Go to the company Web sites for Home Depot ( http://corporate.homedepot.com/wps/portal); Avon (www.avoncompany.com/ ); and Yum Brands, a restaurant company that includes KFC, Pizza Hut, and Taco Bell ( www.yum.com ), to find some examples of strategic and financial objectives. Make a list of four objectives for each company, and indicate which of these are strategic and which are financial?
As part of the discussion post, websites, annual report and other support documents of all three companies were looked into. Based on which four objectives for each of those companies are identified first and then segregated into strategic and/or financial objectives. The finding of which is as provided below:
Founded in 1978, Home Depot today is the world’s largest store when it comes to home improvement retailer. It has 2,286 stores in the United States, Canada, and Mexico with a yearly revenue exceeding 100 billion dollars. They have over 35,000 different products displayed in various company stores altogether and have over one million products listed on their website. While looking at their financial statements, website and through research, these are four of the identified strategic and financial objectives as segmented:
- Strategic: Produce 135 MW of energy through renewal and alternative sources annually by 2020. This is by producing 100 MW through wind and solar while the rest by fuel cells (“Responsibility | Performance”, 2018).
- Strategic to Financial: Reduction of energy usage of 20.8 kWh in 2010 to 15.5 kWh by the end of 2020, which is of 20%. They succeeded in this objective 3-year in advance in 2017 when they managed to use 23.5% less energy in-store (2018 Responsibility Report, 2018).
- Financial: Maximize profit and provide better value to the shareholders by hitting the sales target of 115.5 billion to 120.4 billion per annum by 2020 (2020 Long Range Financial Targets, 2018).
- Strategic: Offering discounts and sale to penetrate low-cost market segment.
Avon is another company with a long history having established in 1886. They’ve their annual sales of over five billion dollars annually. These are the set strategic and financial objectives of Avon:
- Strategic: Provide an opportunity to individuals to earn. This is by enhancing the confidence of individuals as their statement reads, "beauty is the journey, empowerment is the destination”.
- Financial: Accelerate the sales and revenue. The appointment of José Vicente Marino to lead the growth in Brazil (their largest business sector) as general manager there with his role officially starting from September 17 2018, signals their strong commitment on that regard (“Avon appoints new General Manager to accelerate Brazil’s growth”, 2018).
- Strategic: As a global citizen, fulfill the obligations of one by contributing to the environmental and societal well-being. They have made paper promise as part of which the company plans to purchase 100% certified and/or post-consumer recycled content sources by 2020 (“Reforestation”, 2018).
- Strategic/Financial: Improve competitiveness by working with portfolio companies like Blue Bird, Albertsons, Steward Health Care System, YP, Talecris and others to enhance margin and ensure operational efficiency (Avon Investor Day, 2018).
Yum! brands owns some of the most popular and widely circulated restaurants like KFC, Pizza Hut and Taco Bell. Their objective is to build the most loved and trusted brand around the world. The company carefully crafts the recipe to be the fastest growing business. Their strategic and financial objectives identified are as follows:
- Strategic: Drive brand growth by increasing the franchise restaurant ownership from 77% in 2016 to 98% by the end of 2018 (Yum Brand Release, 2016).
- Financial: Reducing the annual capital expenditure to be around $100 million by financial year end of 2019 (Yum Brand Release, 2016).
- Strategic: Reduce GHG emissions and water consumption in the restaurants by additional 10% by the financial year end of 2025 (Yum 2017 GCSR Planet, 2018).
- Strategic: Remove all the artificial trans-fat from the ingredients and from the core food ingredients the artificial flavors and colors are to be completely removed by 2020 (Yum 2017 GCSR Food, 2018).
