An analysis of SkullCandy with strategic management tools e.g. PEST, 5 Forces, Core Competencies, Value Chain Analysis.

1. Skullcandy, Inc.
Prepared by:
Jack Ng
Updated as at 23 Nov 2015 5pm
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2. NOTE to Students
• This is my effort to guide you in strategic
management
• It is by no means a complete analysis
• You MUST put in your own effort to
differentiate from others and achieve
competitive advantage.
~ Jack Ng
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3. Skullcandy
Skullcandy, Inc. is a designer, marketer and distributer of audio and
gambling headphones, earbuds, speakers and other accessories
under the Skullcandy, Astro Gaming and 2XL brands.
Distributed in the United States and about 80 countries around the
world.
A range of styles and price points and comprises sound products
and categories, for example gaming and sports functionality,
women’s as well as Wireless offerings, along with ventures with
manufacturing companies to license its brand.
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4. Skullcandy
ASTRO GAMING holds 6 PATENTs
ASTRO Gaming, creators of premium video gaming equipment,
today announced the issuance of U.S. Patent Number 8,602,892
directed to technology used in team-based LAN communication,
which is used in gaming competitions and professional gaming
circuits. The patented technology is employed in ASTRO Gaming’s
Game Communications Exchange, more commonly known as the
Team MixAmp™.
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5. Skullcandy
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6. Skullcandy
The Company operates in two segments: Domestic and
International.
The National segment consists of Skullcandy and Astro Gaming
merchandise sales to customers in the United States.
International segment comprises Skullcandy merchandise sales
to customers in Europe, Asia, Canada and Mexico, which are
served through the Organization ‘s joint venture and other
geographic areas outside the United States served by its
International businesses.
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7. Skullcandy
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8. Skullcandy
Skullcandy (NASDAQ:SKUL) traded up 4.55% during midday trading on
Tuesday, reaching $5.75. 85,802 shares of the company’s stock were
exchanged.
Skullcandy has a 52 week low of $5.40 and a 52 week high of $11.83.
The stock’s 50 day moving average is $6.01 and its 200 day moving
average is $7.60. The firm has a market capitalization of $163.48
million and a P/E ratio of 23.28.
Posted by Scott Davis on Oct 28th, 2015
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9. Skullcandy
• Net sales: $67.2 million vs. $58.1 million, up 16% (up 19% currency
neutral)
• Gross margin: 41.0% vs. 45.3%, down 430 basis points (down 272
basis points currency neutral)
• Selling, general and administrative expense (SG&A): $24.5 million
vs. $22.7 million, up 8%
• SG&A expense as a percent of net sales: 36.4% vs. 39.2%
• Operating income: $3.1 million vs. $3.6 million, down $0.5 million
(up 29% currency neutral) (Affected by Currency exchange)
• Earnings per share $0.08, up 8% (up 29% currency neutral)
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10. Skullcandy
"Our brands symbolizes youth and rebellion, and embodies our
motto, 'Every revolution needs a soundtrack."
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11. PEST
You must develop your own full PEST analysis
Here are just some of my thoughts, not complete
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12. Economic
What are the facts?
Fed puts December rate hike firmly on the agenda
The U.S. dollar rose sharply and yields for U.S. government debt
soared in anticipation of higher rates.
Skullcandy's Q3 2015 results were negatively affected by
currency issues in its International markets.
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13. Technology
Smartwatches and Smart Bands
Dominate Fast-Growing Wearables
Market
Wearables Shipments to Hit 22
Million in 2014 up 129% from 2013
By 2018 over 250 million smart
wearables will be in use, 14 times
more than in 2013
What about smart phones?
All these have great impact on
the sales and direction of SC
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14. Technology
Data Analytics Help Brands and Retailers Monitor the
Competition
And brands are now able to track what their rivals are doing on
Instagram through a customizable mobile app.
The analytics firm's system also automatically combs through
retailer sites to monitor how client brands measure up against
competitors.
