2007 3rd Place


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2007 3rd Place University of Washington

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2007 3rd Place

  1. 1. Title Page Resolution Consulting Resolution Consulting お早うございます
  2. 2. MISSION <ul><li>To increase net goals and efficiencies in line with the mission statement and guiding principles </li></ul>To promote Health & Happiness through the enjoyment of nature and the world around us To promote Health & Happiness through the enjoyment of nature and the world around us
  3. 3. AGENDA Increase net goals and efficiencies in line with the mission statement & guiding principles Current Trends SWOT Porter’s 5 Forces
  4. 4. AGENDA Recommendations Finance Marketing Supply Chain Managment Diversification Products Reclassification Rims Climbing Increase net goals and efficiencies in line with the mission statement & guiding principles
  5. 5. OBJECTIVE <ul><li>Mission Statement: To promote Health & Happiness through the enjoyment of nature and the world around us </li></ul><ul><li>Increase Sales </li></ul><ul><li>Ward off Risks </li></ul>
  6. 6. REVENUE CHANNELS Current Bike Fishing O Other 1.80% 1.80% 1.80% Other 23.70% 22.00% 24.20% Fishing 74.50% 76.20% 74.00% Bike 2005 2004 2003  
  7. 7. RECENT TRENDS <ul><li>Average growth rate of 2.4% annually </li></ul><ul><li>Percentage of COGS / Revenue is constant </li></ul><ul><li>COGS of bicycle components fluctuates with market prices </li></ul>The industry does not display consistent sales growth.
  8. 8. SWOT ANALYSIS <ul><li>Strengths </li></ul><ul><li>Brand name </li></ul><ul><li>Quality/Expertise </li></ul>Balanced pros and cons in current situation Opportunities Expanding into tech-specific outdoor industries Threat Currency risk Commodity prices Weaknesses Lead times Lack of diversification Frequent product launches
  9. 9. PORTER’S FIVE FORCES <ul><li>Substitutes </li></ul><ul><li>Currently low switching costs due to high modularity </li></ul>Some definite concerns that merit attention Rival Firms SRAM launching component group Campagnolo Specialty firms
  10. 10. SUPPLY CHAIN MANAGMENT <ul><li>Supply/demand uncertainties </li></ul><ul><li>Economies of scale- overproduction </li></ul><ul><li>Time & distance </li></ul><ul><li>Lack of storage space </li></ul><ul><li>Capacity constraint </li></ul><ul><ul><li>The supply chain issues identified to affect Shimano include time and distance and supply and demand uncertainties. </li></ul></ul>
  11. 11. VP of SALES <ul><li>“ Starting the beginning of 2003 we received strong orders, especially for high-end components. We projected a big increase in demand for some new products introduced (XTR, XT, Dura Ace), but we could not foresee the magnitude of the overall market development… in the first half of 2004 [orders] have been 5 times larger than the previous year…” ~ Hiro Hirata </li></ul>
  12. 12. SCM - SOLUTION <ul><li>New production facility </li></ul><ul><ul><li>Targeted toward bicycle assembly plants </li></ul></ul><ul><ul><ul><li>Giant- Taiwan, China, Netherlands </li></ul></ul></ul><ul><ul><ul><li>Specialized- Taiwan </li></ul></ul></ul><ul><ul><ul><li>Cannondale- Pennsylvania </li></ul></ul></ul><ul><ul><ul><li>Pacific Cycle- China </li></ul></ul></ul><ul><ul><li>Cost: $110 M </li></ul></ul><ul><ul><ul><li>Balanced out by product diversification </li></ul></ul></ul>The new production facility will result in increased inventory turnover and decreased lead time.
  13. 14. <ul><li>Tianjin </li></ul><ul><li>Third largest city in Mainland China </li></ul><ul><li>Large and fast growing manufacturing sector </li></ul><ul><li>Kunshan (Economic & Trade Development Zone) </li></ul><ul><li>Economically most successful county in China </li></ul><ul><li>Heavy emphasis on environmental friendly industries </li></ul><ul><li>Preference for precision machinery manufacturing </li></ul><ul><li>Shandong </li></ul><ul><li>One of the richer provinces in China </li></ul><ul><li>Economic development focuses on large enterprises (Tsingtao beer, Haier) </li></ul><ul><li>Second most populous province in China </li></ul>
  14. 15. INVENTORY TURNOVER The inventory turnover needs to be monitored as it has decreased over the past four years. The additional facility built for production will allow for less inventory to sit as work in process. 3.348 3.6639 3.637 3.554 Inventory Turnover           107724 108268 95299 88849 Cost of sales 32176 29550 26202 25001 Average 31803 32549 26551 25843 End 32549 26551 25853 24158 First 2005 2004 2003 2002  
  15. 16. DIVERSIFICATION <ul><li>The fishing products have added to our success </li></ul><ul><ul><li>25% of current sales </li></ul></ul><ul><ul><li>IGFA Lifetime Achievement Award </li></ul></ul><ul><li>Introduction of new products </li></ul>Shimano’s quality products have assisted diversifying its product line.
