by

A case study strategic analysis report

Ali ZaIar
M.Zain Shahid
M.Husnain-ul-haq
Ali Haider Suleria



1
CONTENTS
%ABLE OF CON%EN%S ..................................................................... ERROR! BOOKMARK NOT DEFINED.
CASE ABS%#AC% ......................................................................................................................................2
VISION S%A%EMEN% (P#OPOSED) .............................................................................................................2
MISSION S%A%EMEN% AND IN%#ODUC%ION (AC%UAL) ........................................................................3
SWO% ANALYSIS ...................................................................................................................................4
S%#ENG%H .........................................................................................................................................4
OPPO#%UNI%IES ................................................................................................................................4
WEAKNESESS ....................................................................................................................................4
%H#EA%S ...............................................................................................................................................4
SO S%#A%EGIES .....................................................................................................................................5
WO S%#A%EGIES ....................................................................................................................................5
S% S%#A%EGIES ......................................................................................................................................5
WT STRATEGIES ...................................................................................................................................5
SPACE MA%#IX ......................................................................................................................................7
G#AND S%#A%EGY MA%#IX .......................................................................................................................8
IFE MA%#IX ............................................................................................................................................9
EFE ..........................................................................................................................................................9
CPM ....................................................................................................................................................... 10
%HE IN%E#NAL-EX%E#NAL (IE) MA%#IX ................................................................................................... 11
%HE IFE %O%AL WEIGH%ED SCO#E ....................................................................................................... 11
%HE EFE %O%AL WEIGH%ED SCO#E ...................................................................................................... 11
QSPM ..................................................................................................................................................... 12
#ECOMMENDA%IONS AND CONCLUSION .................................................................................................... 14




2
CASE ABSTRACT
David Pace Iaced some major challenges in manuIacturing, marketing,
selling, and distributing his product. %hese processes were complicated by
a construction industry generally resistant to change, even though
traditional home construction methods could not withstand the damage
inIlicted by recent hurricanes.
Drawing out inIormation about past events Ior the case study helped the
employees recognize and understand the importance oI their company's
key decision points and how those decisions had to be shaped and deIined.
%hey also realized the importance oI identiIying underlying issues and
variables that inIluence and impact current decisions, thereby locking in
certain paths and policies Ior the Iuture-right or wrong. %hey began to see
that their decisions went Iar beyond their immediate environment, and a
variety oI stakeholders were usually impacted (directly or indirectly) by a
speciIic decision process.
%he speciIic area oI past marketing activities Ior the company was
especially revealing. %hrough discussions with management, it became
evident that they Iirst needed to distinguish between the meaning oI sales
and marketing. David's desire to get the industry and customers to
recognize the value oI his product was going to eventually require a two-
pronged approach: one Iocused on sales with customer contacts and
training, and a second Iocused on marketing by convincing the general
public and industry that David produced a must-have superior product. A
marketing-oriented case study that looked at the marketing initiative oI the
company in the past was developed. %his process opened executives' eyes
in an unthreatening way and gave them motivation to immediately begin
developing Iuture-oriented scenarios.
AIter creating these past-experience case studies, the process oI basing the
Iuture alternatives and dilemmas on solid corporate precedence was Iairly
routine. %here was a natural progression oI activities and events that was
"in sync" with logical business operations. %he past became the logical
reIerence point Ior identiIying the key Iactors Ior the Iuture scenario
planning.

'SON STATEMENT (PROPOSED)
Our Vision is simple. 'CELLOX

is committed to Quality, Service and

People.with CELLOX you are building the future one blockat a time.


3
MSSON STATEMENT AND NTRODUCTON
(ACTUAL)
Cellox

LLC has been in business as an EPS manuIacturer since

1961. With over 49 years in the EPS industry and the only Iully integrated
ISO certiIied manuIacturer in the market, we can saIely say we are the
leading ICF manuIacturer.

'We strive to bring the highest quality products to Architects, Engineers,
General Contractors, Builders and Owners. Here at Cellox, we are proud
oI our many successIul partnerships and having played an integral role in
the construction Iield as an ICF manuIacturer

Our customers are our top priority and as an ICF manuIacturer we have
supplied the ICF industry with solutions, innovative technology, and
exceptional customer service Ior over 20 years. We continue to do so. In
Iact, each member oI our technical staII has extensive on-site ICF
construction experience and is dedicated to improving the ICF
construction process while promoting ICF education.

ission
Statement


4
SWOT ANALYSS
STRENGTH

O GeneraI Eco profiIe
O DurabiIity / SustainabiIity
O RecycIabiIity
O Strong/ Iight materiaI
O Economic and competitive

OPPORTUNITIES

O Added by the product
shape
O Low qty production series /
higher varities
O Energy efficiency
reguIation
O Eco IabeIing
O PLA materiaI

WEAKNESESS

O Plastic image in general
O USE OF VOC`s (Volatile
Organic Compound)
O Styrene
O Fire
O Lacking supporting evidence
report

