Creative Marketing Solutions, a marketing firm based in California, plans to establish subsidiaries in Washington, Oregon, and Arizona at an estimated cost that ranges from $400 -$420 million in 2011. It intends to execute the right plans as well asthe capability to promote the double digit growth in the Pacific Northwest. In 2011, the market share in California should have been completely elaborate as compared to year 2010. Second, come up with a cash flow with potential annual synergies of $350 million. The synergies phase in over four years that include 2011-35%, 2012-70%, 2013-90% and fully realize in 2014. Third, invest adequately, and ensure that the return on capital employed at the end of the year is 27% against the cost of capital of 16%. This will translate to a benefit of over $150 million from the returns in the specific accounting period.
Revenues and Costs
The firm plans to increase prices of products to cover the high escalating prices of raw materials. The increase in prices will increase sales by 20% in 2011. Revenues will increase as compared to the previous sales revenue. Also implement new, and specificstrategies of minimizing costs by 20%. This accomplished through hedging to prevent against exposures of currency exchange. The firm will consider changing or outsourcing new suppliers so as to reduce the average unit costs. The costs estimated to reduce to $10 per product or service against the current cost of $15 per product or service before the year end. Finally, increasein the number of services and products produced per period. The number of products and services sold stands at $1,000 average per client, but the firm intends to increase sales to up to $2,000 units by 2012.
The firm targets to come up with differentiated services and products with an aim of increasing customer experience as well aspromoting affordability by the end of the of 2011. This will translate to a profit of $80 million from the increased sales. Second, increase, and implementa strong production capacity that enables the mass services and products. Finally, initiatean appropriateprice mix that will lead to 8% increase in the volume growth by the end of the year. The price mix will lead to high quality in the products of the firm, and this will be instrumental in ensuring high customer retention rate 2012.
In order for the firm to compete effectively, they will establish branches and outlets of selling services and goods. The aim of this is to increase sales, so as to get an edge over the competitors by the year end. Second, the firm will innovate and come up with new selling and promotional strategies that the competitors have not yet thought of (Sinha, 2006). The strategies aimed at increasing the sales in the market and ensuring the competitors services and products limitedby the year end. Third, acquire a new type of technology before the year end, so as to produce high quality services and goods as comparred to the competitors. Finally, the firm intends to invent a new business strategy, namely low cost strategy. The strategy will aim at producing services and goods cheap in comparison to the competitors hence making customers prefer the firm’s services and goods rather than the competitors’ ones.
Customer Value Perspective:
Customer Retention or Turnover
The firm targets to achieve high retention rate of customers by the end of the 3rd of the accounting period as compared to the second quarter of 2011. This accomplishment entails addressing customer complaints and offering warranties and guarantees. Also the firm will endeavor to offer reasonable lead time to customers and implement new policies to effect to that (Kaplan, 2010).
The firm targets to increase the customers’ satisfaction from the current level to an estimated higher level by the end of the year through offering personal services, producing high quality goods as well asoffering personal services.
The firm targets to increase the value given to the customer as compared to other previous periods. The customer value will be added to customers by offering him or her reasonable credit terms as well asafter sales services. This will provide the additional benefits to customers.