Template for answering the Comprehensive Exam

:Introduction & Company profile -1

:Then start doing the ANALYSIS as follows

External Audit: assessing external environment STEPC -2

The main aim from this analysis is to end up with

)(Threats and Opportunities
Political, Governmental, and Legal forces:

● Political stability,
● Government regulations & deregulations.
● Changes in tax laws.
● Level of government subsidies
● Country to other countries relationships
● Trading policies& Import-export regulations
● Political conditions in foreign countries
● Facilities for the entrance for new foreign investment,
● Size of government budgets
● The relations with other countries

Economic forces

● Availability of credit and saving

● Level of disposable income
● Interest rates
● Inflation rates
● Unemployment
● Stock Market trend
● Foreign countries’ economic conditions
● Monetary policies
● investment laws and regulations,
● The GDP and income level (which directly reflects on consumer
spending power)
● The currency depreciation or appreciation
● Wages level
 ● price elasticity of demand
Social, Cultural, Demographic, and Environmental forces:

● Number of marriages, divorces, births, and deaths.

● Social security programs
● Per capita Income
● Lifestyle
● Traffic congestion
● Trust in government
● Average level of education
● Population changes by race, age, and sex
● Air pollution
● size, structure, and regional distribution of the population
● Cultural fear or freedom level
● Cultural symbol (status)
● What’s socially acceptable?
● The attitudinal changes towards business ( product / services)
produced

Technological forces

● Internet availability and usage

● E-commerce
● The rate of development
● The presence of skilled persons
● Presence of technological capabilities.
● Substitute might replace the organization’s product.

Competitors
● The structure, bases and intensity of competition.
● The existing major competitors and any competitive advantage.
● The major strengths and relative position of each competitor.
● The objectives, strategies and the level of profitability of each
competitors.
● The market share level.
THEN I WILL DO PORTER'S 5 FORCES ANALYSIS

:Internal Audit -3
The main aim from this analysis is to end up with: (Strengths and
)Weaknesses

Here I want to analyze the internal functions of the company as

:follows mainly from the data given in the case

Management -

I want to assess the management functions (Planning,

organizing, motivating, staffing and controlling) I want to know
..…the overall management structure, polices

Marketing-

I want to know how the firm is doing its marketing functions (its
customer segments, distribution of its products, its position, brand,
………pricing, promotion

Financial analysis-
Here I am doing ratio analysis for maximum 2 years and compare
them to evaluate the company's financial performance also I can
compare them to the industry average if I have it. Very important
to note that we will calculate the most important rations that
will help us selecting strategies which I believe are the following
:ratios

1) Liquidity Ratios:
They measure the short term debt paying ability.

i.e: firm’s liquidity position.

Current Ratio = the total current assets/total current liabilities = (…..

times) each 1$ of current liabilities is covered by (……) $ of current
assets.
Quick Ratio(Acid test ratio) = Cash+Marketable securities+Receivables/
Total current liabilities
OR = Current Assets – Inventories / Current Liabilities = (…..times
It’s a measure of immediate paying ability. It should be > 1 to be a good
sign.
 2) Assets Management Ratios:
Inventory Turnover Ratio
= Sales / Average inventory = (…..times)
it indicates how many times the inventory turned over during the
accounting period (year).
Fixed Assets Turnover Ratio
= Sales / net fixed assets = (…time)
each 1$ of fixed assets results in (…$) of sales
it measures how efficiently the firm uses its plant &
equipments.

Total Assets Turnover Ratio

= Sales / Total Assets = (….time).

3) Debt Management Ratios (financial leverage):

Determine the level of debt in the firm’s capital structure &
measure how much debt the firm can take to finance its activities.