  16. 17. PRODUCTS <ul><li>Reclassification of existing products </li></ul><ul><ul><li>Increase usability </li></ul></ul><ul><ul><li>Maintain competitive advantage </li></ul></ul><ul><ul><li>Hybrid bikes </li></ul></ul><ul><ul><ul><li>Gas prices </li></ul></ul></ul><ul><ul><ul><li>11% of the retail sales </li></ul></ul></ul><ul><ul><ul><li>Middle of the market </li></ul></ul></ul>Simplifying the product line will allow Shimano to have a more efficient supply chain.
  17. 18. RIM SALES <ul><li>Approximately 10% of Shimano’s bike component sales </li></ul><ul><li>Target middle to high-end </li></ul><ul><li>Goal to increase net sales by 3% in 2007 </li></ul>There is a great opportunity for growth within Shinoma’s rim sales.
  18. 19. RIM POSITIONING Shimano is positioned well in the bicycle rim market. M S D X A Z M - Mavic S - Shimano D - Dt Swiss X - Xero A - Alex Z - ZIPP Price Performance
  19. 20. SURPLUS CAPACITY <ul><li>Climbing equipment </li></ul><ul><ul><li>Aluminum Alloy </li></ul></ul><ul><ul><li>Quality </li></ul></ul><ul><ul><ul><li>ISO 9001 Certification </li></ul></ul></ul><ul><ul><li>Precision instrument </li></ul></ul><ul><ul><li>In line with Shimano’s mission statement </li></ul></ul>Increased capacity can be used to generate additional means of revenue.
  20. 21. NEW PRODUCTS The climbing market is an outdoor niche market that Shimano can relate to.
  21. 22. COMMODITIES PROCUREMENT <ul><li>Commodity prices are rising </li></ul><ul><li>Boeing and Airbus </li></ul><ul><li>increasing orders </li></ul><ul><li>Growth of China </li></ul><ul><li>and India </li></ul><ul><li>Buy futures to </li></ul><ul><li>secure current </li></ul><ul><li>prices </li></ul>Due to increasing commodity prices, futures should be used.
  22. 23. CURRENCY RISK <ul><li>Significant exposure due to base in Japan </li></ul><ul><li>Yen likely to appreciate, albeit gradually </li></ul><ul><ul><li>International pressure </li></ul></ul><ul><ul><li>Most undervalued currency </li></ul></ul><ul><li>Hedge risk </li></ul><ul><ul><li>Lead strategy </li></ul></ul><ul><ul><li>Spread assets/liabilities around different banks </li></ul></ul>Yen could appreciate gradually, hedge exposure risk
  23. 24. MARKETING Current Australian Ironman Triathlon Skil/Shimano Pro-Cycling Team UCI Mountain Bike World Championships Pelton Project Increasing market efforts will aid in raising brand awareness across all product segments
  24. 25. MARKETING Increasing market efforts will aid in raising brand awareness across all product segments Increase Efforts Hawaii Ironman Triathlon Tour de France Sprint triathlon: increase brand awareness among beginner level athletes Increase positioning of Shimano rims against competitors
  25. 26. MARKETING <ul><li>Global Sales = 95% of net sales for bicycle components operation </li></ul><ul><li>Marketing Management – Preservation of Brand </li></ul>Promoting Shimano abroad as a “green company” to improve brand reputation Ensuring quality among overseas production ISO 14001 ISO 9000 Increasing market efforts will aid in raising brand awareness across all product segments
  26. 27. To increase net goals and efficiencies in line with the mission statement and guiding principles Competitors Campagnolo carbon-fiber SRAM threat of increasing market share Maintain Aluminum/Titanium Durability & Quality Capturing Potential Market Share Global Sales Management Investment in ISO certification to ensure quality among overseas production and promotion of brand reputation
  27. 28. <ul><li>Guiding Principles </li></ul><ul><li>Think Creatively </li></ul><ul><li>Continuous self improvement </li></ul><ul><li>Improve technical skills to accomplish dreams </li></ul><ul><li>Achieve objectives through innovation and responsiveness </li></ul>Long Lead Times New Production Facility Greater Efficiency
  28. 29. どうもありがとう
  29. 30. Appendix Undervalued Yen SWOT – S SWOT – W SWOT – O SWOT - T 5 Forces Switching Costs Volume Substitute Rivalry Rivalry 2 Climbing Market Climbing Revenue Climbing Companies Positioning Support IGFA Awards Timeline Decision Matrix ISO 9000 ISO 14001 UCI Tour De France Mavic
  30. 31. SWOT - Strengths <ul><li>Strong brand name and reputation in the industry </li></ul><ul><li>Strong supporter of environmental friendly operations </li></ul><ul><li>Excellent quality and precision with all of our products </li></ul><ul><li>Largest market share in high-end bicycle components </li></ul><ul><li>Strong Manufacturer relationships </li></ul><ul><li>Lack of long-term debt </li></ul>
