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- 2. COMPANY PERFORMANCE REVENUE EPS ROE STOCK CREDIT IMAGE Year 6 $ 180,485 $ 1.82 12.9% $ 27.30 A+ 63 Year 7 $ 244,392 $ 3.17 20.7% $ 41.79 A+ 74 Year 8 $ 274,307 $ 2.02 13.1% $ 38.18 A+ 81 Year 9 $ 236,901 $ 1.58 11.5% $ 29.82 A+ 76 Year 10 $ 221,149 $ 0.83 5.7% $ 22.79 A+ 75 Year 11 $ 243,265 $ 2.02 19.0% $ 27.93 B 75 Year 12 $ 246,271 $ 1.82 14.6% $ 24.48 B 75 SR
- 3. STRATEGIC VISION The strategic vision for Go-Go Cameras is of continued dedication to customer satisfaction with quality products, leading edge technology and fiscal soundness. Go-Go Cameras production and service quality is geared towards social responsibility that will be both profitable for the company, and beneficial to the consumer. RM
- 4. GO-GO SWAT ANALYSIS Strengths: Focused management and staff and communication. Weakness: Focus may be too narrow, marketing/Absence of strong sales, operating projections Opportunities: Co-branding, reduction in cost of production, and broadening the market Threats: Competition, Expectations, pricing pressures from competitors, and poor management strategy RM
- 5. PERFORMANCE TARGETS FOR FY 13-14 EARNINGS PER SHARE $2.75 - $3.25 Historic High $ 3.17 (FY 7) SB
- 6. RETURN ON EQUITY 19-20% Historic High 19-20.7% (FY 11 and 7)
- 7. CREDIT RATING A+ Historic High (FY 6-11)
- 8. IMAGE 70 Historic High 81 (FY 8)
- 9. STOCK PRICE $ 26.00- $30.00 Historic High $41.00 (FY 7)
- 10. ENTRY-LEVEL STRATEGY Kept three models Timing in Design Improvements Offer all cameras everywhere Consistent strategy in all markets SB
- 11. MULTI-FEATURE STRATEGY Narrowed our focus from three models to one Improve quality substantially Focus R&D on only one model SB
- 12. COMPETITION Biggest Competition: B and B Photography & Emprise Inc. Competitive Weaknesses: Multi Store Chains Tech Support Budget Advertising Pricing Entry-Level Warranty Period Entry Level PQ Rating Multi Feature Models SO
- 13. PRODUCTION STRATEGY Major area of concern Overtime vs. Outsourcing Low Productivity Low Compensation Training SO
- 14. GO-GO LESSONS LEARNED Be more proactive and less reactive. Focus decision making on geographic regions. Have a true goal, and define the company Taking more risks in borrowing earlier for a jumpstart Conservative dividend payments when warranted Less “if it aint broke, don’t fix it” strategies
Editor's Notes
- From year to year revenue typically increased. From year 6 $180,485 with an ending increase of $246,271 definitely shows overall improvement over the 6 years. Earnings Per Share fluctuated and had ups and downs over the years. Starting at $1.82, falling to an all time low of $0.83 in year10 and ending right back where we started at in year 12 at $1.82. ROE fluctuated peeking at 20.7% ending at 14.6% which is better than where it stared in year 6 at 12.9%. Year 7 stock prices were the highest at $41.79 with an overall median range of $35.38. Credit was strong with a maintained A+ for the over half of the life of the company, dropping to a B for the last 2 years. Image ratings were always strong. Improving from 63 to a consistent 75 and an 81 at the highest.
- Strengths: Focused management and staff, Communication, punctuality, and Strategy. Weakness: Focus may be too narrow, marketing/Absence of strong sales, operating projections, Opportunities: Co-branding, reduction in cost in production, and broadening the market. Threats: Competition, Expectations, pricing pressures from competitors, and poor managements strategy.
- Our goal over the next two fiscal years is to recover what earnings we have not achieved, while not being too overly optimistic in the ground that must be made up in sales and innovation, as well as a deep marketing plan.
- We did attempt a 4th quarter “salvo” in buying back some stock in FY11 to help ROE and it did help, while putting our credit rating, high for many years, in jeopardy which now has to be addressed in coming years.
- We have high standards for credit use and have historically carried little or not debt at all. We took a calculated risk to increase ROE by repurchasing stock in FY 11 and do have projected ability to repay debt to -0- in 2-3 years.
- Our image, with one small spike in FY 8, has not faltered much, but we unfortunately sat back on our laurels some and did not try to continually amaze our customers or improve our image, year upon year.
- We owe our stockholders, after many years of weak performance, some improvement and will continue to strive for a better value for their loyalty and faith in us.
