Welcome to the Spring 2013 MB107 Executive Presentation Orientation Find your team number and sit...
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Transcript of Welcome to the Spring 2013 MB107 Executive Presentation Orientation Find your team number and sit...
Welcome to the Spring 2013
MB107 Executive PresentationOrientation
Find your team number and sit together with your team.
We’ll get started soon!
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Orientation Meeting Agenda• What is Company X?
• Who’s who in the MB107 Program
• What is the Executive Presentation?
• Dry Run and EP Specifics
• Analysis and Strategy Development
• Financial Target: Economic Logic and Financial Estimates
• Team Dynamics & Project Timeline
• Student Perspective
• The EP day
You are now junior executives working for this company…
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Best Buy Companies, Inc.Not everything you think it is!
Your job?You must come up with a strategy
to move Best Buy Co., Inc.forward in the next 3 years.
The Bottom Line?YOUR TARGET IS
TO ADD 10% TO THEIR OPERATING PROFIT
BY YEAR-END 2016
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Who’s Who in MB107 ProgramMB107 Faculty Coordinator – Professor Caroline D’Abate
MB107 Faculty – Professors Mark Youndt and Cathy Hamilton
MB240/316 Coaching and Leadership Faculty – Professor Tancredi
MB107 Staff – Nancy Walker, Tyler Orfao ’13, Rebecca McCourt ‘14
MB107 Coaches – Enrolled in MB240/316 and Volunteer coaches
Management and Business Faculty – Experts are available Seek them out for specialized questions (marketing, financials, presentations,…)
Reference Librarian – Barbara Norelli, Social Science Librarianhttp://libguides.skidmore.edu/MB107
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What is the Executive Presentation?Outcome: Strategic Plan for Best Buy Strategic recommendation Financial analysis & projections Detailed plan for marketing, operations,
and implementation Briefly describe what other options
you considered and why your chosenstrategic path is the right course of action
Formal and Professional Presentation Your Role: Junior Executives of Best Buy Your Audience: Senior Executives from Best Buy (actually executives
from across the country and various industries) Presentation Format:
-Formal Presentation 20-25 minutes – visual aids/hand-outs encouraged-Question and Answer 10-15 minutes -Senior Exec Evaluation/Consensus 10 minutes (students leave room)-Feedback Session 5-7 minutes (you will receive a team grade)
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Dry Run and EP SpecificsDry Runs are Tues/Wed/Thurs nights (March 19, 20, 21)• Each team has been assigned a one-hour time slot on one of these evenings• Presentation in front of 3-4 student execs and MBD faculty• At the very least, you must have:
• A solid situation analysis• A clear strategic recommendation• A good plan for implementation• Basic financials• Basic PowerPoint
• Solid preparation will yield quality feedback• Use feedback to refine and enhance presentation for the EP day (April 26th)• Bring your iPhone, Flip, DVD recorder, or other device to film the dry run for your
own review (if needed, contact Media Services to borrow a recording device)
Presentation Day – Friday, April 26th at the Courtyard Marriott• Assignment sheet outlines main tasks (Do not ignore it!)• You must update the case to April 26th (Look for 2013 annual report in early April)
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Dry Run & EP Specifics: Executives’ Evaluation
Some key concerns Do you have a good understanding of Best Buy’s situation? Have you identified the key challenges? Will your strategy address those
challenges? Is it implementable? Have you convinced them that it can work? Have you
convinced them that it’s the right course of action?
You will be evaluated on your presentation’s substance, professionalism and effectiveness, and teamwork
Ultimate goal is reliable, consistent, valid, and accurate assessments of your strategic plan and presentation. We give them clear evaluation
criteria (you’ll see the evaluation form beforehand). But remember…
This is real-worldHuman perception is involved
Subjective judgments are being madeImperfection is the rule rather than the exception
Best Buy may be a household name, but it’s got its share of problems.
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Worry List
No growth in revenues, economy-
driven, and holiday
seasonality
Different consumer trends & shopping
behavior in different regions
Turnover at the top
The shrinking
value of our brand name
Supplier relations - Five
suppliers represent 40%
of the merchandise
sold
International unit
stumbling
Consumers are
increasingly discerning
about price, service,
convenience
Cut costs: we have 3 times
the employees as Google, and
only 2% of its mkt cap
Rivals: Amazon,
Newegg.com, Amazon, Walmart,
Radioshack, Mobile phone
service providers
Showrooming trend (same store sales
dropped 4% in last 9 mos
of 2012)
Sources: Case; 2012 Annual Report; Foley, Int’l business times, 1/23/13)
Breakdown of BBY’s sales
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Moving forward…“In the future, we expect to see a reduction in the number of large-format stores, a reduction in square footage for certain of our large-format stores and a continuation of the growth in small-format Best Buy Mobile stores.” (Annual report, 2012)
(
Acquired cloud-like mindSHIFT for $175mill (focusing on small/mid-sized business IT services)
Expanding Geek Squad to eBay and Target stores
By end 2012, had closed all large-format Best Buy branded stores in China, Turkey, UK
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Moving forward…domestic vs internat’lDomestic InternationalIncrease our retail points of presence
Focus on best opportunities for profitable growth
Decrease our overall store square footage
Five Star in China
Increase our flexibility in a multi-channel environment
Small-format Carphone Warehouse and Phone House stores in Europe
Remodel existing key stores in test markets with new “Connected Store” format
Increase the number of small-format Best Buy Mobile stand-alone storesClose 50 or so large-format Best Buys
Explore options for downsizing other branded store
(2012 Annual Report)
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Future Direction Overall
Multi-year cost reductions
US store formal improvements
Growth initiatives
Improved customer experience
(see Annual Report p. 34)
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Analyze Best Buy’s current situation to identify the major issues.
