charlottes ltd · 2014-03-26 · strategy formation ... company performance 620 640 660 680 700 720...

Charlottes Ltd

Joyce Law

Hilda Lam

Leanne Li

Danny Yip

1

Overview

Environmental Analysis

Competitive Strategy Analysis

Financial Analysis

Future Strategies

2

Objectives

Year 1: Improve internal weaknesses

Year 3: Attain a 10% annual profit growth

Year 5: Build a good reputation of Charlottes Ltd in Southeast Asia

3

Mission: “To make Charlottes Ltd the specialty store best known throughout SE Asia”

Unique selling proposition: Providing organized, professional and customized wardrobing service

Market position

Overview of Charlottes Ltd.

4

Strategic Planning Process

Mission

Objectives

Situation Analysis

Strategy Formation

Implementation

Control

5

Environmental Analysis

Competitive Strategy Analysis

Financial Analysis

Future Strategies

6

Situation Analysis

Porter’s Five Forces Model

SWOT Analysis

7

Environmental Analysis

Competitive Strategy Analysis

Financial Analysis

Future Strategies

8

BCG Matrix

9

Relative Market Share

High Low

Relative Market Growth

High Star - “Hold”

Relax Question Mark - “Build”

Lady & Missy

Low Cash Cow - “Harvest”

Time-out Dog - “Liquidate”

GEM Matrix

10

Business Strength

Strong Average Weak

Industry Attractiveness

High Winners (Grow

strongly) Winners (Grow

selectively) Question marks

(Divest)

Average Winners (Grow

Selectively)

Average businesses

(Hold)

Losers (Divest)

Low Profit producers

(Hold) Losers (Divest) Losers (Divest)

Critical Success Factors

Efficient, customized and personalized wardrobing service

Administration with professionals

Continuous positive cash inflow

11

Current Strategy

Maintain its market shares (Hold strategy) in the short run

Competitive advantage: Focused differentiation strategy

12

Environmental Analysis

Competitive Strategy Analysis

Financial Analysis

Future Strategies

13

Company Performance

14

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

Retrun on Assets Profit Margin Functional Cost

Charlottes

Industrial Avg.

Company Performance

620

640

660

680

700

720

740

760

780

800

820

840

As 1000 of sales

Charlottes Industrial Avg.

Asset Utilization

Company Performance

Comparison with Projected Performance

Over projection

Over Acquisition of Assets

16

0

5

10

15

20

25

30

35

40

45

50

Sales

amount

(in $M)

Projected Sales Actual Sales

Environmental Analysis

Competitive Strategy Analysis

Financial Analysis

Future Strategies

17

Phase 1: Sustain local market share

Phase 2: Expansion - Total Man

Phase 3: Expansion - Singapore

Future Strategy: An Overview

18

Phase 1 Enhance efficiency

Accurate sales forecast

Assets utilization

Cooperate with TDC

Market penetration

Online wardrobing service

19

Phase 2: Total Man

Product

Gentlemen & Chill out

Price

Gentlemen - $2000/unit

Chill out - $800/unit

20

Promotion

Mass media & personal selling

Place

Retail outlet

21

Benefit of Total Man

Increase in profit

Better utilization of assets

22

Phase 3: Expansion to Singapore

Constant growth of Manufacturing, Wholesaling and Retailing

No. of Target customers: 600,000 people

Relatively high social status of women

Easy access to Singapore economy

23

Our focus: Market Development

Goals

Attain a profit growth rate of 8% per year

Increase exposure to Southeast Asia countries

24

Marketing 4P in Singapore

Earlier stage:

Product - All 4 brands

Place - Wholesaling & online services

Price - Quantity discount

Promotion - Invitation-only fashion shows

Marketing 4P in Singapore

Later stage:

Product - “Total Woman” programme

Place - Retail store

Price - Market skimming strategy, seasonal discount

Promotion - Direct marketing

26

Risk Assessment

General

Bad debt problem

Price fluctuation or termination of supply

Phase 1

Sudden increase in demand of raw materials

27

Risk Assessment Phase 2

Unsatisfactory market response of Total Man

Operation changes

Phase 3

Over-optimistic forecast

Overseas management

28

Cash Flow Statement: Phase 1

Start up 2007 2008

Beginning cash $60,000 $90,000

Capital Investment $190,000

Profit (Loss) $130,000 $160,000

Capital exp. $130,000 $100,000 $100,000

Change in cash position

$60,000 $30,000 $60,000

Ending cash $60,000 $90,000 $150,000

Cash Flow Statement: Phase 2

Start up 2008 2009

Beginning cash $50,000 $2,069,180

Capital investment $400,000

Profit (Loss) $2,169,180 $2,527,200

Capital exp. $350,000 $150,000 $160,000

Change in cash position

$50,000 $2,019,180 $2,367,200

Ending cash $50,000 $2,069,180 $4,436,380

Cash Flow Statement: Phase 3 Start up 2010 2011

Beginning cash $140,000 $130,000

Capital Investment

$1,100,000

Profit (Loss) $230,000 $350,000

Capital exp. $960,000 $240,000 $300,000

Change in cash position

$140,000 ($10,000) $50,000

Ending cash $140,000 $130,000 $180,000

Projection

2007 2008 2009 2010 2011

Cash Flow and Profit over 5 Year

Cash Flow

Profit

Thank You

Appendice

Budgeted Income Statement Projected Actual

Sales 48,940,000.00 100% 100%

Less: COGS 27,410,209.00 56.01% 55.70%

Gross Profit 21,529,791.00 43.99% 44%

Less: Administrative Expenses

1,036,800.00 43.99% 44%

Less: Sales Expenses

3,130,200.00 6.40% 7.70%

EBIT 17,362,791.00 35.48% 27.50%

Comparison between Charlottes and Competitors

Charlottes Industrial Average

Return on Assets 33.0% 37.5%

Profit Margin 27.5% 25.5%

Asset Turnover 1.2 1.5

Functional Cost as a % of sales

65.6% 70.6%

Asset Utilization 833 700.8

Phase 1 - Capital Expenditure

Startup 2007 2008 2009

Capital Expenditure

MIS $100,000 $30,000 $30,000 $30,000

Website $30,000 $10,000 $10,000 $10,000

MIS Maintenance

$50,000 $50,000 $50,000

Website Maintenance

$10,000 $10,000 $10,000

Total Capital Expenditure

$130,000 $100,000 $100,00 $100,000

Phase 2 - Capital Expenditure

Startup 2008 2009 2010

Capital expenditure

Interior Design $ 200,000 $ 50,000 $ 50,000 $ 50,000

Add. Assets $ 100,000 $ 50,000 $ 60,000 $ 70,000

Other $50,000 $ 50,000 $ 50,000 $ 50,000

Total Capital expenditure:

$ 350,000 $ 150,000 $ 160,000 $ 170,000

Phase 3 - Capital Expenditure

Startup 2009 2010 2011

Capital expenditure

Registration $ 10,000 $ 10,000 $ 10,000 $ 10,000

Interior Design $ 400,000 $ 50,000 $ 50,000 $ 50,000

Add. Asset $ 450,000 $ 100,000 $ 120,000 $ 150,000

Other $ 100,000 $ 100,000 $ 120,000 $ 150,000

Total Capital expenditure:

$ 960,000 $ 260,000 $ 300,000 $ 360,000

Phase 1 - Financing

Short term

Factoring

Long term

Reducing Inventory Levels

Reducing Expense

Phase 2 - Financing

Short Term

Bridging Loan

Long Term

Secure Loan

Phase 3 - Financing

Short Term

Reserves

Long Term

Asset Base Loan

Scenario Analysis

Income Statement