Acquisition and Shareholder Value

Firms purchase other corporations for the numerous benefits that are offered through acquisitions. The firm gains source supply because they have access to the source supply that the previous owner of the corporation did. They also acquire their new distribution channel. If they decide to keep the employees that were working at the corporation, they gain new creative talent that can offer the current workforce and different perspective on how to do things. Acquiring corporations adds value to a company and enhances its earnings per share. It can also add new product lines to ones already established. Firms gain the technology that the corporation was implementing and access to an established infrastructure. They increase their access to working capital finds and gain an advantage for time to market. The rapid expansion of customer base obviously isn’t the only benefit that makes acquiring corporations the best return on investment for large firms (Hari, 2011).

            The amount that a firm pays for the corporation that it is acquiring factors in many different aspects. The value of strategic fits are difficult for anyone to measure and are very much up to both of the companies involved in the merger. The accounting, tax, and legal aspects must be factored in a well and usually tend to be very complex. The firm may be gaining market share because they are eliminating the competition, which can appear very valuable to the firm. Mergers can also lead to a lower cost of capital and lower taxes (Advameg, Inc, 2012). All of these different benefits have to be factored into the valuation of the corporation that is being acquired. It is solely the firm’s decision when deciding how much they are willing to pay for corporations.

            The National Bureau of Economic Research (2012) suggests mergers and acquisitions destroy shareholder wealth in the acquiring companies and that “over the past 20 years, U.S. takeovers have led to losses of more than $200 billion for shareholders”. These losses are primarily dominated by acquisitions that are made by large firms. It is thought that when a large firm’s begins to go down the acquisition route, they have exhausted all internal growth opportunities. Even if a takeover results in a positive net present value, negative return can be seen in share prices following the transaction.

References

Advameg, Inc. (2012). References for Business. Retrieved from Mergers and Acquisitions- advantages, percentages, types, benefits, cost, Types of acquisitions: http://www.referenceforbusiness.com/small/Mail-Op/Mergers-and-Acquisitions.html#ixzz1rYs3xldm

Balls, A. (2012). The National Bureau of Economic Research. Retrieved from Big Firms Lose Value in Acquisitions: http://www.nber.org/digest/aug03/w9523.html

Hari. (2011, August 2). Knowswhy. Retrieved from Why Do Firms Purchase Other Corporations?: http://www.knowswhy.com/why-do-firms-purchase-other-corporations/

ISO 9000

The ISO 9000 focuses on quality management. More specifically, it addresses what an organization needs to do to meet customer quality requirements, abide by regulatory requirements, increase customer satisfaction, and continually improve performance (International Organization for Standardization, 2011).

            The benefits of using ISO 9000 when upgrading processes or software systems are numerous. Following the set of standardized requirements for these new quality management systems is critical because they provide the necessary fundamental aspects of performance improvement, documentation, training, finance and economics. The standards allow for the organization using them to be auditable. It is important to be auditable so that both internal and external groups have a way to measure if specific requirements are being met. Management can use it to see if they are fully in control of organizational activities and clients can use it to gain confidence that the organization can provide products and services that meet their requirements.
            If an otherwise good manager refused to enforce the prescribed standardized processes I would convey to them that enforcing the standards is not optional. It is something that is essential to the project being completed and is an imperative step. I would be forced to put them on a different project that did not involve enforcing standards for ISO 9000 is the continued to not comply. I may even be forced to downgrade them to a non-supervisory position until the upgrading process is complete. If the standards aren’t implemented, the organization is no longer auditable and the entire focus of ISO 9000 is not accomplished. I would, therefore, not be able to have managers on my team who did not support the mission, regardless of how good of a manager there are.

References

International Organization for Standardization. (2011). International Organization for Standardization. Retrieved from ISO 9000- Quality management: http://www.iso.org/iso/iso_catalogue/management_and_leadership_standards/quality_management.htm

Operations Management

The company should be able to take advantage of economies of scale and use collective resources in order to maximize usefulness. This will also keep the strategic and mission objectives from being pulled in too many directions. This would not be the best plan if there is an unexpected supply issue leading to essential resources being unavailable, inadaptable and unobtainable.

