General instructions:
• Download this exam and save it as a WORD document using your first and last name in the document's name.
• Add your name to the header of your saved document.
• Respond to all questions in the space provided in this document.
• To support your responses, refer to sources beyond those identified in the question.
• Submit only the WORDdocument as an attachment via the Isidore assignment.
Part 1 Essay
Instructions:
• Your essay response is limited to 500 words, which is approximately one page of single-spaced, 12-point font type, and should appear in the space provided.
• Your response should be cogent, using bullets or other techniques to highlight your key points.
Information and Analysis:
The Sherwin Williams Company is organized into four strategic business units, the Paint Stores Group, Latin American Coatings Group, Consumer Group, and Global Finishes Group.
A strategic analysis of the company's online and digital presence and BOPIS has the potential to impact two of these units, the Paint Stores Group and the Consumer Group. The exclusive retail outlets for Sherwin-Williams branded paints, stains, supplies, and painting equipment in the U.S. are part of the Paint Stores Group.
The Consumer Groupmarkets Sherwin William's portfolio of branded and private-label paint and painting productsthrough hardware, home improvement, and other retailers.
John G. Morikis, Chairman, President and Chief Executive Officer of Sherwin Williams, in his 2016 Letter to Shareholders, summarizes the company's current and future strategies. Statements from hisletter and the 2016 Annual Report descriptive of the company's strategies are excerpted, edited, and/or paraphrased below.
These statements provide information relevant to a qualitative portfolio analysis using the General Electric/McKinsey Business Screen Model. After reading these statements, explain and display the qualitative application of this model for the Paint Stores Group and the Consumer Group strategic units in the space provided below.
After explaining your criteria, your placement of the units in the model, and the strategies suggested by your placement, comment on the company's strategic direction for these two units relative to your analysis.
Our results in 2016 reflect the progress we have made on the strategies that drive our long-term revenue growth and profitability. These strategies include expanding our specialty paint store platform in the U.S. and increasing the penetration of our well-known branded product lines into independent retail outlets.
Throughout 2016, paint demand in the new residential construction and residential repaint segments remained robust. Sales to these two buyer segments, residential contractors and professional painters, combined to grow at a double-digit pace compared to 2015, while sales volumes to the do-it-yourself customers increased at a more modest mid-single-digit pace.
Our pace of new store openings in 2016 increased our share of total outlets in the dedicated paint store channel. During the year, the Paint Store Group opened 94 net new locations, 11 more than in 2015, bringing our total store count in the U.S., Canada and the Caribbean at year-end to 4,180 stores. We remain confident in reaching our next milestone of 5,000 locations in North America, and we intend to get closer to that goal by opening an additional 90 to 100 stores during 2017.
In 2016, we introduced Paint Shieldmicrobicide paint, the first EPA-registered paint that kills up to 99.9 percent of certain bacteria, including staph and E. coli, on painted surfaces within 2 hours of exposure, and continues to kill 90 percent of bacteria for up to four years when the integrity of the surface is maintained. Originally developed for healthcare facilities, athletic facilities, schools and other specialized business settings, Paint Shield® microbicide paint is also ideal for any residence, especially in the bathroom, kitchen and laundry room.
The Consumer Group supplies branded and private-label products to retailers throughout North America. In 2016, Consumer Group sales increased 0.4 percent to $1.58 billion. This unit's profit increased 3.4 percent to $319.2 million, and operating margin increased to 20.1 percent from 19.6 percent last year due primarily to volume-driven operating efficiencies and good SG&A expense control.
Early in the year, we introduced the INFINITY® paint line in Lowe's stores nationwide. The latest addition to our HGTV HOME® by Sherwin-Williams line of paints, INFINITY paint is a one-coat paint and primer with exceptional coverage and hiding characteristics for both interiors and exteriors. We view the HGTV HOME® by Sherwin-Williams paint program at Lowe's as a significant growth opportunity in the years ahead, and we will capitalize on this opportunity by working closely with Lowe's store associates to drive more volume through their paint department.
On March 19, 2016, Sherwin-Williams entered into a definitive agreement to acquire The Valspar Corporation. These two companies have highly complementary paint and coatings offerings, and the combination will enhance Sherwin-Williams' position as a premier global paints and coatings provider. The transaction will result in an exceptional, diversified array of strong brands and technologies, and accelerate Sherwin-Williams' growth strategy.
Start your response here.
Part 2 Analytics
Instructions:
• Analyze the following scenarios using the EXCEL spreadsheets provided with the exam.
• Record the results of your analysesin the table provided.
• Your recommendation, with your explanation, is limited to 200 words and should appearin the space provided.
Scenarios:
To enrich consumer experiences with its online and digital presence, a venture capitalist has invested $150 million in our hypothetical company. Of this investment, $120.00 million is earmarked for marketing and sales and another $30.00 million is earmarked for all other expenses, including the hiring of qualified personnel.
While our company anticipates that customer response to these efforts will vary by segment, the response is uncertain. In order to understand the impact of this investment, the company tests two scenarios.
Using the Net Marketing Contribution by customer segment spreadsheet, analyze both of the following scenarios and record your results in the table provided. Note that the spreadsheet has an additional line item, Cost of goods sold per customer.
Scenario 1 Year 7 Distribution of Additional Investment in Marketing and sales Distribution of Additional Investment in General, administrative... Increase in customer volume from Year 6
Segment 1 .45 .28 .45
Segment 2 .15 .48 .25
Segment 3 .40 .23 .35
Scenario 2 Year 7 Distribution of Additional Investment in Marketing and sales Distribution of Additional Investment in General, administrative... Increase in customer volume from Year 6
Segment 1 .25 .28 .25
Segment 2 .42 .48 .15
Segment 3 .33 .24 .28
Year 6 Results for Scenario 1 Year 7 Results for Scenario 2 Year 7
Net Marketing Contribution
Marketing Return on Sales
Marketing Return on Investment
Gross Profit
Gross Profit per customer
Net Profit
Given your analysis, recommend one of the two scenarios and explain the rational for your recommendation.
Start your recommendation and explanation here.
Attachment:- Porfolio Analysis.rar