Outlines

BackgroundCurrentSituationLearningOperationCustomerBenchmarkingPrinciplesBenchmarkingAnalysisTacticsforGapsPerformanceMeasurement-BSC

Case

OverviewCaseAnalysisTacticsActionPlan1Section1–CaseOverview

BackgroundCurrentSituationCase

Overview2CaseOverview-

Background3MissionAcademicResourceServiceExcellenceNorthlakeCompanyLocation:MetropolitanProductLines:Textbooks,Sundries,Clothing,Software,ComputersCompetitorsOnlineTextbookVendorsOtherBooksellers:B&N,Wal-mart,etc.CustomersStudentsFacultyStaffAlumniGuestsAUniversityBookstoreTotalBooks67.8%NewTexts46.7%Sundries6.3%Clothing11.7%Computers7.8%Software6.5%Notes4.7%General3.0%Used13.4%FiveProducts-Textbooks-Clothing-Computers-Software-Sundries1.ProductStructure2.FinancialPerformance4CaseOverview–

CurrentSituationIncreasingTrendWhy？3.TextbookSales5For

thefirsttimeinpastsevenyears,textbooksales

decrease.InFall2004,thesalesdecreasewas$180,000,

3%ofannualtextbooksales.(estimated)CaseOverview–

CurrentSituationSection2–CaseAnalysisBenchmarkingPrinciplesBenchmarkingAnalysisCaseAnalysis6CaseOverview–

BenchmarkingPrinciplesBenchmarkingasaToolComparewithSuperiorPerformanceIdentifyGapsImproveNecessaryAreasBuildingPrinciplesAlignwithOrganizationalStrategyProfitabilityServiceExcellence7CaseOverview–

BenchmarkingGrandStrategyLevelFunctionLevelCompetitiveStrategyLevelProductLinesFocusStrategySupportiveDepartmentsOperationHumanResourceMarketingMarketPriceServiceTextbooksClothingComputersSoftwareSundries8GrandStrategyLevelFunctionLevelCompetitiveStrategyLevelProductLinesFocusStrategySupportiveDepartmentsOperationHumanResourceMarketingMarketPriceServiceTextbooksClothingComputersSoftwareSundries9CaseOverview–

BenchmarkingProducts%ofSalesGMRateSalesGrowthNewTexts47%23%26%UsedTexts13%36%18%ClassNotes5%23%4%GeneralBooks3%31%205%Sundries6%38%10%Clothing12%47%41%Computers8%5%-16%Software7%24%13%Benchmarking-GrandStrategyLevel47%38%13%12%47%36%205%41%26%3%5%-16%Top31.ProductStructure&ProfitabilityAnalysis10Last1%ofSales:AboveMedianNewTextsClothingComputersBelowMedianUsedTextsRatio=Northlake/NACSMedian2.NACSBenchmarks11GMRate:AboveMedianNewTextsUsedTextsClothingBelowMedianComputersBenchmarking-GrandStrategyLevelGrandStrategyLevelProductLinesFocusStrategySupportiveDepartmentsOperationHumanResourceMarketingMarketPriceServiceTextbooksClothingComputersSoftwareSundries12CompetitiveStrategyLevelFunctionLevelCaseOverview–

BenchmarkingBenchmarking-CompetitiveStrategyLevel

Average25thMedian75thNorthlakeTotalSpaceinSquareFeet$23,495$14,993$20,006$32,025$22,500SquareFeetperFTEStudent$2$1$2$2$3Average#ofFTEStudents19,78814,23718,20321,33612,708MarketCoverage59.37%N/A

N/A

N/A

59.02%SlightlyBelowtheAverageLevelMarketPotentialforExpansionMarketCoverage13MarketCoverage=(TotalSpace/SquareFeetperStudent)/AverageStudentsMarketPotentialforExpansionMarketCoverageCampusContrib.HighCampusContribution14Benchmarking-

CompetitiveStrategyLevelMarketPotentialforExpansionMarketCoverageCampusContrib.HighCampusContributionSalesperStudentStrongPurchasePower15Benchmarking-

