PROGRAMME
BA (Hons) in Business Studies/Marketing/ International Business Semester 6
MODULE LECTURER
WEIGHTING
USE OF AI-TOOLS
REQUIRED SUBMISSION DATE AND TIME
Assignment Specification
Strategic Management in Practice Klaus Walter
50 %
Not Acceptable
At or before 23:50 on 10/04/2024(end of week 8)
REQUIRED MAXIMUM WORD COUNT
2,000 words (+/- 10%) (check the Word Count Policy here)
INDIVIDUAL OR GROUP
Report – Individual
YOU ARE STRONGLY ADVISED TO REGULARLY SAVE YOUR WORK. YOU ARE REQUIRED TO SEND THE FINAL VERSION AS AN ATTACHMENT (NOT A LINK) IN AN EMAIL TO **************************** BEFORE THE STATED SUBMISSION DEADLINE. ANY FILES EMAILED TO OTHER ACCOUNTS WILL NOT BE CONSIDERED.
Assessment instructions:
Imagine you are a successful corporate development consultant and the management team of HEATOPICA plc ask you at the beginning of year 20X3 to provide strategic advice to the company. One of your first tasks is to prepare an analytical report of HEATOPICA’s strategic move in the year 20X2 in comparison to 20X1.
What inference can you make from the development of the company’s activities in the following departments/disciplines:
• Marketing and Sales
• Research & Development • Production
This part of your assignment paper should consist of approximately 1,000 words.
Now use your findings to design a strategic plan for the next five years (starting from year 20X3). Develop a new idea using Ansoff’s growth matrix and argue comprehensibly which measures need to be implemented in the three departments/disciplines.
This second part of your assignment paper should also consist of approximately 1,000 words.
Your assignment paper should be professionally structured including an attention-grabbing title page, a table of contents with page numbers, a conclusion, and references. You might insert tables, graphics, or illustrations.
The assessment covers all five Learning Outcomes as follows:
1) Assess how strategic decisions are made in an organisation
2) Critically reflect on the importance of strategic decisions for a business
3) Evaluate the need for strategic thinking and planning in a changing world
4) Critique how the development of a new strategy impacts on the organisation
5) Embrace different views regarding these disciplines
ADDITIONAL INSTRUCTIONS AND INFORMATION FOR STUDENTS:
It is your responsibility to inform yourself of the relevant instructions and information. The examiner has the right to refuse to mark your work if the submission instructions have not been observed. Should the examiner not assert this right, you are notified that no precedent is thereby established regarding submission to any other module.
A. WORD COUNT
1. The word count, if applicable, is stated in the Assignment Specification. The word count includes everything in the main body of the text from the Introduction to the Conclusion. The word count does not include the Cover Page, Table of Contents, Reference List or Appendices (if any).
2. Appendices should be kept to a minimum and relevant to supporting key points of the submission.
3. If your submission is more than 10% below the word count guide specified, the examiner will decide whether the main requirements of the assignment have been satisfied or not and will decide on the appropriate mark for the submission if academic expectations have not been met.
4. If your submission exceeds the word count guide by more than 10%, the examiner will assess it as presented, but may reduce your mark in light of the excess content. See the marking scheme for details.
5. You can view the Independent College Word Count Policy here.
B. FORMAT
1. Unless otherwise stated in the Assignment Specification, your assignment must be typed. One- and-a-half or double spacing must be used with a font size of 11/12. Suggested font types are Calibri, Times New Roman, Arial or Garamond.
2. Typed assignments must be submitted in Word or PDF format.
3. Your assignment MUST include the completed official Cover Sheet, to include, if applicable,
the completed Group Assignment Declaration.
4. Work must be presented properly: ensure that you spell-check and proof-read your work
before submission.
C. REFERENCING
1. Independent College uses the Harvard referencing system.
2. Your assignment must include a Reference List of all the sources that you used.
3. Failure to reference the ideas and work of others is plagiarism and a serious academic offence.
4. Consult the following Library Guides for more information on referencing:
• Referencing and Citation Explained
• Referencing and How to Avoid Plagiarism
D. ACADEMIC INTEGRITY
1. This assignment assesses your own learning and understanding; write in your own words and in your own style.
2. It is a breach of academic integrity:
• to copy and paste without referencing the source – this is plagiarism.
• to paraphrase without referencing the source – this is plagiarism.
• to work with others on an individual assignment or allow others to amend your work
in any way – proof-readers may highlight issues but may not correct them for you.
• to submit your own work from any previous assessment/s for this assignment.
• to submit work that has been created artificially e.g., through artificial intelligence –
this includes translation tools or grammar-editing software, which may be used only to
correct small amounts of text or specific words or phrases.
• to use any AI-tools to an extent beyond that specified by the examiner – it is your
responsibility to retain evidence of your ‘process’ of learning and completion of this assignment. If any concerns regarding inappropriate use of AI are raised, you may be asked to furnish this evidence to the College. This evidence may include, but is not limited to, a research trail showing what resources cited in the work were accessed, and when; proof of multiple versions of the work being saved and the content therein, as well as the ‘journey’ you undertook in completing the assignment. You are encouraged to send as many versions of your assignment to **************************** as you wish. You are also encouraged to complete Turnitin’s Ethical Checklist for Students before submitting your work.
3. Alleged breaches of academic integrity will be investigated under the Independent College Academic Misconduct Policy.
E. UPLOAD AND BACK-UP
1. Unless otherwise agreed by the examiner in advance of the submission deadline, your assignment must be submitted on Moodle to the designated Turnitin link.
2. You are encouraged to upload your assignment to the designated link well in advance of the submission deadline to obtain the Turnitin similarity report and to make appropriate edits to your work before the deadline. Note that after the third such submission, a 24-hour wait period is imposed by Turnitin to generate the similarity report. Only the most recent submission to a given Turnitin link is available: previous submissions are overwritten and cannot be recovered.
3. Ensure that you allow sufficient time to upload the final version of your assignment before the submission deadline: systems may be slower at times of high demand.
4. Check and retain your final Turnitin Digital Receipt.
5. You must also send the final version of your assignment as an attachment (not a link) in an
email to **************************** before the submission deadline. This copy of your assignment in **************************** is your official back-up copy. It is the only copy of
your work that will be accepted for grading in the event of an issue with your submission in
Turnitin.
6. An assignment sent only to **************************** in lieu of Moodle will not be
accepted for grading unless also accompanied by evidence (time-stamped screen capture/photograph) that an IT issue precluded upload to Turnitin within the final hour of the submission period. This evidentiary requirement does not apply in the case of a timed test.
7. Once the submission deadline has passed, you cannot amend or change your submission in Turnitin. If you uploaded the wrong file in error you should immediately send the correct file as an attachment in an email to **************************** and then inform Student Services (************************************). The College will facilitate the upload of your correct file only in the following circumstance and with the following penalty: if the final late-submission deadline (if any) has not passed and with the late-submission penalty applicable on the date of receipt of the file in ****************************.
F. LATE SUBMISSION
1. Late submission subject to penalty is permitted for all assignments except time-limited tests. Late submission, if permitted, is penalised by 5 marks of the awarded mark per calendar day or part thereof. This is subject to a maximum of 5 calendar days, after which time the work will not be accepted.
2. Where an assignment is undertaken in a group, the work should be submitted in its entirety, and any penalty incurred for late submission applies to all group members.
3. Note that a late submission is only possible if it is your first submission to the designated link.
4. You can view the Independent College Late Submission Policy here.
F. PERSONAL CIRCUMSTANCES
1. If you are unable to submit this assignment on time or at all due to circumstances beyond your control, you are required to submit a completed Extenuating Circumstances Form with the relevant documentary and supporting evidence to ************************************ not later than one working day after the final late-submission deadline. Extenuating Circumstances Forms with the relevant documented evidence presented more than one working day after the final late-submission deadline will not be accepted.
2. If you are unable to attend a timed test due to circumstances beyond your control, you are required to submit a completed Extenuating Circumstances Form with the relevant documentary and supporting evidence to ************************************ within five working days of the submission deadline. Extenuating Circumstances Forms with the relevant documented evidence presented more than five working days after the submission deadline will not be accepted.