Total Debt To Total Assets Ratio = total debt (liabilities) / total assets =
(…%) the creditors have supplied (…%) of the firms total
financing.
4) Profitability Ratios:
Show the combined effect of liquidity, asset management & debt

management on operating results

Profit Margin on Sales Ratio = Net Income / Net Sales (cash & credit)

= (…%) Each 1$ of net sales results on average in (…) cents of net

income. To be more realistic it’s better to use operating income

.instead of net income

If it’s lower than industry average it indicates;

​ Costs are too high

​ Inefficient operations

​ Heavy use of debt.

 Return On Total Assets (ROA) ratio = net income /average total assets =
(…%) Each 1$ of total assets results in (…) cents of net income.

Return On Common Stockholder’s Equity (ROE) Ratio

= net income / average common stockholder’s equity
= (….%)

5) Market Value Ratios (the outsider’s view):

Give management an indication of what investors think of the

.company’s past performance and future prospects

Price / earnings ratio = market price per share / earnings per share

(EPS) = (..Time). If the market price per share is > 12-15 time EPS, this

.is over valued stock If it’s < 12-15 time EPS, this is under valued stock

Production and operation-

Process, Capacity, Inventory, workforce and quality are the functions

of operation and production if we can extract from the case

anything that gives an indication about the company's operations it

.will be a good thing

R&D-

MIS -

BOTH OF THEM ARE INCLUDED IN THE INTERNAL ANALYSIS.

Hopefully we can extract from the case any strengths and

 weaknesses concerning R&D and MIS and use them in our SWOT

.analysis

:AFTER doing internal and external analysis, we will do

SWOT and TOWS

HERE I have to be able to take strategic choices and select from the
following types of strategies:
Vertical Integration Strategies (Gain Control Over: Distributors, Suppliers, and
Competitors)

1- Forward Integration(Gain Control Over ---Distributors, Retailers)

Guidelines

▪ Current distributors – expensive or unreliable

▪ Availability of quality distributors – limited

▪ Firm competes in industry expected to grow markedly

 ▪ Firm has both capital & HR to manage new business of distribution

▪ Current distributors have high profit margins

2- Backward Integration (Ownership or Control -- Firm’s suppliers)

Guidelines

▪ Current suppliers – expensive or unreliable

▪ # of suppliers is small; # competitors is large

▪ High growth in industry sector

▪ Firm has both capital & HR to manage new business

▪ Stable prices are important

▪ Current suppliers have high profit margins

3- Horizontal Integration (Ownership or Control --Firm’s competitors)

Guidelines

▪ Gain monopolistic characteristics w/o federal government challenge

▪ Competes in growing industry

▪ Increased economies of scale – major competitive advantages

▪ Faltering due to lack of managerial expertise or need for particular resource

Intensive Strategies: Improve competitive position with existing products

1- Market Penetration (Increased Market Share)

● Present products/services & Present markets
 ● Greater marketing efforts
Guidelines

▪ Current markets not saturated

▪ Usage rate of present customers can be increased significantly

▪ Shares of competitors declining; industry sales increasing

▪ Increased economies of scale provide major competitive advantage

2- Market Development (New Markets -- Present products/services to new

geographic areas)
Guidelines

▪ New channels of distribution – reliable, inexpensive, good quality

▪ Firm is successful at what it does

▪ Untapped/unsaturated markets

▪ Excess production capacity

▪ Basic industry rapidly becoming global

3- Product Development(Increased Sales -- Improving present products/services,

Developing new products/services)

Guidelines

▪ Products in maturity stage of life cycle

▪ Industry characterized by rapid technological development

▪ Competitors offer better-quality products @ comparable prices

 ▪ Compete in high-growth industry

▪ Strong R&D capabilities

Diversification Strategies (Less Popular -- More difficult to manage diverse business

activities)

1- Concentric Diversification (New & related products/services)

Guidelines

▪ Compete in no/slow growth industry

▪ New & related products increases sales of current products

▪ New & related products offered at competitive prices

▪ Current products—decline stage of product life cycle

▪ Strong management team

2- Conglomerate Diversification(New & unrelated products/services)