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15. Technology
Mobile broadband penetration has risen to 81.3% in the OECD
area (23 July 2015)
Fiber-optic broadband 15.8 percent in the OECD area (2013).
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16. Technology
The European Commission is striving to push Europe toward a
new broadband goal for 2020: 100 percent coverage at speeds
of 30Mbps or better and 50 percent coverage at 50Mbps or
better
High speed Internet Broadband lead to LAN Gaming
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17. Social / Technology
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18. Social / Technology
Growth in the use of mobile devices and increasing disposable
income are projected to drive industry revenue growth in the next
five years
Gartner Says Worldwide Smartphone Sales Recorded Slowest Growth
Rate Since 2013
Smartphone Sales Declined for the First Time in China
Android's Year-Over-Year Growth Rate at its Lowest
(20 Aug 2015)
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19. Industry 5 Forces Analysis
You must also develop your own 5 Forces analysis
Here are just some of my thoughts, not complete
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20. Industry Analysis
Intensity of Rivalry – High
Many competitors in the market: Audio-Technica, Beats by Dre,
sennheiser, bose, sony, Shure, Grado
Barriers to entry are low in audio high tech industries
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21. Industry Analysis
Intensity of Rivalry – High
POLL: Beats vs Skullcandy vs Bose vs Sony
Discussion in 'The Vestibule' started by Hal-
sephira, May 11, 2014.
This poll may not be representative
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22. Roughly, 600 headphone manufacturing businesses globally.
Increased Competition
Branding is critical
Market Saturation
Intensity of Rivalry – High
Industry Analysis
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23. Market
…
Mature market, More intense competition 23

24. …
Industry Analysis
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25. Market
…
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26. Industry Analysis
.
Define the buyers,
end consumers?
Distributors?
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27. Industry Analysis
.
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28. Industry Analysis
.
Example of substitutes: portable Speakers, blue tooth speakers, phones with built-in
speakers, Music players with phone docking station.
Define the
Industry here
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29. Industry Analysis
.
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30. Industry Analysis
.
Apple, Skullcandy Faces Competition in Zound Industries
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31. Industry Analysis
.
MUZIK - First pair of “smart” headphones are attractive, work wirelessly,
and even let you share what you’re listening to on Facebook or Twitter,
thanks to four programmable smart buttons right on the ear cup. You
can even control the volume and playback using swiping gestures on
that same ear cup. 31

32. Industry Analysis
.
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33. Skullcandy
Opportunities
Technological Innovation in wearables, phones
Recognition of opportunity in Action Sports
LAN Gaming
Threats
Highly competitive industry
Perceived utility of competitor's product
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34. Marketing Video
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35. Marketing Video
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36. Core Competencies
Strong management support of the new CEO Hoby Darling in 2013 in
rebuilding the team and employee morale in order to make a great
company.
Darling was the general manager of Nike+ Sport
Darling believes that success is about getting people engaged in
producing amazing products and telling stories, and it is through these
emotional, authentic stories you tell that your customers connect
passionately with your brand and your products.
rebuild the base— the people, values, and culture —which would
then result in remarkable products and an emotional, authentic
connection with consumers, which would inevitably produce financial
results.
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37. Core Competencies
Culture: Company executives also stopped working in offices and now
occupy cubicles with the rest of the team to increase communication.
In Darling’s view, the strategy is working: Employees are engaged
authentically with the brand and customer. The products are more
about being disruptive with how "Sal" and "Aaron" experience audio
versus just optimizing. And Skullcandy is starting to tell emotional
stories.
New Skullcandy Human Potential Labs, a.k.a. the “Boom Box”. This
state of the art facility studies the effects of music on individuals and
focuses on discovering ways to unlock human potential through
music.
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38. Core Competencies
In-house research crew is led by three-time Olympian Emily Cook
and supported by our talented teams of artists, athletes, engineers
and industrial designers. To accelerate our learning, we’ve also
teamed up with the most influential research minds at the
intersection of the mental, physical and musical worlds. Our
committee consists of experts from a variety of specialized fields
including Dr. Andy Walshe, Director of Redbull’s Global Athlete
Development Program; Dr. Leslie Saxon, Executive Director of Body
Computing at the University of Southern California; and Dr. Nichole
Detling, renowned Sports Psychologist and Ph.D who consults with
an impressive array of professional athletes.