3. You can view the Independent College Extenuating Circumstances Policy here.
G. NON-ENGAGEMENT
1. A student who fails to adequately engage in the assessment components of a programme may be presented to the Examination Board with a recommendation to withdraw them from the programme. Any of the following may be grounds for withdrawal:
• non-submission of more than 50% of assessment components for that semester
• non-participation in more than 50% of assessment components for that semester
• repeated failure to respond to communication from the College, within a reasonable
period, in relation to extremely poor academic performance
• non-submission of more than two modules in a resit period (with derogation for a
student in the first semester of registration).
2. You can view the Independent College Failed Module Policy here.
Please see the Quality Assurance Manual for further information on Independent College Policies.
ASSESSMENT CRITERIA
Exceptional Excellent Very Good Fairly Good Good Satisfactory Limited Poor Very Poor Unacceptable 100 90 80 70 60 50 40 30 20 10
Theory models 10%
Comprehensi ve and detailed knowledge of the topic. Exceptional selection of theory models. Clear insights on the implementati on of theory into practice are presented.
Comprehensi ve and detailed knowledge of the topic. Excellent selection of theory models. Clear insights on the implementati on of theory into practice are presented.
Comprehensi ve and detailed knowledge of the topic. Very good selection of theory models. Clear insights on the implementati on of theory into practice are presented.
Substantial knowledge of the topic. Understandin g of the context. Considerable insights on the implementati on of theory into practice are presented.
Reasonable knowledge of the topic. Good selection of theory models. Insights on the implementati on of theory into practice are presented.
Factual and some conceptional knowledge of the area. Relevant theory presented in a straightforwa rd manner. Only a few insights on the implementati on of theory into practice are presented.
Evidence of limited knowledge of the topic. Some use of appropriate terminology. Some aspects missed or misconstrued . Only a few insights on the implementati on of theory into practice are presented.
Evidence of poor knowledge of the topic. Poor use of appropriate terminology. Most aspects missed or misconstrued . No insights on the implementati on of theory into practice are presented.
Inaccurate or inappropriate treatment of the topic. Lack of knowledge. Misuse of theory. No insights on the implementati on of theory into practice are presented.
Unacceptable treatment of the topic. Lack of knowledge is evident. No theory is applied.
Content depth 40%
Exceptional critical analysis of strategic management procedures. Strong evidence of critical, reflective, and creative thinking. The report is perfectly structured and illustrated. There is an exceptional
Excellent critical analysis of strategic management procedures. Highly developed capacity for critical, reflective, and creative thinking. The report is perfectly structured and illustrated. There is an
Very good critical analysis of strategic management procedures. Very good evidence of critical, reflective, and creative thinking. The report is very well structured and illustrated. There is a very good
Fairly good critical analysis of strategic management procedures. Considerable evidence of critical, reflective, and creative thinking. The report is well structured and illustrated. There is a good flow of arguments
Good critical analysis of strategic management procedures. Good evidence of critical, reflective, and creative thinking. The report is well structured but lacking in illustrations. There is a good flow of arguments
Satisfactory analysis of strategic management procedures. Little evidence of critical, reflective, and creative thinking. The report is satisfactory structured. The flow of arguments and information is satisfactory.
Limited analysis of strategic management procedures. Little evidence of critical, reflective, and creative thinking. The report shows a limited structure. The flow of arguments and information is limited.
Poor analysis of strategic management procedures. Poor evidence of critical, reflective, and creative thinking. The report shows a poor structure. The flow of arguments and information is poor.
Very poor analysis of strategic management procedures. Very poor evidence of critical, reflective, and creative thinking. The report shows a very poor structure. The flow of arguments and information is very poor.
Unacceptable or no analysis of strategic management procedures. No structuring and evidence of critical, reflective, and creative thinking.
flow of arguments and information.
excellent flow of arguments and information.
flow of arguments and information.
and information.
and information.
Conformity with the task 20%
Has addressed the purpose of the task exceptionally and imaginatively. Has justified own ideas with reference to the role in the management team. Is up to date with what’s going on in the field.
Has addressed the purpose of the task excellently and imaginatively. Has justified own ideas with reference to the role in the management team. Is up to date with what’s going on in the field.
Has addressed the purpose of the task very well and imaginatively. Has justified own ideas with reference to the role in the management team. Is up to date with what’s going on in the field.
Has addressed the purpose of the task fairly good with some imagination. Has demonstrate d wide knowledge with reference to the role in the management team and relationship with other disciplines.
Has addressed the purpose of the task well with some attempt to demonstrate imagination. Has demonstrate d knowledge with reference to the role in the management team and relationship with other disciplines.
Has addressed the purpose of the task satisfactory with some attempt to demonstrate imagination. Has demonstrate d knowledge with reference to the role in the management team and relationship with other disciplines.
Has addressed the main purpose of the task. Evidence of knowledge with reference to the role in the management team.
Some of the work is focused on the aims and themes of the task. Limited knowledge of the role in the management team.
Work is not focused on the aims and themes of the task. No knowledge of the role in the management team.
The task is not understood.
Use and quality of figures. 15%
Wide use of a range of supporting resources and evaluations based on literature and lecture
Wide use of a range of supporting resources and evaluations based on literature and lecture
Wide use of a range of supporting resources and evaluations based on literature and lecture
Wide use of a range of supporting resources and evaluations based on literature and lecture
Use of a range of supporting resources and evaluations based on literature and lecture
Partly use of supporting resources and evaluations based on literature and lecture content.
Very limited use of supporting resources and evaluations based on literature and lecture
No use of supporting resources and evaluations based on literature and lecture content.
No use of supporting resources and evaluations based on literature and lecture content.
No use of supporting resources and evaluations based on literature and lecture content.
content. Figures and illustrations are of exceptional quality.
content. Figures and illustrations are of excellent quality.
content. Figures and illustrations are of very good quality.
content. Figures and illustrations are of fairly good quality.
content. Figures and illustrations are of good quality.
Figures and illustrations are of satisfactory quality.
content. Figures and illustrations are of limited quality.
Overall Structure 15%
Information is organised in an exceptionally clear, logical way. Anticipation of the type of material which may come next is easy. The paper is looking professionally . Graphs and illustrations are integrated. All issues required for the paper are discussed.
Information is organised in an excellently clear, logical way. Anticipation of the type of material which may come next is easy. The paper is looking professionally . Graphs and illustrations are integrated. All issues required for the paper are discussed.
Information is organised in a very clear, logical way. Anticipation of the type of material which may come next is easy. The paper is looking professionally . Graphs and illustrations are integrated. All issues required for the paper are discussed.
Most information is organised in a very clear, logical way. Anticipation of the type of material which may come next is possible. The paper is looking fairly good. Some graphs and illustrations are integrated. Most issues required for the paper are discussed.
A good description of information. The paper is looking good. A few graphs and illustrations are integrated. Some issues required for the paper are discussed.
A satisfactory description of information. The paper is satisfactory. No graphs and illustrations are integrated. Issues required for the paper are partly discussed.
Limitations in the description of information. The paper is of limited quality. No graphs and illustrations are integrated. Issues required for the paper are only generally discussed.
Unmotivated description of information. The paper is of poor quality. No graphs and illustrations are integrated. Issues required for the paper are poorly explained.
Very poor description of information. The paper is of very poor quality. No graphs and illustrations are integrated. Issues required for the paper are very poorly explained.
Unacceptable description of information. The paper is unacceptable. No graphs and illustrations are integrated. Issues required for the paper are not explained.
Follow in bellow study case Heatopica
November 20X0
Heating Industry News
Edition #10
Turbulent Times at HEATOPICA plc
Latest News of the Day
Klaus Walter reports
The Executive Board is facing changes despite a good performance – Chairman of the Supervisory Board, Daniel Burner, explains the new strategy.
According to Daniel Burner “this negative feedback from the analysts was a clear signal for us to act”. The Supervisory Board expects that the new management “will work hard to put HEATOPICA plc back on the path to sustainable growth.” The new management will take over from 01 January 20X1. Only time will tell if the management is able to fulfil these huge expectations.
„The new management team need to initiate the strategic change as soon as possible”
– Klaus Walter –
HEATOPICA’S competitors have not been asleep in recent times and have already started to develop newer and more environmentally friendly generations of condensing boilers.
In addition, more and more consumers are asking for completely new heating technologies based on heat pumps. So there are enough challenges for the new management team to keep up with the competition and achieve a leading market position.
