ToolsCorp Corporation

Background InformationToolsCorp Corporation is a fictitious company that does not exist anywhere. For the purpose of this course, it is located it in Tennessee. It builds power tools, lawn mowers, lawn furniture, microwaves, and ranges. All products are manufactured locally and sold through large retailers that place sales papers inserted in every Wednesday and Sunday paper. Although they have a thriving business in the United States and Canada, ToolsCorp is trying to break into the global marketplace.ToolsCorp Corporation is a fictitious company that does not exist anywhere. For the purpose of this course, it is located in Tennessee. As members of the senior management team of ToolsCorp Corporation, your group has been asked to prepare a neat and organized report for the Strategic Officers Steering Committee (SOS-C) of ToolsCorp Corporation. The purpose of this paper is to obtain permission from them to go forward with the next step (developing a full-blown business plan) for ToolsCorp’s strategic initiative to break into the global marketplace.Paper should discuss the following (at a minimum):Executive SummaryA complete strengths, weaknesses, opportunities, and threats (SWOT) analysis (including at least 5 factors from each category and full explanations of why each factor is important and why it was placed in the category) of the environment that exists within ToolsCorp and the environment that ToolsCorp is proposing (the SWOT analysis must identify at least five factors for each category of the SWOTâ??Strength,
Weakness, Opportunity, Threatâ??and make doubly sure to fully explain each
factorâ??why it is important, how its intended to use it, why it belongs
in this category, and any other issue you feel explains its importance in the
analysis. Be sure to note the SWOT Common Mistakes, make sure you do not make
one of those mistakes. Be sure to realize, the internal SWOT factors must be
current; while the external factors can be current or future-oriented factual
information. Therefore, you cannot just make-up factors, especially the
internal SWOT factorsâ??the Strengths and Weaknesses, the attributes of the firm
in questionâ??they are especially susceptible to unfounded and unsubstantiated
statements, because ToolsCor p is
a fictitious company. For example, you
cannot claim ToolsCorp
had x-number of dollars in sales last year; no such data exists, ToolsCorp
is fictitious. Please see the Drawing Logical Conclusions file)An outline of the business plan to be developed for ToolsCorp’s strategic initiative ( Generic BPs and MAs can be researched as
long as you find one that closely resembles ToolsCorp,
its industries, and its goalsâ??e.g., a manufacturing firm going global to the
area of the world you intend to locate and to the level of involvement you
intend for ToolsCorp
would be idealâ??engineer it by finding
such a firm, then applying those specifics to ToolsCorp.
However, get as close as you can and make changes to these generic plans to
tailor them to your ideas for ToolsCorp) Key operating principles as you will apply them (The Operating Principles need to state
the value or ideal the firm holds to help them make their decisions.)A preliminary market analysis of the market(s) into which ToolsCorp expands (Generic BPs and MAs can be researched as
long as you find one that closely resembles ToolsCorp,
its industries, and its goalsâ??e.g., a manufacturing firm going global to the
area of the world you intend to locate and to the level of involvement you
intend for ToolsCorp
would be idealâ??engineer it by finding
such a firm, then applying those specifics to ToolsCorp.
However, get as close as you can and make changes to these generic plans to
tailor them to your ideas for ToolsCorp.)The one-year, five-year, and ten-year strategic objectives of the strategic initiatives presented as one strategic proposal for each time frame (3 strategic proposals in all), complete with implementation plans, potential ramifications, and feedback mechanisms (each of your three strategies must
identify three necessary elementsâ??implementation plan, potential ramifications,
evaluation mechanisms and measures. The implementation plan must tell us HOW to
accomplish your plan. Telling us WHAT you want to do is not a plan. The
potential ramifications must identify several advantages and several
disadvantages which may result from implementing your planâ??the more pros and
cons you identify the better. The evaluation mechanisms and measures must be
four facetedâ??proactive and reactive mechanisms and the qualitative and
quantitative measures those mechanisms gather. Be sure to note the Strategy
Common Mistakes section)The additional material that your group considers necessary to support the case for going forward with ToolsCorp’s global strategic initiative (This is not optional, you must input additional material.) – should be financials of the company, the prospective financials after expansion, include a chart to reflect current and future
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
ToolsCorp Corporation is a fictitious Company
that does not exist anywhere. For the purpose of
this course, we have located it in Tennessee. As
members of the senior management team of
ToolsCorp Corporation, your group has been
asked to prepare a neat and organized report for
the Strategic Officers Steering Committee (SOSC) of ToolsCorp Corporation. The purpose of this
paper is to obtain permission from them to go
forward with the next step (developing a full
blown business plan) for ToolsCorp’s strategic
initiative to break into the global marketplace.


