Response to student 1
Procter & Gamble Company is a good example of how poor planning can lead to losses. The company is struggling to recover from losses resulting from unsound decisions by the former CEO, A.G Lafley. Lafley engineered the $57 billion acquisition of Gillette in 2005. The acquisition led to the increase in the size of the company and enabled it to double its sales over a decade. Lafley also focused on the domestic market is which is relatively at the maturity stage compared to other markets. The company’s competitors focused on emerging markets that offer opportunities for growth. The result was a significant loss in market share. Mr. Lafley resigned in 2009, but the company reported weak performances under his successor, Mr. Bob McDonald. The company’s failure is attributed to the focus on premium-priced consumer products in the domestic market. Consumers have significantly cut their spending hence consumer products have not been doing well. Mr. Lafley later rejoined the company in 2013 and replaced McDonald as the CEO. His first year saw an improvement in the performance of the firm. The company is now planning to cut some of its outlying brands.
Question: How will the company use financial management to identify the brands to cut?
Response to student 2
The manager of the karate school is an excellent example of management’s failure. A manager should use financial skills and techniques to assess the viability of a capital project such as the investment in the marketing tool. Several aspects of the proposed investment must be considered in arriving at a decision. The project is a marketing tool hence the manager should have understood marketing before investing in the tool. The result of this poor financial management decision is cash outflows without any significant returns to the school.
Question: Do you think the manager should have hired the services of a marketing consultant to assist in evaluating the investment?
