ToolsCorp Corporation

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Background Information

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 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 Summary
  • A 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 SWOT—Strength, Weakness, Opportunity, Threat—and make doubly sure to fully explain each factor—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 factors—the Strengths and Weaknesses, the attributes of the firm in question—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 goals—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 ideal—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 goals—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 ideal—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 elements—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 plan—the more pros and cons you identify the better. The evaluation mechanisms and measures must be four faceted—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 intend—doing so is crucial to all GP questions— 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 elements—found in the Learning Materials section— 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 decisions—famous principles are “the customer is always right” or “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 other—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 initiative—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 • 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. • 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 • I have discussed these conclusions in the chats, but thought I should write them down for you. • I have taken the devil’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 fact—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. • 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 • Conclusion 1 • ToolsCorp has a very strong retail strategy—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 • ToolsCorp has a very sound marketing strategy—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 products— 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 • Conclusion 3 • 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 world—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. • 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 • Conclusion 4 • 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. • A Reason to Think Twice before you Switch Core • 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 PepsiCo’s core business. UNIT 5 GP LOGICAL CONCLUSIONS • Conclusion 5 • ToolsCorp, like most other manufacturers, is most likely expanding overseas to manufacture because of the cost advantages—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 • Conclusion 6 • 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 sense—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 • 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 margins—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 overseas—that is why so many US manufacturers do that. UNIT 5 GP LOGICAL CONCLUSIONS • Example of a Good Reason to Manufacture in High Cost Areas • Japan’s auto industry came to the US to manufacture cars—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 • A Vital MBA Skill • You too should draw logical conclusions when you research and analyze ToolsCorp’s situation to develop a solution for this GP—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 • Addendum to the Rationale • I just wanted to provide some more rationale for these conclusions. You must realize that ToolsCorp's management has already decided to go global—that in itself is a drastic change. However, the reason is most likely to try to gain competitive advantage—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 • As explained above, managers are generally risk averse—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 • Pay special attention to the marketing and retail strategy soundness that ToolsCorp employs. Certainly, ToolsCorp enjoys the thousands of retail stores’ 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. • • 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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Explanation & Answer

Attached.

Running Head: TOOLSCORP CORPORATION

Toolscorp Corporation
Student’s Name
Institution

1

TOOLSCORP CORPORATION

2
Abstract

Toolscorp Corporation is based in Memphis, Tennessee. It is renowned for the production
of microwaves, lawn furniture, power tools, ranges and lawn mowers. The products are made
locally and then sold in the region through numerous retail and wholesale stores which ensures
that its sales are prominent.

Toolscorp wants to expand its business in the global market. This report is meant for
presentation to the company’ s strategic Officers Steering Committee(SOS-C) and endorses the
creation of a business plan which will outline the strategic ingenuity to establish its position in
the global market. The reports will be inclusive of a detailed SWOT analysis of the company’s
business environment, an outline of the business plan and the analysis of the mission statement
the of the company. The report will also be inclusive of the crucial operation aspects which will
be used in the initial market analysis. Moreover; there will also be strategic plans which will be
on the three-year timeline. The strategic goals will be implemented over a span of one, five and
ten years. The strategic plan will outline the implementation objectives, consequences, and the
evaluation procedures.

SWOT Analysis

TOOLSCORP CORPORATION

3

The SWOT analysis is meant to analyze the company’s present and future environment.
This will include Toolscorp internal and external market environment. (Bagirova,2013) The
environment analysis will cover five aspects for each classification of strength, Weakness,
Opportunities and Threats.
Strengths
The company has an internal business environment which enables it to be successful in
the market. This can be attributed to the variety of products offered which are lawn mowers,
lawn furniture, power tools, ranges and microwaves. The diversification of the product portfolio
creates a balance to the revenue earned by the company because it means that in case of any
reduction in one of the products being offered by the company the other products equipoise it
hence leading to a balance in the company’s revenue(Johson,2015). This makes it almost
impossible for Toolscorp to undergo a sharp decrease in its total income.

Toolscorp has a manufacturing plant which is based in Memphis, Tennessee. This
location is crucial because the city is the biggest along river Mississippi. Memphis is a big
manufacturing town which has state of the art infrastructure and well-connected transport
system. Moreover, Memphis international Airport is located in Bluff city. The Airport is ranked
the second busiest cargo airport in the world. There is also a very good railway network, wide
roads and transport companies like fortune500. The good infrastructure ensures that Toolscorp
can access its North American market easily. The infrastructure will also be crucial when the
Toolscorp expands its market to the overseas market (Harnish,2014).

TOOLSCORP CORPORATION

4

The research and Development unit is another internal factor which ensures that the
company is strengthened. This department enables the company to endeavor to progress the
competitiveness of the products it offers also expand the range of its products by undertaking
extensive market research he research process of the company’s research and development unit
includes an industry analysis as well as market survey with the intention being to manufacture
energy conserving products and of high quality . The research and Development team enables
the company to invent new products and also rationalize the business procedures to increase
efficiency(Premo,2010).

Toolscorp boasts of an efficient working environment which increases job satisfaction.
This can be attributed to a level organization paradigm coupled with open communication and
proper remuneration. These aspects ensure that the company can be able to attract and retain top
staff in the industry. The company during its expansion phase is meant to enhance the job
satisfaction of all the global branches.

The Toolscorp brand is very prominent in the North American market because it has an
efficient market mix. This has continually enabled the customers to distinguish and value the
advantages that can be gotten wit...


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