Avon appoints new General Manager to accelerate Brazil’s growth. (2018). Retrieved from http://media.avoncompany.com/2018-08-08-Avon-appoints-new-General-Manager-to-accelerate-Brazils-growth
Avon Investor Day . (2018). Retrieved from http://investor.avoncompany.com/interactive/lookandfeel/3009091/AVON_InvestorDay_Jan212016.pdf
Home Depot. (2018). 2018 Responsibility Report . Retrieved from http://corporate.homedepot.com/sites/default/files/2018-responsibility-report
Home Depot. (2018). 2020 Long Range Financial Targets . Retrieved from http://ir.homedepot.com/~/media/Files/H/HomeDepot-IR/reports-and-presentations/quarterly-earnings/2018/Q1/2020-targets-update.pdf
Reforestation. (2018). Retrieved from http://www.avoncompany.com/corporate-responsibility/environmental-sustainability/reforestation/
Responsibility | Performance. (2018). Retrieved from https://corporate.homedepot.com/responsibility/performance
Yum! Brands. (2016). Yum Brand Release . Retrieved from http://www.yum.com/app/uploads/FINAL-Yum-Brands-Release-101016.pdf
Yum! Brands. (2018). Yum 2017 GCSR Food . Retrieved from http://citizenship.yum.com/pdf/Yum-2017-GCSR%20Food.pdf
Yum! Brands. (2018). Yum 2017 GCSR Planet . Retrieved from http://citizenship.yum.com/pdf/Yum-2017-GCSR-Planet.pdf
Objective of the three company have been mentioned below with analysis of strategic and financial aspect of these objectives.
Strategy 1: Through the recession faced by the country where real estate market was hit hard the company supported and took care of their associates with salary and bonus even though the company had lost about 25% of its business. They believed that taking care of their associates, they would take care of the customers and when the market bounced back the company would be there well prepared with motivated and loyal associates having better competitive advantage.
In addition, investment in associates has helped succession planning from within the organization. Currently senior management in various positions have been working for decades. Good hiring and investment in staffs and possibility of growth and career in the company is another strategy. (Tome, 2018)
Objective 2: Major investment plan for December 2017 for over 11 billion dollars in the next three years. Of this 5 billion in stores for greater coverage and better purchasing experience for customers, over 1 billion in supply chain which will help reach 90% of US population the very next day. (Tome, 2018)
Objective 3: With investment of 11 billion the company aims to earn 120 billion dollar in 2020 by reaching operating profit of 15%. (Tome, 2018)
Objective 4: Corporate Social Responsibility has been practiced. Their project work on refurbishing apartment for homeless drug users who were in the process of transitioning from quitting drugs are also part of their strategy to be involved in the community and contributing to the society. (Tome, 2018)
Strategy 1,2 and 4 are strategies while 3 is financial strategy.
Objective 1: Since their main customers are women, they have put women empowerment as their forefront campaign. They also advocate and speak out about domestic violence. Providing scholarships and contributing to foundation working for breast cancer shows their CSR as their forefront campaign.
Objective 2: Giving representative opportunity to women and become part of Avon company while at the same time earn money through sales commission is a good strategy. It has targeted women to be a part of their company of selling directly to customers.
Objective 3: Collaborating with fashion designer Kenzo Takada, Avon has taken out fragrance as well showing collaboration between fashion and fragrance. (Global News, 2017)
Objective 4: Another CRS strategy is to provide scholarships to young aspiring girls. This gives positive image of the company. Growth of customers through word of mount is a powerful marketing strategy which can be accomplished by helping and motivating people in need.
Objective 1,3 and 4 are strategic objectives while objective 2 is financial.
Yum brand owns the famous eatery brands such as KFC, Pizza Hut and Tako bell. "Yum! Brands, Inc., based in Louisville, Kentucky, has over 45,000 restaurants in more than 140 countries and territories and is one of the Aon Hewitt Top Companies for Leaders in North America. In 2018, Yum! Brands was recognized as part of the inaugural Bloomberg Gender-Equality Index and ranked among the top 100 Best Corporate Citizens by Corporate Responsibility Magazine . (Yum, 2018)”
Objective 1: Strategy by providing variety. Customization of eatery such as tacos, burritos and even offering American Vegetarian Association (AVA) certified menu.
Objective 2: Taco Bell one of the companies of Yum, is one of the first of QSR or quick service restaurants giving it a competitive advantage over competitors.
Objective 3: Always original, the flavor of life, and live mas are some of the marketing strategy of KFC, Pizza Hut and Taco Bell. They cater to satisfy customers. For example Pizza Hut claims that pizza day should be special and so they aspire to provide that experience.
Objective 4: Mobile ordering and payment application has also been used to help customers order online or drive thru. Home delivery is also served through these apps.
Objective 1,2 and 3 are strategic while objective 4 is financial strategy.
These are some of the objectives of these three companies. It is seen that most of the objective are focused on strategic aspect while few are actual financial goals. Although the strategic goal is to improve the financial aspect, the ratio is seen to be 3 to 1 which shows how strategic goals are held in more important light than financial.
