Comprehensive 3-Year Strategic Business Plan for D Company

This assignment provides a comprehensive 3-year strategic business plan for D Company, a manufacturer of athletic footwear. The plan begins with a strategic vision and establishes objectives for key performance indicators such as earnings per share, return on equity, credit rating, image rating, and share price. A competitive differentiation strategy is outlined, focusing on high-end products with an 8-star quality rating and revised pricing. The plan includes a SWOT analysis identifying strengths, weaknesses, opportunities, and threats. Furthermore, it presents projected income statements across four geographical segments, along with detailed plans for human resources, marketing, operations/production, and financial management, including investment in robot-assisted production, increased marketing budgets, and strategies to reduce costs. The financial section addresses loan reduction, equity, and dividend policies, aiming to maximize shareholder wealth and operational efficiencies.

Strategic business plan
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Table of Contents
Introduction......................................................................................................................................3
Three-year strategic plan..................................................................................................................3
Strategic vision............................................................................................................................3
Establishing Objectives...............................................................................................................3
Competitive Strategy...................................................................................................................3
SWOT Analysis..........................................................................................................................4
Income Statement........................................................................................................................4
Individual areas...........................................................................................................................6
Conclusion.......................................................................................................................................8
References........................................................................................................................................9
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Introduction
Below mentioned is a three-year strategic plan for the D company which manufactures
athletic footwear. It contains a strategic vision for the company which is the basis for
establishing objectives and determining competitive strategy. SWOT analysis has further been
performed to determine the changes required in the individual areas of operations of the
company. An income statement has been developed based on the projections made for the plan
period.
Three-year strategic plan
Strategic vision
Company offers ranges of running shoes, cross trainers, court shoes, cleats, hiking shoes
and other sports shoes. It aspires to be first choice for every athlete. It is heading strongly
towards making itself a cult in the field of athletic footwear within a decade (Zorpas, Voukkali
and Pedreño, 2018).
Establishing Objectives
Objectives are the targets that company aims to achieve. It has decided to target
achievement of five performance objectives as laid down by board members and expected by
investors:
Year 11 Year 12 Year 13
Earning per share $1.38 $1.52 $1.68
Return on Equity 12.80% 15.02% 17.62%
Credit Rating B+ A A+
Image Rating 68 75 85
Share Price $19.16 $20.69 $22.35
Competitive Strategy
Company has been on advent to place itself among the market leader's position and to
cement it, it has decided to adopt differentiation strategy from year 12. This strategy eyes to
increase competitive advantage by providing different and distinct items from the competitors in
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the high end market. It aims to manufacture products that can achieve top quality rating of 8
stars. Strategy aims to improve financial management and can be bifurcated into two highlighted
parts – improving revenues and reducing costs. Under the revised pricing policy, new range of
footwear would be launched which would be priced up to $80 in the wholesale market and $112
on the online marketplace. Further, to optimise cost structure, company has decided to adopt
quality framework that will help it eliminate wastages in the operational processes, improving its
gross profit margin as result. In addition, company aims adoption and maintenance of constant
dividend payout policy with a growth of 50%.
SWOT Analysis
Strength – Biggest strength of company is its varied ranges of products and the trust of
customers that it has been able to achieve over the years. It brand image is also positive in the
market (Bahadori and et. al., 2018).
Weakness – Company has been able to produce in lesser quantity than what was
demanded from it. Therefore, it can be observed that its low productivity has been its weakness.
Opportunities – Company can re-design its manufacturing capacity to complete larger
demand. Further, it can introduce its new ranges to its existing market or can take business to
unexplored markets of Australia.
Threat – Company operates in a highly competitive market and has strong competition in
the face of international companies which are trusted by global athletes since years. Trust those
brands enjoy of athletes of global level is biggest threat to the company.
Income Statement
Company has four geographical segments – N.A., E.A., A-P, L.A.. Out of the four,
manufacturing units are at only N.A. and A-P and produce is sold in all four region.
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Individual areas
Human Resources
Company aims:
Year 11 Year 12 Year 13
N.A.