The structure of a company globally needs to be influenced by the identity of the organization. The company has to ensure that they are going to be able to grow and establish new market share without neglecting their current market share. If a company spreads themselves too thinly end up learning an expensive lesson that they were not fit to compete internationally (AIU, n.d.).

Formalization keeps established strategies and operations in place. This is important for accurately forecasting future performance of the company. Specialization allows for the creation of a niche market. This gives businesses a competitive advantage over the competition, regardless of their size. Centralization has the ability to both strengthen and isolate companies. Which impact is seen depends on the location strategy chosen. A central location proves to be most beneficial for strategic positioning.

The first big decision that a company needs to make based on their organizational identity and structure when going global is the location of their headquarters. The decision needs to be made whether or not the headquarters will be centralized in one main location or subdivided into various locations that would help to meet the goals and objectives of the organization better than one location. Organizational characteristics need to be adjusted for the culture of the new society.

            Organizations must be sensitive to international laws, labor laws, and regulatory concerns when they endeavor on an international expansion (Kogut, 1998). There should also be a focus on cultural translations of the service or product a company is providing. Ensuring that all aspects of the business translate well into each specific country is most beneficial for managing the risk of offending the consumer. The cost of doing business should also be considered, as things such as regulations and taxes can be pricey if not forecasted.

References

AIU. (n.d.). Course MGMT415- Global Operations Management. Retrieved from Managing Resources & Operations: https://mycampus.aiu-online.com/Classroom/Pages/multimediacoursetext.aspx?classid=316435&tid=204&uid=284898&HeaderText=Course Materials: MGMT415-1202A-02 : Global Operations Management

 Kogut, B. (1998). International business: The new bottom line. Foreign Policy, 152–162.

Global Business Competitiveness

Businesses have found it increasingly important to become competitive in the global business environment for several reasons. The advantages that come along with expanding into the international market place have given businesses a competitive edge over each other. The more efficiently that you can do business, the more money that you are going to be able to make. In order to dominate your specific market, executing effective operations management is key. If businesses cannot keep up with the face pace and standards of operations management in their industry, they will be left in the dust.

Operations management involves the acquisition, development, and utilization of resources for products, processes, services, and supply chains. Operations management is constantly advancing here is America as well as in countries around the globe. A software company in Walldorf, Germany named SAP was the originator of the concept of supply chain management server software (McGraw-Hill, 2006). It automated the supply chain management process.

I have been personally affected by this over the last year. I work for the Defense Logistics Agency and we are in the process of converting our supply chain management from BSM to EBS. Our EBS system was designed by that same German company, SAP.  We converted to the new system so that we can keep our supply chain management current and up to date with the acquisition industry. In order to be competitive, companies have to ensure that they are using the most innovative technology or their competitors will have the upper hand.

References

McGraw-Hill. (2006). Introduction to Operations Management. Retrieved from McGraw-Hill: http://highered.mcgraw-hill.com/sites/dl/free/0070965390/451252/samplech01.pdf

The Three Forms of Business Organizations

The three forms of a business organization are sole proprietorship, partnership, and corporation.

A sole proprietorship is an unincorporated business that is only owned by one person  (IRS, 2012). They are the most numerous form of business organizations in the United States. Sole proprietorships are very easy to both form and dissolve. Advantages include low start-up costs, low operational overhead, and no corporate income taxes. The sole owner receives all of the profits. These businesses are also subject to fewer regulations, which is an additional perk. Disadvantages include unlimited liability for the sole owner, limited life, and increased difficulty to raise capital (Garrison PhD., 2012). Unlimited liability for the sole owner means that the owner is personally responsible for all actions and debts incurred by the company and any of its employees. Limited life for the company means that when the owner dies, so does the business.

