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Final

Glo-Bus Final.docx

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Department
Global Management Studies
Course
GMS 200
Professor
Louis Pike
Semester
Winter

Description
H-D Co. Annual Report; Glo-Bus Industry 5 500351051 - Kim,Ashley 500466964 - Tahir,Ahmad Ainan 500452433 - Cicione,Victor 500450970 - Zia,Areeba Paper ID #: 218318357 500453086 - Samad,Tauriq Dr. Shavin Malhotra Review of Financial Performance . . . . . . . . . 1-3 Strategic Vision . . . . . . . . . 3-4 Performance Target Forecasting . . . . . . . . . 4-6 Company’s Competitive Strategy . . . . . . . . . 6-9 in Entry-Level Cameras Company’s Competitive Strategy . . . . . . . . . 9-11 in Multi-Featured Cameras Competitors’ Analysis . . . . . . . . . 11-13 Strategy to ‘Out-Compete’ . . . . . . . . . 13-15 Closest Competitors Lessons Learned . . . . . . . . . 15 Appendix 1 . . . . . . . . . 16-18 Appendix 2 . . . . . . . . . 19-22 1 Review of Financial Performance Net Revenues When the previous management team gave H-D to the current management team in year five, our net revenue was at an estimated $200,000,000. After taken over by new management, extensive improvements were introduced to H-D. As a team, we decided to invest in many important factors like quality, research and development, and brand image. Due to the amount of money spent in these sections, H-D’s net revenue for year six slightly dropped to about $187,000,000. Our next focus was on customer satisfaction. In year seven we thoroughly focused on how to give our customers the best bang for their buck. Unfortunately, in year seven the net revenues totalled $178,000,000 due to the fact financially we were unable to offer the lowest prices for our product. Year eight and nine followed in suit with our previous yearly trends. In year eight the net revenues was $156,000,000, and in year nine the net revenues was $147,000,000. In year ten we decided to lower the price and quality, but keep the same image rating. This resulted in an increase in revenue as the net revenue was $163,000,000. Refer to Chart 1 in the appendix to see the changes throughout the years. Earnings per Share (EPS) H-D’s earnings per share followed a somewhat similar trend in comparison to Net Revenue. H-D started off at a two dollar earnings per share, and that would be the highest it would reach. In years six and nine, H-D underwent a loss in earnings per share. In years seven, eight and ten, the earnings per share faced an increase from the previous year. The lowest the earnings per share would go was in year nine, weighing in at $0.69 per share. Our main 2 competitors were the companies “Capture” and “B Picture-Perfect.” Shown in Chart 2 you are able to see the entire simulation, displaying our competitor’s values in Earnings per Share. Return on Equity (ROE) Once again due to H-D’s strategy of initial investments in year five, the Return on Equity experienced a loss in year six. After year six, it followed the exact same pattern as did Earnings per Share; loss in years six and nine, gains in years seven, eight, and ten. It seems as if year nine was our worst year, and we experienced somewhat of a recession. The lowest the ROE would reach would be in year nine as well, valuing at 5.10%. The highest the Return on Equity would reach was also in year five. The years we focused on keeping the image rating high, but offering lower prices, we experienced an increase in Return on Equity. Chart 3 shows how our ROE looked throughout the simulation. Credit Rating H-D’s credit rating was probably the strongest feature we had as a company. In year five, the company was handed over to us with a credit rating of B+. In year six, we seemed a little unclear about our credit rating so we did not change much. It remained at a B+ in year six. In year seven after we did some more research on how the credit rating affects our company, we realized the more debt we have, the greater money we spend on interest rates. As soon as we found this out, we decided to raise our credit rating from B+ to A- in year seven. In year eight, nine and ten, we raised our credit limit to the maximum it can be, topping out at A+, as shown in the chart below. Refer to Chart 4 in the appendix. 3 Stock Price H-D’s stock price was relatively weak, and did not supply our company with large quantities of income. As shown in the chart below, our stock price was constantly falling until year’s eight and ten, where it somewhat increased. Our stock price would not top out higher than what it was given to us at, but it did reach its all-time low which was $16 a share. As a company we tried to increase our stock price, but the product we were selling was just unable to bring in high demand, which would relatively increase our stock price. Refer to Chart 5 in the appendix. Image Rating Our image rating was the only thing that didn’t really go below the investor’s expectation by a large amount. H-D focused on giving our customers the best picture quality in our cameras because as a team we thought this was the most important feature in a camera. In year six our image rating surpassed the investor’s expectation reaching a high of 73. In the next years seven, eight, nine and ten, our image rating experienced constant drop. The lowest it would reach was in year eight, at 63. Refer to Chart 6 in the appendix. Strategic Vision Company and Customers H-D is the creator behind our design, our cameras and the distribution of our low-entry level and high-entry level cameras. Our motto that has been our strategy since the beginning of our companies’ existence has always been and will remain “Quality at its best price.” It is the base of our companies’ vision, that we provide the best cameras with the best features for our consumers at an affordable price. We want to keep our customers happy, and with our 2-year warranty, we have done our best to cater to our customer’s needs. By having a 2-year warranty 4 unlike some other competitors in the market, hopefully this will get customers to return and become a loyal customer to our company. Our Workers A key ingredient to our success as a company has been our workers. At H-D we value and care about every single worker we have. We believe in work ethics and believe that our workers should be treated like family. As a company we provide the benefits of a cafeteria and an on-site childcare for our workers. We have invested into additional safety equipment for our workers and have made sure that we improved our lighting and ventilation in our company. Our Green Footprint H-D has made its best effort to make our products environmentally friendly. H-D is constantly ensuring that our entry -level cameras and multi-featured cameras are made from recycled materials and use environmentally friendly components. We guarantee our customers that we are an environmentally friendly company, by making the shipping of our products more eco-friendly as well as the manuals and packaging. Future At H-D we are confident that with our great strategic tactics and hardworking staff, we will be able to grow upwards into the industry. We believe that we will excel as a company based on our core values, which are our customers, our workers and our product. 