Four-year Strategic Business Plan Sample

Executive Summary

This paper presents a report on a strategic business plan of a company at the beginning of a four-year planning and at the end of the four years. It is divided into three main parts; the first part presents a general overview of the company. In this section, the company’s management structure is given and there is a diagrammatic representation of the structure of the company’s administration.

The second part provides a detailed analysis of the industry and the company’s situation before the commencement of the four years of operation. The initial stage is referred to as round 0 as no simulation has occurred yet. During this juncture, all ten enterprises in the industry are similar in all aspects and no company is more advantaged than the other. They thus face the same internal and external issues. It is also in this section that the company’s mission, general strategy, and specific business objectives for the next four years are determined.

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The third and final section of the document describes the business situation after the four years of operation. It evaluates successes and failures that the company has encountered over the last four years since the time of setting its strategy and objectives. The section starts by evaluating factors that have led to failures and successes of the industry and the focus moves from the industry to the company. It is also in this section that the company’s analysis of successes and failures is done. The general overview of the company after four years shows that it has not performed well in most aspects, which is why change is required. Thus, future problems and issues are determined, while future objectives are set to help the company recover from its poor performance.

Organizational Structure

An organization’s structure outlines how activities are coordinated within the organization. Different operations are put under the control of different departments and management to ensure that they are carried out effectively and efficiently (Csaszar 623). However, all these units are joined by the leading management that dictates the general activities of the enterprise. In this paper, the organization has been structured into five main departments according to the primary operations of the company.

The structure above has been chosen for the company as it encompasses all activities carried out by the firm. The departments are also relevant as they are direct determinants of the company’s success. If one of these departments lacks adequate management and representation, then the firm is more likely not to succeed in its activities. Direct supervision of all departments by a managing director will help the company be more coordinated and avoid unnecessary confusion (Csaszar 627). All departments know that they are supposed to report to the managing director on their progress and, thus, at any moment they are aware of where to seek help or to whom to report. Lastly, directors are crucial as they develop strategic goals in line with the shareholders’ will and thus remove the conflict of interest that can occur between the management and shareholders.

The board of directors is the most senior management body in the structure. It plays an important role in representing shareholders in the management to ensure that their resources are not misused. The directors also make strategic decisions in the company by setting long-term goals (Csaszar 624). Lastly, they determine the company’s values and delegate duties to the managing director who runs the business. The second-ranked official in the structure is the managing director. The managing director’s primary role is to formulate and implement all strategic decisions made by the board of directors and he represents the board in the executive management. He also coordinates all departments to ensure that the firm’s operation runs smoothly without interferences. Lastly, he is the face of the company to the outside world as he presents it at all levels.

The finance manager oversees all financing and accounting activities in the enterprise. He is in charge of the company’s budgeting, which is always in line with the long-term strategy. The finance manager also determines the costs and expenses that the company incurs and calculates the risk involved. He ensures that financial statements are prepared (Csaszar 626). The production manager, in turn, supervises the activities of the company and its production operations. He also assesses requirements relating to resources within the production department and helps in their equal distribution. Finally, he ensures that quality control measures are observed in the company.

The human resource manager is responsible for the availability of labor within the enterprise. She hires the best employees that each department needs to meet the quality requirements. She also promotes and praises those who work well in the organization. Other roles of this manager include retrenching those who do not meet the organizational standard. The research and development manager works hand in hand with the production department. Her role includes providing new technology to the company through research and development. She also ensures that the proper utilization of technology is present within the organization and determines the future technological needs of the company. Lastly, the sale and marketing manager ensures that all manufactured products are sold (Csaszar 630). The manager thus organizes product promotion and advertisement to raise awareness among customers. He also ensures the proper distribution of goods produced and, finally, he manages all sales made by the firm.

Before the Start of the Simulation

Situation Analysis: Industry

The Competitive Situation of the Market Place

The market at the beginning of the round is quite stable as all industry players have a similar percentage of the market share. According to market analysts in different sectors, companies feel secure in the industry where all players have some market share. In case few enterprises dominate the market, there is a higher chance of elimination from the industry (Grant 23). Besides, an equal distribution of market shares ensures that other businesses do not dictate their policies to others. All the enterprises in this industry have a market share of 10% each and, thus, they are more stable and more secure. The market situation means that every business has a particular degree of command in the market. Hence, no company is likely to experience high losses.