In the past few weeks there have been rumours in the business press that HEATOPICA plc would replace its Executive Board. Today, only a few days after the annual shareholders’ meeting, those rumours were finally confirmed when the Chairman of the Supervisory Board announced the names of the new management team “Just looking at the facts, this change might come a bit surprising “, Daniel Burner, chairman of the Supervisory Board, stated. Based on HEATOPICA’s most recent financial results, one would have to say that the past year was a success. HEATOPICA’s Condensing Boiler, “Topica Classic”, continues to be in high demand. The company’s financial results and market share are roughly in line with those of its competitors.
Why then is the former Executive Board replaced? Daniel Burner states that “the former board was not able to present a satisfactory strategy for sustainable, long-term growth of HEATOPICA plc to the Supervisory Board.” Outdated manufacturing plants with poor ecology standards, a focus on the domestic market, just one distribution channel, and a very conservative marketing mix are just a few of the points that raised questions about HEATOPICA’s long-term development. Several renowned heating industry experts have repeatedly criticized the management for “a lack of vision and economic expertise”. Furthermore, contingency planning for difficult times due to recession, supply chain problems or energy shortages due to wars or unrest was not clearly evident. Most financial analysts also agreed with the above statement.
© Klaus Walter (2024)
4
HEATOPICA plc
The homepage of HEATOPICA plc provides information on the organisational structure of the company:
Research & Development (R&D)
The creative heart of our company beats in the R&D department. We work with leading heating technology scientists to develop new products and to improve the quality of existing products. The finished products are tested intensively to ensure that they meet the high-quality standards we set ourselves.
Purchasing
This is where all the necessary materials and supplies are purchased that are needed to produce the heating systems and to guarantee the smooth running of the business operation.
Production
The assembly of our heating system products takes place in the production department. Our highly qualified production staff guarantee the professional workmanship of the heating systems and a long service life.
Marketing and Sales
Our sales and marketing department is the interface between the clients and the company. This is where client requests are received, processed, and coordinated. The sales department serves as a competent point of contact for questions about our products for customers, retailers and within the company.
Administration
All administrative tasks, facility management, accounting, and IT are combined in this area. In addition to hiring and dismissing, our human resource’s function takes care of the topics of further training and motivation of staff.
© Klaus Walter (2024)
5
Current Organisational Chart
Executive Board
Marketing and Sales 121 Employees
R&D
39 Employees
Purchasing 23 Employees
The product:
The company is currently producing and selling only one product, which is the Topica Classic. The customer base is currently only domestic, and the clients are retailers. So, it is operating in the B2B market.
HEATOPICA’s Key Figures of the previous year (20X0, the year before the new management team took over)
General
Share Price EUR Net Profit mEUR Revenue Total mEUR
1. Market
Total Sales Topica Classic Units Revenue Total Topica Classic mEUR
Topica Classic | Market 1 (Domestic Market)
Sales Units Planned Sales Units Planned Revenue mEUR Market Share %
Production 956 Employees
Administration 221 Employees
Technical Data:
Oil condensing boiler – Medium 20 Output 20 kW
Pre-assembled control for an unmixed heating circuit and hot water preparation
Integrated, pre-assembled heating circuit incl. pump Return collector
Single-line oil filter set
Complete pre-wiring of all electrical lines
Current Price: € 3,157
20X0
253.00 8.26 152.73
20X0
48,378 152.73
20X0
48,378 51,000 152.73
13.15
© Klaus Walter (2024)
6
2. Production
Actual Production Quantity Topica Classic Units Final Inventory Topica Classic Units Utilization of Staff % Utilization of Production Lines % Productivity Index Index Cost of Goods Manufactured Topica Classic EUR/Units Cost of Goods Sold Topica Classic EUR/Units
3. Cost Structure
Revenue mEUR Cost of Goods Sold mEUR R&D Costs mEUR Sales Costs mEUR Administration Costs mEUR Operating Income mEUR Return on Sales %
4. Performance Indicators
Net Profit mEUR Equity mEUR Return on Equity % Share Price EUR
5. Finance
Final Cash Balance mEUR Overdraft Loans mEUR Interest expenditures mEUR Debt Ratio %
Year 20X1: The challenges of the new management team in its first year
General Economic Situation in Year 20X1
The economy is expected to continue performing well in 20X1. Due to strong demand and growth abroad, the willingness of companies to invest is very high. Most experts expect that the Gross Domestic Product (GDP) will increase by 3 % in real terms and investments will expand by 2 % in real terms. However, it is expected that the cost of living will grow by 2 % and wage and salary growth will stagnate.
High unemployment continues to be a significant issue for most workers. As a result, during a recent collective bargaining session, the employees agreed to accept no real wage increases in exchange for job protection and job creation. Employers agree not to dismiss any employees in production because of the wage freeze. In case the economic situation forces companies to dismiss employees, they will have to pay for additional dismissal costs for every dismissed employee. The weekly working time per employee is reduced to 35 hours (compared to 39 hours previously).
20X0
48,378 0 100.8 110.0 1.02 2,079 2,808
20X0
152.73 100.60 6.60
18.07 10.57 16.90
5.41
20X0
8.26 43.49 22.81
253.00
20X0
22.94 0 -1.87 54.47
© Klaus Walter (2024)
7
News from the Heating Industry
There are seven serious competitors offering a comparable product. New entrants to the market are not expected. Marketing experts predict that the market is ready for a new generation of condensing boilers with a higher energy rating. Some of the competitors have already started to develop new generations which puts some pressure on HEATOPICA to develop a successor to the original Topica Classic.
A bulk buyer is willing to buy up to 9,000 units of Topica Classic at a price of 2,475 EUR. The management team must decide whether to sell products at such a low price or to focus on their retail clients.
The housing company Easy-Home-Developments publishes an invitation to tender and asks companies to submit bids for an order of 14,000 condensing boilers. Only the company offering the lowest price will be awarded the contract.
Incremental Innovation in Year 20X1
Based on competitive pressure HEATOPICA begin with the development of a successor to Topica Classic (product name “Topica Classic – Gen. 2”). However, before the new product can be launched it needs to be improved in terms of its technology and its ecological footprint, measured by an ecology index. Customers are placing an increasingly higher value on the environmental friendliness of the heating system they purchase (energy usage, possibility to recycle, emissions etc.). The internal experts predict that the production capacity for the new generation will be 55 units per employee per period instead of 50 units per employee per period for the old generation (productivity improvement). The costs for input materials/parts for Topica Classic – Gen. 2 will also be about 10 % less than for the old generation (efficiency improvement).
During Year 20X1 HEATOPICA have the ability to begin the development of Topica Classic – Gen. 2, with the option of launching the product in the following year (Year 20X2). The development will be market-ready when the technology index of the new product reaches 100.0 points. The current technological index of a prototype of Gen. 2 is 80 points. Experts are estimating that reaching the state of a market-ready product is going to take approximately 170 – 180 person-years in development. However, a product launch should only be attempted if the product’s technology and other features are more advanced than those of the older product. Otherwise, the company will face a potentially massive decline in sales.
With the introduction of the new product (Topica Classic – Gen. 2) the old product will be replaced by the new one in the market. Marketing experts think sales will be considerably higher in the period of the relaunch due to the relaunch-effect. The earlier the relaunch, the stronger the relaunch-effect. For delayed relaunches in subsequent years (Year 20X3 or later), the relaunch-effect is less strong.
Furthermore, any tenders that HEATOPICA have won from the previous period will be supplied with the new product (Topica Classic – Gen. 2). The old board of managers already started some research and prototyping on Topica Classic – Gen. 2. The development status of the condensing boiler is as follows:
• Technology index about 80 (indicating the quality level of the product)
• Ecology index about 80 (indicating the environmental sustainability of the product)
• Value analysis index about 90 (indicating the material consumption performance)
During the period in which Topica Classic – Gen. 2 is introduced to the market, the inventory of finished products of the old generation of Topica Classic will be scrapped at the value of production costs. The value will depreciate immediately and be recorded under “Other Expenses” on the Income
© Klaus Walter (2024)
8
Statement. Any existing inventory of input materials/parts of the old generation of Topica Classic can still be used to produce Topica Classic – Gen. 2. The production data show that Topica Classic – Gen. 2 can be produced at lower costs than the old generation. This is important for the production planning related parts of the strategy.
Tasks:
Analyse and summarise the situation of the company at the end of Year 20X0 (equals the beginning of Year 20X1). Take the following market research report, acquired by the new management from a research institute, into consideration. Identify the indicators with which the so-called marketing mix (4Ps) can be controlled.
