Cpm and explanation sa ratio PDF

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Summary

In every business the computation of CPM is very necessary as it helps how would the flow of your business going. it also helps businessman to think of a better way on how to improve business strategies....

Description

Starbucks

Critical Succes s Factor Adverti sing

.20

3

.15

4

.20

3

.15

3

.15

3

.15

Produc t Quality

.30

4

1.20

3

.90

3

.90

3

.90

3

.90

2

.60

Price Compe titivene ss Produc t variety Financi al Positio n Custo mer Loyalty Global Expansi on Custo mer Service Total

.05

2

.10

3

.15

2

.10

3

.15

3

.15

2

.10

.10

3

.30

4

.40

2

.20

2

.20

4

.40

2

.20

.05

3

.15

3

.15

2

.10

4

.20

4

.20

2

.10

.10

4

.40

2

.20

3

.30

2

.20

3

.30

3

.30

.15

4

.60

3

.45

4

.60

3

.45

4

.60

2

.30

.20

4

.80

3

.60

4

.80

3

.60

4

.80

4

.80

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Major weakness Minor weakness Minor strength Major strength

WT Score

3.2

Ratin g

WT Score

2.85

Ratin g

WT Score

Krispy Kreme Doughnuts (KKD) Ratin WT g Score

4

3.00

Ratin g

McDonald’s

.05

Legend: Rating

WT Score

Peet’s Coffee and Tea

Ratin g

3.75

Ratin g

Caribou Coffee

Weigh t (WT)

1.00

WT Score

Dunkin Donuts

3.5

2.55

Starbucks shows highest score of 3.75, second is McDonalds which is 3.50 and the lowest score of 2.80 which is Peet’s Coffee and Tea. The competitive profile matrix (CPM) weighs product quality. The product quality (0.30) is the most important item on the list of critical success factors because in every product, quality is the one thing that the consumer looks into and it helps to maintain customer satisfaction and loyalty thus, Starbucks score on this factor as the highest in comparison to their other competitors. Customer service rates .20, Global expansion 0.15, Customer Loyalty .10, Product Variety .10, Price Competitiveness .05, Financial Position .05, Advertising .05. The

advertising weight, 0.05, CPM does not reflect a high level in ranking the critical success factors, but does release valuable information in comparison to their competitors on the CPM. The weight on each factor depends on their importance in the company thus; in this analysis the quality of the product is the most important because this is what the company focuses on.

The Current ratio is another test of a company's financial strength. It calculates how many assets are likely to be converted to cash within one year in order to pay debts that come due during the same year. An acceptable current ratio varies by industry. The more liquid the current assets are, the smaller the current ratio can be without cause for concern. Starbucks current ratio is 0.8x for the year 2008 compared to 0.79 x for the year 2007. This can be considered as a poor current ratio since it should not be seriously concerned and more asset is to be needed to cover up current liability or short-term debt. Quick Ratio is another test for company’s financial strength that measure the firm’s ability to pay off short term obligations without relying on the sale of inventories which is important. Inventories are typically the least liquid of a firm’s current asset, and if sales slowdown, they might not be converted to cash as quickly as expected. Starbuck’s quick ratio is 0.48 for the year 2008 compared to 0.47 for the year 2007. This can be indicated as a poor quick ratio, therefore if the accounts receivable can be collected, the company can pay off its current liabilities even if it has trouble disposing of its inventories. Fixed Asset turnover ratio is one of the measures of activity and measures how effectively the firms use its plant and equipment. Starbucks has a good fixed asset turnover which means that the company is using its assets more efficiently than other competitors in the industry policy and they have the right amount of fixed asset relative to its sales.

Total Asset turnover ratio measures the turnover of all the firm’s asset. Starbucks has a good total asset turnover which means they are generating enough sales given its total assets. Days sales outstanding represents the average length of time the firm must wait after making a sale before receiving cash. Starbucks has a poor days sales outstanding which means that customers are not paying their bills on time that deprives the company of funds the funds that could be used to reduce some costly capital. Inventory turnover shows how many times the particular asset is turned over during the year. Starbucks has a poor Inventory turnover which means it is holding too much inventory therefore it is unproductive and represents an investment of low rate in return. Total debt to total asset measures the percentage of funds provided by creditors. Starbucks has a poor total debt to total asset which indicates...