Companies’ ‘Competitive Advantage' in the Marketplace

The main competitive advantage of enterprises in the industry is the low production cost. Every business in the industry has a 30.37% of income after deduction of expenses. It means that the firms in the industry only incur 69.63% in terms of the cost of goods produced and sold, as well as other administrative expenses. Market analysts state that when companies in the industry incur lower expenses and gain more profits from their activities, then they automatically gain a competitive advantage (Grant 37). They can use the extra money for increasing their economies of scale, hence increasing their profit and solidifying their position in the market. The companies in this industry also incur low costs in terms of technology at the level of only $280 per technology. Hence, they have another competitive advantage. Society is nowadays looking for a better technological product, which is why those companies that provide it are already advantaged.

Situation Analysis: Company

Three Significant Ratios

The shareholding profit ratio is one of the most important ratios in the company as it helps determine returns that shareholders get based on their investments. The ratio is calculated by dividing the share price by the earning per share issued by the management in a given year (Hesterly and Barney 23). At the beginning of the company’s operation, the ratio stood at 22.1%, thus meaning that the company was performing well regarding rewarding of its shareholders. Below is the formula used for computing the ratio.

P/E ratio= (share price)/ (earning per share) =106/4.79 = 22.1

Return on capital employed (ROCE) is also a critical ratio as it helps determine the efficiency of the company’s operation with account for the capital. The basic logic of the company’s analysis states that when the company applies a lot of capital in the investment, then it should be reflected in the returns it gets (Hesterly and Barney 23). The ROCE of the company at the beginning stands at 20.08, which means that capital employed has over 20 times returns. The following formula has been used for calculating the ratio.

ROCE = Earnings before Interest and Tax (EBIT) / Capital Employed

The last ratio of concern is the earnings per share ratio. The ratio determines the value that shareholders get as a result of profit earned (Hesterly and Barney 23). The higher the profit gained, the more the income that shareholders get. The ratio is calculated by dividing earned net profit by shareholding equity. The company had earnings of $4.79 and, thus, shareholders had good earnings from their investment.

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Company’s SWOT Analysis

Strengths

The company has several strengths that provide it with an advantage in the marketplace as compared to other companies. Strengths are factors found in the micro-environment of an enterprise that make it more efficient in operations (Hesterly and Barney 23). In the case of this company, these factors include the ability of the company to maintain higher earnings with fewer expenses. It means that the company has extra money for growth and development in the market. The ability to maintain low costs proves to be a difficult task for many companies and, thus, the company should capitalize on this strength. The company also maintains good product promotion efforts with a budget of $29.18 million, which is also its strength. Product promotion is the main pathway to market growth and at this rate, the company can have more sales than other companies in the industry.

Weaknesses

The company also has few weaknesses that put it at risk. Weaknesses are internal factors that disadvantage the organization in its ability to produce and operate efficiently (Hesterly and Barney 23). One of these shortcomings identified in the company includes high administration and future costs. Despite the fact that the total cost level of the company is regarded to be low, it is worth noting that some expenses are required to be low at all times. These costs include administration costs and future costs, but in the company they amount to $98.8 million and $59.4 million respectively, hence being too high. The company also does not have a research department, which is its future is doomed. The company can only have a real micro-environment by establishing a research department.

Opportunities

There are also untapped opportunities that the company can venture into to enhance the profitability margin. Opportunities are found in the macro-environment and only those businesses that are quick to spot them can utilize them appropriately (Hesterly and Barney 23). One opportunity that the company has in round 0 is the ability to advance in innovation and technology. Current enterprises in the industry do not have research and development departments and, thus, the company can benefit if it takes the lead in this respect. The company also has another opportunity of using outsourcing services in the industry for cheaper production. All enterprises in the industry produce most of their products on their own, which is why outsourcing can be an excellent opportunity for the company.

Threats

The company also encounters several threats within the sector, which can hinder its future. Threats are those factors that pose the danger to the operations of the firm from the external environment (Hesterly and Barney 23). One such threats includes a competition that the company faces; there are nine other businesses in the industry, which are of the same market value. Thus, in the future they may take away the market share. They all have a strong macro-environment effect and, thus, there is no chance of backsliding in the market. Another threat comes from transportation and traffic changes. The carriage at round 0 stands at approximately $65 million and there is the fear of a reduction in future profit if these expenses continue increasing. Tariffs are determined by the government, while transportation cost varies with account for oil prices; hence, the strategy needs to be developed in order to avoid potential repercussions.