Make recommendations for the decision-making in Year 20X1 and discuss in class.
Competitors Price EUR Duplo 3240 Hamber 3150 Margo 3200 HEATOPICA 3157 Prala 3400 Flipper 3199 Sequoer 3100 Adaga 3000
Ø / Sum 3181
Deviation Technology Ecology Advertising Sales Force Customer Satis- Awareness
Sales Units 44291 46979 48378 48378 33480 51522 52851 40000
Revenue Market mEUR Share % 143,50 12,35
147,98 12,74 154,81 13,33 152,73 13,15 113,83 9,80 164,82 14,19 163,84 14,11 120,00 10,33
%
1,86 -0,97 0,61 -0,75 6,89 0,57 -2,54 -5,68
Index Index
105,81 110,95 105,11 108,79 105,95 111,05 105,32 108,79 105,04 108,79 105,60 111,68 105,95 110,74 104,90 108,79
105,46 109,95
mEUR Employees
7,00 105 8,00 112 8,50 130 6,90 121 7,20 107 9,00 130 6,50 115 6,00 100
7,39 115
faction Index
62,21 61,83 83,74 72,70 53,44 74,81 77,02 77,78
70,44
Index
59,19 63,19 63,84 59,56 59,41 65,07 65,03 58,44
61,72
The new management has made a couple of strategic decisions during the year 20X1. The following key figures provide an overview of Year 20X1 final numbers.
HEATOPICA’s Key Figures Full Year 20X1
General
Share Price EUR Net Profit mEUR Revenue Total mEUR
1. Market
Total Sales Topica Classic Units Revenue Total Topica Classic mEUR
Topica Classic | Market 1 (Domestic Market)
Sales Units Planned Sales Units Revenue mEUR Market Share %
Bulk Buyer | Topica Classic
Sales Units Revenue mEUR
365879 1161,51
20X1
263.00 3.50 142.15
20X1
45,000 142.15
20X1
42,000 42,000 133.60
11.66
20X1
0 0
© Klaus Walter (2024)
9
Requests for Bids | Topica Classic
Sales in 20X1 Units Revenue in 20X1 mEUR Offer for 20X2 EUR Amount to deliver in 20X2 Units
2. Production
Actual Production Quantity Topica Classic Units Final Inventory Topica Classic Units Utilization of Staff % Utilization of Production Lines % Productivity Index Index Cost of Goods Manufactured Topica Classic EUR/Units Cost of Goods Sold Topica Classic EUR/Units
3. Cost Structure
Revenue mEUR Cost of Goods Sold mEUR R&D Costs mEUR Sales Costs mEUR Administration Costs mEUR Operating Income mEUR Return on Sales %
4. Performance Indicators
Net Profit mEUR Equity mEUR Return on Equity % Share Price EUR
5. Finance
Final Cash Balance mEUR Overdraft Loans mEUR Interest expenditures mEUR Debt Ratio %
Human Resources at the end of Year 20X1
20X1
3,000 8.55 3,999 0
20X1
45,000 0 100.2 98.7 1.10
1,970 2,976
20X1
142.15 88.67 17.32 17.81 10.12
8.23 2.46
20X1
3.50 45.48 8.04 263.00
20X1
38.53 0 -1.87 54.42
Executive Board
Marketing and Sales 121 Employees
R&D
124 Employees
Purchasing 23 Employees
Production 903 Employees
Administration 215 Employees
© Klaus Walter (2024)
10
Market research report 20X1 (Retail Customers)
Other customers in 20X1
Tasks:
Analyse how the strategic decision-making in Year 20X1 has affected HEATOPICA’s situation. Compare the key figures and take the market research reports into consideration.
Develop a SWOT analysis based on the information known so far.
Year 20X2: Expansion to a foreign country
General Economic Situation in Year 20X2
Due to fears about economic overheating, the Central Bank has changed its approach and increased the prime interest rate by 0.5 %-points. Furthermore, the government has recently announced several new spending cutbacks. Due to this sort of restrictive economic policy, the economic research institute predicts a contraction of the economy in the middle of the year. It is estimated that the GDP will decrease by 1 % in real terms and so business investment in the country will decrease by 1 % in real terms as well. As the costs of living will increase by 3 % the average wages and salaries will accordingly increase by 3 %.
News from the Heating Industry
The Association of Heating Manufacturers (AHM) has both bad news and good news. The bad news is that a demand decline of about 10 % is expected in the domestic market. However, the good news is, that this negative development could be partly covered by potential sales to a foreign market. AHM has recently drawn attention to a new, foreign market and recommends starting sales activities there. AHM referred to this foreign market as “market 2”. Market 2 at present is relatively small and is currently expected to only have total volume demand equal to about 10% of the domestic market (market 1). However, experts believe that the foreign market could grow significantly in the coming periods.
The country of market 2 has a different currency than market 1 and this currency is referred to as “FCU” (foreign currency units). At present, the FCU-Euro exchange rate is 0.7 FCU per 1 EUR (EUR/FCU =1.43). The marketing department, though, will be starting immediately with some research and price calculations in the foreign currency. While both, market 1 and market 2, are
Competitors
Duplo Hamber Margo HEATOPICA Prala
Flipper Sequoer Adaga
Ø / Sum
Price EUR 3499 3200 3199 3181 3300 3199 3079 3000
3207
Deviation Technology EcologyAdvertisingSales ForceCustomer Satis-Awareness
Sales Units 39481 47880 55776 42000 40307 41000 51424 40000
357868
Revenue Market mEUR Share % 138,14 12,06 153,22 13,37 178,43 15,57 133,60 11,66 133,01 11,61 131,16 11,45 158,33 13,82 120,00 10,47
1145,90
%
9,10 -0,22 -0,25 -0,81 2,90 -0,25 -4,00 -6,46
Index Index
108,96 117,17 108,26 113,19 109,38 117,12 108,05 113,19 107,63 113,19 108,54 118,00 109,10 116,11 107,35 113,19
108,41 115,14
mEUR Employees
8,00 107 8,24 120 8,50 150 7,00 121 7,20 110 7,00 130 8,00 115 6,00 100
7,49 119,13
faction Index
79,51 85,27 80,84 86,72 82,91 88,42 75,69 62,41
80,22
Index
61,91 66,27 67,59 61,88 61,47 68,17 68,89 59,87
64,51
Duplo Hamber Margo HEATOPICA Prala
Flipper Sequoer Adaga
Bulk Buyer Units
5000 0 0 0 0 1000 1200 0
Requests for Bids Offer in EUR
2500 0 0 3999 0 2850 2999 0
© Klaus Walter (2024)
11
looking for the same products, market 1 has delivery priority over market 2. The cost of delivery for market 2 is 75 EUR per unit.
A domestic bulk buyer is currently looking to buy up to 7,000 units of Topica Classic at a price of 2,650 EUR/unit. A foreign governmental agency requests that the competitors tender bids to supply up to 9,000 units of Topica Classic.
HEATOPICA’s Key Figures Full Year 20X2
The management team’s decisions are now showing clear results, particularly in terms of first sales to the foreign market. The following key figures provide an overview of Year 20X2 final numbers which will be considered as a basis for Year 20X3 decision-making.
General
Share Price EUR Net Profit mEUR Revenue Total mEUR
1. Market
Total Sales Topica Classic Units Revenue Total Topica Classic mEUR
Topica Classic | Market 1 (Domestic Market)
Sales Units Planned Sales Units Revenue mEUR Market Share %
Topica Classic | Market 2 (Foreign Market)
Sales Units Planned Sales Units Revenue mEUR Market Share %
Bulk Buyer | Topica Classic
Sales Units Revenue mEUR
Requests for Bids | Topica Classic
Offer for 20X3 EUR Amount to deliver in 20X3 Units
2. Production
Actual Production Quantity Topica Classic Units Final Inventory Topica Classic Units Utilization of Staff % Utilization of Production Lines % Productivity Index Index Cost of Goods Manufactured Topica Classic EUR/Units
20X2
335.00 19.34 171.68
20X2
52,000 171.68
20X2
46,547 46,811 152.49
13.45
20X2
5,453 5,189 19.19 27.38
20X2
0 0
20X2
3,298 0
20X2
52,000 0 99.9 83.9 1.07 1,720
© Klaus Walter (2024)
12
Cost of Goods Sold Topica Classic
EUR/Units
2,589
3. Cost Structure
Revenue mEUR Cost of Goods Sold mEUR R&D Costs mEUR Sales Costs mEUR Administration Costs mEUR Operating Income mEUR Return on Sales %
4. Performance Indicators
Net Profit mEUR Equity mEUR Return on Equity % Share Price EUR
5. Finance
Final Cash Balance mEUR Overdraft Loans mEUR Interest expenditures mEUR Debt Ratio %
Human Resources at the end of Year 20X2
Sales Force Domestic Market = 135 Employees Sales Force Foreign Market = 12 Employees
The analysis of market development is now becoming more complex. Decisions must be made for two retail markets, the bulk buyer business and for submitting a bid for the tender.
