Strategic Management

Table of Contents

Introduction3

Cumulative Balanced Score Card3

Income Statement of Zeus Technologies4

Balance Sheet of Zeus Technologies6

Competitive Strategy of Zeus Technology7

Strategic Plan8

Selection bases for the Strategic Direction13

Effectiveness of Strategies14

Sales Offices14

Brands15

Sales Promotion17

Competitor Analysis18

Estimation of Competitor Moves25

Sustainability of Competitive Advantage26

Distinct Competitive Advantage28

Three Criteria of a Winning Strategy28

Goodness of Fit Test28

Competitive Advantage Test28

Performance Test29

Application of Value Chain Analysis29

Important Issues in Order to Achieve Competitive and Financial Success30

Low Sales30

Low Liquidity31

Loss of Revenue due to Capacity under Utilization31

Strategic Management

Introduction

Zeus Technologies was established to provide microcomputers to the global market. The market segment is divided in five types of market requirements namely cost cutter, innovator, work horse, Mercedes and traveler. This report contains strategic management analysis of Zeus Technologies.

Cumulative Balanced Score Card

Table 1: Cumulative Balanced Score Card

Cumulative industry results for last four quarters ending in quarter: 8

 

Minimum

Maximum

Average

Zeus Technologies

Total Overall

0.00

210.03

32.35

37.56

Financial Performance

-20.51

131.63

25.30

83.91

Market Performance

0.01

0.37

0.17

0.20

Marketing Effectiveness

0.41

0.74

0.63

0.71

Investment in Future

1.32

5.74

3.81

4.06

Wealth

-5.03

3.24

0.02

1.74

Human Resource Management

0.79

0.88

0.84

0.85

Asset Management

0.07

1.94

0.83

1.02

Manufacturing Productivity

0.20

0.63

0.40

0.63

Financial Risk

0.00

1.00

0.58

0.81

Income Statement of Zeus Technologies

Table 2: Income Statement of Zeus Technologies

Income Statement

 

