CONCEPTS OF THE CASE

Case can be relate with the concepts of chapter -3. Four important questions which are very important for organization for its strategies formulation. 1. Where are we? 2. Where do we want to be? 3. How should we get there?

4. Can we afford it?

Corporate Objective of zenith computer terminals, Inc.

1. Increase profit to1 million (Before taxes). 2. Sales must raised to 12 million. P & L statement as on December
Particulars
SALES Less Expenses: Sales Production Marketing Administration Service

Amount

Amount $10,000,000
$1,500,000 6,000,000 1,300,000 500,000 + 250,000

- 9,55,0,000 $ 450,000

Five Departments
In zenith computer terminals, Inc. case has five departments. 1. 2. 3. 4. 5. Sales Department Production Department Marketing Department Administration Department Service Department

1 .Develop a new budget based on how the ideal profit and loss statement should look if it reflects the president's bottom-line objective for ZCT. Justify your expenses for each of the five budgeted expense areas.

Particulars SALES Less Expenses: Sales Production Marketing Administration Service

Amount

Amount $12,000,000

$1,800,000 6,850,000 1,500,000 450,000 + 400,000

- 11,000,000 $ 1,000,000

Sales department
Current Status
1. 20 sales reps. 2. Average sales rep cost : $ 75,000. 3. Average sales made by sales rep: $ 500,000. 4. New rep can produce $300,000 sales. 5. Sales volume from sales rep grow @ 10% 6. Budget: $1,500,000.

Decision Taken
Sales: Target is12 million 1.Normal year sales grow at 10% hence I million sales achieved. 2. Recruitment of 4 more sales rep will generate 1 million sales. It will cost us $300,000 . 3. Budget Allotted : $1,800,000.

Production Department
Current production capacity Target production: 12000 units Current four line production capacity: 10,000 units. To get new production capacity $400,000+$125,000 +$325,000 : $ 850,000. New production capacity gives more 2500 units. Takes four months to get this machinery.

Decision taken
Installed new production unit. Costs: $850,000

Marketing department
Current position Marketing staff :15 Rep and has $ 600,000 over heads. Direct mailing will generate 1 % of sales. Terminals are used to modify one of the existing product to meet and exceed the competition.

Decision taken
Increase the budget of $200,000. to increase mailing system. It also helps to increase sales leads.

Administration Department
Current status
They has : 7 mangers : $240,000 12 clerks: $200,000 General OH: $60,000 1 manager should be replaced. 3 clerks should be eliminated .

Decision taken
Removed 3 clerks reduced the budget of $50,000 Current budget: $450,000.

Service department
Current Status
They have 5 service reps: each will budget :$40,000. Need of additional expenses: $30,000. Current ratio of service ad sales rep is 4:1.

Decision Taken
Recruited 3 more sales rep. Current ratio came down to 3:1. Current budget increased to : $400,000 ($30,000+$120,000.)

2.What would be the net profit of sales?

A. Remained at $10 million and budgeted expenses increased to the projected levels? Particulars
SALES Less Expenses: Sales Production Marketing Administration Service + $1,800,000 6,850,000 1,500,000 450,000 400,000 - 11,000,000 $ - 1,000,000

Amount

Amount
$10,000,000

2.What would be the net profit of sales?

B.Remained at $10 million and budgeted expenses increased to the projected levels? Particulars
SALES Less Expenses: Sales Production Marketing Administration Service

Amount
$1,800,000 6,850,000 1,500,000 450,000 + 400,000

Amount
$14,000,000

- 11,000,000 $ 3,000,000

3.Determine the four most important objectives for each department. Be specific by detailing what should be done and the time frame for reaching the objection.
Sales Department Main objective: Increase sales volume to $12,000,000 next year. Four objectives: 1. Hire four new sales reps by January end were they can be ready for project by April -1 2. Training of four new reps should be complete by March 31. 3.There should be continuous training programme to sales rep round the year to achieve targeted performance. 4. There should be advance training on launch of new terminal. This will give complete knowledge to sales rep about new product in turn help in generating the leads.

3.Determine the four most important objectives for each department. Be specific by detailing what should be done and the time frame for reaching the objection.
Production Department Main objective: Increase production to 12,000units Four objectives: 1.Have new production line installed and running by Mar 31 2.Instead of going for new production. They can run four production lines on second eight-hour shift for three weeks. By that we can avoid loss of waiting time for new production line installation. 3.For new production line there is a need of 10 production workers and training them will take around two weeks training hence recruit and hire 10 production workers by second week of March. 4.Train 10 new production workers by March 31.

3.Determine the four most important objectives for each department. Be specific by detailing what should be done and the time frame for reaching the objection.
Marketing Department Main objective: Support sales force efforts to achieve $12,000,000. Four objectives: 1.There is a need to implement a quarterly based mailing system. Were it should reach the target for the quarter which should be able to reach the main objective. 2.Selection of vendor to develop Alpha Terminal before April. 3.Alpha terminal design should be approved before the project start I.e. by September. 4.Development of alpha terminal brochure should be ready before last week of September.

3.Determine the four most important objectives for each department. Be specific by detailing what should be done and the time frame for reaching the objection.
Administrative Department

Main objective: To reduce cost from $500,000 to $450,000. And efficiently providing services to other departments. Four objectives:

1.Terminate three clerical staff members in the starting or ending month of Jan which would be easy for accounting purpose. And it will be right time to take new clerks and train them 2.Company should train new clerks by mid of Jan or first half of Feb. 3.Evaluate of inefficient manager out of seven manager and look for layoff or replace. 4. Evaluation of performances and take immediate action accordingly. There should be need of computerization before December by that there can be proper

3.Determine the four most important objectives for each department. Be specific by detailing what should be done and the time frame for reaching the objection. Service Department Main objective: To handle all service calls efficiently and increase the capacity of service personnel for new determined targets. Four objectives: 1.Hire and train three new service reps by February. 2.Satisfactorily handle projected service calls within 24 hours. 3.Design a new maintenance contract program for new source of income for handling. 4.Implement new maintenance contract program during last six months of year with objective of eliminating service calls.