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W&H 4 26

Strategic Audit
by

michael Hultin

on 4 May 2010

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Transcript of W&H 4 26

Management History Mission Gallery 30 years ago, Don Wallace, a custom furniture maker, and Tom Hinz, an experienced glass blower, collaborated on their first bar for their friends, Arcata's legendary YoungBergs. “It's simple…We are America's greatest bar builders. We build the best bars in the world. That's who we are. That's what we do."











Owner/CEO Tom Tellner

Chief Financial Officer-Robert DePierro

General Manager-Don Ehnebuske

i.Sales/Marketing-Mark Coates

ii.Manufacturing
1.Design
2.Rough Cutting
3.Assembly
4.Finishing
5.Distribution
Objectives To ensure high standard of quality.
To design and build efficiently.
To safely ship and transport products.
To maintain quick and efficient installation.
To maintain a comfortable and friendly culture.
Steamboat Springs Bar Canadaigua, NY USA Their layout selection includes 14 styles, ranging from the American Sports Bar to the English Pub.

They even built the Cheers restaurant bars in Boston. Specalizing in custom hand-made bars
External Enviroment Internal Enviroment 8' Mohagany Portable Bar RECOMMENDED STRATEGY
Growth Strategy
Johnny Foley's, SF, Ca El Toro Brewery, Morgan Hill, Ca Blue Point, Cleavland, OH. CORPORATE CULTURE

Close relationships
Family oriented- to help encourage stable family environments
Create a balance between work ethics and enjoyable environment (S)
Developing cross training to increase employee knowledge base (S)
OPERATIONS AND LOGISTICS

Low production efficiency (W)
Automated competitors = 85 cabinets per day
Custom handmade = 11 cabinets per day (on a good day)
Implementation Expand marketing strategies and advertisements (Programs A-C.)

Activities
Online Banner ads/ Magazine ads (Program A)
a.Yacht magazine
b.Home Design
c.Interior Design
d.Wine Spectator
e.Food & Wine Research new developments (Program B.)
a.Hotels
b.Casinos
c.New Construction
d.High end houses (Planning Departments)
e.Country Clubs
f.Gentlemen’s Clubs
g.Breweries
h.Wineries Re-engage in tradeshow activities (Program C.)

a.Hire new tradeshow/marketing manager to travel and implement.

b.Develop easy to transport display (e.g. portable bar).

c.Focus but don’t limit to West coast shows to reduce cost.
d.Create extensive display catalog of previous work.
Wallace & Hinz Sweet River Saloon, Eureka, Ca CORPORATE RESOURCES
MARKETING

1.Entirely online (W)
2.Trade shows- eliminated (W)
3.Exceptional website construction (S)


FINANCE

RATIOS
Wallace and Hinz 2009 Financial Ratios2009

Current Ratio -.086
Gross Profit Margin 37.7%
Debt to Asset Ratio 95.02%
ROA 8.92% HUMAN RESOURCES MANAGEMENT (HM)

Transform old employee habits (techniques/styles) toward faster more productive techniques/styles (S)

Hiring new fresh employees with innovative ideas
a.Help communicate to older employees who are stuck in their ways to transfer new knowledge (W)
INFORMATION TECHNOLOGY (IT)

Trying to integrate more modern technological design and implementation techniques. (S)
a.Eliminated trial and error process
b. Promotes efficiency
c.Exact manufacturing

Bringing in new machinery to implement faster production and efficiency.
Growth Strategy—Through Marketing (Functional-level Strategy)

Expand marketing strategies and advertisements
Online Banner ads
Magazine ads
Research new developments
Re-engage in tradeshow activities



Continue and broaden accessory line to gain brand awareness and offer customers a complete package. Production line process (Program D.)
Activities

Increase advancements in new technologies, which will reduce operational costs (time value and wages).

CNC machine
Utilize new technologies and machines to make production more efficient.
Continue and broaden accessory line to gain brand awareness and offer customers a complete package. (Program E.)

Activities
Custom brand labeled stools/chairs
Glasses: Pint/wine
Engage in vertical integration by cutting out transportation companies and focus on implementing the businesses own transportation. (Program F.)

Activities
Reduce the costs of transportation fees.
Continue or begin building your crates for transportation.
Increase in ability to use as a tax write off.
Create new price structure for transportation fees.
WHO WILL IMPLEMENT THE PROGRAMS

Program A., Program B. and Program C.

1.Hire a new marketing/advertising manager to oversee and implement the three new programs.

2.Current employment can design and build portable bar for tradeshows.
WHO WILL IMPLEMENT THE PROGRAM

Program E.
Find a manufacturing company who can create complimentary accessories.
Current employees can design and build the chairs/stools for clients. ONLINE/BANNER-ADS:

CPM-Cost per mili-impressions-charges every time you load or re-load a web page or an advertisement (advertisements popup).