A partnership is an unincorporated business that has more than one owner (IRS, 2012).  A business is defined by the IRS as members who carry on business, trade, financial operations, or ventures and then divide the profits from them. The three different types of partnerships are general, limited, and limited liability partnership. The differences between the three are found in the degree of management control and personal liability. Advantages include the enhancement of value via synergy, ease of formation, greater potential for capital access, and no corporate income taxes. Partnerships, like sole proprietorships, are typically subject to fewer regulations. Disadvantages only slightly differ from those of a sole proprietorship. There is unlimited liability, limited life, and additionally, the possibility of conflicts arising between partners. Conflicts that are unable to be solved typically result in the dissolution of the partnership (Garrison PhD., 2012). Unlimited liability can be avoided with a limited liability partnership. A limited liability company can be owned by one or more members and each member has a limited personal liability for the actions and debts incurred by the company. Advantages of limited liability businesses include management flexibility and pass-through taxation (IRS, 2012).

Corporations are legal entities that do business. They differ from sole proprietorships and partnerships because they are distinct from the members who own the company. The types of corporations include public or private standard, for-profit, charitable, and not-for-profit. Advantages include unlimited commercial life, flexibility in capital raising, ease of ownership transfer, and limited liability. Disadvantages include regulatory restrictions, increased organizational and operational costs, and double taxation.

Financial managers are responsible for looking out for the corporation’s shareholders. The main goal of financial managers is to maximize profits and the main goal of a corporate financial manager is to maximize the current value per share of the existing stock (Ross, Westerfield, & Jordan, 2008). If the corporation’s stock is not publicly traded, the financial managers’ goal is to “maximize the market value of the existing owners’ equity” (Ross, Westerfield, & Jordan, 2008). I believe that the validity of the goal encompasses the essential core values that all financial managers should possess however, the statement could be interpreted the wrong way. If the financial manager is doing something illegal or unethical to increase the current value, he would be failing to make good financial decisions on behalf of the shareholder. A corporate financial manager should focus on making the best financial decision for the shareholder and include its profit potential alongside whether or not it is legal or ethical and how it would reflect on the corporation’s name. There is much more to making sound financial decisions than whether or not it will increase the value of the shares. That is why the main goal of financial managers for corporations in flawed in my opinion.

References

Garrison PhD., S. (2012). Study Finance. Retrieved from Types of Business Organization: http://www.studyfinance.com/lessons/busorg/

IRS. (2012, March 16). Retrieved from Sole Proprietorships: http://www.irs.gov/businesses/small/article/0,,id=98202,00.html

IRS. (2012). Retrieved from Limited Liability Company (LLC): http://www.irs.gov/businesses/small/article/0,,id=98277,00.html

IRS. (2012). Publication 541. Retrieved from Table of Contents: http://www.irs.gov/publications/p541/ar02.html#d0e252

Ross, Westerfield, & Jordan. (2008). Essentials of Corporate Finance. Retrieved from The Goal of Financial Management: http://highered.mcgraw-hill.com/sites/0073405132/student_view0/ebook/chapter1/chbody2/1_4_the_goal_of_financial_management.html

Financial Ratios

    The current ratio tests the liquidity of a company. It is calculated by dividing the current assets by the current liability. The ratio tells us the proportion of the current assets that are available for the company to cover the current liabilities that it has (Loth, 2012). The ratio ascertains whether the short term assets of a company can readily pay off the short term liabilities. Cash, marketable securities, inventory, receivables, and cash equivalents are all short term assets. Payables, taxes, accrued expenses, current portion of term debt, and notes payable are all short term liabilities. This ratio is frequently used in financial reporting because it is important for a company to have enough current assets to cover its current liabilities. The ratio is important to banks because short-term creditors should prefer a higher current ratio as it means reduced risks for the bank. The ratio is important for investors to understand because if a company has a lower current ratio, it is an indicator that the company is using more of their assets to grow the business (Internet Center for Management and Business Administration, Inc. , 2012).

The quick ratio is calculated by finding the sum of a company’s liquid current assets minus inventory and dividing those by current liabilities. It is much like the current ratio but excludes inventory. The higher the ratio, the more liquid that a company is thought to be. The current assets that are used to calculate the ratio cash, notes receivable, and accounts receivable. Banks can use this formula when determining whether a company is a good candidate for a loan. A good candidate is one who is low risk. Investors need to understand the quick ratio because it can help them to determine the likeliness of the company to yield a high return (Quickratio.org, 2011).