Two “Key Slides” to include in your presentation:
1. The key challenges/opportunities/issues facing Best Buy are…
2. Our strategy addresses these by… (explain how)
Analysis and Strategy Development
Q: Where should I start?
A: Read the case, the annual report, any/all reports and articles linked on the MB107 website, and stay current on any
“new” news or reports on Best Buy
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Analysis and Strategy DevelopmentStart with Situational Analysis
This leads to Strategy Development
External Analysis• General/Macro-environment• Porter’s 5 forces• Industry life cycle• KSFs• Value chain• Competitor analysis
• Strategic group mapping• Market segmentation• Rivals’ profiles Strategic
OptionsInternal Analysis• Mission/vision• SWOT• Core/distinctive competencies• Competitive advantage• Internal value chain
Select Optimal Strategy (5 elements)• Arenas• Vehicles• Differentiators• Staging• Economic logic
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Analysis and Strategy Development: Your strategic recommendation must be comprehensive
Economic Logic• Lowest costs via scale advantages?• Lowest costs via scope and replication advantages?• Premium prices due to unmatchable services?• Premium prices due to proprietary product features?
Arenas • Which product categories?• Which market segments?• Which geographic areas?• Which core technologies?• Which value chain emphasis?
Staging• Speed of expansion:
fast, slow, moderate?• Sequence of initiatives:
methodical or ad hoc?• Action steps
Differentiators• Image?• Customization?• Price?• Styling?• Product Reliability?
Vehicles• Internal Development?• Joint Ventures?• Licensing/Franchising?• Acquisitions?
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Financial Target – Best BuyRefer to the MB107 Financial Template Guide (word doc)• Utilize case data, Best Buy’s 2012 Annual Report, Best Buy’s 2013 Q3
earnings release, upcoming 2013 annual report (early April??)• Recent company events/presentations • Analyst estimates (e.g., Yahoo Finance, Mergent Online, Passport GMID
industry reports, Datamonitor Industry Profiles, First Research reports)• Project Best Buy’s operating income (without the effect of your strategic
recommendation) out through 2016 (this is the projected baseline)• Your strategic recommendation must contribute an additional 10% to Best
Buy’s operating income by year-end 2016
Refer to the Financial Template (excel) – Step 1 tab – Best Buy’s historical financials 2010-2012 (you’ll need to
update to 2013 when available)– Step 2 tab - Calculate baseline financial projections for 2013 -2016
using cost/revenue assumptions (do research to determine assumptions)
– Steps 3-5 tab - Demonstrate the impact of your strategy on the projected financials (show how they earn the extra 10%)
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Financial Target – Best Buy
Fiscal Year Ended Recent Quarter
27-Feb 26-Feb 3-Mar 3-Nov2010 2011 2012 2012
Revenue $49,243 100.0% $49,747 100.0% $50,705 100.0% $10,753 100.0% Domestic - US - - $37,615 74.2% International - - $13,090 25.8%Cost of goods sold $37,201 75.5% $37,206 74.8% $38,132 75.2% $8,167 76.0%Gross profit $12,042 24.5% $12,541 25.2% $12,573 24.8% $2,586 24.0% SG&A expenses $9,622 19.5% $10,029 20.2% $10,242 20.2% $2,538 23.6% Restructuring charges $52 0.1% $138 0.3% $39 0.1% $36 0.3% Goodwill impairment - - $1,207 2.4%Total operating expenses $9,674 19.6% $10,167 20.4% $11,488 22.7% $2,574 23.9%Operating profit $2,368 4.8% $2,374 4.8% $1,085 2.1% $12 0.1%
Walmart: GM=24.86%; OM=5.49%Amazon: GM=24.75%; OM=.89%
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Financial Analysis & Projections
Strategy gets the plane started, the numbers keep you in the air!
SWOT – Key Success Factors of Best Buy vs. competition
Current and Future Standing on Key Financial Variables – Margins, Ratios, inventory turnover, profitability, etc.