CompetitiveStrategyLevelPricePriceChangeAmazonEcampusBarnes&NobleWalMartAverageNorthlakeFall,2003-Fall,2004-27.45%-22.61%-22.45%-28.02%-25.08%-22.03%-25.08%-22.03%LowDecreasingMagnitudePriceTrend16Benchmarking-

CompetitiveStrategyLevelPriceLowDecreasingMagnitudePriceTrendHighCurrentPrice

PriceAmazonEcampusBarnes&NobleWalMartAverageNorthlake2004Fall$58.82$57.78$61.36$57.08$58.76$60.83$58.76$60.8317Benchmarking-

CompetitiveStrategyLevelServiceFacultyOverallSatisfactionCustomerQueuingTime18FacultyOverallSatisfactionCustomerQueuingTime%ofCoursepacksAvailableFirstDay%ofTextbooksAvailableFirstDayBenchmarking-

CompetitiveStrategyLevelServiceHighServiceQualityImprovingService%ofCoursepacksAvailableFirstDay%ofTextbooksAvailableFirstDay19FacultyOverallSatisfactionCustomerQueuingTime%ofCoursepacksAvailableFirstDay%ofTextbooksAvailableFirstDayBenchmarking-

CompetitiveStrategyLevelGrandStrategyLevelProductLinesFocusStrategySupportiveDepartmentsOperationHumanResourceMarketingMarketPriceServiceTextbooksClothingComputersSoftwareSundries20CompetitiveStrategyLevelFunctionLevelCaseOverview–

BenchmarkingOperationMarketingHumanResourceSpaceUtilizationCost&ExpenseInventoryManagementEmployeeStructureLaborEfficiencyLaborExpensePromotionChannel21Benchmarking–FunctionLevel22OperationInventoryManagementGMROI

=InventoryTurnover*GMRateGoodBenchmarking–FunctionLevelOperationInventoryManagementGrossMarginRateInventoryTurnoverMedianMedian

0IncreasepriceGoodComputersNewTextsUsedTextsClassNotesClothingGeneralBooksSoftwareSundriesReduceprice23Benchmarking–FunctionLevelOperationInventoryManagementGoodSpaceUtilizationLowRatio=Northlake/NACSMedianMedian24Benchmarking–FunctionLevelOperationInventoryManagementGoodSpaceUtilizationLowCostandExpenseControlCostControl25Benchmarking–FunctionLevelOperationInventoryManagementGoodSpaceUtilizationLowCostandExpenseControlExpenseControlGood26Benchmarking–FunctionLevelOperationInventoryManagementGoodSpaceUtilizationLowCostandExpenseControlGoodOperatingRisksCostStructureNorthlakeNACS(Average)2002200320042004FixedCost1,484,7811,642,3641,881,734$2,483,757VariableCost6,616,7516,760,7308,052,2609168894TotalCost8,101,5328,403,0949,933,99411,652,651FC/TC18.33%19.54%18.94%21.31%27Benchmarking–FunctionLevelOperationInventoryManagementGoodSpaceUtilizationLowCostandExpenseControlGoodOperatingRisksOperatingLeverageNorthlakeNACS(Average)2002200320042004GrossMargin2,148,4132,440,4033,058,347$3,188,106TotalOper.Expenses1,484,7811,642,3641,881,734$2,483,757OperatingLeverage3.243.062.604.53

2004(NACS,average)28Benchmarking–FunctionLevelOperationInventoryManagementGoodSpaceUtilizationLowCostandExpenseControlGoodOperatingRisksOperatingRisksNorthlakeNACS(Average)2002200320042004BreakEvenSales6,060,3316,197,6006,842,6699,626,965MarginofSafety2,704,8323,003,5324,267,9382,730,035MarginofSafetyRatio30.86%32.64%38.41%22.09%MarginofSafetyRatio=(TotalSales-BreakEvenSales)/TotalSales29