Global News. (2017). Avon’s Michele Van Dien on inspiring collaborations between fashion and fragrance. Global News . Retrieved from http://media.avoncompany.com/avon-life-colour-launch
Tome, C. (2018, September 1). GO BEHIND THE SCENES WITH "GIVE ME AN H” - THE HOME DEPOT’S PODCAST SERIES TAKES YOU INTO UNCHARTED TERRITORY . Retrieved from The Home Depot: https://soundcloud.com/user-925968891/diy-career-advice-carol-tome
Yum. (2018, September 9). Building Three Global, Iconic Brands People Trust and Champion. Retrieved from Yum!: http://www.yum.com/company/
The Home depot company is an online shopping center which include various department holiday decoration, electronic appliances, bath and faucets, blends and windows treatments, building materials, decor and furniture, Door and windows, electrical parts and equipment flooring and area rugs, hardware and cooling, kitchen and kitchenware, lawn and garden, lighting and celling, fans, outdoor living, paints, plumbing, tools and accessories [CEO, 2016].
They provide free - 2 day delivery to their customer (No any membership is required to get this opportunity) [Jones, 2018]. In different occasion they provide the heavy discount to their customer. They provide different discount offer per day differently.
They provide special discount and offers to customer. The offers are in package form so that customer can get benefit. The main financial Objective is they want to sell their product in a big volume so that they give various opportunity to their customer. They have only little bit profit margin in a single product but they sell their product in package form then they get high benefit from this strategy.
- To provide a better customer service (Strategic)
- To provide a better shopping experience. (Strategic)
- To increase in Market share value (Finance)
- Increase in sales by 6.5% (Finance)
Avon is the one of the oldest and leading social beauty selling company in US. The company product portfolio includes awards winning skincare, color cosmetics, fragrance and personal care product, featuring iconic brands such as ANEW, Avon color, Mask, and skin so soft. They develop quality of beauty product. The main objective of the company is empowering women through economic opportunity and the company also proudly support efforts to end breast cancer and domestic violence. So the major strategies of company is empowering all women and making them confident and develop a quality product so that these product supports to end breast cancer and domestic violence. Avon had annual sales $5.7 billion worldwide in 2016 [Tiemaan, 2017]. From the data of 2016, the Avon is fifth largest beauty company in world. It has more than 6.4 million representative. So in the case of direct selling approach it is second largest enterprise in the world.
- To invest more effort and time for organizational growth (Strategic)
- Continuously growing their business and create a high standard (Strategic)
- To save the total cost of $250 million in end of 2017. (Financial)
- To be financially strong (Financial)
Yum Brand Company based in Louisville, Kentuclly has over more than 45,000 restaurants in different countries. Form corporate responsibility magazines in 2017, the products of Yum Brands recognizes as Gender - Equality index and company ranked among the top 100 best corporate citizens [Enz, 2005]. The Major brands are KFC, Pizza Hut, and Taco Bell. The Yum brands are worldwide brands and they are in almost 140 countries and they are world’s largest restaurants company since 1997. After KFC, Pizza Hut, Taco Bell they are largest restaurant chain in world. The Main objective of Yum Brands Inc. is delivering the quality foods and service to their customer. The other objective are they are popular in Gender Equality index so they include most of employees from diverse backgrounds (Male, Female, Different Ethnic group and others). It ranked among top 100 best corporate citizen so they want to increase the operating profit and sales growth at least 5% [Sheraj, 2017].
- To focus on to increase more franchises in the world.
- To establish a support mechanism so that people’s capacity by inspiring peoples.
- To increase the stock value of the organization
- To invest more in Growth generating and also invest in other income generating assets.
CEO. (2016). Company Profile. AVON corporate responsibility report .
Enz, C. (2005). Multibrading at Yum! Brands Inc. Thinking outside the bun. The Scholarly Commons .
Jones, D. (2018). About Home Depot Inc. . The Wall Street Journal .
Sheraj, S. (2017). A Comparitive Analysis of the KFC in China and Bangladesh. International Journal of Science and Business .
Tiemann, J. (2005). Avon Product. Harvard Business Review .