  31. 32. SWOT - Weaknesses <ul><li>Lack of diversification in our product line </li></ul><ul><li>Lead time: 120 days </li></ul><ul><li>Possible conflict with monopoly regulations </li></ul><ul><li>Too many product introductions </li></ul>
  32. 33. SWOT - Opportunities <ul><li>CAMS/carabineers </li></ul><ul><ul><li>We are already familiar with the materials involved in manufacturing </li></ul></ul>
  33. 34. SWOT - Threats <ul><li>Currency Risk </li></ul><ul><li>Rising cost of commodities </li></ul><ul><li>Cyclical demand for biking products </li></ul><ul><li>Market Saturation (Europe?) </li></ul>
  34. 35. Bargaining Power of Customers – Switching Costs <ul><li>Originally, lower – customers frequently purchased different components from different manufacturers </li></ul><ul><li>Companies are now trying to increase switching costs by producing components that operate at peak performance when used in conjunction with other components manufactured by the same company </li></ul>
  35. 36. Bargaining Power of Customers – Buyer Volume <ul><li>Subjective </li></ul><ul><ul><li>Frame Manufacturers purchase in greater volume – allows them to have greater bargaining leverage </li></ul></ul><ul><ul><li>Consumers can also purchase components individually </li></ul></ul><ul><li>Shimano refuses to offer volume discounts reducing bargaining power of customers by volume in relation to price </li></ul>
  36. 37. Threat of Substitute Products <ul><li>Switching Costs – Low, but beginning to increase. </li></ul><ul><ul><li>Although components from different companies can work together, performance is best when components are consistent by manufacturer </li></ul></ul><ul><li>Price – currently lower than 2 main competitors </li></ul>
  37. 38. Intensity of Competitive Rivalry <ul><li>Campagnolo </li></ul><ul><ul><li>focusing on the three fundamental concepts that would also characterize its future - technological innovation, after-sales service and pursuit of customer satisfaction thanks to products of forceful personality. </li></ul></ul><ul><ul><li>Dominating carbon-fiber sector </li></ul></ul><ul><li>SRAM </li></ul><ul><ul><li>60% of mountain bike shifter market </li></ul></ul><ul><ul><li>2005 announcement of first road bike component group in 2007 – allowing them to enter the high-ened road market </li></ul></ul><ul><ul><li>Can SRAM have shorter lead times than Shimano? </li></ul></ul><ul><li>Frame Manufacturers </li></ul><ul><ul><li>Starting to manufacture their own parts </li></ul></ul><ul><ul><li>This is a heavy cost for them </li></ul></ul>
  38. 39. Intensity of Competitive Rivalry <ul><li>Industry Growth </li></ul><ul><ul><li>Industry Growth is slow </li></ul></ul><ul><ul><ul><li>Demand for cycles is relatively slow but industry is still changing with innovation </li></ul></ul></ul><ul><li>Level of Advertising Expense </li></ul><ul><ul><li>Sponsorship </li></ul></ul><ul><ul><ul><li>SRAM is starting to sponsor teams </li></ul></ul></ul><ul><ul><ul><li>Campy had shared equal sponsorship of teams with Shimano </li></ul></ul></ul>
  39. 40. UNDERVALUED YEN <ul><li>Japan's currency </li></ul><ul><li>The cheap yen is dangerous </li></ul><ul><li>Feb 8th 2007 From The Economist print edition </li></ul><ul><li>THE yen is perhaps the world's most undervalued currency. It is even cheaper than the Chinese Yuan by some measures. Last week the Japanese currency hit an all-time low against the euro and its real trade-weighted value fell to its lowest since at least 1970, according to an index tracked by JPMorgan. </li></ul>
  40. 41. CLIMBING MARKET <ul><li>6,000,000 in US </li></ul><ul><li>29,000,000 Worldwide </li></ul><ul><li>Annual spending of $400 </li></ul><ul><li>35% of spending is on equipment </li></ul>
  41. 42. CLIMBING REVENUE <ul><li>29 Million People x $400 x 35% x 30% = amount spent on annual climbing hardware </li></ul><ul><li>30% of market available </li></ul><ul><li>Estimate 20% of available market </li></ul><ul><li>Retail 40% </li></ul><ul><li>Distributor 30% </li></ul><ul><li>Mfg 15% </li></ul><ul><li>Shimano 15% = 8.34 Million USD </li></ul>