Quarter 1

Quarter 2

Quarter 3

Quarter 4

Quarter 5

Quarter 6

Quarter 7

Quarter 8

Gross Profit

  Revenues

0

0

1,191,400

4,995,458

12,393,332

12,988,454

19,337,680

37,774,183

- Rebates

0

0

22,725

110,975

286,145

314,985

430,625

768,900

- Cost of Goods Sold

0

0

458,978

1,785,506

4,701,232

4,954,451

7,084,707

13,667,753

- Tariffs

0

0

33,646

90,613

290,879

307,977

443,670

807,214

= Gross Profit

0

0

676,051

3,008,364

7,115,076

7,411,041

11,378,678

22,530,316

Expenses

  Research and Development

0

120,000

420,000

280,000

4,675,340

3,913,212

3,091,927

7,657,247

+ Quality Cost

0

0

21,035

196,339

389,044

375,726

461,115

581,617

+ Advertising

0

0

159,876

238,243

663,719

854,501

1,089,851

1,953,383

+ Sales Force Expense

0

0

381,539

292,702

628,297

614,836

1,163,100

2,847,596

+ Sales Office and Web Center Expenses

0

500,000

473,000

369,534

556,028

580,186

1,163,700

887,534

+ Marketing Research

88,000

0

69,000

92,000

92,000

92,000

92,000

115,000

+ Shipping

0

0

19,224

77,812

182,502

197,667

263,612

456,201

+ Inventory Holding Costs

0

0

22,644

12,952

26,968

36,349

124,736

144,893

+ Excess Capacity Cost

0

0

631,657

20,056

0

0

761,479

48,103

+ Depreciation

0

0

45,833

70,833

70,833

70,833

118,557

209,664

+ Web Marketing Expenses

0

0

152,000

212,120

116,650

421,110

701,210

479,880

= Total Expenses

88,000

620,000

2,395,808

1,862,591

7,401,381

7,156,420

9,031,287

15,381,118

  Operating Profit

-88,000

-620,000

-1,719,757

1,145,773

-286,305

254,621

2,347,391

7,149,198

Miscellaneous Income and Expenses

+ Licensing Income

0

0

0

0

0

0

0

0

- Licensing Fees

0

0

0

0

0

0

0

0

+ Other Income

0

1,000,000

0

0

1,000,000

0

0

0

- Other Expenses

0

0

0

0

0

0

0

0

= Earnings Before Interest and Taxes

-88,000

380,000

-1,719,757

1,145,773

713,695

254,621

2,347,391

7,149,198

+ Interest Income

6,000

0

0

0

3,750

8,250

12,750

17,250

- Interest Charges

0

0

0

19,588

137,500

172,534

172,534

172,534

= Income Before Taxes

-82,000

380,000

-1,719,757

1,126,185

579,945

90,337

2,187,607

6,993,914

- Loss Carry Forward

0

82,000

0

1,126,184

384,972

0

0

0

= Taxable Income

0

298,000

0

1

194,973

90,337

2,187,607

6,993,914

- Income Taxes

0

89,400

0

0

58,492

27,101

656,282

2,098,174

= Net Income

-82,000

290,600

-1,719,756

1,126,184

521,453

63,236

1,531,325

4,895,739

Earnings per Share

-8

15

-51

26

6

1

16

52

Balance Sheet of Zeus Technologies

Table 3: Balance Sheet of Zeus Technologies

Balance Sheet

 

Quarter 1

Quarter 2

Quarter 3

Quarter 4

Quarter 5

Quarter 6

Quarter 7

Quarter 8

Current Assets

  Cash

518,000

1,108,600

1

1,902,176

12,104,303

11,699,209

9,978,627

14,582,464

+ 3 Month Certificate of Deposit

400,000

0

0

0

0

0

0

0

+ Finished Goods Inventory

0

0

226,441

129,518

269,678

363,485

1,247,360

1,448,927

Long Term Assets

+ Sinking Fund

0

0

0

0

250,000

550,000

850,000

1,150,000

+ Net Fixed Assets

0

1,100,000

1,654,167

1,583,333

1,512,500

2,587,023

4,655,055

4,445,391

= Total

918,000

2,208,600

1,880,609

3,615,027

14,136,481

15,199,717

16,731,042

21,626,782

Debt

  Conventional Bank Loan

0

0

0

0

0

0

0

0

+ Long-Term Loan

0

0

0

0

5,000,000

6,000,000

6,000,000

6,000,000

+ Emergency Loan

0

0

391,765

0

0

0

0

0

Equity

+ Common Stock

1,000,000

2,000,000

3,000,000

4,000,000

9,000,000

9,000,000

9,000,000

9,000,000

+ Retained Earnings

-82,000

208,600

-1,511,156

-384,972

136,481

199,717

1,731,043

6,626,782

= Total

918,000

2,208,600

1,880,609

3,615,027

14,136,481

15,199,717

16,731,042

21,626,782

Competitive Strategy of Zeus Technology

The competitive strategy of Zeus Technology remained focuses on providing good value for money (see Table 4).

Table 4, Bases for Competitive Advantage.

Basis For Competitive Advantage

 

Type of competitive advantage being pursued

Market Target

Lower Cost

Differentiation

Broad Cross Section of Buyers

Overall low cost provider strategy

Broad differentiation strategy

                                        

XHybrid - More value for the money

                                        

Narrow Buyer Segment (Market Niche)

                                        

 

Focus low cost strategy

Focus differentiation strategy

The company developed a competitive advantage to increase the revenue as well as keeping it unique distinction among the competitors. The company decided to use best-cost provider strategy. The best cost provider strategy was developed to ensure that customers receive more value by receiving products having upscale attributes but at price which is competitive in the market. If a competitor was offering a product with basic features, we offered features having a little more than competitor and lowered our prices in the initial quarters to boost sales.

Among the five strategies it was observed that the technology business is always evolving with new technology coming up every new quarter, had the company went with one of the other strategies, the competitor advantage would had been matched by the competitor and out smarted by expensive marketing campaigns.

Strategic Plan

Following strategies were developed to initiate the company which will be able to compete in globally:

Table 5 : Strategic Plan

Mission Statement

We aim to ...