Issues and Problems to Be Faced

The company must be ready to face different issues in its operations. According to Hollensen (34), issues in management are those items that cause arguments about necessary steps to be taken. One issue that the company must face in the future concerns research and development. The company has no such department and, thus, for future growth, it must handle this issue. Apart from research, the company has been also doing much of its production, which is more costly than outsourcing. Since the company currently produces in America, its production cost is $119.1 per unit, while in the case of outsourcing the cost would be much lower at $111.3 per unit. The management must make a decision on this issue in order to determine the way forward.

There are also several problems in the management that require managerial skills to solve them efficiently. A problem in an enterprise is a rising difficulty, which hinders operations, but it is eliminated by finding a solution (Hollensen 7). The company plans to maintain a stable environment and, thus, it must face the problem of cash liquidity. Its current liabilities are minuscule at only approximately $27.5 million, but if it plans to maintain the same micro-environment, it will have to solve the liquidity problem. Another problem concerns transportation. Currently, the cost of shipping and tariffs stands at $65 million; however, if production is increased, this price may rise, hence affecting the company’s operations. It is a future problem that needs a solution.

Strategic Plan

Mission Statement

The company has emerged in response to the technology gap that existed in the market; it is thus aimed at producing quality technological electronic products like minicomputers and Android phones to be sold at developed and emerging markets of the Americas, Europe, and Asia where better technical products are needed. The company aims to provide unique products that serve the targeted market needs. The electronics provided should be of a pocket-size for easy portability by users who will have quick access to the internet at all locations. New products should also offer programs that can help users remain updated at all times with modern technology.

Overall Strategy of the Company

The company will employ a stable general strategy in its operation to ensure that it gains the needed competitive advantage. A stable management plan is a type of policy, under which the management avoids confrontation with other companies and concentrates on having a better internal and external environment (Hollensen 65). Businesses that lack a high market share prefer this strategy as it ensures that they gradually gain the market share while creating a strong, loyal customer base.

The company under consideration also has the above-stated features and, thus, it will operate in the right way if it uses a stable general strategy. This company has a small market share, which is why it will function appropriately if it seeks stability in the market. The current market share of the company stands at 10% based on round 0 data. It is the view of the board of directors that since there is no market leader in the industry, then this company requires stability in all areas to become such a leader in the future. The company will, therefore, resort to moderation in all departments, which will include minimizing current costs and advancing in all aspects.

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Long-Term Objectives (4 Years) and Proposed Strategies

Production Objectives

There are several objectives that have to be adopted in the production department for the next four years. First, the company will continuously reduce its production capacity during the next four years to decrease the direct production cost. The company will also continue investing in its plant in the US market for the next four years. It will thus increase its current investment of 12 plants to a much bigger number of plants. Lastly, the company will increase the contract manufacturing in the overseas market by producing in Asia at 50% by the fourth year. Production in Asia is necessary as it will reduce the distribution cost incurred in transporting products from the US market.

The first strategy that the company can use to attain its objective aimed at reducing expensive production services is by outsourcing too much cheaper sources. The current direct production cost of the company is above the outsourcing cost by approximately $9 per unit, which can be converted into profit if outsourcing is chosen. Outsourcing to Asia will be the next strategy that has to be applied in contract manufacturing. By outsourcing services to the Asian market, it will lower the transportation cost incurred by transporting goods from the American market. The inventory in the Asian market will also be maintained at adequate levels once production starts there.

Research and Development Objectives

The objective of the company is to create an effective research and development department that will enhance the production of the most technological product in the market for gaining a competitive advantage. In terms of the product range, the firm will be aimed at producing a range of unique items, especially those that are preferred by the younger generation. Features of such products should be modern and should help in enabling easy access to the internet and other modern technologies. The technology that the company seeks has to be inbuilt so that it can remain unique and accessible to the firm only. This way, the firm will always have an upper hand in the technological world.

The above objectives shall be attained by investing heavily in the research and development department once the operation commences. The company plans to spend $685.21 million on research and development over the next year. These expenses should be funded by unplanned loans, which will help boost the business’s ability to support the research department. The in-house development of technology will be attained by the human resource manager hiring qualified staff to help in developing the technology. With adequate financing and expertise, the management will attain a higher standard of research and development.