Objectives are set to convert the strategic vision into specific performance targets. The economic and competitive forces as well as internal capabilities of the company are considered while setting the objectives to make sure that they reflect the management’s aspiration for performance. Financial objectives are related with the financial targets the company aims to achieve like expected sales and profit margin. On the other hand, strategic objectives indicate the market position, competitive strength and future business prospects (Gamble, Petaraf, & Thompson, 2015). By going through the websites of the three companies as asked by the question, the following four objectives are identified for each company and classified as strategic and financial objective:
Home Depot is the world’s largest home improvement retailer founded in 1970 with which is now serving with 400,000 associates and 2,286 stores spread over USA, Canada and Mexico. It has more than 35,000 products in its store while more than one million products are available online. The company generated the revenue of $100.9 billion in 2017 (Home Depot, n.d.). The priorities of the company as per The Home Depot (2017) are:
1.Strategic: Enhance customer experience by leveraging its physical and digital assets and increase value returned to shareholders in the form of dividends and share repurchases.
2.Strategic: Position itself as "One Home Depot” by investing in stores, associates, interconnected customer experience, supply chain and delivery capabilities.
3.Financial: Generate sales revenue between the range of $114.7 billion and 119.8 billion by 2020.
4.Financial: Ensure operating margin and return on invested capital ranging from 14.4% to 15.0% and 36.4% to 39.6% respectively.
Avon, the company for women was founded in 1886. It stands for beauty, innovation and optimism. It has around 6 million independent sales representatives who sell the products of recognized brands that include ANEW, Avon Color, Avon Care, Skin-so-Soft and Advance Technique in more than 70 countries around the world (Avon, n.d.). The objectives of Avon includes:
1.Strategic: Achieve profitable, sustainable top line growth by focusing on representative experience and satisfaction through enhanced training, new sales initiatives programs, and better services and improved forecasting (Avon, 2018).
2.Strategic: Place digital at the center of all actions to drive future progress and enhance digital and e-commerce capabilities.
3.Financial: Improve financial resilience by strengthening balance sheet.
4.Financial: Resource most attractive markets to grow representative base by reinvesting $350 million (Avon, n.d.).
Yum brand is the world’s largest restaurant company in terms of system units that includes KFC, Pizza Hut and Taco Bell. It serves in more than 140 countries with more than 45,000 restaurants and 1.5 million employees (Yum Brands, n.d.). Its objectives comprises of:
1.Strategic: Be the best in the world at building best restaurant brands and define a global company that feeds the world (AIFarhan, AIRasheed, AIAli, Mohammad, & AIMailem, 2013).
2.Strategic: Make right changes in the business to build an enduring foundation for long-term growth and increased return for stakeholders (Yum Brands, 2018).
3.Financial: Return $6.5 to $7 billion to shareholders in 2019 through dividends and share repurchases (Yum Brands, 2018).
4.Financial: Reduce capital expenditure to $100 by the end of 2019 and limit general and administrative cost to 1.7% of the system sales.
AIFarhan, F., AIRasheed, M., AIAli, L., Mohammad, L., & AIMailem, S. (2013). LinkedIn . Retrieved from https://www.slideshare.net/Falfarhan/yum-presentation
Avon. (2018, August 2). Avon Reports Second-Quarter 2018 Results . Retrieved from http://investor.avoncompany.com/file.aspx?IID=3009091&FID=394481307
Avon. (n.d.). About Avon . Retrieved from http://www.avoncompany.com/aboutavon/index.html
Avon. (n.d.). Investor . Retrieved from http://investor.avoncompany.com/interactive/lookandfeel/3009091/AVON_InvestorDay_Jan212016.pdf
Gamble, J. E., Petaraf, M. A., & Thompson, A. A. (2015). Essentials of Strategic Management: The Quest for Competitive Advantage (Fourth ed.). New York: McGraw Hill Education.
Home Depot. (n.d.). About Us . Retrieved from https://corporate.homedepot.com/about
The Home Depot. (2017, December 6). The Home Depot Updates Strategic Priorities; Confirms Fiscal Year 2017 Sales and Diluted Earnings-Per-Share Guidance; Outlines Long-Term Financial Targets; Announces Accelerated Business Investment Plan and $15 Billion Share Repurchase Authorization . Retrieved from News Releases: http://ir.homedepot.com/news-releases/2017/12-06-2017-110035522
Yum Brands. (2018). Annual Report 2017 . Retrieved from http://www.yum.com/annualreport/
Yum Brands. (n.d.). About . Retrieved from http://www.yum.com/company/