Ids Financial Services

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IDS Financial Services What is the business issue facing Reed Saunders and IDS? IDS was facing new challenges as to how to maintain this 30 percent growth rate in the market place where the competition was increasing day by day. The consumer financial industry is growing very fast which creates new opportunities to be exploited. With this the competition is also growing as the competitors are becoming more and more aggressive in marketing and selling their products. Short Term Objective: Increase sales revenue by 30% over the next 3 years while reducing the cost of sales by 5% per year. Also, increase the earnings by 24% over the next 3 years. Long Term Objective: To become the premier financial firm in the world. What is the business model and how will it drive IDS’s growth? IDS representatives had the most success in small towns and mid sized communities in the Midwest where the cost of doing business was low and competition was not as strong as larger metropolitan areas. Drive Growth Number of clients per planner: The number of clients handled by one planner is 208 (1.4 million/6731 planner) Exhibit 1. Revenue per client can be calculated as $2078.57 [2910m (Total revenue)/1.4m (Total client)]. The cost incurred to get a new client is found out as $120.36 ($21388000/177693) Exhibit 5 and 6. In this case the return on investment on $1 is $17.26 ($2078.57/$120.36). An additional client would bring about a revenue increase of $2078.5 and assuming profit of about 4.5 %, assuming an increase to 308 clients per planner Cost to the company: $72,962,232 Revenue generated in 1987 would be: $3,880,889,733 If only this alternative and increasing the sales force were to be used, an additional expenditure of about 72 million is to be undertaken, this is quite a formidable investment Number of sales per planner: According to exhibit 5 average accounts per

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