BreakEvenSales=TotalOper.Expenses/GMRateBenchmarking–FunctionLevelOperationInventoryManagementGoodSpaceUtilizationLowCostandExpenseControlGoodOperatingRisksOperatingRisksNorthlakeNACS(Average)2002200320042004BreakEvenSales6,060,3316,197,6006,842,6699,626,965MarginofSafety2,704,8323,003,5324,267,9382,730,035MarginofSafetyRatio30.86%32.64%38.41%22.09%2004(NACSAverage)LowMarginofSafetyRatio30Benchmarking–FunctionLevelHumanResource

EmployeeStructureFewerPart-timeEmployeesvs31Benchmarking–FunctionLevelHumanResource

EmployeeStructureFewerPart-timeEmployees

LaborEfficiencyLowLaborEfficiency

LaborExpenseLowLaborExpenseLaborEfficiencyAverage25thMedian75thNorthlakeSalesperEmployee$444,665$350,385$440,618$536,855$383,124SalesperEmployeeHour$8,085

N/AN/A

N/A

$7,368LaborExpense

Average25thMedian75thNorthlakeLaborExpenses12.90%10.30%12.40%15.00%12.60%LaborExpensesperEmployee$57,362N/A

N/A

N/A

$48,27432Benchmarking–FunctionLevel

ChannelWeakOnlineSales,SeasonalDemandMarketing33Benchmarking–FunctionLevel

ChannelWeakOnlineSales,SeasonalDemand

Marketing

PromotionFewPromotionsGrossMarginAverage25thMedian75thNorthlake%ofSales25.80%24.30%2.80%28.80%27.50%%ofNetSales26.20%23.40%26.70%29.60%27.50%TotalNetSales=TotalSales-SalesDiscount34Benchmarking–FunctionLevelCaseAnalysis-

SummaryGrandStrategyLevelFunctionLevelCompetitiveStrategyLevelOperationHumanResourceMarketingMarketPriceServiceNewbooks,Usedbooks,ClothingComputersSundries,Software,OtherBooksAppealingNotAppealingAverageLevelLowHighHighGoodInventoryManagementLowSpaceUtilizationProblematicStructureLowLaborEfficiencyWeakOnlineSalesFewPromotions35ReasonAnalysis-FishboneDiagramSalesDecreaseHighPriceEmergingTechnologyFewPromotionsSingleChannelAlmostNoPromotionsIgnoreSeasonalPromotionOnlinePublishersOnlineShoppingOnlineVendersFrequentUpdatesHighCostLowNegotiationPowerWeakOnlineSalesDependonCampusContrib.36Section3-TacticsTacticsforGaps-GrandStrategyLevel-CompetitiveStrategyLevel-FunctionLevelPerformanceMeasurement-BSCTactics37Tactics-GrandStrategyLevelCompetitivePosition(%Sales)HighStrong

LowWeakAverage

Med-iumNewTextsComputersUsedTextsGeneralBooksClothingSundriesClassNotesSoftwareGEMatrixofBookstoreMarketAppeal(GMRate)

ExpandSelectiveDevelopHarvestorShrinkStrengthen-NewTextsDevelop-UsedTextsCultivate-ClothingMaintain&Improve-Computers38Tactics-

CompetitiveStrategyLevelNewTextsIncreaseonlinesalesDoseasonalpromotionsMaintainarelativelyhighpriceClothingExtendseriesof“clothingandgifts”CorporatewithAlumniFundingOfficeHighGrossMarginLowSalesProportionUsedTextsIncreasesalesproportionFindmoresourcesofsupplyImposemorecontrolonsuppliersHighGrossMargin&StrongDemandLowSalesProportion&UnstableSupplyCurrentSituationSolutionProductLinesComputers

IncreasepriceofcomputersPromotethesaleofaccessoriesHighInventoryTurnoverLowGrossMarginHighPriceOnlineShoppingImpact39Tactics-FunctionLevelFunctionlevelOperation

Maintainhighinventoryturnover,whileensurefullrange,timelydeliveryEnhancespaceutilizationReduceexpenseofoperatingutilitiesHumanResourceHiremorestudentemployeesIncreasewagesProvidemoretrainingMarketing

