Strategic Plan

MGT 400: Strategic Management

Dr. Bruce Hartman

Fall 2010

Created by: Cherish Bustos, Sara Himes, Taylor Himmelspach, &

Melinda Murrill

Table of ContentsIntroduction

History

Company Timeline

H&R Block Today

American Canyon & Vallejo Profile

Demographics

Population Information

Potential Clientele

Goals

Projected Achievement for 2010

Audits

Internal and External Audits

Implementation

Advertising

Technology

Public Relations

Evaluation

Monitoring and Evaluation Strategy

IntroductionH&R Block is a tax services company. They provide tax services to

individuals, families and companies across the US and Canada. With both

face-to-face, and online services, H&R Block offers an ideal combination of

services suited to the taxpayer of today. Through other channels, the

company also is one of the leading providers of business services through

RSM McGladrey (The leading professional services firm providing tax and

consulting services), and offers financial products to support its tax business

through the H&R Block Bank. H&R Block focuses on providing superior

services, and the most technologically advanced tax assessment tools in

order to best serve their customers.

History of H&R BlockThe aim of H&R Block has always been to provide the best financial

services to customers from all walks of life. Throughout the history of the

company, from its formation in 1955 to this day, it has been growing in both

customer base and national coverage. The time-line below highlights the life

of H&R block throughout its process of becoming one of the nation’s top tax

services providers.

H&R Block Timeline

Figure 1http://www.hrblock.com/company/history/expan.html

Today, H&R Block: Prepares 1 in every 7 U.S. tax returns

Has a retail office within 5 miles of most Americans

Delivers customized tax advice for more than 400 occupations

Files 1 in every 5 Earned Income Tax Credits

Has helped clients obtain more than $50 billion in tax refunds, credits

and other government benefits in fiscal 2010

Local H&R Block ProfileWithin Vallejo there are 3 main offices, and other offices in nearby

Benicia and Fairfield. The location that our group shall report on is the

American Canyon branch.

Location:CANYON CORNERS

100 W AMERICAN CANYON RD

AMERICAN CANYON, CA 94503

Phone: 707-643-1856

Years of OperationThis branch is the newest on the area, only in operation since 2007.

This fact means that it is still growing, and has much potential for expansion

as the American Canyon area is also a new residential area with much

growth potential.

Branch Volume

As a new branch, he American Canyon location is quite small. Though

not the smallest in the district, it is quite small in comparison to the larger

branches in the area, namely the Target and Sonoma locations. The Target

shopping center location had 2900 returns in 2010 as opposed to American

Canyon’s 600 returns.

Customer RetentionAs of last season, the American Canyon location had 60% retention of

customers. That is to say that 63.46% of the previous year’s customers

returned to have their taxes done again in 2010/

2010 Statistics (American Canyon location

only) New client tax returns / total tax returns---------------- 198/522

Total returns completed / Total returns started--------- 522/600

58% growth in new clients

28.6% are new clients

Demographics

Vallejo:

RACE / STATUS SHARE

Hispanic or Latino, any race 17.08 %

Not Hispanic or Latino 82.92 %

TOTAL 100.0 %

Non-Hispanic by Race

White 32.89%

Black 23.60%

Hispanic 19.01%

Filipino 21.26%

Other  3.24%

Total 100.00%

Source:  Claritas Inc (July 2004)

American Canyon:

Race/Status Share

White Alone 5,138 (52.6%)

Hispanic 1,731 (17.7%)

Asian Alone 1,561 (16.0%)

Black Alone 698 (7.1%)

Two or More Races 448 (4.6%)

Native Hawaiian & Pacific

Islander

123 (1.3%)

American Alone 53 (0.5%)

Other 22 (0.2%)

Source:  Claritas Inc (July 2004)

These numbers, though from the last conscious date are still relevant.

The high percentage of

Hispanic residents

necessitates the presence of a

Spanish speaker at the

location, of which they have

two. This fact is a great marketing tool, and can be used to promote the

American Canyon location.

Potential Clientele Below is a graph of recent home sales in the area. Though the prices of

homes are down significantly, the number of homes sold recently saw a

spike in 2008 and 2009. These new residents and homeowners are the

perfect client base for this new location. Also the slump in the housing

market will mean that home owners will be eager to get as many tax breaks

as possible on their homes.

Below is the ranking of best cities in America for entrepreneurs. With a

number 1 rating, Vallejo is in a prime location for more small business

growth. Small businesses are the perfect clients for H&R Block, and at this

location they are a potentially lucrative sector.

