turnover – Stock Turn
Advantage of High Inventory Turnover
• Increased Sales Volume• Less Risk of Obsolescence and Markdowns• Improved Sales Person Morale• More money for market opportunities
Relation between Cycle Stock & Base Stock
Units
Availability
WEEKS
Cycle Stocks
Safety/ Base Stock
Lead Time
Time for Replenishment
The Category Life Cycle
• Variations on the category Life Cycle• Seasonal Merchandise
IntroductoryStage
GrowthStage
MaturityStage
Decline Stage
TotalMarketSales
Time
Developing a Sales Forecast
• Sources of information for category Level Forecast• Previous Sales volume• Published sources• Customer Information• A focus group• Shop competition• Vendors & Buying residing office• Store level Forecasting• CPFR- Collaboration, Planning Forecasting, and
Replenishment
The Assortment Planning Process
• Variety• Assortment• Product Availability-Assortment Process for
service retailers
Trade-Offs between Variety, Assortment & Product Availability
• Determining Variety and Assortment• Profitability of Merchandise Mix• Corporate Strategy and positioning toward the
assortment• Physical Characteristics of the store layout of the
internet site• Balance between Too much versus Too little
assortment• Determining product availability• Cycle stock
Buying Systems
• Staple Merchandise Buying Systems• The Inventory Management Report• Basic Stock List• Inventory Turnover• Product availability• Backup stock• Forecast• Order Point
Buying Systems (contd..)
• Order Quantity• Monthly Reductions• BOM- Beginning of Month Stock to Sales Ratio• EOM- End of Month stock ratio• Monthly additions to stock• Evaluating the Merchandise Budget Plan• Calculating Open-To-Buy for past periods & Current
period
Allocating merchandise to stores
• Analyzing Merchandise Performance• ABC Analysis• Sell through Analysis• Multi attribute Method
Buying Merchandise
• Private –Label Brands• Private Label Options• Bargain branding• Premium Branding• A Brand or a store?
INTERNATIONAL SOURCING DESCISIONS
• Cost Associated with Global Sourcing decisions
• Country-of-Origin effect• Foreign Currency Fluctuations• Tariffs• WTO• NAFTA - North American Free Trade
Agreement
Free Trade Zones
• Managerial issues associated with global sourcing decisions
• Building of Strategic Partnerships• Source close to Home or buy Made in America
Connecting with Vendors
• Internet Exchanges• Wholesale Market Centres• Trade shows• Buying on their turf• Resident Buying Offices
Negotiating with Vendors
• Guidelines for Planning Negotiations with Vendors
• Knowledge is Power• Consider History• Assess where things are today• Set goals• Additional Markup opportunities• Terms of Purchase• Transportation
Negotiating with Vendors (contd..)
• Delivery & Exclusivity• Communications• Advertising allowances• Know the vendor’s goals & Constraints• A Continuous relationship• Testing new items• Communications• Showcase
Negotiating with Vendors (contd..)
• Plans to have as many negotiations as the vendor
• Choose a good place to negotiate• Don’t burn bridges• Don’t assume
Establishing & Maintaining strategic relationships with vendors
• Defining strategic relationships• Maintaining strategic relationships mutual
trust• Open Communication• Common Goals• Credible commitments• Building Partnering relationships
Pricing
• Pricing Strategy• Everyday Low Price• High Low Pricing- Deciding which strategy is
best
Approaches for setting prices
• The cost oriented method• Determining the initial markup from maintained markup
and gross margin• Determining the initial retail price under cost oriented
pricing• The demand oriented method• The competition oriented method• Profit impact of setting a retail price • The us e of break-even analysis• Calculating Break-even for a new product• Calculating Break-even sales
Price Adjustments
• Markdowns• Reasons for taking markdowns• Liquidating markdown merchandise• Markdowns and price discrimination• Coupons• Rebates• Price bundling
Price Adjustments (contd..)
• Multiple Unit-pricing• Variable pricing• Pricing on the internet• Leader pricing• Price lining• Odd pricing
Are you a smart merchandiser now??