Productivity 5000 5200 5408
Reject Rate 5.20% 5.00% 4.80%
Labour charges $10 $12 $15
A-P
Productivity 3500 3640 3786
Reject Rate 4.80% 4.65% 4.45%
Labour Charges $10 $12 $15
From the above, it can be seen that company aims to increase incremental productivity by
4% and to achieve this objective, it is planning to undertake:
 Investment in robot-assisted production which will cost around $57m in year 12 but will
be able to increase productivity further by 50% and;
 Increase incentives rate of labour by $1 each per reduced rejected shoe to inspire them to
minimise rejections (Mallon, 2019).
Marketing
Company distributes its products in two ways – wholesale distribution and online
distribution. However, its marketing activities are common and primarily focusses on wholesale
distribution as it earns larger part of revenue. Below mentioned is forecast of total pairs of
products that are expected to be sold as per wholesale market:
Year 11 Year 12 Year 13
Price
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N.A. 60 70 80
E.A. 60 70 80
A-P 60 70 80
L.A. 60 70 80
Sales units
N.A. 33483 34440 36162
E.A. 29350 30190 31698
A-P 20883 21480 22554
L.A. 11683 12017 12618
Revenue
N.A. 2009000 2410800 2892960
E.A. 1761000 2113200 2535840
A-P 1253000 1503600 1804320
L.A. 701000 841200 1009440
Company targets 8 stars shoes however, above projections are based on 6 stars shoes for
the year 11, which would be increased to 7.5 year 13. To achieve the above targets, it has spent
$40m on advertising in year 11 and now, plans to increase 10% annually on marketing budget. In
addition, to increase its sales, company is expecting to increase its retailer counts by 2000 retail
outlets (Soares and Setyohady, 2017).
Operation/Production
Company has been producing from two manufacturing units as at present as the facilities
at E.A. and L.A. are not yet commissioned.
Cost Price Year 11 Year 12 Year 13
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A.P. 15 20 25
N.A. 15 20 25
E.A.
L.A.
Cost of production Year 11 Year 12 Year 13
N.A. $35 $38 $40
A-P $25 $27 $29
It can be seen that cost is increasing and it can be owed to the increase in labour cost and
cost of raw material which has been used to achieve higher quality in star ratings.
Reject rate Year 11 Year 12 Year 13
N.A. 5.20% 5.00% 4.80%
A-P 4.80% 4.65% 4.45%
In order to achieve these objectives, other than increasing incentives rates, company is
planning to invest in plants with better efficiencies. This would be able to reduce the cost of
rejection by $10m in year 12 and will aid savings of 1033 and 1499 in the plants respectively.
Financial
To achieve the operational targets and maintain a credit rating of minimum B+, it is very
important for company to maintain sound financial health (Elbanna and Fadol, 2016).
Financial position Year 11 Year 12 Year 13
Loans $80m $45m $20m
Equity $20m $19m $18m
Dividend $1.5 $2.25 $3.38
As seen above, company plans to take down outstanding loans from $80m to $20m by the
13th year by generating funds from other sources. In addition, from the funds generated, company
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plans to apply a buy-back in order to consolidate its shareholding. However, dividend would be
declared in line with the 50% constant growth policy decided to be adopted.
Conclusion
Above strategic plan is prepared in accordance with the objectives specified by the
management and investors with an aim to maximise wealth of the shareholders and optimise
operational efficiencies of the company.
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References
Books and Journal
Bahadori, M. and et. al., 2018. Factors affecting strategic plan implementation using interpretive
structural modeling (ISM). International journal of health care quality assurance.
Elbanna, S. and Fadol, Y., 2016. An Analysis of the Comprehensive Implementation of Strategic
Plans in Emerging Economies: The U nited A rab E mirates as a Case Study. European
Management Review. 13(2). pp.75-89.
Mallon, W.T., 2019. Does strategic planning matter?. Academic Medicine. 94(10). pp.1408-
1411.
Soares, S. and Setyohady, D.B., 2017, August. Enterprise architecture modeling for oriental
university in Timor Leste to support the strategic plan of integrated information system.
In 2017 5th International Conference on Cyber and IT Service Management
(CITSM) (pp. 1-6). IEEE.
Zorpas, A.A., Voukkali, I. and Pedreño, J.N., 2018. Tourist area metabolism and its potential to
change through a proposed strategic plan in the framework of sustainable
development. Journal of cleaner production. 172. pp.3609-3620.
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