Market research report 20X2 (Domestic Retail Customers)
20X2
171.68 89.42 12.53 21.37 11.32 37.03 11.26
20X2
19.34 63.32
42.51 335.00
20X2
26.91 0 -1.87 47.3
Executive Board
Marketing and Sales 147 Employees
R&D
124 Employees
Purchasing 24 Employees
Production 958 Employees
Administration 229 Employees
Competitors
Duplo Hamber Margo HEATOPICA Prala
Flipper Sequoer Adaga
Ø / Sum
Price EUR
3399 3200 3225 3276 3300 3199 3049 3000
3206
Deviation TechnologyEcology Advertising Sales Force Customer Satis-Awareness Sales
Revenue Market mEUR Share %
117,06 10,33 150,42 13,27 157,48 13,89 152,49 13,45 134,14 11,83 161,70 14,27 140,25 12,37 120,00 10,59
1133,53
%
Index Index
94,41 108,59 96,39 90,39 95,62 103,71
104,31 101,08 95,07 101,08 98,55 105,08 89,90 80,00 109,8 117,42
98,01 100,92
mEUR Employees faction Index
8,50 115 89,09 8,24 130 81,39 8,50 135 86,66 7,00 135 72,22 9,00 120 80,03
10,00 135 70,99 14,00 150 80,90 6,00 100 67,38
8,91 127,5 78,58
Index
Units
64,04 34440 68,35 47005 70,13 48831 63,47 46547 63,99 40647 73,02 50547 74,67 46000 60,90 40000
67,32 354017
6,02 -0,19 0,59 2,18 2,93 -0,22 -4,90 -6,43
© Klaus Walter (2024)
13
Market research report 20X2 (Foreign Retail Customers)
Competitors
Duplo Hamber Margo HEATOPICA Prala
Flipper Sequoer Adaga
Ø / Sum
Price FCU
2450 2300 2350 2346 2365 2240 2134
0
2312
Deviation TechnologyEcology
Advertising Sales Force Customer Satis-Awareness Sales Revenue
Market Share %
0 27,05 27,61 27,38 8,37 9,60 0 0
%
Index Index
94,41 108,59 96,39 90,39 95,62 103,71
104,31 101,08 95,07 101,08 98,55 105,08 89,90 80,00 109,8 117,42
98,01 100,92
mEUR
Employees faction Index
3,00 11 85,36 2,00 12 84,79 3,00 15 85,11 0,70 12 86,05 2,00 12 85,26 1,50 15 85,96 2,00 10 83,56 0,00 0 82,68
2,03 10,88 84,85
Index
Units mEUR
0 0 5495 18,96 5489 19,35 5453 19,19 1653 5,86 2003 6,73
0 0 0 0
20093 70,09
5,96 -0,53 1,64 1,46 2,29 -3,12 -7,70 0,00
40,75 40,75 43,00 34,90 39,25 41,75 42,75 32,25
39,43
Other Customers 20X2
Tasks:
Prepare an overview of the strategic decisions in Year 20X2 and explain how these have affected HEATOPICA’s performance.
Analyse gaps in comparison to the strongest competitor (benchmark).
Year 20X3: New Product Development
General Economic Situation in Year 20X3
As expected, the economy contracted significantly during the second half of the previous year, particularly in the fourth quarter. Although the federal government initiated several programs to support the economy, experts are of the opinion that, at best, the decline is likely to continue for most of the current period, after which things may start to turn around. Overall, experts predict the following for Year 20X3. The GDP will decrease by 0.3 % in real terms and, as a result of this development, investments in the country will decrease by 1.4 % in real terms. The cost of living will increase again by 1.2 %. On the other hand, no further personnel-related cost increases for companies are expected. Wages and salaries will remain stable. However, companies now must pay costs for additional dismissals for every single lay-off.
News from the Heating Industry
The Topica Classic demand in the domestic market is expected to decrease by an additional 10 %. Unfortunately, the demand for Topica Classic in the foreign market has also come to a standstill, and no growth is expected for the current period.
However, the demand for Generation 2 of Topica Classic is expected to strongly increase if there is a minimum technology index of 125.00. Retail clients are looking for more quality here. Products from companies with an accumulated investment of 30 mEUR in R&D will be viewed as the technology leaders in the market. If a company can position themselves as a technology leader, they can anticipate a growth of 2% in market share.
Competitors
Duplo Hamber Margo HEATOPICA Prala
Flipper Sequoer Adaga
Bulk Buyer Units
0 00 00 0 3298 00 0 3199 0 2499 00
Requests for Bids Classic Offer in EUR
3200
© Klaus Walter (2024)
14
There is bad news in terms of logistics costs. The Association of Transport Contractors (ATC) has announced drastic price increases after the federal government introduced a tax specifically targeting the trucking industry.
Bulk Buyer orders are not expected in Year 20X3. However, the City of Whitehill has requested bids to supply up to 50 Topica Classic boilers to be used for various youth centres. Only the competitor offering the lowest price will be awarded the contract.
A new opportunity – “Heat Pumps”
In the heating industry sector, there has been a lot of excitement about a technological breakthrough in the development of heat pumps.
Heat pumps function similarly to refrigerators, which work according to the reverse principle. Heat is extracted from the environment, which is then transferred to the radiators of the building. A small amount of electricity is required for the drive. HEATOPICA plc intends to develop a heat pump to market it alongside the existing Topica Classic under the brand name “PRO-Topica”.
There is a preliminary market forecast available for such a new product. Studies indicate that in Year 20X4 there will be a demand for up to 2,000 – 3,000 units in the domestic market (market 1). The price suggestion ranges from 7,500 to 8,500 EUR per unit. For the Years 20X5 and later, demand growth of more than 50 % per period is expected. From Year 20X5 onwards it will also be possible to sell the new product to the foreign market (market 2). The market volume for PRO-Topica in market 2 in year 20X5 will likely be 5 to 6 mFCU in terms of sales revenue. Experts suggest a price of around 4,900 FCU per unit of PRO-Topica in market 2.
While it is potentially possible to complete the development of the new PRO-Topica in the year 20X3, the product cannot be launched until year 20X4. If there is a shortage of production capacity, the production of Topica Classic has priority over PRO-Topica.
Marketing experts have indicated that the technology and ecology indices for PRO-Topica should be at a minimum of 100 before the product is launched. Otherwise, the product’s (and the company’s) reputation may be damaged. Research and development consultants assume that it will take a development of about 200 person-years over Years 20X3 and 20X4 to achieve a technology index of 100 points and to reach a marketable level.
HEATOPICA’s manufacturing managers look forward to producing a second product. However, they are pointing out that PRO-Topica would need double capacity on the production lines. Also, the productivity of factory staff will be much lower compared to Topica Classic. It is expected that a person working in the factory will only be able to produce 18 units of PRO-Topica per year compared to about 55 units of Topica Classic. So, the Head of Production comes with a good idea: the production of PRO-Topica could be outsourced to a sub-contractor.
Note: PRO-Topica has to be fully developed by HEATOPICA plc first before any external production (outsourcing) is possible. External producers manufacture products according to the construction requirements set by HEATOPICA plc.
© Klaus Walter (2024)
15
Task: Develop a priority list for strategic decisions according to the table below.
Strategic Objective Department KPI In 20X3 Later (tick) (tick)
Marketing & Sales
Production
R&D
Purchasing
Administration
HEATOPICA’s Key Figures Full Year 20X3
The following executive summary shows the status of the most important key figures at the end of the third year in which the new management team has been in charge of the company. Positive developments can already be derived from the operational and strategic management decisions.