5 Performance Target Forecasting Earnings per Share (EPS) Over the past six years of the simulation, H-D has consistently tried to inquire its earnings per share that was above and beyond the call of duty. Unfortunately, even with our extensive research, and constant upgrades in our company, we were unable to reach this target. H-D has decided that since we are most likely unable to surpass the investor’s expectation, our main goal for the next two years is to have an earnings per share that is constantly increasing with regards to the previous year. Return on Equity (ROE) Return on equity mainly indicates the profitability of a company. In order for H-D to ever start becoming a very successful company, we must raise this value to as high as it can possibly be. By increasing this value, we can insure our investors and partners that the money they are putting into this company is being used effectively and their shares will be on the rise. For the next two years the management team will do whatever possible to have our Return on Equity above the investor’s expectations. Credit Rating H-D’s credit rating has been at its maximum for the past three years and as a management team for the next two years we will continue to keep our credit rating at the highest possible value, removing any unhidden costs due to our debts. Image Rating H-D’s image rating has been the most important factor over the simulation. We have realized a camera that cannot take the best quality pictures will have no use to any customer. For 6 the next two years we will keep this in mind and try our best to keep our image rating increasing positively, so our customers can be satisfied with the product they are buying. Stock Price H-D’s stock price is very important for the success of our business. Since we are struggling to make money selling our products, we can use the money we receive from investments and find different ways to make improve our product. By increasing our stock price more investors would be likely to buy our product because they can then sell it for more money than they bought it for, which is ultimately their main goal. For the next two years H-D will try to have our stock price greatly exceed the investor’s expectation by almost double. Company’s Competitive Strategy in Entry-Level Cameras Our company has considered a great deal of options when looking at how to provide the best cameras to consumers for a great price. With regards to this, our company has experimented with a number of different strategies. Our cameras have evolved over the past years to their current versions In general, our entry level cameras are a product that caters to a strong group of customers that are either enthusiasts looking for what only our product offers them, or they believe in the superior way in which we stand behind our products. With this in mind, we have always carefully considered every aspect in designing, building, improving, marketing, selling and supporting our cameras. Please see below for a look at our product design and marketing strategies, as well as to take a glance at Chart 7 so as to get a brief overview of our performance. Product Design: A camera’s primary goal is to take great pictures, pictures that hold precious memories. For this reason we have designed our entry level segment of cameras to provide anyone and 7 everyone with the opportunity to preserve a snapshot of their lives with our cameras. To accomplish this we have designed our cameras to be as low cost as possible while still remaining competitive with all other cameras on the market from other manufactures. Thus, the megapixel rating on our camera’s stand at 8.5 megapixels, this was an obvious choice, as the rating allows a camera to produce images that are of good high quality at greater than 20 x 25 cm, far higher than that of a standard photo size, and exceeds the needs of all but a professional photographer. It is also noteworthy to take into consideration that the higher the megapixel rating of an image, the larger the file size the image is. This directly translates into requiring a larger storage medium to hold the same number of images as a lower resolution image. The cost of memory cards can be quite high, and we found that this megapixel rating allowed for an excellent balance of quality and affordability. In regards to the other core components of the entry level cameras, we have thoroughly equipped it with a 3 by 4 cm LCD display screen, and a 2x optical zoom capability. These components keep the cost of the camera low, and still allow it to produce excellent photographs. We have opted to spend an equal amount of five dollars per component, this allows for good quality construction and interface development. We have improved the imaging device however to help produce excellent images. In regards to features, we have provided simply two features. This is a camera designed to be used, and as such we found it best to keep the device as simple as possible so that it can focus on its primary purpose. We have also dedicated a total of thus far nearly 12 million towards improving future iterations of our product, and continue to support improvement of the product by providing one million per year to this cause. As we have devoted ourselves to providing a cheap camera that does its job and suits anyone. We currently offer four different camera models, allowing our customers to have a 8 camera for anyone. Our camera’s carry a P/Q (performance/quality) rating of two stars. This indicates that our camera is a simple device at a low price point. Marketing: Our entry level cameras are sold globally and in all markets. We have focused equally on every market, and dedicated ourselves to providing the same top notch service in any corner of the globe. Having taken the demographics of the various geographic regions into account, we setup a presence within each of them to best meet our and our customer’s needs. We stand behind our cameras with a strong class leading warranty of two years. Our technical support budget for helping our customers enjoy their products is well above both the industry standard and average. We appropriately proportioned a budget to each region that is relative to the market share we hold. Pricing Strategy: Our pricing strategy had two major priorities. The first and most importantly was to price our cameras so as to optimally balance allow us to achieve the greatest possible net profit. To do this we had to finely balance keeping our cameras at a low enough price point so as to drive consumer demand for our product, and to also keep the price at a level so we could earn revenue. To do so, we evaluated each region individually. To that end, the pricing for our cameras in each region differed greatly. In general over the years, the cameras sold in North America retailed somewhere between $120 - $135. Our Europe-Africa and Asia-Pacific were relatively equal and sold for between $140 - $160. Our Latin America region was our largest market and was priced at between $160 - $175. Please see Chart 8 to view the pricing trends of the market over the past couple of years. Our cameras have always been priced
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