- We kept three models and chose not change the entry-level model until we felt it had worn out it’s value as it was designed. Again, one of our least-strategic moves was to not change anything if it appeared nothing was wrong and therefore never got an edge on the Entry-Level market. We did not, until the very end, vary our strategy in different markets based on exchange rate or on our existing strength in certain markets.
- We only re-vamped the Multi-Feature segment dramatically only one time in our tenure, with a subtle adjustment in two features later on in the simulation. The decision to narrow our models to one was based on research that less might mean more in our efforts, advertising, etc. To have one outstanding camera versus many mediocre models could have been successful if we had truly taken it over and beyond all other models, not just lead, along with others, at a 3 -1/2 star PQ rating.
- Our biggest competition going into year 13 will be B and B Photography and Emprise Inc.. In order to overcome our competition we have a few key areas of our business that we need to improve over the next few years. Multi Store Chains: In order to increase the number of multi store chains willing to stock our brand we need to increase our PQ rating in the entry level camera division. We currently have one of the lowest rating at 2 ½ stars. I suggest we increase the rating to 3 stars.Tech Support Budget: Tech support was not a major weakness for our company, but we still averaged slightly less than our competitors. I suggest we increase the budget by 50 thousand per quarter in Europe and Africa, and North America.Advertising: I believe that we should increase our advertising budget by 100 thousand per quarter in all regions. It will be very important to increase advertising budgets since we are going to be increasing the PQ rating of the entry level division. We need to let consumers know that we are improving our products.Pricing: Our price is fairly competitive but somewhat high considering our PQ rating. If we are going to increase our PQ Rating then I suggest we raise our price only slightly to keep up with yearly inflation.Entry Level Warranty Period: Our competitors are offering a 1 year warranty period in almost all regions. As it stands right now, it may increase our cost, but if we increase our PQ rating our warranty claims should go down, offsetting any potential costs.Multi Feature Models: This is a difficult decision for our company, our PQ rating is higher than the industry average but we are the only company with only 1 model. We suggest we add at least 1 additional model, but we should not make this move until we have increased the PQ of our entry level as it will have increased costs associated with it.
- Production strategy has been a major area of weakness for our company. Up until FY10 we choose to produce the majority of excess units using overtime, and were hiring and laying off employees yearly. Our compensation and training costs were low compared to the industry which caused us to have low productivity. We realized this was not the proper strategy, and began outsourcing instead of using overtime. We began giving slight increases each year to base wages, incentive bonuses, attendance bonuses, fringe benefits, and quarterly PAT training and productivity improvement. After several years of increases however we were still 20% below the industry average for total compensation which killed our productivity.We think, in the future, we need to better balance the use of overtime and outsourcing. Overtime will probably be the best option in quarters 1,2, and 4 when unites assembled at regular time does not drastically exceed total units to be assembled. In Q3 we will probably need to utilize outsourcing and overtime depending on projected volume. We definitely need to continue increasing Compensation and Training for employees to increase to get closer to the industry average. We think this will help increase our productivity and help bring down our labor costs.
- Be more proactive and less reactive: Our company started struggling around Year 8, and as a team we became more reactive than proactive with our decision making. Wethink it would be much more beneficial to stick to a single strategy throughout the entire game, but with any learning experience such as this it is hard not to try and do what you think is best at the time. Focus decision making on geographic regions: I believe in the beginning of the simulation we looked at the decisions more holistically then we should have. Each region is different, and we should have taken advantage of the regions that we were already set up to be successful in. We had the approach of being at least 10% market share in each region, when we could have probably been the market leader in some regions and average in others. Once the exchange rates became a factor we began adjusting our decisions to the region, but I think that was a strategy we should have used from the beginning. We never defined the company’s true nature as to how we might look at leading the market, but used more of a “keeping up: attitude. We needed to be more true to our own goals and plans.We took on debt late in the game, therefore it hurt one of our more prized results in credit rating quality. Again, the move to repurchase shares was reactiev and somehwhat of a “last ditch effort” to improve ROE.We also sat back too much and waited for results, which are always hindsight, to direct us where to go next. We waitied until markets were “done” with us and our products and didn’t have growth plans in place.As stated previously, we needed to stay true to a plan, and had a plan that was not so generic or “average” . We wanted to be competitive, yet we never devised plans to excel and surpass others. We ended up taking the “we try harder” strategy instead of striving to be number one and never defined ourselves.We clung to our high credit rating and paid all initial debt down immediately, which did not give us the returns we thought we would get from doing it. Having no debt is noble, but there can be such a thing as good debt when it is an initial investment in initiatives that will reap rewards later on. We used debt late in the game to repurchase stock to help ROE, and while it helped us one year, it became an issue the next year we had to address and couldn’t pay it down as much as we wanted.