General
Share Price EUR Net Profit mEUR Revenue Total mEUR
1. Market
Total Sales Topica Classic Units Revenue Total Topica Classic mEUR
Topica Classic | Market 1 (Domestic Market)
Sales Units Planned Sales Units Revenue mEUR Market Share %
20X3
337.00 8.08 153.88
20X3
45,400 153.88
20X3
37,231 43,067 124.35
12.50
© Klaus Walter (2024)
16
Topica Classic | Market 2 (Foreign Market)
Sales Units Planned Sales Units Revenue mEUR Market Share %
Requests for Bids | Topica Classic
Offer for Year 20X4 EUR Amount to deliver in Year 20X4 Units
2. Production
Actual Production Quantity Topica Classic Units Final Inventory Topica Classic Units Utilization of Staff % Utilization of Production Lines % Productivity Index Index Cost of Goods Manufactured Topica Classic EUR/Units Cost of Goods Sold Topica Classic EUR/Units
3. Cost Structure
Revenue mEUR Cost of Goods Sold mEUR R&D Costs mEUR Sales Costs mEUR Administration Costs mEUR Operating Income mEUR Return on Sales %
4. Performance Indicators
Net Profit mEUR Equity mEUR Return on Equity % Share Price EUR
5. Finance
Final Cash Balance mEUR Overdraft Loans mEUR Interest expenditures mEUR Debt Ratio %
20X3
20X3
20X3
8,169 4,355 29.53 16.84
3,997 50
20X3
47,422 2,022 91.0 100.0 1.12 1,694 2,774
20X3
153.88 76.89 22.78 26.99 10.67 16.56
5.25
8.08 69.65 12.76
337.00
20X3
37.49
0 -1.87 46.06
© Klaus Walter (2024)
17
Human Resources at the end of Year 20X3
Executive Board
Marketing and Sales 165 Employees
R&D
200 Employees
Purchasing 28 Employees
Sales Force Domestic Market = 150 Employees Sales Force Foreign Market = 15 Employees
Tasks:
Compare the production-related indicators of the years 20X1, 20X2 and 20X3. What conclusions can be drawn from the analysis and what strategic measures do you recommend?
How would you assess the current financial situation of the company?
Market research report 20X3 (Domestic Retail Customers)
Market research report 20X3 (Foreign Retail Customers)
Other Customers 20X3
Production 904 Employees
Administration 221 Employees
Competitiors Price EUR
Duplo Hamber Margo HEATOPICA Prala
Flipper Sequoer Adaga
Ø / Sum
Deviation %
-0,03 -0,03 1,48 2,74 1,51 7,63 -5,57 -7,72
Technology Ecology
Advertising Sales Force Customer Satis- Awareness
3250 3250 3299 3340 3300 3499 3070 3000
3251
Index
Index
111,69 122,72 107,39 100,84 106,62 116,72 116,41 111,47 105,52 111,47 118,41 113,71
96,50 91,71 112,25 121,31
109,35 111,25
mEUR Employees faction Index
9,00 140 84,24 8,35 130 85,72 8,50 135 85,54 8,00 150 88,03 9,00 150 87,79
18,00 225 80,73 11,00 130 80,36 6,00 100 68,69
9,73 145 82,64
Index
Sales
Units
67,23 41292 69,81 37508 72,58 37922 65,29 37231 65,69 36784 78,89 39228 76,67 36000 61,61 40000
69,72 305965
Revenue Market mEUR Share %
134,20 13,49 121,90 12,25 125,10 12,58 124,35 12,50 121,39 12,20 137,26 13,80 110,52 11,11 120,00 12,06
994,72
Competitors Price FCU
Duplo Hamber Margo HEATOPICA Prala
Flipper Sequoer Adaga
Ø / Sum
Deviation %
-1,87 2,40 4,49 2,83 0,91
-0,50 -8,27 0,00
Technology Ecology
Advertising Sales Force
Customer Satis- Awareness
Sales Units
Revenue Market mEUR Share %
31,15 17,76 28,57 16,29 31,20 17,79 29,53 16,84 24,01 13,69 30,93 17,63
0,00 0 0,00 0
175,40
2300 2400 2449 2410 2365 2332 2150
0
2344
3,50 2,10 6,00 1,70 2,00 2,00 4,00 0,00
3,04
51,58 49,78 56,33 42,84 46,88 52,86 54,96 34,11
48,67
9030 7937 8493 8169 6769 8842
0 0
49240
Index
Index
111,69 122,72 107,39 100,84 106,62 116,72 116,41 111,47 105,52 111,47 118,41 113,71
96,50 91,71 112,25 121,31
109,35 111,25
mEUR
Employees
faction Index
15 60,19 15 79,56 15 80,03 15 81,67 30 59,08 20 54,37 10 53,56
0 83,01
15 68,93
Index
Competitors
Duplo Hamber Margo HEATOPICA Prala
Flipper Sequoer Adaga
Bulk Buyer Units
0 0 0 0 0 0 0 0
Requests for Bids Offer in EUR
0 0 0
3997 0 0 0 0
Tasks:
Write down a few points on how the two markets (domestic and foreign) differ. Recommend strategic actions for both markets.
What conclusions can be drawn from the situation on the tender market?
© Klaus Walter (2024)
18
Year 20X4: Launch of PRO-Topica on the domestic market
General Economic Situation in Year 20X4
After the difficulties of the past two years, the economy finally seems to be improving. It can be expected that the GDP will increase by 2-3 %. However, the costs of living will increase by about 3 %. The unions and the employers have agreed that salaries and wages will increase by 3 % and that the working hours of production employees will be reduced in order to protect and create jobs in the coming year. There will be a freeze on overtime until further notice.
News from the Heating Industry
The market research department comes with good news: The demand for Topica Classic in the domestic market will increase slightly whereas the demand in the foreign market will increase by up to 50%. However, this figure is contingent on the price level of competitors. A bulk buyer wants to buy up to 5,000 units of Topica Classic at a price of 2,500 EUR per unit and a national construction company asks for bid requests for up to 9,000 Topica Classic.
Market research on heat pumps (PRO-Topica) indicates that in Year 20X4 a market volume of around 10% of the market for Topica Classic can be expected. Research further indicates that retailers are willing to pay somewhere between 7,500 and 8,000 EUR per unit.
The Federal Environment Office announces that due to a new environmental law, environmental standards have to be raised significantly. This applies to both products.
Tasks:
When the new management team took over the leadership of the company in the Year 20X1, the vision statement shown below was developed. We are now at the beginning of Year 20X4. Where stands the company now?
What are the challenges for this year and the next one? Note down some bullet points.
© Klaus Walter (2024)
19
Complete the balanced scorecard template to visualise the necessary steps. Insert suitable indicators from the annual key figures and market research reports into the empty fields.
HEATOPICA’s Key Figures Full Year 20X4
Additional indicators are available for the year 20X4. These relate to the newly launched PRO- Topica product.
General
Share Price EUR Net Profit mEUR Revenue Total mEUR
1. Market
Total Sales Topica Classic Units Revenue Total Topica Classic mEUR Total Sales PRO-Topica Units Revenue Total PRO-Topica mEUR
Topica Classic | Market 1 (Domestic Market)
Sales Units Planned Sales Units Revenue mEUR Market Share %
Topica Classic | Market 2 (Foreign Market)
Sales Units Planned Sales Units Revenue mEUR Market Share %
20X4
371.00 7.24 172.29
20X4
20X4
40,555 147.92 3,086 24.38
32,427 32,305 118.33
11.46
20X4
8,078 8,200 29.39 13.13
© Klaus Walter (2024)
20
PRO-Topica | Market 1 (Domestic Market)
Sales Units Planned Sales Units Revenue mEUR Market Share %
Bulk Buyer | Topica Classic
Sales Units Revenue mEUR
Requests for Bids | Topica Classic
Sales in Year 20X4 Units Revenue in Year 20X4 mEUR Offer for Year 20X5 EUR Amount to deliver in Year 20X5 Units
2. Production
Actual Production Quantity Topica Classic Units Actual Production Quantity PRO-Topica Units Final Inventory Topica Classic Units Final Inventory PRO-Topica Units Utilization of Staff % Utilization of Production Lines % Productivity Index Index Productivity Index PRO-Topica Index Cost of Goods Manufactured Topica Classic EUR/Units Cost of Goods Manufactured PRO-Topica EUR/Units Cost of Goods Sold Topica Classic EUR/Units Cost of Goods Sold PRO-Topica EUR/Units
3. Cost Structure
Revenue mEUR Cost of Goods Sold mEUR R&D Costs mEUR Sales Costs mEUR Administration Costs mEUR Operating Income mEUR Return on Sales %
4. Performance Indicators
Net Profit mEUR Equity mEUR Return on Equity % Share Price EUR
5. Finance
Final Cash Balance mEUR Overdraft Loans mEUR Interest expenditures mEUR Debt Ratio %
20X4
20X4
3,086 3,705 24.38 14.76
0 0
20X4
50 0.20
3,549 0
20X4
38,533 3,705 0 619 100 98.6 1.16 1 1,800 5,909 2,976 10,903
20X4
172.29 91.03 22.44 27.47 13.40 17.95
4.20
20X4
7.24 74.88 10.39
371.00
20X4
38 0 -1.87 45.61
© Klaus Walter (2024)
21
Human Resources at the end of Year 20X4
Executive Board
Marketing and Sales 165 Employees
R&D
200 Employees
Purchasing 39 Employees
Sales Force Domestic Market = 150 Employees Sales Force Foreign Market = 15 Employees
Market research report 20X4 (Topica Classic Domestic Retail Customers)
Market research report 20X4 (Topica Classic Foreign Retail Customers)
Market research report 20X4 (PRO-Topica Domestic Retail Customers)
Other Customers 20X4
Tasks:
HEATOPICA plc introduced PRO-Topica to the domestic market and most of the competitors launched similar heat pumps. Prepare an executive summary of the PRO-Topica market development.