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39. Core Competencies
ASTRO GAMING holds 6 PATENTs
The Team MixAmp facilitates team communication at professional
LAN gaming competitions by providing teammates with zero-lag, full-
duplex voice communication seamlessly mixed in with each gamer’s
individual game audio.
The Team MixAmp also provides broadcasters and tournament hosts
with the ability to tap into and broadcast to their viewers live team
chat and game audio during gaming competitions as popularized by
the “Listen-In with Astro” segments seen at many gaming
tournaments over the years.
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40. Core Competencies
Skullcandy CEO Hoby Darling highlighted what worked during the
quarter. "Our product innovation, demand creation and distribution
strategies are resonating with Skullcandy and Astro consumers around
the world." Darling said. He continued:
Our deep relationship with our consumer, coupled with our ability to
be nimble and quick to market allows us to serve our consumer
innovative and creative products that align with current trends. Our
new Skullcandy wireless ear buds and headphones are a great
example and an awesome addition to our existing product lineup that
already includes several of the best-selling styles at retail. Strong sell-
through of our new wireless products and increased year over year
sales of our traditional wired products contributed to Skullcandy being
the number one chosen headphones in the US for the fourth
consecutive quarter.
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41. Core Competencies
The focal point would be culture, with the other two company
pillars of people and values built into Skullcandy’s everyday
operations. Everything from the office layout to the type of
team member hired at Skullcandy to the relationships
between individuals — both inside and outside the office —
was going to be different. (from Mark Burns article)
Culture
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42. "We believe we have revolutionized the headphone market by
stylizing a previously-commoditized product and capitalizing on the
increasing pervasiveness, portability and personalization of music.”
Core Competencies
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43. value chain analysis
Please construct one
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44. Value Chain Analysis
Marketing & Sales
Strong branding and PR e.g. Skullcandy Partners with Expert Skydiver
Andy Stumpf in World Record Breaking Jump.
Using Data Analytics measuring where it stands against the
competition. Skullcandy relies on HookLogic to provide aggregated
data from a network of retail sites including Target, Walmart, Costco,
Macy's and Best Buy and ensuring that Skullcandy products, for
example, are prominently displayed in ads alongside rivals.
The system lets Skullcandy see how many people viewed its product
pages across a category. Skullcandy then promotes those pages
further
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45. Value Chain Analysis
R&D
With innovation at the forefront of the company's mission,
Skullcandy continues to expand its technology and research
pursuits. The mission comes to life through an in-house product
development team and Skullcandy's new Human Potential Labs,
a program that seeks to understand how music, science and
technology can unlock human potential.
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46. HR
Skullcandy Recognized in OUTSIDE Magazine as One of the Best Places
to Work for 2015.
Skullcandy encourages employees to lead an active lifestyle, are eco-
conscious, and prioritize giving back to the community.
"The companies recognized in this year's Best Places to Work list are
the gold standard for stellar work environments that seek to empower
their employees both in and out of the office," said OUTSIDE Online
Editor Scott Rosenfield.
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47. Differentiation Strategy?
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48. Cooperative Strategies
Skullcandy collaboration
with iconic Australian
fashion brand MINKPINK.
Targeting at women
(Nov. 19, 2015)
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49. Cooperative Strategies
Skullcandy Partners with
Expert Skydiver Andy
Stumpf in World Record
Breaking Jump (Nov. 2,
2015)
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50. One Last Thing
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52. Stay Hungry, Stay Foolish
• Stay Hungry - Never be satisfied, and always
push yourself further.
• Stay Foolish - Do the things people say cannot
be done.
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53. 53

54. “Don’t ever let someone tell you, you can’t do
something. Not even me.”
~ Chris Gardner – On Pursuits Of Happyness
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