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Determine industry requirements Resources - labor, capital, information Technology - high tech, rate of change Assess Porters five forces Assess buyer characteristics Assess supplier characteristics. Summarize as a statement of industry opportunities and threats. Using a published economic forecast, forecast industry revenues for 5 years. 7/26/2013
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RESOURCES: Concentration of suppliers; number of suppliers; location of suppliers; research assessments by financial analysts. TECHNOLOGY: Flexible or inflexible; engineering or skill; machine or labor intensive; barriers to entry; R&D requirements; patents; value added, rate of change. PRODUCT/SERVICE: Value density; product diversity; industry life cycle; profit levels; value chain. MARKETS: Overall size; geographic scope; number of buyers; concentration of buyers; location of buyers; number of competitors; character of competitors; role of advertising; share of advertising; market share; distribution channels. CHECK OUT:
www. virtualpet.com/industry/howto/search.htm
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1 Threat of new entrants. 2 Bargaining power of customers. 3 Threat of substitute products. 4 Bargaining power of suppliers. 5 Jockeying for position among current competitors.
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100
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1993
PREDICASTS F&S INDEX - Index to periodical literature organized by company name and industry (SIC) code. ABI COMPUTER SEARCH SYSTEM - Search by key words - industry name, product name, etc. Less precise than SIC code. VALUE LINE INVESTMENT SERVICE - Most industries are reviewed once every 24 months. PREDICASTS INVESTMENT SERVICE - Most industries are reviewed once every 24 months. TRADE ASSOCIATIONS
CHECK OUT:
www. virtualpet.com/industry/howto/search.htm
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Identify opportunities in the industry. Markets - future buyers Suppliers - new sources of supply Technology - future developments Identify threats in the industry Markets - new competition Suppliers - dwindling source of supply Technology - new substitute technologies Summary statement of impact on next five years and forecast revenues.
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Expenditure-Current $:Bill.
Forecast G.R. = 11 %
1000
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YEAR
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1998
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A. B. C. D. E. F. G. H.
Definition of Purposes (and objectives) List of purpose areas Determine firms purposes and objectives. Develop trend analysis of firms sales. Analyze firms operating ratios. Analyze firms financial ratios. Assess firms strengths and weaknesses Forecast firms sales for five years.
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PURPOSES (REQUIRED)
Categorized general statements about firms future intent.
Market standing Profitability Physical and financial resources Innovation Product/service quality and productivity Worker attitude and training Management performance and development Public responsibility
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Identify one or more purposes in each category. Identify one or more objectives for each purpose.(optional) Summarize as a statement of firms purposes (and objectives).
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Sales $
Grow th Rate = 9%
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1. Return on Assets - profit / total assets 2. Return on Sales - profit / sales revenues 3. Asset Turnover - sales / total assets 4. Expenses as percent of sales - gross profit; R&D; G&A; Sales/Mkt.; other. 5. Other asset turnovers - inventory; fixed assets; acct. receivables; other. FIVE YEAR COMPARISON WITH INDUSTRY MEDIANS AND COMPETITORS
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1. Debt to assets = Total debt / total assets 2. Current ratio = Current assets/ current liabilities FIVE YEAR COMPARISON WITH INDUSTRY MEDIANS AND COMPETITORS
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Marketing and sales Finance Management Operations (use ratios) Research and development Quality assurance Emphasis on actual performance, not on publicity statements!
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LIST OF STRENGTHS LIST OF WEAKNESSES OVERALL SUMMARY ASSESSMENT ABOUT WHAT THIS MEANS FOR FUTURE REVENUES DESCRIBE THE REALISTIC FORECAST THAT THIS ANALYSIS SUPPORTS.
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Sales $
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1998
A. Analyze business opportunity B. Assess firm/market match. C. Prepare a five year financial forecast.
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Assess technical feasibility Assess competition Evaluate financial resources Evaluate product/service Determine firms position in industry Evaluate firms organizational capabilities
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RECOMMENDATIONS -- Describe what is required for this firm to achieve its purposes.
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Purpose - to show the future of the firms business in financial terms. Begin by reviewing your five year sales forecast with dollar amounts for each year.. Produce a five year income statement showing cash flows (REQUIRED). Produce five year balance sheet, and cash flow statement. (OPTIONAL)
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THE END
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