Production 864 Employees
Administration 258 Employees
Competitors Price EUR
Duplo Hamber Margo HEATOPICA Prala
Flipper Sequoer Adaga
Ø / Sum
Deviation %
-2,11 1,45 -1,81 8,25 9,76 3,80 -8,34 -11,01
Technology Ecology Index Index
129,79 135,20 118,39 111,02 118,17 129,37 128,51 121,60 115,97 121,60 132,37 122,03 101,78 103,09 114,70 124,57
119,96 121,06
Advertising Sales Force Customer Satis- mEUR Employees faction Index
9,00 145 87,00 9,00 137 74,81 8,50 125 79,89 8,00 150 79,08 9,00 150 78,65
14,00 150 76,57 9,00 150 79,85 6,00 100 82,61
9,06 138,38 79,81
Awareness Index
Sales
Units
Revenue Market mEUR Share %
155,46 15,05 124,22 12,03 136,57 13,22 118,33 11,46 108,86 10,54 143,80 13,92 130,58 12,64 115,01 11,13
1032,83
3300 3420 3310 3649 3700 3499 3090 3000
3371
71,55 47110 72,62 36322 76,36 41261 66,52 32427 68,34 29422 82,55 41097 79,75 42260 62,09 38335
72,47 308234
Competitors Price FCU
Duplo Hamber Margo HEATOPICA Prala
Flipper Sequoer Adaga
Ø / Sum
Deviation %
-2,38 3,72 -0,38 5,72 8,97 -5,14 -10,51 0
Technology Ecology Index Index
129,79 135,20 118,39 111,02 118,17 129,37 128,51 121,60 115,97 121,60 132,37 122,03 101,78 103,09 114,70 124,57
119,96 121,06
Advertising Sales Force Customer Satis-
Awareness Index
60,90 58,08 66,34 49,25 55,17 62,82 65,18 35,64
56,67
Sales Units
Revenue mEUR
46,67 36,32 39,92 29,39 36,01 35,60
0 0
223,91
Market Share %
20,84 16,22 17,83 13,13 16,08 15,90
0 0
2400 2550 2449 2599 2679 2332 2200
0
2458
13890 10174 11644
8078
9600 10903 0 0
64289
mEUR
Employees faction Index
5,00 30 80,24 3,00 22 69,46 6,00 25 77,80 1,70 15 74,45 4,00 30 71,42 3,00 20 73,54 4,00 15 51,88 0,00 0 83,35
3,81 19,63 72,77
Competitors Price EUR
Duplo Hamber Margo HEATOPICA Prala
Flipper Sequoer Adaga
Ø / Sum
Deviation %
6,11 10,23 10,23
8,85 10,23 8,87 -54,52 0
Technology Ecology
Advertising Sales Force Customer Satis-
Awareness Index
71,55 72,62 76,36 66,52 68,34 82,55 79,75 62,09
72,47
Sales Units
Revenue mEUR
33,80 23,99 27,20 24,38 29,00 26,78
0 0
165,16
Market Share %
20,47 14,52 16,47 14,76 17,56 16,22
0 0
7700 7999 7999 7899 7999 7900 3300
0
7257
4390 2999 3401 3086 3626 3390
0 0
20892
Index
102,13 98,50 99,75
103,00 103,00 105,40
82,63 80,00
96,8
Index
108,07 84,57 98,07
100,52 100,52 107,38
88,32 80,00
95,93
mEUR
Employees faction Index
5,00 145 88,83 3,00 137 87,31 5,00 125 87,75 0,00 150 89,88 3,00 150 88,41 4,00 150 89,66 4,00 150 85,95 0,00 100 84,72
3,43 138,38 87,81
Competitors Bulk Buyer Units
Duplo 535 Hamber 5000 Margo 5000 HEATOPICA 0 Prala 0 Flipper 5000 Sequoer 5000 Adaga 0
Requests for Bids Classic Offer in EUR
3100 0 0 3549 0 3499 3200 0
© Klaus Walter (2024)
22
The controlling department has submitted further evaluations of key figures from the production department. These can be seen in the following graphs. What conclusions can you draw from the information?
3000
2000
1000
2400 2400
20X3 20X4
Training Budget (€ per Production Staff per Year)
2000 1600
0
20X1 20X2
60 40 20
0
Attrition Rate (Number of Production Staff)
53 54 45
40
20X1 20X2
20X3 20X4
Motivation Index Production Staff
80 64,5 60
40
20
0
71,1 67,4
20X2 20X3 20X4
55,5
20X1
Year 20X5: Launch of PRO-Topica on the foreign market
General Economic Situation in Year 20X5
The economy continues to grow, but costs increase sharply. Experts currently predict a GDP increase by 1.0 to 1.8 %. The cost of living will rise by 4.5 % and, accordingly, the unions push through a salaries and wages increase by 4.0 %. The over-time limit will be maintained in the current period.
News from the Heating Industry
The demand for Topica Classic in the domestic market will only increase slightly. In the foreign market however, the demand is expected to increase significantly by around 20 – 50%. A bulk buyer is willing to purchase up to 7,000 units of Topica Classic at a price of 2,700 EUR per unit. A governmental organisation is asking companies to submit bids to provide up to 4,000 units of Topica Classic for replacement of boilers in state-owned schools.
There is also good news in terms of the heat pump demand. It is expected that the domestic demand for PRO-Topica will be growing by 50%. Additionally, PRO-Topica can now also be sold in the foreign market. Experts predict that the potential PRO-Topica market volume is to be 40% of the size of the domestic market. A subcontractor offers free capacity for an external production of PRO-Topica. The price per unit is 5,750 EUR for volumes up to 4,999 units and 5,250 EUR above 5,000 units.
Federal Environment Office: Based on recent inspections, one of the company’s purification plants for industrial waste needs to be repaired. As a result, the company will face one-time “other costs” of 6.0 mEUR in the current period.
© Klaus Walter (2024)
23
Task:
Discuss measures to achieve the goals set out in the vision 20X5. Distinguish between internal and market-driven actions and summarise them in a table.
HEATOPICA’s Key Figures Full Year 20X5
Additional indicators are available for the year 20X5. These relate to the sales activities of PRO- Topica in the foreign market.