Marketing Objectives

The primary company’s goal set for the marketing department is to maintain the current market share without the company incurring the cost of maintenance. With a general strategy of gaining stability in the market, the company thus plans to reduce the overhead cost that results from product promotion with an aim of increasing the availability of cash for other expenses. With the current marketing budget of approximately $29 million, the market knows about the company’s presence; hence, there is no need for extensive future promotion and advertisement.

The above aim will complement the research and development strategy. The company is aimed at producing unique products in the market and, thus, it will gain future shares by having better products than other companies. Market specialists say that innovation is the best way to sell an enterprise because the society looks at what is different in the market rather than what is the most advertised or promoted (Hitt et al. 45). Quality is another best way to sell the product and, thus, the company intends to use this strategy to gain a bigger market share in the future. Within the next four years, the firm will manage to produce quality unique products in the market. Additionally, it will have more cash at disposal during that time, which is why it will be best placed to conduct an intensive product promotion of its quality products.

Finance Objectives

The company requires a lot of finances to ensure that it launches active research and development activities to take advantage of the current market opportunities. Thus, the primary objective of the finance department is to source out cash to help fund development needs within the company. In terms of dividends, it will maintain a good relationship with the shareholders, thus maintaining a higher dividend rate. The company will also maintain high liquidity to ensure that it meets current needs without any difficulties.

To achieve these objectives, the company must use a particular strategy. First, the company will need to acquire a lot of unplanned loans so that it can meet its current needs like research and development expenditures. These loans are important for the company at this point because it is in line with the general company strategy; thus, taking loans will be a part of a brilliant financing plan. The unplanned loans will also help the company to boost its liquidity as per the objective of high liquidity tolerance (Hitt et al. 34). The company is aimed at maintaining a dividend value of the half of the amount earned in the net profit after tax.

After Completion of YEAR 4 of the Simulation

Situation Analysis: Industry

Principal Competitors' Performances

During the initial round, the company had nine leading competitors in the global market. These companies have remained in the market since then and, thus, they are still the company's primary competitors. Most of these companies have succeeded as compared to the business under consideration mainly because of decisions made during the initial round. Organizations are more or less successful in the same market mostly because of strategic decisions that they take at the beginning (Sarasvathy 419). Some of these companies have not had a single incidence of losses; hence, they are more successful in the industry.

The first reason that has allowed several businesses in the industry to succeed is the decision they took regarding the capital structure. All successful enterprises in the industry have not acquired unplanned loans over the four years of operations; they have relied on the capital obtained from shareholders and long-term loans. Thus, most of them have been able to maintain an active microenvironment. In turn, the analyzed company and three others in the industry have taken unplanned loans, which have eventually led to unexpected losses for the enterprise. The capital structure decision is therefore a core determinant of success in the industry.

The two leading companies in the industry in terms of profit gained during the four years also have an intensive marketing promotion. They have maintained this campaign over the last three years, which can explain why they have acquired much profit. By the fourth year, the reviewed company had no budget for the marketing promotion, but these two leading enterprises had a budget of $58.4 million and $39.5 million respectively. In turn, all those companies that spend nothing like the analyzed business or just a little on the product promotion are the ones that face most losses. High spending of these two companies is an indication that marketing promotion is a factor relating to success in this industry, which is why companies need to promote themselves to succeed.

Lastly, the nature of production has also contributed to the failures and successes of some enterprises in the industry. Production is a key determinant of the company's future and, thus, any strategic decision made concerning this issue can profoundly influence future profitability and success of a company (Sarasvathy 429). In the industry, those companies that have retained their production and even increased it to 100% capacity are the ones that dominate in the market. In turn, other companies like the analyzed business that had opted for outsourcing have lost their market share after the four years of operations.

Situation Analysis: Company

Marketing

The market report of the company indicates that its marketing department has not been performing well as compared to others in the industry. The market share determines the company's performance in the industry and when the market share increases, then the company is presumed to be performing well in the industry (Wheelen and Hunger 45). However, if the share reduces, the company is assumed to be performing poorly in the industry.

Based on the above assumption, the company can be said to be losing in the market as it has lost a good percentage of its share. At round 0, the company had a market share of 10%; however, after four years it has reduced that share to only 0.1%. It means that the company has lost 99% of its share in the industry and, thus, it is true that the company has been performing poorly in the market.

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Production

The company’s production is also lower as compared to the competitors in the industry. Four years ago, all these companies had an equal contribution to the market; they had a 10% market share. At that time, they all had similar performance with demand and supply of 4.949 million units. However, that production has changed and the company has reduced its output by more than half to around 2.86 million units in the fourth year. Despite the enormous drop in production, other companies within the industry have maintained their production levels and have continued influencing the market.