The debt ratio is a company’s total debt divided by its total assets. The ratio indicates the long term solvency of a company (Internet Center for Management and Business Administration, Inc. , 2012). The ratio can be important to banks because the measure how much and to what extent a company is using long term debt. It also measure the company’s ability to repay any long term debt they may have. Investors need to know the meaning of the ratio because it will help them in determining the company’s level of risk based of its financial health.

The return on equity ratio measure how profitable a company is. It is calculated by dividing the net income by the shareholder equity. Investors would be wise to understand the ratio because it is essentially the bottom line measurement of profits earned per dollar invested. It tells investors exactly how much their dollar is earning them. The higher the rate of return on equity, the more efficient that a company’s management has been in utilizing the equity base. It is important for banks to understand the return on equity ratio because it is a profitability indicator that can show just how well a company is doing (Kulkarni, 2011). This could also be used to mitigate risk when trying to decide whether or not to extend a line of credit to a company.

References

Internet Center for Management and Business Administration, Inc. . (2012). Finance. Retrieved from Financial Ratios: http://www.netmba.com/finance/financial/ratios/

Kulkarni, A. (2011). Buzzle.com. Retrieved from Return on Equity Ratio: http://www.buzzle.com/articles/return-on-equity-ratio.html

Loth, R. (2012). Investopedia. Retrieved from Current Ratio: http://www.investopedia.com/university/ratios/liquidity-measurement/ratio1.asp#axzz1qF6PNKt1

Quickratio.org. (2011). Quickratio.org. Retrieved from The Importance of Quick Ratio: http://www.quickratio.org/

Big Investors vs. Small Investors

There are many disadvantages that come with being a small investor. Many believe that big investors in the stock market are the major players that get to earn most of the profit while the small investors are left in the dark. Often, small investors lack the capital to build a truly diversified portfolio. When buying and selling stock, larger lot sizes often take precedence over smaller lots sizes (Benoit, 2006). Small investors also usually receive news later than large traders, mutual funds, and brokers do. Another disadvantage that small investors face is the lack of access to highly sophisticated analytical software that large brokerage firms use to obtain the upper hand in their trading decisions.

It has also been noted that the more money an investor has, the better tips that they are likely to get. The Wall Street Journal sited Goldman Sachs holding trading huddles with the richest of their clients and giving them stock advice that they hadn’t divulged to their other customers with less money (Jagow, 2009). There is a lot of evidence to support the saying that the rich get richer. To the small investor, it can seem almost hopeless when trying to get the same treatment as you richer co-investors.  

While there are many disadvantages that small investors face, there are also many advantages that they have. Most individual investors can afford to hold the stocks that they own for five plus years. Most of the firms working on Wall Street cannon do this because of the pressure they face to have short term profits that are locked in. Ben Graham, a mater investor, explains that the market becomes more and more predictable as your time frame increase (Hanson, 2006). The buy and hold strategy reduces the fees, taxes, and commission cost significantly over time.

There are also many rules and regulations that favor the small investor. Small investors can exit IPO stocks right away, while most institutional players are limited in early exits. Small investors are therefore, less prone to the risk of fluctuating stock prices. Small investors also have a great ability to move in the same or opposite direction of the trend because their small purchases don’t move the stock price significantly. Big investors are forced to slowly build their position in any stock because of the impact that such a large purchase makes.

References

Benoit, D. (2006, March 1). Investment Banter. Retrieved from Name the disadvantages of being a small investor: http://www.investmentbanter.com/showthread.php?t=90820

Hanson, T. (2006, January 9). The Motley Fool. Retrieved from Secret Advantages for Small Investors: http://www.fool.com/investing/general/2006/01/09/secret-advantages-for-small-investors.aspx

Jagow, S. (2009, August 24). Marketplace Scratch Pad. Retrieved from Big investors vs small ones: http://www.marketplace.org/topics/business/marketplace-scratch-pad/big-investors-vs-small-ones

Sole proprietorship, partnership, and corporation

The three forms of a business organization are sole proprietorship, partnership, and corporation.

