Unformatted text preview: What is represented by this BrainBat? DD OO OO GG OO NN Chapter 2 Retail Strategic Planning and Operations Management Learning Objectives 1. 2. Explain why strategic planning is so important and be able to describe the components of strategic planning: statement of mission; goals and objectives; an analysis of strengths, weaknesses, opportunities, and threats; and strategy. Describe the text's retail strategic planning and operation management model, which explains the two tasks that a retailer must perform and how they lead to high profit. Learning Objectives 1. Explain why strategic planning is so important and be able to describe the components of strategic planning: statement of mission; goals and objectives; an analysis of strengths, weaknesses, opportunities, and threats; and strategy. Components of Strategic Planning Mission Statement Statement of Goals and Objectives SWOT Analysis Strategies LO 1 Components of Strategic Planning Mission Statement: Is a basic description of the fundamental nature, rationale, and direction of the firm. LO 1 Elements of a Mission Statement How the retailer uses or intends to use its resources. How it expects to relate to the everchanging environment. The kinds of values it intends to provide in order to serve the needs and wants of the consumer. LO 1 Statement of Goals and Objectives Goals and Objectives: Are the performance results intended to be brought about through the execution of a strategy. LO 1 Statement of Goals and Objectives Market Performance Objective Financial Performance Objective Societal Objectives Personal Objectives LO 1 Statement of Goals and Objectives Market Performance: Represents how a retailer desires to be compared to its competitors. LO 1 Statement of Goals and Objectives Financial Performance: Represents the profit and economic performance a retailer desires. LO 1 Market Performance Objectives Market performance objectives establish the amount of dominance the retailer has in the marketplace. LO 1 Market Performance Objectives Market Share: Is the retailer's total sales divided by total market sales. LO 1 Financial Objectives Profitability Objectives: Objectives that deal directly with monetary return a retailer desires from its business. LO 1 Profitability Objectives Net Profit Margin Asset Turnover Return on Assets Financial Leverage Return on Net Worth LO 1 Profitability Objectives Net Profit Margin: Is the ratio of net profit (after taxes) to total sales and shows how much profit a retailer makes on each dollar of sales after all expenses and taxes have been met. net profit/net sales where net profit = total revenue total expenses LO 1 Profitability Objectives Asset Turnover: Is the total sales divided by total assets and shows how many dollars of sales a retailer can generate on an annual basis with each dollar invested in assets. Sales/Assets LO 1 Strategic Profit Model Exhibit 2.1 LO 1 Profitability Objectives Return on Assets (ROA): Is net profit (after taxes) divided by total assets. Net profit/total assets Measures amount of profit generated for each $1 in assets. Asset turnover measures total sales for each $1 of assets LO 1 Profitability Objectives Financial Leverage: Is total assets divided by net worth or owners' equity and shows how aggressive the retailer is in its use of debt. If greater than 1 the return on equity (e.g. stock price, owner's investment in the business) exceed return on assets. LO 1 Profitability Objectives Return on Net Worth (RONW): Is net profit (after taxes) divided by owners' equity. The final measure of profitability. Is the return relative to investment in the business. LO 1 Profitability Objectives Gross Margin Percentage: A measure of profitability derived by dividing gross margin by net sales. Gross margin is net sales COGS Gross margin percentage is gross margin/net sales LO 1 Productivity Objectives Productivity Objectives: State the sales objective that the retailer desires for each unit of resource input: floor space, labor, and inventory investment. LO 1 Societal Objectives Societal Objectives: Reflect the retailers' desire to help society fulfill some of its needs. LO 1 Societal Objectives Employment objectives Payment of taxes Consumer choice Equity Benefactor LO 1 Personal Objectives Personal Objectives: Reflect the retailers' desire to help individuals employed in retailing fulfill some of their needs. LO 1 Personal Objectives Self-gratification Status and respect Power and authority LO 1 Strategies Strategy: Is a carefully designed plan for achieving the retailer's goals and objectives. LO 1 Minimal Retail Strategies Get shoppers into your store. Convert these shoppers into customers by having them purchase merchandise. Do this at the lowest operating cost possible that is consistent with the level of service that your customers expect. LO 1 More Retail Strategies Physical differentiation of the product. The selling process. After-purchase satisfaction. Location. Never being out of stock. LO 1 Strategies SWOT Analysis: Is the identification and analysis of a retailer's strengths, weaknesses, opportunities, and threats a firm faces. LO 1 ...
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- Spring '08