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G-Force Air pres.pdf MGO306
- 1. MGO 403 - Fundamentals of Strategic Management (L01) BSG Presentation Lee Tjin Hao Jermaine Joel 50325331 Natalie Young 50321565 Nurul Abyana Binte Saifullizam 50294310 Ross Michael Gomes 50330830
- 3. Table of contents Years 11-15 3-Year Plan Outcomes & Learning Points Year-by-year Projected vs. Actual 01 02 03 04
- 4. Years 11-15 01 Before the 3-Year Plan
- 5. Our Initial Plan Differentiation Increase number of models along the years S/Q Rating & Models High S/Q rating with Low number of models Shift in Strategy Decided to go for value for money strategy
- 6. Before our 3-Year Plan Our Rankings: Year 15 Year 14 Year 15 Overall 5th 8th 7th
- 8. Our Competitors’ Rankings Year 14 Year 15 Year 15 GTD 1st 1st 1st 6th 4th 5th 3rd 3rd 3rd 2nd 5th 4th 5th 8th 7th
- 9. End of Year 15 Status
- 10. End of Year 15 Status Net Revenues (in millions) Industry Average (in millions) Internet $ 159 194 Wholesale $ 449 503 Private-Label $ 18 42 Total $ 684 773
- 11. EPS ROE Stock Price Credit Rating Image Rating $2.28 12.8% $14.07 C 91 $4.50 25.0% $100.00 A- 75 $4.12 19.6% $61.93 B- 100 $5.84 24.8% $117.72 B 99 Investor’s Expectation JamJam WhamBam
- 12. Key Financials Details (Year 15) Below Average Total Net Revenue 13% Below Average Gross Profit 21% Below Average Net Profit 86% Cash Overdraft EOY Net Cash Balance $3.8M
- 13. 3-Year Plan 02 Projected 3-Year Plan
- 14. Porter's 5 Forces Threat of New Entry Low Possible but unlikely Substitutes None Buyer Power High Retail, Online consumers, Private-label Supplier Power High Monopoly - Complete control over prices Competitors All 4: A & J NA & EA: H LA & AP: C
- 15. Year 15 SWOT Analysis T Threats - Strong competition - Group A, J in all regions - Group H in NA & EA - Group C in AP & LA - Fluctuations in Exchange Rate S - High Image Rating (21% above average) - Lowest Reject Rates - High Quality (S/Q rating) - Largest facility in LA & 2nd largest in AP Strengths O Opportunities - Possible celebrity endorsement - Low competition in other segments (Availability of other strategies) W Weaknesses - Low Market Share - No celebrity endorsement - Low Models
- 16. Price and S/Q Rating Product Line Breadth J H G G D E F I B A C G G Year 15 Price and S/Q Rating Product Line Breadth D E F C A J I H B Year 16 Change in Strategies ● High S/Q & Price ● Low models ● High S/Q & Price ● High models
- 17. 3-Year Plan Vision Statement We strive to be the first choice provider of luxury footwear worldwide. To produce high-quality shoes that are accessible to a range of markets and demographics. We aim to triumph in both the wholesale and internet markets with higher quality and variety of models, and a bigger network of retail outlets carrying our brand. G-Force Air, We can take you there!
- 18. 3-Year Plan - Branded Production Targets Branded Manufacturing ● Aim for high operating profit margins with substantial market share. ● Maintain high internet and wholesale prices (above industry average) Branded Cost of Pairs Sold ● Decrease costs for all 4 regions.
- 19. 3-Year Plan - Private-Label Production Targets Private Label Manufacturing ● Lower costs. ● Maintain prices for all 4 regions and maintain S/Q rating. ● Win 20% market share for each region every year. Private Label Cost of Pairs Sold ● Pricing our shoes slightly below previous year’s lowest price (with 20% market share).
- 20. 3-Year Plan Operating Projections North America Europe-Africa Asia-Pacific Latin America Branded Price Maintain Maintain Maintain Maintain Private-Label Price Maintain Maintain Maintain Maintain Warehouse Expenses Decrease Decrease Decrease Decrease Marketing Expenses Increase Increase Increase Increase Pairs Sold Increase Increase Increase Increase Cost per Pair Decrease Decrease Decrease Decrease
- 22. 3-Year Plan Performance Targets $5.98 EPS Year 16 $6.54 Year 17 $7.00 Year 18 28.6% ROE 27.3% 28.0% $50.00 Stock Price $150.00 $180.00 B Credit Rating A- A 93 Image Rating 100 100
- 23. Year 16 Projected vs Actual What went right? - Successfully differentiated ourselves from competitors - Lower production costs as shoes were only produced in one region Rankings Year 16 Scoreboard: 1st Game-to-Date Scoreboard: 2nd $6.05 Actual 28.9% $104.56 B 92 $5.98 EPS Projected 28.6% ROE $50.00 Stock Price B Credit Rating 93 Image Rating
- 24. Year 17 Projected vs Actual What went wrong? - Too little production facilities to meet expected demand Rankings Year 16 Scoreboard: 4th Game-to-Date Scoreboard: 4th $5.54 Actual 21.8% $87.28 B+ 92 $6.54 EPS Projected 27.3% ROE $150.00 Stock Price A- Credit Rating 100 Image Rating
- 25. Year 18 Projected vs Actual What went wrong? - Lost over 60% of private label bids - Market share was limited by the amount of production facilities we had What went right? - Used excess cash to pay dividends and buy back shares Rankings Year 16 Scoreboard: 5th Game-to-Date Scoreboard: 4th $6.99 Actual 28.0% $147.36 A- 86 $7 EPS Projected 28% ROE $180.00 Stock Price A Credit Rating 100 Image Rating
- 26. Actual Performance Overview $6.05 Year 16 (Actual) $5.54 Year 17 (Actual) $6.99 Year 18 (Actual) 28.9% 21.8% 28.0% $104.56 $87.28 $147.36 B B+ A- 92 92 86 $5.98 EPS Year 16 (Projected) $6.54 Year 17 (Projected) $7.00 Year 18 (Projected) 28.6% ROE 27.3% 28.0% $50.00 Stock Price $150.00 $180.00 B Credit Rating A- A 93 Image Rating 100 100
- 28. Outcomes ● Ranking held steady at 4th place for the last 2 years (GTD scoreboard) ● Plan was not very accurate because we were overly optimistic in our predictions ● Increased number of models to segregate ourselves from our competitors ● Corporate Responsibility Award ○ Year 15, 2nd place ○ Year 16, winner ○ Year 18, 2nd place
- 29. Competitors (Year 16-18) ● Iris Footwear was our key competitor in 3 regions ○ High value, high model ● No direct competitor in Latin America region ● We did our best to stay competitive by changing our strategy to segregate ourselves from our previous competitors
- 30. Ending Status (Year 18) Below Average Net Profit $104M Below Average Net Sales Revenue $740M Below Average Market Share 6.2% Below Average EOY Net Cash Balance $7M
- 31. Learning Points ● How the functional pieces of a business fit together ○ The revenue-cost-profit economics of a business ● Valuable practice in crafting profitable growth strategies ● Useful experience and practice in assessing business risk ● Apply the collective skills and knowledge learned in business school