A sole proprietorship is an unincorporated business that is only owned by one person  (IRS, 2012). They are the most numerous form of business organizations in the United States. Sole proprietorships are very easy to both form and dissolve. Advantages include low start-up costs, low operational overhead, and no corporate income taxes. The sole owner receives all of the profits. These businesses are also subject to fewer regulations, which is an additional perk. Disadvantages include unlimited liability for the sole owner, limited life, and increased difficulty to raise capital (Garrison PhD., 2012). Unlimited liability for the sole owner means that the owner is personally responsible for all actions and debts incurred by the company and any of its employees. Limited life for the company means that when the owner dies, so does the business.

A partnership is an unincorporated business that has more than one owner (IRS, 2012).  A business is defined by the IRS as members who carry on business, trade, financial operations, or ventures and then divide the profits from them. The three different types of partnerships are general, limited, and limited liability partnership. The differences between the three are found in the degree of management control and personal liability. Advantages include the enhancement of value via synergy, ease of formation, greater potential for capital access, and no corporate income taxes. Partnerships, like sole proprietorships, are typically subject to fewer regulations. Disadvantages only slightly differ from those of a sole proprietorship. There is unlimited liability, limited life, and additionally, the possibility of conflicts arising between partners. Conflicts that are unable to be solved typically result in the dissolution of the partnership (Garrison PhD., 2012). Unlimited liability can be avoided with a limited liability partnership. A limited liability company can be owned by one or more members and each member has a limited personal liability for the actions and debts incurred by the company. Advantages of limited liability businesses include management flexibility and pass-through taxation (IRS, 2012).

Corporations are legal entities that do business. They differ from sole proprietorships and partnerships because they are distinct from the members who own the company. The types of corporations include public or private standard, for-profit, charitable, and not-for-profit. Advantages include unlimited commercial life, flexibility in capital raising, ease of ownership transfer, and limited liability. Disadvantages include regulatory restrictions, increased organizational and operational costs, and double taxation.

Financial managers are responsible for looking out for the corporation’s shareholders. The main goal of financial managers is to maximize profits and the main goal of a corporate financial manager is to maximize the current value per share of the existing stock (Ross, Westerfield, & Jordan, 2008). If the corporation’s stock is not publicly traded, the financial managers’ goal is to “maximize the market value of the existing owners’ equity” (Ross, Westerfield, & Jordan, 2008). I believe that the validity of the goal encompasses the essential core values that all financial managers should possess however, the statement could be interpreted the wrong way. If the financial manager is doing something illegal or unethical to increase the current value, he would be failing to make good financial decisions on behalf of the shareholder. A corporate financial manager should focus on making the best financial decision for the shareholder and include its profit potential alongside whether or not it is legal or ethical and how it would reflect on the corporation’s name. There is much more to making sound financial decisions than whether or not it will increase the value of the shares. That is why the main goal of financial managers for corporations in flawed in my opinion.

References

Garrison PhD., S. (2012). Study Finance. Retrieved from Types of Business Organization: http://www.studyfinance.com/lessons/busorg/

IRS. (2012, March 16). Retrieved from Sole Proprietorships: http://www.irs.gov/businesses/small/article/0,,id=98202,00.html

IRS. (2012). Retrieved from Limited Liability Company (LLC): http://www.irs.gov/businesses/small/article/0,,id=98277,00.html

IRS. (2012). Publication 541. Retrieved from Table of Contents: http://www.irs.gov/publications/p541/ar02.html#d0e252

Ross, Westerfield, & Jordan. (2008). Essentials of Corporate Finance. Retrieved from The Goal of Financial Management: http://highered.mcgraw-hill.com/sites/0073405132/student_view0/ebook/chapter1/chbody2/1_4_the_goal_of_financial_management.html

Pricing

When managers are deciding how to price their products, they have to focus on many important cost and market factors in addition to legal issues that they may encounter. Prices are usually determined by supply and demand that clears the market unchanged by price controls (Cox, 1997). Price controls are set in place by legislation on many products to keep the price from going to high. Management would have to comply to any price controls that are set in place for the specific product that they are offering the market. Competition in the market forms the prices that people are willing to pay for a good or service (Ballve', 1956). If the management knows from their prior research that their product is in abundant supply, they should look to competitors pricing and try to match the ranges that they are pricing, making adjustments based on the quality of the product in comparison. If research suggests the product is scarce and in high demand by the public, pricing should be adjusted higher because of the willingness of the consumer to pay the inflated price. This is why is it thought that the free market is the sovereignty of the consumer (Ballve', 1956).