Financial Projections:Domestic/International revenues
Revenues by brandRevenues by product category
Cost of sales and Operating costsDon’t be afraid to lose a little money in YR1
Project three years out
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Financial Target/Economic LogicWhat will account for the returns of your strategy?
Some key concerns:Capital
- What is your funding source? How will you pay for your proposed plan?- Operations? Investments? Financing? Cash?
Can you explain your quantitative analysis?- Offer a coherent explanation of your finances- Realism – Is it realistic? Feasible? You need to provide a good story - Back it up – Use external sources to provide evidence
Explain and justify the assumptions that underlie your numbers- Assumptions about costs (cost of goods sold, inventory, supplier relations, distribution, facility costs, employee-related costs)- Assumptions about growth (revenue projections, units sold, sales in different product categories, in different regions, market share, revenue projections)
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Team Dynamics: Your Junior Executive Team Create SYNERGY & ride MOMENTUMApply individual and team GOAL-SETTINGBe ACCOUNTABLE to your teamCOMMUNICATE early, often, and effectively
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Team Dynamics
MB107 Teams Fail When Team Members or Individuals:Don’t develop competencies from the course
Use the analytical tools you’re learning in MB107
Engage in social loafing Instead, hold each other accountable Share the workload
Fail to take the advice of others Instead, recognize escalation of commitment is occurring Realize when it’s time to move on Seek intervention when you need to
Emphasize relationships, rather than the task Instead, look for symptoms of groupthink Mare sure you’re not putting “getting along” ahead of
making good decisions
Don’t forget the 360-degree evaluations!
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Team Dynamics:Your Coaches
Coaches work with your team
• They won’t do the work for youThey are facilitators, advisors, and leadersThey’re here to help you negotiate team relationshipsThey’ll help you stay on targetThey work with you from today through to April 26th
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Team Dynamics:Meetings
Keep a schedule that works for everyone
If your team needs a place to meet for one or two nights during the semester, you must reserve a room.
You cannot assume that campus spaces are available.
Room reservations should be made only when you absolutely need them and through Skidmore’s Scheduling
Office:
http://cmsauthor.skidmore.edu/odsp/scheduling-office.cfm
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Teambuilding & Situation analysis
• Thorough analysis• Identify the key issues…be able to back it up
Alternate strategies
• Come up with 2 alternates• Do they address the issues?
Pick a Strategy & Develop
implementation
• What to do (how, action plan, staging, vehicles)• Why it makes sense?
Dry Runs• Great chance for feedback• Be open to it…use it!
Back to the drawing board
• Major revisions to analysis, diagnosis, recommendation, and implementation plan
Financials • Numbers to support your plan• Revenues, expenses, profits, all the details• How do you reach the target?
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Teambuilding & Situation analysis
• Thorough analysis• Identify the key issues…be able to back it up
Alternate strategies
• Come up with 2 alternates• Do they address the issues?
Pick a Strategy & Develop
implementation
• What to do (how, action plan, staging, vehicles)• Why it makes sense?
Dry Runs• Great chance for feedback• Be open to it…use it!
Back to the drawing board
• Major revisions to analysis, diagnosis, recommendation, and implementation plan
Financials • Numbers to support your plan• Revenues, expenses, profits, all the details• How do you reach the target?
Back it up
Substantiate your assertions
Be able to explain:• how you know what you
know• why you’re suggesting
what you’re suggesting
EVIDENCE!
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The Student Perspective Tyler Orfao ’13 and Rebecca McCourt ‘14
MB107 Student [email protected]
We’re here for you!Come to us with team problems, for team support,
for help with preparing for the dry runs or the EP, etc…
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ResourcesMB107 website
Financial Template (excel and word doc)
Your coaches
Student coordinators
Barbara Norelliand Library Resources
MB107, Coaching, and Leadership Faculty
All MB dept faculty
Tutors: SAS drop in hours and Accounting Lab
SUCCESS
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ResourcesMB107 website
Financial Template (excel and word doc)
Your coaches
Student coordinators
Barbara Norelliand Library Resources
MB107, Coaching, and Leadership Faculty
All MB dept faculty
SUCCESS
Your team is the most critical
resource for success!
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A FEW FINAL NOTESTO BE PROFESSIONAL, YOU MUST BE PREPARED!
– Address technology needs prior to April 26th (multi-media, connection issues, laptop issues, multiple flash drives, etc.)
Prepare for no Internet access at hotel – This means no email, no datastor, no Dropbox/Cloud
Use USB/flash drives Equipment /power failures – The show must go on…can
you present without PowerPoint?– Travel arrangements – getting to/from the Courtyard Marriott– Know the time of your presentation (it’s a tight schedule)– Perform Library Research Assignment – Check your Skidmore e-mail multiple times each day!
Best Buy Companies, Inc.