Guidelines

▪ Declining annual sales & profits

▪ Capital & managerial ability to compete in new industry

▪ Financial synergy between acquired and acquiring firms

▪ Current markets for present products – saturated

3- Horizontal Diversification(New & unrelated products/services for current

customers)
Guidelines
 ▪ Adding new products/services would significantly increase revenues

▪ Highly competitive and/or no-growth industry; low margins & returns

▪ Current distribution channels can be used

▪ New products have counter cyclical sales patterns

Defensive Strategies

1- Retrenchment: (Regrouping , Cost & asset reduction to reverse declining sales &
profit)
Guidelines

▪ Failed to meet objectives & goals consistency; has distinctive competencies

▪ Firm is one of weaker competitors

▪ Inefficiency, low profitability, poor employee morale, pressure for stockholders

▪ Strategic managers have failed

▪ Rapid growth in size; major internal reorganization necessary

2- Divestiture(Selling a division or part of an organization)

Guidelines

▪ Retrenchment failed to attain improvements

▪ Division needs more resources than are available

▪ Division responsible for firm’s overall poor performance

▪ Division is fit with organization

▪ Large amount of cash is needed and cannot be raised through other sources
3- Liquidation: Selling , Company’s assets, in parts, for their tangible worth

Guidelines

▪ Retrenchment & divestiture failed

▪ Only alternative is bankruptcy

▪ Minimize stockholder loss by selling firm’s assets

I will select 2 strategies and take into consideration my analysis
especially the financial analysis to know if I am able to pursue specific
strategy or not. The most expensive strategies are (Integration
Strategies)

After I decide on my strategic choices I will select:

Means for Achieving Strategies
1- Joint Venture/Partnering -

▪ Two or more companies form a temporary partnership or consortium for

purpose of capitalizing on some opportunity.

Why Joint Ventures Fail -

▪ Managers who must collaborate daily; not involved in developing the venture

▪ Benefits the company not the customers

▪ Not supported equally by both partners

▪ May begin to compete with one of the partners

Guidelines

▪ Synergies between private and publicly held

▪ Domestic with foreign firm, local management can reduce risk

▪ Complementary distinctive competencies

▪ Resources & risks where project is highly profitable (e.g. Alaska Pipeline)

▪ Two or more smaller firms competing w/larger firm

▪ Need to introduce new technology quickly

2- Mergers & Acquisitions

▪ Provide improved capacity utilization

▪ Better use of existing sales force

▪ Reduce managerial staff

▪ Gain economies of scale

 ▪ Smooth out seasonal trends in sales

▪ Gain new technology

▪ Access to new suppliers, distributors, customers, products, creditors

3- First Mover Advantages

▪ Benefits a firm may achieve by entering a new market or developing a new

product or service prior to rival firms.

Potential Advantages

▪ Securing access to rare resources

▪ Gaining new knowledge of key factors & issues

▪ Carving out market share

▪ Easy to defend position & costly for rival firms to overtake

4- Outsourcing

▪ Companies taking over the functional operations of other firms

Benefits

▪ Less expensive

▪ Allows firm to focus on core business

▪ Enables firm to provide better services

I do recommend not to stop here and just give general

recommendations we need to give an outlook about how will
we implement our strategies by going through the
 organizational structure and functions with more
concentration on the Marketing part:

Selecting an organizational structure

Select one of the following 4 types:
FUNCTIONAL STRUCTURE:
The company rather being lead by an entrepreneur, he is replaced by as team of managers
who have functional specializations. The entrepreneur must learn now to delegate his
responsibilities; otherwise, the new structure will yield no benefit

ADVANTAGES

▪ Centralized control of operations

▪ Promotes in-depth functional expertise

▪ Enhances operating efficiency where tasks are routine

DISADVANTAGES

▪ Functional coordination problems

▪ Inter-functional rivalry

▪ Overspecialization and narrow viewpoints

▪ Hinders development of cross-functional experience

▪ Slower to respond in turbulent environments

DIVISIONAL STRUCTURE:
It occurs especially when the organization is managing diverse product line or when the
organization is expanding to cover wider geographical areas
ADVANTAGES:

▪ Decentralized decision making

▪ Each business is organized around products

▪ Puts profit/loss accountability on manager

▪ Facilitates rapid response to environmental changes

▪ Allows efficient management of a large number of units

DISADVANTAGES

▪ May lead to costly duplication of functions

▪ Inter-divisional rivalry

▪ Corporate managers may lose in-depth understanding

MATRIX STRUCTURE
The matrix structure (some times called the matrix organization) it combines the functional
and divisional structure. It is designed to gain the advantage and minimize the disadvantages
of the functional and divisional structures.
The matrix is formed by using permanent cross functional teams to integrate functional
expertise in support of a clear divisional focus on project, product or program.
The matrix structure in the multinational organizations offers a flexibility to deal with the
regional differences as well as the multi products, programs or regional needs.
The matrix structure is the common solution for the organizations that pursues the growth
strategies in a dynamic and complex environment

▪ Functional & product form are combined simultaneously at the same level.

▪ Employee have 2 superior, functional superior & horizontal product manager

WHEN TO USE?

▪ Scarce resources

▪ Ideas need to be cross fertilized across projects

▪ External environment is very complex and changeable

3. Distinct phase exist in the DEVELOPMENT OF matrix structure

1. Temporary cross functional task forces: Project manager is in charge as the

key horizontal link
2. Product or brand management: The functional is still the primary
organizational structure, product manager act as integrator of semi permanent
product or brand.
3. Mature matrix: A true dual authority structure, functional & product structure
are permanent

Human resources:

As most probably the case will be about a company that wants to

invest in Egypt or Middle East, so, HRM has a big role here to answer
the Question of (WHO WILL IMPLEMENT THE STRATEGY) mainly
through the main HR functions and policies which are:
a. Preparation and selection: Review of the employees' job description, job
specification and job performance standard to match the change of the organization.

b. Succession Planning: the preparation of the company succession plan will enable the
organization to stand any future challenges.

c. Career Path and development: the preparation of the career path for the employees
will help the stability and minimize the turnover of the employees.

d. Recruitment: designing a good recruitment process (Selection, interviews) with a high

level of orientation to ensure the compatibility of the new recruited employees with the
existing culture to achieve organizational objectives.

e. Training and development: on-the- job” training, Off-the-Job training and Provide
career planning assistance for employees.

f. Incentive system will ensure the motivation of the employees to better performance
(linking incentive to production)

g. Compensation Policies and protection: What employees get in exchange for their
contribution to the organization 🡪 maintains, retain productive workforce, achieve the
org. objectives.

h. Managing workforce diversity ( if the organization is going internationally)

i. Enhance employee participation: in implementing our strategy, all employees from

different organizational levels must make a meaningful contribution in decision-making
.this will increase employee's involvement and enhance their working life balance.

j. Enhance employee organizational commitment: by increasing job involvement,

which results in lower levels of absenteeism and turnover.

k. Implementing employee recognition programs: starting with personal attention

and ending with appreciation for a job well done.

l. Develop effective staffing plans supporting the organizational strategies by allowing

to fill job openings proactively (in terms of number and the quality of the workforce for
the short and long term) VIP in case of international operations.( if the company is
multinational)

Adding the culture perspective here will be a good point.

R&D

WHEN we select strategies such as product development and related

diversifications require that the new products be successfully
developed and that old ones be significantly improved and here R&D is
essential
As we are MARKETING SPECIALIZATION so we need to excel in the
marketing part as much as we can:

So…….

We can make a simple marketing overview as follows:

A- Selecting target segment:

Level of Market Targeting Segment

▪ Mass (undifferentiated) marketing

The same offer with the a advantage of economic of scale
▪ Segment (differentiated) marketing
Several segment with offer for each
▪ Concentrated (niche) marketing
Target Singles with a single marketing mix
▪ Local marketing
Tailoring products for the local customer group needs
▪ Customization
Tailoring products for the small group of people or specific individuals needs.