Price discrimination that offers product at different prices based on the consumer type can also be illegal so management needs to be sure they are pricing in accordance to all of the laws in the area where they are making sales.  Management needs to ensure that they are covering all of the expenses that were incurred during the production of the product including materials, labor, and overhead. Selling products at a loss or at the break-even point will have no benefit to the company.

            Discounted cash flow is a valuation method that analyzes how attractive an investment opportunity is (Investopedia, n.d.). It uses projected future free cash flow and discounts them from the weighted average cost of capital to determine the present value of the investment. If that value is higher than the current cost, it is determined that the investment is undervalued and has the potential to be a good investment. I would disagree with the R&D manager because it is not impossible to use the DCF Method in research and development. You don’t need to measure cost saving; instead, they would forecast future earnings based upon if the research and development project were successful and factor that into the equation (Hindinger, n.d.).

References

Ballve', F. (1956). Essentials of Economics: A Brief Survey of Principles and Policies. Mexico City. Retrieved from http://freedomkeys.com/pricecontrols8.htm

Cox, J. (1997). The Concise Guide to Economics (Second Edition ed.). Savannah-Pikeville Press. Retrieved from http://freedomkeys.com/pricecontrols3.htm

Hindinger, J. (n.d.). eHow Money. Retrieved from How to Use Discounted Cash Flow (DFC) in Research and Development: http://www.ehow.com/how_6576330_use-flow-_dcf_-research-development.html

Investopedia. (n.d.). Investopedia. Retrieved from Discounted Cash Flow-DFC: http://www.investopedia.com/terms/d/dcf.asp#axzz1nmvqV5Cn

E-books or Paperback?

            My research suggested that the younger that the consumer was, the more likely they were to make their purchases online. Those who did a lot of their shopping online said that it saved them time and gas money that they would have used sitting it traffic and shopping, had they physically gone to the store. Those online shoppers also boasted that they could find better deals online and very rarely had to pay fees on shipping. Another interesting twist was people who bought books that they read on a device that they already owned, which completely eliminated the need for any shipping at all. The young group mostly looked for deals on textbooks that they could only find online. The people in the middle age group purchased mostly books, more specifically, reference or leisure. This probably has to do with the fact that most of them have completed their degrees. The few people who did purchase books online from the older group were the more tech savvy of their generation. This group made the fewest online sales from those who I questioned on the topic.

The people who bought books that they read on their devices seldom noted a reason to ever enter a brick and mortar establishment. The books summary and description are available on the site that they purchase it from. Most have 20-30 pages as a preview to the reader before they commit to the purchase. This is very similar to thumbing through the pages of a book that you would pick up in a brick and mortar establishment. These online store have libraries that you can browse through if you don’t know what you want as well as convenient searches that lead the reader to almost anything they could ever dream of reading. It some situations, it was ever noted that actually having to go to find a book in a store would take more time and effort than the online store.

            The younger 50% of the demographic that I spoke to don’t buy paper copies of books at all. They take up space and in some instances, cost notably more than the electronic version. The older people got, the more attached they seemed to the sentimental idea of their books. They wanted to be able to dog ear the pages and keep their copy to read again in the future with their already extensive collection of books that they had acquired over their lifetime. Amazon, who is one of the largest sellers of the e books, says that they outsell the printed version two to one (Association of American Publishers, 2011).

References

Association of American Publishers. (2011, April 15). Engadget. Retrieved from E-book sales triple year-over-year, paper books decline in every category: http://www.engadget.com/2011/04/15/e-book-sales-triple-year-over-year-paper-books-decline-in-every/

Job Order Costing Method Versus The Process Costing Method

The job order costing method is used for measuring and individual job or batch order whereas the process costing method is used for measuring different aspects of the process itself. The process costing method also measures the standardized units that are being produced. Process operations are repetitive, highly standardized, and usually used in situations that involve high production volume. The products processes have little flexibility and result in a homogeneous product or service. Job order operations are custom orders that result in heterogeneous products or services. Unlike the operations for processes, job order operations have a low production volume, a high level of flexibility during the production process, and low to medium standardization of the actual product.

