Archive for January, 2003

The MoSCoW Approach = Prioritizing for the Future

Thursday, January 30th, 2003

By Leigh Howe

MoSCoW is a process for planning and prioritizing a large project. This dynamic planning method got its start in the Software and IT industry to meet the need of developing systems quickly.  It was originally called “Rapid Application Development”.  However, it is applicable to many types of business environments.

At Whittaker Associates, we have been using a simplified version of the MoSCoW in our project planning with clients. Using the MoSCoW framework, we plan and prioritize the steps and phases of a project in collaboration with clients using the following rules: 

º    MUST be a part of the project – fundamental to success;

º    SHOULD be a part of the project – important but the success does not rely on it;

º    COULD be a part of the project – can be left out without impacting the project;

º    WILL NOT be a part of the project – left out at this time but could become important at a later date.

Our primary focus in using the MoSCoW is to define the “what” of the project and clearly communicate that with our client.  Our team develops an outline for the project, the team, and the requirements for completion, and then works with the client to prioritize the outline.  This planning and prioritization allows our client to get a “big picture” view of the project and those phases and tasks that are critical, desirable, or extra.  It also allows our client to determine which phases or tasks are more suited to be done internally, versus externally by consultants, researchers or other entities. 

Some benefits of using this approach include more active involvement in the project by all parties, final project results more likely to meet the intended objectives, and the smooth implementation of the project is likely to go smoothly.  MoSCoW is not a silver bullet in project planning, but can help in completing a project more efficiently and effectively.

Automotive Sales Incentives: Short-Term Solution May Lead to Long-Term Problem

Thursday, January 30th, 2003

By Jeff Vedders

Sales Incentives and the Automotive Industry

You’ve seen the signs everywhere, 0% financing for 36 months on all 2003 vehicles.  Are you paying attention?  Bought that new car yet?  It sure seemed like a great deal when first announced, but are incentives really working?

According to an article in Rubber & Plastics News, analysts are predicting a third consecutive year of declining sales, expecting sales of 16.4 million units in 2003.  It should be noted, however that if these predictions hold true, it will be the fifth best year in U.S. history.  While this doesn’t sound too bad, these same analysts point out that their predictions are based on continued high sales incentives and continued cost cutting, not to mention a short, successful war with Iraq.  Even if the sales projections hold true, profits are hard to come by for automakers and suppliers.

General Motors began the incentive push we are seeing today with their “Keep America Rolling” campaign introduced after September 11th.  Ford and DaimlerChrysler were quick to follow.  This helped to increase demand for US light vehicles.  The “Big Three” are the primary companies offering these incentives.  According to the PricewaterhouseCoopers North American Suppliers Report, foreign-owned automakers are focused solely on trimming costs from the manufacturing process rather than relying on incentive programs.

Profitless Prosperity and Other Dangers for the Big Three

As seen above, large numbers of American cars are being sold.  However, the cost-cutting necessary to remain competitive coupled with the recent sales incentives are shrinking margins significantly.   The North American Suppliers Report mentions that cash normally used for research and product development is being passed on to the consumer.  Needless to say, this could be damaging for the Big Three in the future as foreign-based automakers make inroads into the North American market.  Also, U.S. auto sales fell in October and November leading many analysts to conclude that consumers are becoming immune to incentives.

While sales incentives are moving more cars, ultimately these incentives are a short-term solution.  If these incentives continue, there could be long-term problems for the Big Three automakers. 

One final thought: CNW Marketing/Research estimated the following incentives being offered by automakers in August.  General Motors offered $3,392 per vehicle; Ford, $3,478; and DaimlerChrysler, $3,116.  Japanese automakers offered an average of $2,096.

Sources:

º    Rebates are strong poison, Joe Kohn, Automotive News, v 77, p 6, September 02, 2002.

º    More of the same: Forecasters expect third consecutive decline in U.S. auto sales, Jim Henry, Rubber & Plastics News, v 24, n 6, p 4, December 23, 2002.

º    North American Supplier Report, PricewaterhouseCoopers AUTOFACTS, published by Auto Business Ltd.

Are Retail Sales Important to Your Community?

Thursday, January 30th, 2003

By Pete Julius

Does your economic development organization receive a portion of its funding from sales tax?  Is your community heavily dependent upon sales tax?  Below are two tables that provide insight to any community that is currently evaluating their existing retail base.  The first table identifies which retail segments contain the highest sales per square feet ratio, while the second reveals which segments have recently achieved the greatest advancement in sales.  

It is surprising to see drug stores ranked number one.  Electronics and other high-end product retailers would seem to be the most logical choice.  However, drugs stores make sense considering the astronomical cost of prescription drugs.  With the aging of America, prescription drugs will continue to be a very vital issue.  Until the government can resolve the prescription drug issue, drug stores should remain at the top of the list.       

 Retail Segment Sales/Square Feet
Drug Stores $543
Consumer Electronics $499
Specialty Apparel $419
Discount Stores $344
Footwear Stores $279
Home Furnishings $262
Off-Price Retail $219
Furniture Stores $215
Auto Parts $206
Department Stores $206

                                           Source: Bank of America

It is very intriguing that the top two retail segments in both tables are identical.  This comparison points out that these two retail segments – drug stores & electronics – will not only provide greater sales per square footage, but they have also recently achieved the most sales growth.  The next three retail segments experiencing the greatest sales growth are general merchandise stores, food services and drinking establishments, and building and garden materials.

Retail Segment 2001-2002 Percent Change in Sales ($M)
Health & Personal Care Stores, including Drug Stores 8.0%
Electronics & Appliance Stores 6.3%
General Merchandise Stores 6.0%
Food Services & Drinking Places 5.5%
Building Material, Garden Equipment 5.4%
Sporting Goods, Hobby, Book & Music Stores 4.9%
Furniture & Home Furnishings Stores 4.2%
Clothing & Clothing Accessories Stores 3.0%
Motor Vehicle & Parts Dealers 2.0%
Food & Beverage Stores 1.8%

                       Source: U.S. Department of Commerce

These tables provide a good starting point to those communities currently going through the process of attracting more retailers into their communities.  However, knowing these statistics is only the tip of the iceberg.  Retail location decisions are highly driven by demographics.  If you do not have the specific demographics that a certain retailer is looking for, then your chances to attract them will be minimal.