B-Positioning:
Positioning

Begin by the differentiating the company’s marketing offer that will deliver more
value than the competitors thus gaining competitive advantage
1. Choose a broad poisoning for the product
● Become best at one of the three value disciplines. (Operational Excellence –
Product Leadership and Customer Intimancy)
● Achieve an adequate performance level in the other two disciplines.
● Keep improving one’s superior position in the chosen discipline so as not to
lose out to a competitor.
● Keep becoming more adequate in the other two disciplines, since
competitors keep raising customers’ expectations about what is adequate.
2. Choose a specific poisoning for the product
▪ Best quality
▪ Best performance
▪ Most reliable
▪ Most durable
▪ Safest
▪ Fastest
▪ Best value for the money
▪ Least expensive
 ▪Most prestigious
▪Best designed or styled
▪Easiest to use
▪Most convenient
3. Choose a value poisoning for the product
● More for More
● More for the Same
● The Same for Less
● Less for Much Less
● More for Less

C-Brand or Product strategies

1. Line extension: additional items in the same product under the same brand
Advantage:

● Saving cost
● Minimize risk in introducing new products
Disadvantage:

● Brand dilution
● consumer confusion
● Cannibalization on original product

2. brand extension: launching new product under the same brand

Advantage:

● Saving high advertising cost and build brand name

● Give new products instant recognition and faster acceptance
Disadvantage:

● consumer confusion about the brand image and may loose its positioning
● may harm consumer attitude toward other product under the same brand

3. multi branding: new brand name in the same product

Advantage:

● establish different features

● appeal to different buying motives
Disadvantage:

● multi branding might gain only small market share

● need resources on building different brands
D-Pricing strategies
1. Market penetraion: set low prices to ensure high level of sales
used when:

● market is highly price sensitive

● low price simulate market growth
● production and distribution cost fall with in accumulated production
experience

2. Market skimming: initial prices are set high and gradually reduced to capture
greet number of market segments
Used when:

● sufficient number of buyers have a high current demand

● high price communicates the image of superior product

3. Product quality leadership : relative prices are set at a premium

Used when:

● brands perceived relative high quality

4. Early cash recovery :

Used when:

● Faced with problem of liquidity

● Belief that the product life is likely to be short
Can be delivered by:

● Mass distribution
● Rigorous credit control policy
● Special offers
● Discount to trigger immediate sales and prompt payment

5. Reflecting product differentiation :

Used when:

▪ Target different segments it different products

E-Promotion strategies
1. Advertising
Used when:

● Build up long term image

● Cost efficient in reaching geographically dispersed buyers
● Trigger quick sales
 ● Gives image of good value to the brand

2. Sales promotion
Used when:

● Encourage trial or purchase

● Short run effect
● Boosting sagging sales

3. Public relation
Used when:

● Building up good corporate image

● Heading off unfavorable rumors

4. Personal selling
Used when:

● Making sales
● Building customer relations preference, conviction and solicit action
● Build up buyers

5. Direct and interative marketing

Used when:

● Targeted individual consumers

● Localized and customized used to reach well defined target segments

F-Distribution strategies
1. Identify major alternatives channels
Number of intermediary:

● Exclusive distribution
● selective distribution
● intensive distribution

2. Evaluting alternatives channels

Based on:

● Channels cost
● Sales output
● Product complexity

3. Selecting channels
Based on:

● Years on business
● Growth record
● Financial strength
● Service reputation

Inventory management
● Manufacture focused
● Time based market focused

HOPEFULLY WE CAN REACH THIS STEP ISA

AT THE END WE NEED TO WRITE A GOOD CONCLUSION THAT MAINLY

ANSWERS THE QUESTION GIVEN ABOUT THE CASE.

GOOD LUCK