RankingBest Cities for Entrepreneurs in America

Middle Sized Cities

1 Vallejo, CA (15)

2 Modesto, CA (21)

3 Stockton, CA  (23)

4  Bakersfield, CA  (33)

5 Tacoma, WA  (38)

6 Spokane, WA  (42)

7 Salinas, CA   (45)

8 Fresno, CA   (48)

9 Ventura, CA  (63)

10 Honolulu, HI   (68)

Source: Entrepreneur Magazine (Oct 2003)

( # )  Overall Ranking

Goals

2011 Tax Season

Increase the visibility of the American

Canyon Location.

Construct street side placard noting the

presence of the branch in the shopping

center.

Create a branch specific web page in

conjunction with corporate site

Increase customer retention by 5 % from

2010 to 2011 (Total 68.5%)

This will hopefully lead to increased

retention rates in years to come.

Achieve 100% of sales goals for each of the

branches 6 expert employees.

Continue new client growth with another 58%

growth in new clients from 2010 to 2011.

Internal and External Audit of H&R

Block Leveraging a wide portfolio of services, H&R Block has been effectively

building its offerings, which gives the company a competitive advantage in a

highly competitive market place. H&R Block is a diversified company that

has a broad product portfolio including: services for tax filing, financial

advice, investment and mortgage, as well as business consulting. The

company also offers investment services, security products, income tax

return services, and electronic filing services. Leveraging their broad range

of services, H&R Block has been effectively building its offerings, which has

given them competitive advantages in a highly competitive market place.

There are 12,923 offices in the United States and an additional 1,571

worldwide, which has led to large scale operations that enable the company

to realize economies of scale and build a strong brand image. The company

has also experienced strong revenue growth during the past few years,

which reflects the company’s growing market share.

Although the company has been successful in most areas, they do

possess some weaknesses. The company has recorded declining margins

during the past few years. The company’s operating profit and net profit

margins have decreased, which reflects an inefficient cost structure.

Declining margins can negatively affect the company’s growth plans. The

cash flow from operations has also declined, which indicates inefficient

management of its operational activities and can affect H&R Block’s

expansion plans in the long run.

An increasing demand for compliance solutions has led to great

opportunities for this organization. Fuelled by large market expansions by

banks and credit unions and increasing compliance requirements by financial

institutions under various regulations, demand for financial services in

Europe and the United States have increased. With a strong offering in this

market, H&R Block should see significant growth. The demand for

investment products in the United States is likely to increase over the next

couple of decades due to the investment needs of the baby boomer

generation. About 82 million people were born between 1946 and 1964 and

as a result, these people will want to move their money from institutional

retirement products to retail accounts. The company looks well placed to

benefit from this emerging trend. Finally, Asia’s economic growth and

increasing awareness of insurance and wealth-creation products presents a

significant opportunity for the company. The company has an established

presence in the two high growth markets in this region, India and China.

These countries are high potential growth markets and could enable H&R

Block to generate incremental revenues worldwide.

There is an emerging need for financial services worldwide, other

companies have begun to focus on expanding their services, which poses a

threat to H&R Block. The tax return preparation and electronic filing

businesses are highly competitive because there are a number of accounting

firms offering similar services. Intuit is the dominant supplier of tax

preparation software and is also the company’s primary competitor in the

online tax preparation market. There are many smaller competitors in the

online market as well. Consolidation within the industry has also created a

threat because a number of large commercial banks and insurance

companies have merged with other financial institutions to diversify their

offerings. Increasing competitive pressures could force the company to

reduce its service price, which could adversely affect it revenues and

margins. Also hurting the company is the United States homebuilding market

slowdown. This industry generated total revenues of $323 million for the

company in 2009, but deceleration in the market could affect the company’s

mortgage business.

ObjectivesOur proposed objectives focus on higher market penetration and

entering new markets.

For higher market penetration, we are focusing on promoting more of

H&R Block’s services to current customers. We suggest that when customers

are in the office filing their taxes, H&R Block representatives suggest other

H&R Block services which the customer might be receptive of. The additional

services that we feel customers would be most interested in are the Instant

Refund Anticipation Loans, Federal and State Refund Anticipation Check, the

Emerald Prepaid MasterCard, and the Emerald Savings Account. After

researching these programs, we believe that these are programs that many

current H&R Block customers would be interested in. Our goal for the

American Canyon location is to have at least 25% of the customer base

enrolled in these additional programs, beyond their basic tax filing.