%H#EA%S

O Competitors working on
weaknesses
O #enewable material like PLA
O Governmental requirements
O Consumer/ retailer pressure
O Demand Ior high variety
O One component solution



5

SO STRATEGIES

Invest more in ICF`s
Market your PoP products
Market your recycle friendliness
WO STRATEGIES

Open outlets on coastal areas for
ICF product promotion
Stream line your PoP supply chain
buy invest on new plant.
Hire or outsource a new advertising
team and strategy
ST STRATEGIES

Call on workshops for more
awareness for ICF products.
Give Construction workers more
incentives for ICF products
Should also do more R&D on PPM
products so company can improvise
on new packaging
WT STRATEGIES

Run a campaign to show how plastic
is environment friendly
Increase ICF production by
purchasing a new plant.
Cost cut the expenses to reduce
negative income generation


6
Financial Ratio Analysis

Growth Rates % Cellox
SaIes (Qtr vs year ago qtr) (5.00)
Net ncome (YTD vs YTD) (37.30)
Net ncome (Qtr vs year ago qtr) (52.40)
SaIes (5-Year AnnuaI Avg.) 14.86
Net ncome (5-Year AnnuaI Avg.) 7.25
Dividends (5-Year AnnuaI Avg.) 15.37
Price Ratios
Current P/E Ratio 22.4
P/E Ratio 5-Year High 83.5
P/E Ratio 5-Year Low 14.8
Price/SaIes Ratio 3.46
Price/Book 'aIue 2.73
Price/Cash FIow Ratio 13.30
Profit Margins
Gross Margin 87.6
Pre-Tax Margin 22.2
Net Profit Margin 15.5
5Yr Gross Margin (5-Year Avg.) 87.0
5Yr PreTax Margin (5-Year Avg.) 23.5
5Yr Net Profit Margin (5-Year Avg.) 18.9
FinanciaI Condition
Debt/Equity Ratio 0.08
Current Ratio 1.6
Quick Ratio 1.1
nterest Coverage 34.6
Leverage Ratio 1.7
Book 'aIue/Share 9.04
nvestment Returns %
Return On Equity 12.3
Return On Assets 7.4
Return On CapitaI 11.3
Return On Equity (5-Year Avg.) 19.4
Return On Assets (5-Year Avg.) 10.1
Return On CapitaI (5-Year Avg.) 16.2
Management Efficiency
ncome/EmpIoyee 71,000
Revenue/EmpIoyee 458,000
ReceivabIe Turnover 5.3
nventory Turnover 1.0
Asset Turnover 0.5




7

SPACE MATR
















-2 -3
-1 -3
3 -1
5 -5
4 -5

-2 2
-5 1
1 1
-2 2
-4
1

Control over Suppliers and Distributors Profit Potential
Market Share Growth Potential
Product Quality Financial Stability
Environmental Stability (ES) Average Financial Strength (FS) Average
Competitive Advantage (CA) Average Industry Strength (IS) Average
Customer Loyalty Ease of Entry into Market
Technological Know-how Resource Utilization
Competitive Advantage (CA) Industry Strength (IS)
orking Capital
Cash Flow
Competitive Pressure
Barriers to Entry into Market
Environmental Stability (ES)
Rate of Inflation
Technological Changes
Price Elasticity of Demand
Financial Strength (FS)
Return on Investment
Leverage
Liquidity


8
y-axis FS ES 3.2 (-4.7) (1.5)
x-axis CA IS (-3.5) 1.5 (2)
GRAND STRATEGY MATR

Cellox Company lies in the third quadrant because they are somewhat at a
weak competitive position and industry growth is also not very rapid.
Factors which were considered while making this matrix were
1. Market development
2. Market penetration
3. Product development
4. Forward integration
5. Backward integration
6. Horizontal integration
7. #elated diversiIication





9
FE MATR
STRENGTHS Weights Ratings Weighted score
General Ecoprofile 0.15 2 0.30
Durability / Sustainability 0.03 4 0.12
Recyclability 0.09 3 0.27
Strong/ light material 0.17 1 0.17
Economic and competitive 0.12 1 0.12

WEAKNESESS
!lastic image in general 0.08 3 0.24
USE OF VOC's 0.14 1 0.14
Styrene 0.09 2 0.18
Fire 0.02 3 0.06
Lacking supporting evidence report 0.10 3 0.30
Total 1 1.86

EFE
OPPORTUNITIES Weights Ratings Weighted score
O Added by the product shape 0.07 2 0.14
O Low qty production series / higher
varities
0.15 3 0.45
O Energy efficiency regulation 0.05 1 0.05
O Eco labeling 0.03 3 0.09
O !LA material 0.08 4 0.32

THREATS
O Competitors working on
weaknesses
0.11 3 0.33


10
O Renewable material like !LA 0.10 1 0.10
O Governmental requirements 0.10 2 0.20
O Consumer/ retailer pressure 0.23 1 0.23
O Demand for high variety 0.08 4 0.32
Total 1 2.26

