Page 21 - Articles Written by JGJ EF DPS

PARAGRAPH 1

The Business Communications Group (BCG) had, in its fifteen years of
existence, established for itself a dominant position in a number of global
markets. The credit for its success lay at the feet of one man, its founder;
Chairman; and Chief Executive, Richard Sweet. Sweet had developed the
company on the basis of planned introduction of new products supported
by imaginative marketing, and good customer service the BCG achieved
an annual turnover in excess of £2 billion. With its high profit margins, and
continually rising share prices, it had rapidly become one of the favourites
of investors. However, it had recently become apparent to the chief
executive that the organization structure, no longer fitted the company's
strategy.

Normally the class will readily generate the strengths of BCG: new
products, imaginative marketing and customer service which in
combination make it a market leader (Board 2). In addition it will
normally be picked up that there is a weakness, a problem with the
company structure.

However, it is at this point that a more visual and visceral analysis of the
information may be made by using the chalk board to spell out the
linkages and causal factors that might be at play in the paragraph as
shown in Boards 2, 3, 4 and 5.

Board 3 shows the relationship of high profit margins, rising stock prices
and sales. Examination of the product life cycles, as plotted to show the
profit momentum line, allows a clearer interpretation of the core
competences of BCG to emerge. Essentially, BCG has created both a
potential technological gap and barrier to entry. From these it may be
drawn out that BCG is perceived as a good investment and that
management is also perceived as good.

Board 3 also shows the profit momentum line that may be implied from
the statement ‘planned introduction of new products’. As product ‘A’
reaches maturity a new product ‘B’ is introduced to take-up the profit
short-fall and so on thereby maintaining the up-ward trend in sales and
profit growth. It might also be argued that the same logic could be
applied to geographic introduction of the product line (market extension
1, 2, 3) where new markets (Europe, China etc.) allow product extension
driving the profit momentum line up (profit momentum b) – Board 4.

Board 4 gives a visual interpretation of management’s contribution to
financial performance of BCG. Moreover, it may be drawn out that the