SolvetheunstableorderproblemDomorepromotionsIncreaseproportionofonlinesales40MeasureLevelKSFIndicatorsActualPositioninIndustryOptimalVarianceFinanceGrossMarginRateNewBooks23.4%50th-75th30.17%6.77%UUsedBooks36.3%50th-75th44.18%7.88%UClothing47.0%>75th55.95%8.95%USalesGrowthSalesChangefromPriorYear20.8%>75th19.56%1.24%FCustomerConvenienceOnlineSales1.9%50th-75th6.51%4.61%USatisfactionSatisfactionSurvey4.05N/A5.000.95UOperationInventoryManagementInventoryTurnover9.1>75th7.881.22FStoreUtilizationSalesperSquareFeet$74125th-50th$1,458$717UExpenseControlUtilities0.5%75th0.10%0.4%ULearning&DevelopmentEmployeeStructurePart-time/Full-time30%<50th77%43%U41Tactics-

BalancedScorecardMeasureLevelKSFIndicatorsActualPositioninIndustryOptimalVarianceFinanceGrossMarginRateNewBooks23.4%50th-75th30.17%6.77%UUsedBooks36.3%50th-75th44.18%7.88%UClothing47.0%>75th55.95%8.95%USalesGrowthSalesChangefromPriorYear20.8%>75th19.56%1.24%FCustomerConvenienceOnlineSales1.9%50th-75th6.51%4.61%USatisfactionSatisfactionSurvey4.05N/A5.000.95UOperationInventoryManagementInventoryTurnover9.1>75th7.881.22FStoreUtilizationSalesperSquareFeet$74125th-50th$1,458$717UExpenseControlUtilities0.5%75th0.10%0.4%ULearning&DevelopmentEmployeeStructurePart-time/Full-time30%<50th77%43%U42Assumption：TheNACSbenchmarkshaveanormaldistribution.The5thand95thpercentilesareestimatedaccordingly.ThreeCriteria：Importance,BigGap,DataAvailableTactics-

BalancedScorecardMeasureLevelKSFIndicatorsActualShort-termandLong-termGoalsFirstyearSecondyearThirdyearFinanceGrossMarginRateNewBooks23.4%25.66%27.91%30.17%UsedBooks36.3%38.93%41.55%44.18%Clothing47.0%49.98%52.97%55.95%SalesGrowthSalesChangefromPriorYear20.8%20.8%20.8%20.8%CustomerConvenienceOnlineSales1.9%3.44%4.97%6.51%SatisfactionSatisfactionSurvey4.054.374.685.00OperationInventoryManagementInventoryTurnover9.19.19.19.1StoreUtilizationSalesperSquareFeet$741$980$1,219$1,458ExpenseControlUtilities0.5%0.37%0.23%0.10%Learning&DevelopmentEmployeeStructurePart-time/Full-time30%45.67%61.33%77.00%43Tactics-

BalancedScorecardSection4-ActionPlanLearningOperationCustomerActionPlan44ActionPlanLearning&DevelopmentOperationCustomer45ActionPlanLearning&Development46Learning&Development

EmployeeStructureHiremorestudentsaspart-timeemployeesTrainingProvideextensivetrainingand

career-enhancingpackagesCompensationOfferindustry-leadingcompensationandexcellentbenefitsPerformanceEvaluationEstablishanewperformanceevaluationsystembasedonBenchmarkingindicatorsLearning&DevelopmentOperationActionPlan47ProcurementUsedBooksEstablishtakeoverpointsofusedbooksoncampususingsomeslogans,e.g.environmentalfriendly.NewBooksBuildalong-termrelationshipwithsuppliers.LogisticsInventoryEstablishan

electronicinterface,streamlineprocedurestoimproveinventorycontrol.MarketingOrdersProvideaccuratesalesandcustomerprofileinformation;Utilizeadistributedstoresystemsoftwaretomeetthedemandsofchangingtechnologyinretailchannels.OnlineSalesOfferseamlessonlineorderingandanonlineportaltobenefitbookstore’ssuccess,especiallyinpeakseasons.Learning&DevelopmentOperationCustomerActionPlan48StoreDe