General
Share Price EUR Net Profit mEUR Revenue Total mEUR
1. Market
Total Sales Topica Classic Units Revenue Total Topica Classic mEUR Total Sales PRO-Topica Units Revenue Total PRO-Topica mEUR
Topica Classic | Market 1 (Domestic Market)
Sales Units Planned Sales Units Revenue mEUR Market Share %
Topica Classic | Market 2 (Foreign Market)
Sales Units Planned Sales Units Revenue mEUR Market Share %
PRO-Topica | Market 1 (Domestic Market)
Sales Units Planned Sales Units Revenue mEUR Market Share %
PRO-Topica | Market 2 (Foreign Market)
Sales Units Planned Sales Units Revenue mEUR Market Share %
Bulk Buyer | Topica Classic
Sales Units Revenue mEUR
20X5
432.00 12.07
217.11
20X5
42,804 165.59 5,619 51.52
20X5
32,259 35.305 124.00
11.42
20X5
10,545 12,117 41.58 14.59
20X5
3,845 4,073 34.76
17.41
20X5
1,774 1,546 16.76 24.77
20X5
0 0
© Klaus Walter (2024)
24
Requests for Bids | Topica Classic
Offer for Year 20X6 EUR Amount to deliver in Year 20X6 Units
2. Production
Actual Production Quantity Topica Classic Units Actual Production Quantity PRO-Topica Units Final Inventory Topica Classic Units Final Inventory PRO-Topica Units Utilization of Staff % Utilization of Production Lines % Productivity Index Index Productivity Index PRO-Topica Index Cost of Goods Manufactured Topica Classic EUR/Units Cost of Goods Manufactured PRO-Topica EUR/Units Cost of Goods Sold Topica Classic EUR/Units Cost of Goods Sold PRO-Topica EUR/Units
3. Cost Structure
Revenue mEUR Cost of Goods Sold mEUR R&D Costs mEUR Sales Costs mEUR Administration Costs mEUR Operating Income mEUR Return on Sales %
4. Performance Indicators
Net Profit mEUR Equity mEUR Return on Equity % Share Price EUR
5. Finance
Final Cash Balance mEUR Overdraft Loans mEUR Interest expenditures mEUR Debt Ratio %
Human Resources at the end of Year 20X5
Sales Force Domestic Market = 150 Employees Sales Force Foreign Market = 15 Employees
20X5
3,998 0
20X5
46,323 0 3,519 0 100.0 97.7 1.14 1.04
2,061 0 3,216 9,032
20X5
217.11 118.12 23.04 31.05 16.20 28.69 5.56
20X5
12.07 84.95 16.12
432.00
20X5
59.25 0 -1.87 43.86
Executive Board
Marketing and Sales 165 Employees
R&D
200 Employees
Purchasing 51 Employees
Production 866 Employees
Administration 297 Employees
© Klaus Walter (2024)
25
Market research report 20X5 (Topica Classic Domestic Retail Customers)
Competitors Price EUR
Duplo Hamber Margo HEATOPICA Prala
Flipper Sequoer Adaga
Ø / Sum
Deviation Technology Ecology
Advertising Sales Force Customer Satis- Awareness
Sales
Units
74,38 43897 74,49 36306 78,23 43228 67,75 32259 70,13 36135 85,30 37491 81,34 44906 62,41 37884
74,25 312106
Revenue Market mEUR Share %
153,64 14,15 132,52 12,20 146,93 13,53 124,00 11,42 130,09 11,98 146,18 13,46 138,76 12,78 113,65 10,47
1085,77
3500 3650 3399 3844 3600 3899 3090 3000
3498
144,33 9,00 175 120,91 9,30 155 138,00 8,00 135 130,99 8,00 150 130,99 9,00 150 136,11 15,00 180 114,18 8,00 150 127,71 6,00 100
130,4 9,04 149,38
83,61 77,26 85,54 85,30 80,67 80,64 83,03 72,21
81,03
%
Index
0,06 141,73
4,35 129,39 -2,82 130,19 9,90 137,37 2,92 126,42 11,47 141,61 -11,66 107,06 -14,23 117,15
128,86
Index
mEUR Employees faction Index
Index
Market research report 20X5 (Topica Classic Foreign Retail Customers)
Market research report 20X5 (PRO-Topica Domestic Retail Customers)
Market research report 20X5 (PRO-Topica Foreign Retail Customers)
Other Customers 20X5
Competitors Price FCU
Duplo Hamber Margo HEATOPICA Prala
Flipper Sequoer Adaga
Ø / Sum
Deviation Technology Ecology
Advertising Sales Force Customer Satis- Awareness
Sales Units
Revenue Market
2400 2741 2499 2921 2679 2899 2200
0
2620
144,33 120,91 138,00 130,99 130,99 136,11 114,18 127,71
130,4
5,00 60 4,00 30 4,00 35 2,00 15 4,00 30 5,00 51 4,00 15 0,00 0
4,00 29,5
86,17 71,61 82,95 73,04 76,56 58,20 54,89 83,68
73,39
68,61 66,11 73,28 55,92 63,00 72,40 73,50 36,90
63,71
11125 14863 15772 10545 11843 14390
0 0
78538
%
Index
-8,39 141,73 4,62 129,39 -4,61 130,19 11,49 137,37 2,26 126,42 10,65 141,61 -16,03 107,06 0 117,15
128,86
Index
mEUR
Employees faction Index
Index
mEUR
36,05 55,00 53,21 41,58 42,83 56,32
0 0
284,98
Share %
12,65 19,30 18,67 14,59 15,03 19,76
0 0
Competitors Price EUR
Duplo Hamber Margo HEATOPICA Prala
Deviation Technology Ecology
Advertising Sales Force Customer Satis- Awareness
Sales Units
Revenue Market
Flipper 12999 Sequoer 7599 Adaga 0
Ø / Sum 8795
7850 8000 7999 9041 8075
119,85 88,99 108,33 109,27 109,27 119,24 96,34 80,00
103,91
5,00 175 3,00 155 4,00 135 0,80 150 3,00 150 6,00 180 4,00 150 0,00 100
3,69 149,38
83,81 78,75 80,18 73,61 85,76 69,50 30,28 85,22
73,39
74,38 74,49 78,23 67,75 70,13 85,30 81,34 62,41
74,25
3144 4129 5404 3845 4680 1425 1000
0
23627
%
Index
-10,74 112,7 -9,04 109,00 -9,05 110,6
2,80 112,6 -8,18 112,6 47,8 115,8 -13,6 85,27 0 80,00
104,82
Index
mEUR
Employees faction Index
Index
mEUR
24,68 33,03 43,23 34,76 37,79 18,52
7,60 0
199,62
Share %
12,36 16,55 21,65 17,41 18,93
9,28 3,81 0
Competitors Price FCU
Duplo Hamber Margo HEATOPICA Prala
Flipper Sequoer Adaga
Ø / Sum
Deviation Technology Ecology
Advertising Sales Force Customer Satis- Awareness
Sales Units
Revenue Market
5900 6250 6099 6998 6200 9628 5650
0
6675
119,85 88,99 108,33 109,27 109,27 119,24 96,34 80,00
103,91
2,00 60 2,00 30 2,00 35 0,40 15 3,00 30 2,00 51 2,00 15 0,00 0
1,91 29,5
82,74 76,43 77,74 81,25 83,75 86,92 84,31 83,68
82,1
68,61 66,11 73,28 55,92 63,00 72,40 73,50 36,90
63,71
0 1372 1740 1774 1621 879 0 0
7386
%
Index
-11,61 112,7 -6,37 109,00 -8,63 110,6 4,84 112,6 -7,12 112,6 44,24 115,8
-15,36 85,27 0 80,00
104,82
Index
mEUR
Employees faction Index
Index
mEUR
0 11,58 14,33 16,76 13,57 11,43 0 0
67,66
Share %
0 17,11 21,18 24,77 20,05 16,89 0 0
Competitors Bulk Buyer Classic Units
Duplo 0 Hamber 4559 Margo 0 HEATOPICA 0 Prala 7000 Flipper 0 Sequoer 0 Adaga 0
Requests for Bids Classic Offer in EUR
3400 0 0 3998 0 3999 3200 0
Task:
In 20X5, HEATOPICA plc successfully launched the PRO-Topica product on the foreign market, thereby achieving market leadership. Four other companies are the competitors here. Discuss possible threats and risks that the company could face in this market in the following years.
© Klaus Walter (2024)
26
3000
2000
1000
0
1600
2400 2400 2400 2000
Training Budget (€ per Production Staff per Year)
20X1 20X2
20X3 20X4 20X5
60 40 20
40 41
Attrition Rate (Number of Production Staff)
53 54 45
0
20X1 20X2
20X3 20X4 20X5
80 60 40 20
0
64,5
71,1 55
67,4 66,5
20X4 20X5
Motivation Index Production Staff
5,
20X1 20X2 20X3
Task:
The available data can now be compared with the Vision 20X5 and a new strategic plan must be drawn up. Discuss what a vision 20X9 could look like. Will it have the same focus? Which indicators, if any, would you no longer consider and which, if any, would you add? Con