Q1 A complete SWOT analysis (strengths, weaknesses,
opportunities and threats, including at least five factors from
each category and full explanations of why each factor is
important, how do you intend to use the factor, and why it was
placed in the category) of the environment that exists within
ToolsCorp and the environment ToolsCorp is proposing.
Hint: use the SWOT and Strategy file (SASF) for reference, the
Required SWOT Writing Format is depicted therein. Remember
that you cannot assume or make things up about ToolsCorp, so
the internal factors will require some thought, but you can draw
logical conclusions from facts on similar real firms in the same
industries, so research those real firms, also remember that
external factors for similar firms in the same industries may
indeed be the same


Q2 An outline of the business plan to be developed
for ToolsCorp’s strategic initiative
Hint: decide among you where you are going to
expand globally and to what level of involvement you
intendâ??doing so is crucial to all GP questionsâ??
research business plans and find one for a
manufacturing firm going where you intend, tailor it
to ToolsCorp specifications, remember, this is just an
outline, not a formal business plan, so it does not
have to be specifically detailed, but it must be
specific to ToolsCorp, where they are going globally,
what sort of involvement they intend, whether or not
they will make a JV commitment, etc., other
important but general information.




Q3 A full mission statement containing the nine
components and presented in a well written
paragraph
Hint: be sure write in a succinct manner, carefully
choosing your words to include the nine essential
elementsâ??found in the Learning Materials sectionâ??
be sure to research several sources for writing
mission statements.
Q4 Key operating principles as you will apply them
Hint: a principle is a value or ideal a firm uses to help
guide its decisionsâ??famous principles are â??the
customer is always rightâ? or â??quality is our most
important product,� tell us HOW they would help
guide decisions.


Q5 A preliminary market analysis
Hint: research market analysis, find one for a
manufacturing firm going global to a country in
the same region and with a similar involvement
and tailor it to ToolsCorp specifications;
remember, this is just a preliminary market
analysis, not a formal one, but you must at least
analyze the country or region of the globe
intended for expansion, the type of involvement
in that country or region, which products would
best suit target market, the economic and sociocultural specifics of that area, etc.


Q6 The one-year, five-year, and ten-year strategic
objectives of the strategic initiatives presented as one
strategic proposal for each timeframe (three strategic
proposals in all) complete with implementation plans,
potential ramifications, and feedback mechanisms
Hint: See SWOT and Strategy file (SASF) for strategy
specifications, the Required Strategy Writing Format
is depicted therein. There are three full strategies
required, they should build upon each otherâ??e.g.,
one year to open the manufacturing facility and begin
production and meet production quotas in the host
country, five year to open retail stores and meet sale
quotas in the host country, ten year to expand to
other host countries for manufacturing, production
and sales