Average Cost: $0.01-$0.80 per mili-impression (1,000) when not targeted.
Average Cost on search engines: $10.00-$35.00 per mili-impression (1,000) for specifics targets.

CPC – cost per click – (PPC-pay per click) advertisers pay each time they click on their advertisement and are redirected onto their main website.
Average Cost: $1.00-$2.00 per click.
NON-ONLINE ADVERTISEMENT AVERAGE COSTS:

Newspapers – $1,300 per week for 2” x 2” ad

Magazines - $1,200 to $5,000 per month or per issue (depends on ad size and demographics)

Outdoor (billboard) - $3,000 to do artwork and install media on billboard; rates depend on impress level, ranges from $5,000 to $500,000 (the higher the quality of the artwork and the larger the demographic group, the higher the price); minimum contract is 16 weeks.

*Note: Prices reflected are negotiated prices for a 12-week campaign
PROGRAM B.: Engage in long-term contracts with companies:

Average cost: personal travel and phone expenses.
$100.00-$1000.00
This can be one of the least expensive programs to implement. Average Tradeshow activities and costs:

On average, project a budget total of $10,000 per trade show exhibit. This should cover all expenses of an average booth, with the following cost breakdown:


Space: 24%
Booth expenses: 33%
Show services: 22%
Transportation: 13%
Advertising, promotional and special activities: 4%
Personnel (including travel, hotel and expenses): 4%
PROGRAM D. : New Technologies/Machines:

CNC MACHINES: RANGE FROM $20,000-$90,000.
www.woodweb.com
www.k2cnc.com
www.wwthayer.com
http://www.cncmasters.com/
PROGRAM E. : Expand business line with accessories for Bars:

CHAIRS/STOOLS- Utilize excess wood materials and build complementary bar stools/chairs.

GLASSES: WINE AND PINT:
W/ETCHED LOGO: 24 Pint/wine glasses: $200-$300.
W/PRINTED LOGO: 24 Pint/wine glasses: $150-$250.
PROGRAM F. : Internal Transportation:

Semi-truck
New - $100,000 +

Insurance
Average: $600-800 per year

Depending on size, weight, brand, model, make and driver.
Gasoline
Current I-5 Diesel averages: $3.18-$3.35 as of 4/23/2010.
Average MPG for semi, is 6-8 mpg.
Average gas tank: 250-300 gallons (between two tanks)
Crating and Freight

Depending on the costs of building crates internally, can reduce costs.
Assuming on average bars are produced a year with $74,000 per year in crating costs, that’s approximately $7,400 per crate.

Total approximated costs for transportation:
Miscellaneous expense (labor, food, lodging): $2,000.
Crate expense: $7,400.00
Semi-transportation: $1,342.71

Total approximated costs: $10,742.00 per bar.
A. Review overall financials and compare to the previous year before program implementation.

B.If marketing programs are implemented; are you receiving more client inquiries? Also, hire a very qualified marketing consultant.

C.Utilize benchmarking to verify that program implementation is successful.

D.Look into hiring financial personnel to oversee the profits/losses from programs as well as daily operational expenditures and develop methods/strategies to reduce unnecessary costs.
EVALUATION AND CONTROL Opportunities

Rising trend of alternative resources
Utilize international connection for further expansion
Develop strong brand name to combat with cheaper alternatives
Consistent amount of US government contracts
Threats

Exposed to resource price volatility
Market gradually incorporating machines making lower costs
Economic down turn
Inefficient production
CORPORATE-LEVEL STRATEGIES

Pursue a strategy of concentric standard by providing all kinds of products with best quality.
BUSINESS-LEVEL STRATEGIES

Top quality can differentiate Wallace & Hinz’s products from its competitor.
Classic style and techniques keep its leading position among competitors and can attract customers.
FUNCTIONAL-LEVEL STRATEGIES

Marketing strategy is to provide customers with all kinds of products to fulfill their need and gain market share.
Develop their website to increase brand awareness, and create a testimonials part to gain reputation.
Strengths

Strong company culture
Seasonal employment
Advancements in new technology
Website construction
Consistent military sales
Full service package Weaknesses

Low production efficiency
High Operating costs
Veteran employees unwilling to change
Passive marketing effort Wallace & Hinz Emily McCray
Morgan Ober
Ruoxi Liang
Geoff Davis
Michael Hultin http://www.wallaceandhinz.com/
Production line process
Increase advancements in new technologies Design and build portable show room bar to decrease cost of shipping to each tradeshow.

Allow increased exposure due to ease of shipping

Lower cost of booth space
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