  42. 43. POSITION SUPPORT 263 284244 Dt Swiss 10 4800000 Xero 225 391319 ZIPP 233 52957 Shimano 589 153000 Mavic 83 2200000 Alex Links Web Rank Company
  43. 44. IGFA Awards <ul><li>Shimano and anglers to be honored at IGFA World Record Achievement Awards By IGF- 3/22/07 </li></ul><ul><li>Shimano will be honored with the International Game Fish Association's Lifetime Achievement Award at the IGFA's Fourth Annual World Record Achievement Awards celebration, April 28th.Other tackle, lure and line manufacturers will also be honored based on the number of computer printouts of anglers using their products in setting the new records in 2006. </li></ul><ul><li>Shimano is receiving a lifetime achievement award as the only rod and reel manufacturer ever to have achieved the incredible feat of 3,000 IGFA world records ,&quot; said IGFA Conservation Director Jason Schratwieser. </li></ul>
  44. 45. Timeline Introduction of climbing gear Rims marketing campaign begins New factory construction New factory completed Green marketing campaign begins ISO certification 2007 2008 2009
  45. 46. Decision Matrix More revenue, brand dilution Creative thinking Not an advantage Outsource production More revenue, in core competencies Innovating through technology Technology advantage Brand Extension through outdoor sports More revenue, not feasible Not aligned Not an advantage Target low end Benefits & Drawbacks In line with mission statement Competitive advantage
  46. 47. ISO 9000 <ul><li>ISO 9000 is a family of standards for quality management systems. ISO 9000 is maintained by ISO, the International Organization for Standardization and is administered by accreditation and certification bodies. Requirements include: </li></ul><ul><ul><li>a set of procedures that cover all key processes in the business; </li></ul></ul><ul><ul><li>monitoring manufacturing processes to ensure they are producing quality product; </li></ul></ul><ul><ul><li>keeping proper records; </li></ul></ul><ul><ul><li>checking outgoing product for defects, with appropriate corrective action where necessary; and </li></ul></ul><ul><ul><li>regularly reviewing individual processes and the quality system itself for effectiveness. </li></ul></ul>
  47. 48. ISO 14001 <ul><li>The ISO 14000 environmental management standards exist to help organizations minimize how their operations negatively affect the environment (cause adverse changes to air, water, or land), comply with applicable laws, regulations, and other environmentally oriented requirements, and continually improve on the above. </li></ul><ul><li>ISO 14000 is similar to ISO 9000 quality management in that both pertain to the process (the comprehensive outcome of how a product is produced) rather than to the product itself. As with ISO 9000, certification is performed by third-party organizations rather than being awarded by ISO directly. The ISO 19011 audit standard applies when auditing for both 9000 and 14000 compliance at once. </li></ul><ul><li>ISO 14001 is the standard against which organizations are assessed. ISO 14001 is generic and flexible enough to apply to any organization producing any product or service anywhere in the world. </li></ul>
  48. 49. UCI – Union Cycliste Internationale <ul><li>2004 UCI TRACK WORLD CHAMPIONSHIPS </li></ul>Reference Only: 2007 Participants List
  49. 50. Tour de France – Number of Viewers <ul><li>In terms of publicity, reporters represent 445 newspapers in 27 countries. 56 television channels blanket 169 countries with a total number of viewers estimated at more than a billion during the three-week race. Forty-three national radio stations cover the race along with 59 local French stations. </li></ul>Reference: International Herald Tribune
  50. 51. Mavic <ul><li>Mavic is a French bicycle parts manufacturer whose name is an acronym for Manufacture d'Articles Vélocipédiques Idoux et Chanel founded by Charles Idoux and Lucien Chanel. The company is most noted as a manufacturer of bicycle wheels. Many competitive cyclists such as those in the Tour de France ride on Mavic wheels. Mavic is based near St. Etienne, France. </li></ul>
  51. 52. Climbing Industry <ul><li>Black Diamond </li></ul><ul><li>Alien Cams </li></ul><ul><li>Metolious </li></ul><ul><li>Omega Pacific </li></ul><ul><li>Forged Friends </li></ul><ul><li>Wild Country </li></ul>
  52. 53. RIM SALES Revenue channels are heavily weighted by bike components.