All of this means that the costing methods for both have to be tailored to the type of production that is being implemented. They have both similar and contrasting aspects to the inner workings of their systems. Job order costing specifically assigns jobs direct materials, labor, and overhead. When the cost of the total job is divided by the number of units that the job produced, the result is the total cost per unit.

The process costing method assigns these same direct materials, labor, and overhead to a specific process as opposed to a job. The processes total cost is found and then divided by the amount of units that must pass through the process during production. The result is the cost per equivalent unit. Both methods are “ultimately interested in determining the cost per unit of product (or service) resulting from either system” (Wild & Shaw, 2012, 1).

The company that I work for would best benefit from the process costing method. We do fuel acquisitions which is a service we provide for our customer, the warfighter. We have several different methods that we use for each procurement. The easiest way to place costing metrics on each acquisition would be to measure the amount of money that is spent on each individual process required. An emergency buy (ebuy), which normally takes a few days, does have the same processes applied to it as a bulk fuel acquisition which takes month to complete. Using this method would leave room for variety in the services that we offer.

References

Wild, J. J., & Shaw, K. W. (2012). Managerial Accounting. New York: McGraw Hill/Irwin.

New Consumer Products, Target Markets, & Competitive Advantages

The new consumer product is called The Body Ball. It is a small inflatable ball that has two resistance bands made of rubber attached to each side. My target market is anyone who is in the fitness industry, interested in fitness, or is simply looking to get into shape and lose weight.  The ball will be a condensed version of several different types of fitness equipment and can be easily used from the privacy of home for any shy consumers out there. The ball could be sold in volume to any gyms who want to use it for classes or make it available for gym goers to use in their free time. Gyms always want to have the most modern equipment and this would be an opportunity to stay ahead in their industry.

A good song for the campaign would be anything that was very upbeat or had to do with fitness or working out. Some suggestions would be “Move It” by the artist Dope. A good endorser would be someone very fit and athletic, even someone who had a career in the fitness industry such as Bob Harper from The Biggest Loser. “According to the U. S. Food and Drug Administration (FDA) Americans spent an estimated $30 billion a year in 1992 on all types of diet programs and product” (Worldometers, 2012, 4) and that means there is a huge market out there for us to get a slice of. It is easier to make money off of a product when you have a larger segment of people that are going to have a potential interest in your project.

This is a very unique product that many have never seen anything like. By showing the results that the product can produce, people are going to want to get their hands on this piece of fitness equipment. We can advertise in gyms and on television so that we can target as much of our specific market segment as possible. We are poised to compete with the competition because, as many people have never seen or used this product before, they aren’t going to have any idea what type of results that it can produce. They will have to try it on their own to figure out how well that it works. New products spark peoples interest and a lot of people are so desperate to lose weight that they are willing to try anything. This will be a very high quality product and good marketing could make this product a lot of money. If we could get commercial time when shows that are specifically targeting weight loss, such as The Biggest Loser, we will be able to reach more of our target market as well.

References

Worldometer. (2012). Real time world statistics. Retrieved from http://www.worldometers.info/weight-loss/

Successful and Unsuccessful Marketing Plans

Introduction

A marketing plan can make or break the overall success of a product or service. The way that fire services has both failed as well as succeeded with their different marketing techniques is a good example and the things that should and should not be done when trying to carry out a successful marketing plan. The movie Warrior’s failure to attract an audience used the excuse that America wasn’t ready for MMA. Taking a look back, it seems that it may have been the marketing teams fault more than Americas. Each of these examples are great to look back and learn from for any marketing plans that are created in the future.

Marketing Plans

A marketing plan is a company’s action program that details the strategy that they are using or planning to use. The strategy can be for one specific product or an entire line of products, depending on how individualized the plan is. The plan should be a “fully detailed analysis of the market you are participating in, strategies you’ll employ and the tactics for executing these strategies” (MarketingPlan.net, 2011). The marketing plan can make or break the level of success that a product or service achieves. A lot of time, effort, and energy should be placed into a marketing plan because of the impact it has.