Q7 The additional material that your group considers
necessary to support the case for going forward with
ToolsCorp’s global strategic initiativeâ??this is not
optional, you must input additional material.
Hint: additional material may be the single most
important thing done on any major business project,
the additional material is something not already
covered in the project plans which may help ensure a
successful expansion project. The additional material
can be anything, but make sure it is meaningful
enough to warrant inclusion into your project.
Obvious additions, such as, qualified personnel,
needed equipment, knowledge of laws and culture,
etc., are standard procedures for any global business
and will not earn best grades. Think this one through.
Background information on ToolsCorp Corporation.
 ToolsCorp Corporation is a fictitious company that
does not exist anywhere. For the purpose of this
course, it is located it in Tennessee. It builds power
tools, lawn mowers, lawn furniture, microwaves, and
ranges. All products are manufactured locally and
sold through large retailers. The large retailers have
sale papers inserted in every Wednesday and Sunday
paper. Although they have a thriving business in the
United States and Canada, ToolsCorp is trying to
break into the global marketplace.
 Hints: you must use these few known facts to draw
logical conclusions based upon research of real firms
and real situations-see the Drawing Logical
Conclusions file.
UNIT 5 GP LOGICAL CONCLUSIONS
â?¢ To some extent, all managers are risk-averse; which means
they are leery of drastic change, future unknowns, lack of
needed resources, and unproven methods. They are
especially leery of change if their firms are already doing well,
as is ToolsCorp. To be sure, the best managers will take on risk;
but they need good reason to do so.
â?¢ In the case of ToolsCorp, a decision has been made to
expand globally. That in itself is a drastic change; but the
promise of cheaper manufacturing costs, larger consumer
markets, and expanded needed resources make that risk
worthwhile. The question MBAs need to ask themselves when
they plan their strategies is have we provided enough
justification for our management to approve the direction we
propose?
UNIT 5 GP LOGICAL CONCLUSIONS
â?¢ I have discussed these conclusions in the chats, but
thought I should write them down for you.
â?¢ I have taken the devilâ??s advocate position of a risk
averse ToolsCorp manager and drawn some conclusions
from the information we know about ToolsCorp. These
conclusions are based in factâ??as can be researched
through the benefits of using big-box retailers, the costs
and risks of retail outlets and marketing departments, risk
management in business strategies, and common
business practices.
â?¢ Of course, these conclusions do not have to be set in
stone; if you can present good reason for management
to take on the risks, do so.
UNIT 5 GP LOGICAL CONCLUSIONS
â?¢ Conclusion 1
â?¢ ToolsCorp has a very strong retail strategyâ??they
distribute through the big box retailers which gives
their products maximum exposure with shelf-space
in thousands of retail stores, some of which are
already overseas (Wal-Mart for example, with nearly
7,000 Wal-Marts and Sam’s Clubs outlets worldwide).
Consequently, ToolsCorp needs no retail resources,
no retail outlets, and has no retail expense; yet they
benefit from some of the most high-profile retail
space anywhere.
UNIT 5 GP LOGICAL CONCLUSIONS
Conclusion 2
â?¢ ToolsCorp has a very sound marketing strategyâ??they let the
big box retailers place ToolsCorp’s products on the hundreds
of thousands of retail shelves in outlets all over the world,
which is real-time in-your-face advertising; and the big boxers
even place ads for ToolsCorp products in all Wednesday and
Sunday papers at their thousands of outlet locations
worldwide. Although, we are not told in the assignment, one
can logically conclude that the big box retailers also have
internet presence for online sales of ToolsCorp productsâ??
research any big box retailer and see if they have an online
presence. Consequently, ToolsCorp needs no marketing
resources and has no marketing expense; yet ToolsCorp
enjoys wide-spread knowledge of their products, online sales
worldwide, and localized continuous advertising for their
products.
UNIT 5 GP LOGICAL CONCLUSIONS
â?¢ Conclusion 3
â?¢ ToolsCorp would have to have a very good reason to approve a
change in either of these sound and very cost-effective retail and
marketing strategies. In fact, a logical extension would be to
negotiate additional distribution contracts with other big boxers
all over the worldâ??however, having new distributors would
require a dramatic increase in ToolsCorp production to supply the
new big boxers. Opening their own retail stores or setting up their
own marketing arm would be costly and involve much more risk.
â?¢ ToolsCorp can reach other markets by distributing through
European, Asian, South American, or Australian big-boxers, but to
have products to distribute, ToolsCorp must manufacture more. It
is highly unlikely that a thriving business, like ToolsCorp, is so
inefficient that it has surplus products in its warehouses or that it
has excess capacity in its factories. Therefore, to have the
products to deliver the additional big-boxers, additional products
must be produced.
UNIT 5 GP LOGICAL CONCLUSIONS
â?¢ Conclusion 4
â?¢ ToolsCorp is a manufacturer, manufacturing is their core business, there
would have to be a very good reason to step out of their core to take on
another core business when they are already undergoing considerable
change by going global. Firms which choose to diversify into different
core businesses most likely will merge with or acquire a firm already in
that other core. Again, changing core businesses does happen, but also
again, a good reason needs to be given.
â?¢ A Reason to Think Twice before you Switch Core
â?¢ PepsiCo, the giant soft-drink and pre-packaged food manufacturer
purchased the restaurant franchise companies Pizza-Hut, Taco Bell, and
Kentucky Fried Chicken. One of the reasons was to secure lucrative soft