One market that H&R Block has a possibility of gaining customers from

is the small business market. With the high quality of the H&R Block Business

Services, we feel that if more small businesses were aware of the programs

offered, they would be incredibly interested in working with H&R Block. Many

companies believe that H&R Block’s expertise focuses only on personal tax

preparation, thus, when deciding which company they would like to have

prepare their taxes, H&R Block may not come to mind. However, if more

small companies were made aware of the many different H&R Block Business

Services offered, we believe they would give serious consideration to giving

their business to H&R Block.

A more specified market that we believe H&R Block should be

accessing is the start-up business market. A key concern that many

entrepreneurs have when starting their own business is that of financial

documents. A person may have the knowledge to successfully start their own

company, but they may not have accounting expertise to complete all of the

paperwork associated with a start up business. With H&R Block Business

Services, the client can focus on their business, and leave the bookkeeping,

payroll and tax preparation to H&R Block. Again, we believe that if more

entrepreneurs were aware of the H&R Block Business Services, it would give

them serious confidence to take the next step and start their business. Our

goal for the American Canyon location is to have a 15% gain of businesses

enrolled in one of the H&R Block Business Services program.

Strategy

The strategy that we have chosen for the American Canyon

location is the Differentiation Strategy. We have chosen the

Differentiation Strategy because of the high level of product

uniqueness, and also because H&R Block focuses on the industry

as a whole, as opposed to a market segment.

H&R Block is known for its superior quality, unique features,

and responsive customer service, all of which fit in with the

Differentiation Strategy. Although there is a Liberty Tax located

across the street, we believe that the unique programs provided

by H&R Block incredibly differentiate them from Liberty Tax.

Customer reliability on the unique programs offered by H&R

Block, as well as the customer loyalty created by these unique

programs will, discourage potential competitors.

Implementation Plan

Commercials aired on local television

Our goal is to get a commercial for H & R Block aired locally in the

Vallejo/American Canyon area. To do so, we will prove to H&R Block

Corporate that a local commercial will be effective and will bring in new

customers. We will first aim for a temporary commercial, in order to prove it

is beneficial. We will find out if our sales numbers went up post-commercial,

and also use our surveys to find out who heard about us via commercial.

Street sign (Marquee)Trying to find the storefront is a bit difficult for those who are not

already very familiar with the area. As of yet there is not a plaque identifying

the branch’s location. Being tucked back in the shopping center, it is a

challenge to see from the street.

Street signs (Person) Our goal is to have an employee hold a street sign. He will be dressed

professionally, wearing slacks and a button up shirt and will be standing

outside of the American Canyon location to draw attention to our store. We

will find a high school student to do this job, and he will be paid minimum

wage.

Banners/FlyersWe will be very aggressive with our banners and flyers. We are going to go

into shopping centers near our store location and leave flyers on all of the

cars. We are also going to leave flyers at restaurants and school

campuses (for example: CMA).

Facebook and TwitterWe are going to create a Facebook and Twitter account for H&R Block,

American Canyon. It will be specifically for our location. Facebook and

Twitter are extremely popular, and a great way to advertise. They are also

free to join and will not cost us anything. Our Facebook and Twitter can be

updated to provide clients with news about the business, specials that are

going on, etc.

Block PartyWe are going to host a block party in order to meet new people in the

community. This will get the Chamber of Commerce involved.

American Canyon Web PageWhile looking for information on the location, it was difficult to get past

the corporate sight and find information on the branch itself. A personalized

branch web page would make it easier for potential customers to view

expert’s profiles and gain more information on local events and incentives.

So much of today’s population uses the internet to investigate business and

get information, it is imperative that the customer have a connection with

not only the brand of H&R Block, but also have a relationship ith the tax

specialist working them through the process.

Monitoring and Evaluation of

StrategiesUltimately, we are going to monitor and evaluate our strategies

through surveys. We will provide these surveys in many different forms.

There will be surveys handed out to customers in the store. We will call

customers on the phone and ask them to answer questions. There will also

be surveys sent to our customers in the mail, sent to them by email, and also

directly available from our website. These surveys will ask customers

questions such as: how they heard about us, what made them come to our

store, why they chose us over competitors, and how can we get the word out

better? We will also specifically ask what form of advertising reached them

as a customer.

Our main strategy is to bring in new customers, so we will monitor this

by keeping a close eye on our records of how many new customers we

provide service to. As of last year, out of 522 total returns, 198 of those

were new customers. By keeping track of these numbers, we will be able to

tell if our strategy is bringing in new clients.