Fire Services

The marketing plan for Fire Services was successful for many different reasons. They looked at their services as a whole and tried to utilize every aspect of the service in their marketing plan. Respected speaker on fire services marketing Ben May stated “how we perform our job, our uniforms, our apparatus, our public appearance, and non emergency public exposure all market us to the community” (Hyden, 2011). His ability to see fire service as a concept reinvents the way that they go about doing their marketing.

Fire services start with their strategic plan and develop their marketing plan from that. This enables the fire service provider to keep the original vision in mind. They utilize the strategic plan as a navigation tool for the marketing that they do. This is a good example of how including all of the aspects of the product or service that you are creating a marketing plan for can lead to the overall success of the product or service itself.

In the same article, reasons that marketing attempts have failed in the past is highlighted. The major reason for marketing failure has been company’s inability to separate marketing from selling. They detail how the modern day marketing techniques that are used are a relatively new concept. Where, in the past things have been sold because we need them to meet our everyday needs, the newer marketing is geared towards meeting needs and wants and reaching out for people disposable incomes as well.

 This is a good example of the fact that knowing the strategic plan and using it to implement your marketing plan is key. If the right elements of a product or service fail to be built on, it has the potential to compromise any marketing efforts that have been put together by the company. From the examples, it is obvious that what is chosen to be in the marketing plan is essential.  An extensive and well thought out marketing plan is imperative to the success of any product or service.

Warrior

A recent movie that was dubbed a failure by critics alike was called Warrior. Part of the reason that led the movie to be a failure was MMA’s lack of mainstream appeal. The movie was about MMA fighting. It was concluded that the public just wasn’t into the idea of MMA fighting enough to take an interest in going to see a movie about it.

 Instead of being a breakout movie to introduce MMA to a broader audience, it ending up flat out failing miserably. This could have been the marketing teams fault because they failed to spike the public’s curiosity about the emerging sport. It could also be that people just aren’t interested in cage fighting. Nevertheless, the movies marketing team was unsuccessful in securing the markets interest and the movie’s box office debut turned out to be a disaster.

The more saddening truth about the movie is that its marketing team had a budget of $45 million dollars (Snowden, 2011). Contrary to the title of the article “Does Warrior’s Box Office Failure Show The Mainstreams Still Not Ready for MMA And The UFC” (Snowden, 2011), there is a lot of contradictory evidence that we have seen. Shows about The UFC, such as The Ultimate Fighter, have gained large audiences in the past. If so many people can be interested in a television show, the marketing team for the movie should have been able to produce a better turn out for the movies box office debut.

A large audience also shells out a hefty amount buying UFC fights on paper view. The marketing team for this project did not do a good job of taking advantage of the elements of marketing that these shows and events do. I don’t think that it was the audience not being ready for MMA; I think that is a prime example of when marketing plans fail.  

Conclusion

From a failure at the box office for an MMA movie, to the successes and failures of fire services marketing campaign, there is a lot that can be learned. Not making the same mistakes as other have in the past is one of the best ways to ensure success in marketing. An extensive and well thought out marketing plan can help a product or services success immensely. These examples help to show the gravity of poor decisions as well as plans that paid off.

References

Hyden, T. (2011, April). Retrieved from At the Crossroads: Fire Service Marketing and Strategic Planning: http://ehis.ebscohost.com.proxy.cecybrary.com/eds/pdfviewer/pdfviewer?vid=2&hid=101&sid=e367d57d-e0e2-45e7-ade6-b6c977d8e89d%40sessionmgr112

MarketingPlan.net. (2011). Marketingplan.net. Retrieved from What is a Marketing Plan?: http://www.marketingplan.net/what-is-a-marketing-plan/

Snowden, J. (2011, September 19). Retrieved from Does Warrior's Box Office Failure Show The Mainstreams Still Not Ready For MMA And The UFC?: http://mma.sbnation.com/2011/9/19/2434990/UFC-News-movie-mainstream-warriors-box-office-failure-show-the-mainstream-fox