drink supply contracts for its fountain drinks. After some time, PepsiCo
spun-off these three prepared-food restaurants because they were not
cost-effective and were different from PepsiCoâ??s core business.
UNIT 5 GP LOGICAL CONCLUSIONS
â?¢ Conclusion 5
â?¢ ToolsCorp, like most other manufacturers, is most likely
expanding overseas to manufacture because of the
cost advantagesâ??facilities, labor, equipment, storage,
transportation, raw materials, component parts,
distribution, regulatory fees, taxes, etc., ad infinitum are
often cheaper. Manufacturing firms will rarely go to
manufacture in other locations where the costs of
manufacture are of equal or more expense than the
area in which they currently produce. There would have
to be a very good reason to not seek the competitive
advantage of low-cost manufacture in a lower cost
manufacturing area. See the Division of Tasking file for
some ideas about manufacturing globally.
UNIT 5 GP LOGICAL CONCLUSIONS
â?¢ Conclusion 6
â?¢ ToolsCorp is a thriving business, which means they run their business
efficiently. Important parts of that efficiency are the strong retail and
marketing strategies they use. ToolsCorp wants to expand globally;
therefore, distributing through European, Asian, or South American bigbox distributors makes good senseâ??if it works in North America, why not
Europe, or Asia? I am sure many of you will consider that obvious
strategy. However, please keep in mind the need to have enough
products to supply the new big-boxers. You simply cannot expect
ToolsCorp to keep thousands of units of product in inventory, that would
be highly inefficient. Likewise, you cannot expect ToolsCorp to have the
excess manufacturing capacity in its Tennessee factory to produce the
thousands of units of product needed to supply the new big-boxers. That
too would be inefficient. An efficiently run company would keep both
excess manufacturing capacity and excess inventory to a minimum.
Consequently, ToolsCorp will have to manufacture more product if it
wants to sell more product.
UNIT 5 GP LOGICAL CONCLUSIONS
â?¢ Therein lies the question; where to manufacture more
product? Certainly, ToolsCorp could expand its Tennessee
facility or even build another manufacturing facility
somewhere else in the States. That would save American jobs
and keep that Made in USA image. However, the only cost
advantage would be the increased volume of sales from the
new big-boxers; because the continued cost of American
manufacture saves no money and the development of
additional facilities in the US will cost even more in US prices.
Competitive advantage is often based upon expanding profit
marginsâ??lower production costs increase profit margins even
with the same wholesale prices. Consequently, as explained in
Conclusions 5, an easier sell to management would be to
manufacture in lower cost areas overseasâ??that is why so
many US manufacturers do that.
UNIT 5 GP LOGICAL CONCLUSIONS
â?¢ Example of a Good Reason to Manufacture in High Cost
Areas
â?¢ Japanâ??s auto industry came to the US to manufacture
carsâ??that is a great example of a good reason to
manufacture in a high cost country. Manufacturing
costs in the US were not cheaper than in Japan, but the
US has a very large consumer market for cars and the US
imposes very high tariffs on imported autos. By
manufacturing in the US, the Japanese auto makers
could avoid the tariffs and avail themselves of the huge
consumer base. Therefore, the increased cost of
manufacture was overcompensated by the lack of auto
import duties.
UNIT 5 GP LOGICAL CONCLUSIONS
â?¢ A Vital MBA Skill
â?¢ You too should draw logical conclusions when you
research and analyze ToolsCorpâ??s situation to
develop a solution for this GPâ??see the Drawing
Logical Conclusions file uploaded to the LM section,
posted to your small group DB, and discussed in the
chats and DBs. The ability to draw logical
conclusions is a vital analytical skill for MBAs. Logical
conclusions must be based in fact.
UNIT 5 GP LOGICAL CONCLUSIONS
â?¢ Addendum to the Rationale
â?¢ I just wanted to provide some more rationale for these
conclusions. You must realize that ToolsCorp’s
management has already decided to go globalâ??that in itself
is a drastic change. However, the reason is most likely to try to
gain competitive advantageâ??remember, we are not
told. Competitive advantage is key to all business endeavors;
it is what separates you from your competitors. A manufacturer
can gain competitive advantage not if its products are just as
good as the competition, but if they are cheaper, better, or
faster. One way to make it cheaper is to manufacture at less
cost; which usually means going to a cheaper country to
manufacture. To make it better or faster often requires newer
features or better technology.
UNIT 5 GP LOGICAL CONCLUSIONS
â?¢ As explained above, managers are generally risk
averseâ??which means they do not like taking
chances without good reason. Since ToolsCorp
is already a thriving business using their present
strategies, the management would be reluctant to
enter into more drastic change; unless persuaded
to do so by good reason and logic. That is the crux
of what MBAs do, convince management to do as
the MBA recommends. To do that, you must
provide convincing evidence of great potential to
succeed.
UNIT 5 GP LOGICAL CONCLUSIONS
â?¢ Pay special attention to the marketing and retail strategy
soundness that ToolsCorp employs. Certainly, ToolsCorp
enjoys the thousands of retail storesâ?? shelf space and the
local, in-your-face, and online marketing; but it is not
free. ToolsCorp must sell its products to the big boxers at
wholesale prices, undoubtedly with special payment
terms. Therefore, ToolsCorp does pay for the services the
big boxers provide, but the price difference is nowhere
near the cost and resources they would have to expend
to manage and operate the retail and marketing arms of
their business themselves.
â?¢
â?¢ Consequently, if you intend to have ToolsCorp enter a
retail or marketing capacity, you need a very good
reason with sound and sustainable profit potential.

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