Finance

The company’s finance department has been performing poorly in comparison to the main competitors in the industry. For the past four years, the company has been continuously experiencing losses and it is a strong indicator that the company has not had a healthy financial performance. The current trend of losses in the enterprise can be attributed to the poor initial decision concerning the capital structure and the company's priorities. The company opted for a capital structure that was more funded by creditors than the shareholders. According to Wheelen and Hunger (75), such capital structure is always risky to the operation of an enterprise as it risks the shareholders’ investments. The weak capital structure has thus played a significant role in destabilizing the financial performance of the company. Apart from the capital structure, the company has also failed by using unplanned loans, which has made the company face a liquidity crisis. Compared to other well-performing businesses in the industry, the company's decision to undertake these two strategies seem like the primary cause of the current poor financial performance.

Other indicators of the poor performance of the company’s financial sector include market capitalization of the company, which stands at only penny stock. Other better-performing companies have a market capitalization of above $19 million. Thus, comparing them with the analyzed business, it is evident that the latter has experienced some financial constraints. Cumulative returns of total shares represent another indicator of financial performance.

Changes in Financial Ratios

One of the ratios identified in the previous analysis is the profit-equity ratio. The ratio is attained by dividing the company's share price by annual earnings per share (Porter 74). For this ratio to be of importance to the business, a company is required to have a profit margin and maintain a healthy share price. As per the previous analysis, the company had a P/E ratio of 22.1, meaning that the company was still profitable and the shareholders were getting some earnings. However, in four years the company could not compute the P/E ratio. Its share price was in pennies and earnings per share was $-34.35. The company is thus performing poorly as this ratio is not computable.

The return on capital employed (ROCE) was another ratio that was evaluated in the previous analysis at year 0. It is calculated by dividing the company’s earnings before interest and tax (EBIT) by the capital employed (Porter 78). At the beginning of the four-year period, the company’s ROCE ratio was at 20.08, meaning that the firm had good returns as compared to the capital that the shareholders had invested. However, this ratio has changed negatively to -12.02 in year four. The change represents the poor performance of the company as the company has been suffering from losses. The company cannot get any returns, meaning that it is now making losses and returns are in negative figures.

The last ratio evaluated is the earning per share ratio. The rate determines the average returns that each share receives from the company by dividing the net profit by the total shareholding equity (Porter 107). At the beginning of round 0, this ratio stood at $4.79. According to the ratio at that round, each share was receiving $4.79 from the net profit made at that period. However, in the fourth round, the company has a ratio of $-35.34. The company has been experiencing a lot of losses and, thus, instead of shareholders receiving some earnings, they have suffered from losses.

SWOT Analysis

Strengths

Despite the fact that the company has been making some losses, it has maintained low costs and expenses, which is a significant advantage for the company’s present and future operations. The current cost of production for the company stands at $ 379.4 million, which is the lowest level as compared to other businesses in the industry. The company can thus use this strength for increasing its market influence and market share (Helms and Nixon 220). The company also has a high number of production plants located in the United States. It has a total number of 17 plants, which makes it ranked as number four in the industry by the number of plants. Hence, it can use these strengths to gain a more pronounced industrial influence. The facilities mean that the company has immersive investments under-utilized. Lastly, the company also enjoys a good rate of account receivables and it is less likely to face liquidity problems if it sticks to the same trend. Out of the ten companies in the industry, it has the lowest account receivable balance at $2,046,000.

Weaknesses

The company's performance is not good at the moment, which can be attributed to several weaknesses that the firm has been facing. The company has weak liquidity. According to Helms and Nixon, poor liquidity makes it difficult to handle most operations (Helms and Nixon 226). Current liabilities of the company stand at approximately $7.4 billion; however, current assets are smaller at the level of only $3.09 billion. It means that the firm cannot meet its current cash requirements, hence making its operations difficult. The company also has a zero capacity utilization of its production plants. Despite investing in 17 plants in the United States, these plants are not in use as the company outsources production. The company thus should reconsider its priorities based on this weakness. Moreover, the company has quite expensive technology, which is not effective. According to the available data, each technology of the company was produced at $1,620, which is the highest cost in the industry. Finally, the company has stopped funding research and development, which is also a weakness in terms of future needs.