CPM

CELLOX
BK MCD
Success factors Weights #atings Score #atings Score #atings Score
Advertising
0.14 3 0.42 2 0.28 4 0.56
Quality
0.15 4 0.6 2 0.3 1 0.15
Price competitiveness
0.1 4 0.4 4 0.4 4 0.4
Financial position
0.17 1 0.17 2 0.34 3 0.51
Market share
0.13 2 0.26 4 0.52 3 0.39
Global expansion
0.25 3 0.75 3 0.75 4 1
Product development
0.2 2 0.4 2 0.4 4 0.8
Total
1 2.58 2.71 3.25









11
THE NTERNAL-ETERNAL (E) MATR

%HE IFE %O%AL WEIGH%ED SCO#E



S%#ONG AVE#AGE WEAK


3.0 %O 4.0 2.0 %O 2.99 1.0 %O 1.99


HIGH
I II III

3.0 %O
3.99





MEDIUM
IV V VI
%HE EFE
%O%AL
WEIGH%ED
SCO#E
2.0 %O
2.99


2



LOW
VII VIII IX

1.0 %O
1.99





1 Cellox Score
2 Industry Score


1


12
QSPM

Strategic Alternatives


Key Internal Factors Weight
Acquire a new
manufacturing
plant
Improve the
existing setup by
adding new
features
Strengths AS TAS AS TAS
1. Corporate citizenship should be encouraged to
ensure access to even international markets.
0.05 4 0.20 3 0.15

2. Negative income generation can lead to shortage oI
working captial
0.04 2 0.08 2 0.08
3. Most oI the sales are generated through POP
0.05 3 0.15 4 0.20
4. Serving the largest economy in the world.
0.08 3 0.24 2 0.16
5. Consolidation taking place in the Plastic industry
increases purchasing power and shiIts bargaining
power in their Iavor.

0.03 --- --- --- ---
6. Web site is poorly designed and not useIul.
0.04 --- --- --- ---
7. Workshop Ior ICF products
0.05 --- --- --- ---
8. ICF products are the newest material available Ior
construction in market

0.06 2 0.12 1 0.06
9. Market Leader oI POP products
0.06 3 0.18 2 0.12
10. Negative income oI $238,000
0.06 3 0.18 3 0.18
11. Holds 17.1 percent oI market share
0.05 2 0.10 2 0.10


13
Weaknesses
1. Stock price has been losing value over the past Iive
0.06 1 0.06 1 0.06
2. Constantly negative income Ior 5 Years
0.06 3 0.18 2 0.12
3. No #D to improve PPM products
0.05 2 0.10 3 0.15
4. Not serving International markets.
0.04 3 0.12 1 0.04
5. Lack oI interest Ior construction workers Ior ICF
Products.
0.05 4 0.20 3 0.15
6. Lack oI organizational structure.
0.02 3 0.06 2 0.04
7. Decreased amount oI advertising.
0.08 3 0.24 2 0.16
SUBTOTAL 1.98 1.42



Key External Factors Weight

Acquire a new
manufacturing
plant
.
Improve the
existing setup by
adding new
features
Opportunities AS TAS AS TAS
1. Demand Ior PoP is relatively inelastic.
0.05 3 0.15 2 0.10
2. Worldwide Plastic products sales continue to grow
Iaster than most segments oI the world economy.
0.06 3 0.18 2 0.12
3. World Packaging sales to exceed $800 billion in
2005, up 6.4 percent.
0.07 3 0.21 2 0.14
4. Advancements in technology.
0.05 2 0.10 1 0.05



14
5. Increase oI natural disasters
0.07 4 0.28 3 0.21
6. Barriers to entry are high.
0.05 --- --- --- ---
Threats
1. People have a negative perception about plastic
products
0.06 3 0.18 1 0.06
2. #igid Credit policy
0.05 1 0.05 4 0.20

3. Assets located overseas Irom global markets are
subject to threat oI expropriation and terrorism.

0.03 --- --- --- ---
4. %hreats oI global business in dealing with varied
regulatory environments and currency Iluctuations.
0.07 --- --- --- ---
5. Increasing pricing pressures.
0.03 3 0.03 1 0.03
6. Negative publicity.
0.02 1 0.02 4 0.08
SUBTOTAL 0.88 0.66
TOTAL ATTRACTIVNESS SCORE 2.91 2.07

RECOMMENDATONS AND CONCLUSON
%he authors implemented this case study scenario planning strategy by enabling Cellox
decision makers and managers to discover things Ior themselves, rather than doing the
work Ior them. Managers became reIlective practitioners with access to appropriate
inIormation. Not only did Cellox executives have to deal with their Wisconsin location
and a reluctant construction industry, but the scenario planning strategy helped them to
carve through these Iuture issues: contractor training, regional product manuIacturing
versus regional product distribution, lead times required Ior product certiIication and
approval in states and counties, job site technical assistance Ior contractors, Iranchising
ICF construction crews, production capacity issues associated with a Iirst "super-sized"
product order, organizational structure over the next decade, and the qualiIications
required Ior Iuture personnel. %his was a signiIicant outcome Ior a small-sized company
that thought it was only Iacing a couple oI key issues in the Iuture.