Opportunities

Despite the fact that the company has difficulties with making a profit, there is a little chance that it can gain some advantages. The cost of products sold in the European market provides the company with the best position to expand in the market. When a company enjoys lower pricing than other players in the industry, it creates an opportunity to develop its services (Helms and Nixon 235). In Europe, the total serving cost is $8.3, which is the lowest level in the industry. The company can thus use this flat pricing in the industry to gain a larger market share. The company has not invested in the research and development during the last year and, thus, some investment in this area can also prove to be profitable to the company. The initial investment in this sector has not added value to the enterprise, but at this point when most companies are relaxed in the area, the company can use it as an opportunity. The company should also consider moving production to Europe as it has a good market prospect in the region.

Threats

Threats that the company faces include stiff competition in the market. Stiff competition is unwelcomed by most firms as it forces small companies out of the market if they fail to put up with the pressure (Helms and Nixon 221). The company has been facing the same situation as it has been threatened by its competitors. Four years ago, the company had a share market of 10%. However, it has been reduced to 0.1%. It is a clear indication of the competitive threats that the company faces and, thus, it needs to handle them appropriately. The company also faces a threat from the market promotion launched in the market. It has a zero market development budget; therefore, if other companies have intensive budgeting, it is more likely to lose their market share further. Finally, the company faces a threat of increases in production cost as it depends on outsourcing services. Most businesses in the industry opt for outsourcing services. Thus, there is a threat that these services may become more expensive if the demand for services increases.

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Significant Issues and Problems

One issue that the company must face concerns the nature of financing that the firm must choose. Currently, most financing is done using unplanned short-term loans, which seems to be working contrary to companies' expectations. The management thus needs to make a decision on the nature of financing that they would like to use in the future. Another issue is the preferred production method. Currently, the company is operating at 0% capacity in production, but those enterprises that have opted for the direct production are producing at a much cheaper cost. Thus, the company needs to be decided if they want to outsource, produce directly, or combine both methods.

The company also expects to have a problem when dealing with the shareholders of the enterprise. The shareholders are leading investors in the company and, thus, they can withdraw investments if they get no income (Hahn and Powers 63). Therefore, in the future, the company should expect more shareholders to threaten with a drop in their investment into the firm. Another problem the enterprise needs to address is the problem of losing the market share. There has been a continuous decline in the market share for the last four years and there is no guarantee that this trend will stop. The management should expect to face a problem of the reduced market share in the future.

Projected Strategic Plan

Production Objective

The company is aimed at producing its products on its facilities, but still maintaining a significant amount of outsourcing services. The company has been enjoying excellent outsourcing services for the last four years that have been quite cheap for the enterprise. However, those businesses that have retained direct production enjoy more economical production now. The strategy to be used under this objective is to ensure that the human resource manager employs the qualified personnel that will operate the company's plants and raises the production capacity (Steiner 54). Direct production by the company should be performed in plants located in the United States, while the Asian market shall retain the outsourcing services.

Research and Development Objective

The aim of the company is to be an essential technological powerhouse in the next three years of operation. Currently, most enterprises in the market utilize little resources for research and development and, thus, investment in these areas needs to be increased. The company will continually invest in research and development for the next three years to ensure that it becomes a market leader in technology. The enterprise plans to use long-term loans for the financing of research and development. Previous attempts to advance in this area have failed as the company used short-term financing to fund long-term investments. This time, long-term funding should be used; hence, there is a higher chance of succeeding.

Marketing Objective

The company is aimed at increasing its presence in the European market, which appears to be promising for the enterprise. As compared to Asian and American markets, the company enjoys much lower cost pricing in Europe, which is why increasing its market share in this region should remain a number one priority. The strategy for improving the market share consists of direct advertising through traditional media like televisions and modern internet advertising platforms (Steiner 67). The company will also establish a production center in the region, initially by outsourcing, so that to reduce distribution time and cost.

Finance Objective

For the next four years, the company is aimed at increasing its liquidity and maintaining a good current ratio that will support its operation. The current structure of business financing is not beneficial as it places the company in an insolvent cash position, which negatively affects operations. Thus, there is a need to ensure that during the next three years the company changes its capital structure. For the above to be attained, the company has to source out funds from other sources rather than using unplanned loans. The primary strategy is to acquire long-term loans, which will assist the business by paying off its long-term expenses (Hahn and Powers 63). Once long-term expenses are taken care of, the company can use the extra cash for repaying the unplanned loan to stabilize its operations.

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