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Paradigm Electronics
- 1. Paradigm Electronics Dennis Stovall & Associates
- 2. Introduction Slide • Corporate name: Paradigm Electronics • Mission: – Paradigm Electronics is a cutting edge technology company. We provide innovative and affordable technology solutions for today's families, offices and travelers by focusing on packaging complete products that are easy to use and meet the changing demands of our customers. • Target Markets: Traveler and Workhorse
- 3. Current Situation • Strengths: – 2nd ranked team overall for total performance – Industry leader in financial performance, marketing effectiveness, HR, manufacturing productivity and financial risk. – Leading, or 2nd in brand judgment
- 4. Current Situation • Weaknesses: – Below cumulative industry average in market performance and asset management. – Consumers felt pricing was high in both markets
- 5. Current Situation • Market leader in Workhorse • Second in Traveler
- 6. Analysis of What Does Not Work • One Product for multiple target markets • Not producing enough inventory to meet all demand created by sales staff and advertising
- 7. Direction to Take • Product: – Develop a specialized product for Mercedes industry – Redesign Workforce product to not include unneeded expenses
- 8. Direction to Take • Ensure manufacturing produces excess inventory to fill all orders • Lower pricing to meet customer expectations
- 9. Direction to Take • Investments: – Continue to invest in the future – Continue to invest in market research
- 10. Conclusion • Increase in market share • Increase in brand judgment
- 11. Conclusion • Increase in revenue • Increased financial strength • Increase in asset management
- 12. References Bont, C., & Hamersveld, M. (2007). Market research handbook. Chichester, West Sussex, England: John Wiley & Sons. Chapter 4: The Market Research Process. Page 99-128. Cadle, J., Paul, D., & Turner, P. (2010). Business analysis techniques: 72 essential tools for success. Swindon, England: British Informatics Society Limited. Crawford, C. (1977).Marketing Research and the New Product Failure Rate. In Journal of Marketing. (p.52). Retrieved from Kaplan University Library. Olve,N. Petri,C.,Roy,J.,Roy,S.(2004). Making Scorecards Actionable. In TWELVE YEARS LATER: UNDERSTANDING AND REALIZING THE VALUE OF BALANCED SCORECARDS. Retrieved November 10, 2004, from http://www.iveybusinessjournal.com/topics/governance/twelve-years-later- understanding-and-realizing-the-value-of-balanced-scorecards#.UnxsIvlJ7uY Rucci Jr., W. F. (Summer 2012). Fine-tuning your financial operations: What your financial statements tell you - and why you should listen. Massachusetts Family Business, 14-22.
Editor's Notes
- Team Introduction The virtual team name Cyber Achievers, as it was suggested by the team members during an initial discussion seminar, was chosen due its associative nature within the virtual business’s industry, as well as playing off the “A” in Team A. The name was actually a combination of two suggestions, Cyber Masters and Achievers, displaying the use of integrative thinking and collaboration amongst the group. This virtual team has chosen to commit themselves to maintaining a diligent communications dialogue throughout the exercise by using the Balanced Scorecard dialogue parameter as prescribed by the Ivey Business Journals best practice of Making Scorecards Actionable (Olve, et al., 2004).
- In the first quarter the virtual company name became Paradigm Electronics. The strategy, it was decided, would focus on two distinctive computer brands that would serve the two highest rated computer industry segments; those being Traveler and Workhorse. The strategy was developed around the company’s mission and goals which was to provide the common consumer industries, family, office staff and business travelers with an ideally innovative computer(s) that incorporated both elegant and practical styling and software programs. The products created were Black Star Laptop and Quantum PC. Our strategy was to create products that meet the needs of our customers as well as generate revenue to expand our business. With large monitors, high speed computing power and software applications for presentation, database management, and book keeping, Paradigm Electronics remains competitive in the world of technology. There are techniques that can help in guiding the process of developing a successful business. The Porter’s Five Forces Framework technique encourages awareness of the external business environment. It is imperative to have knowledge of your competitors, acknowledge any barriers in company development, be aware of product substitutions, understand the choice of consumers, and familiarize yourself with other companies that provide similar products and services (Cadle, 2010). This information provided structure in our business and allowed for proper strategizing to meet the clients need.
- The Balanced Scorecard is an amazing management and communication tool that can help an organization focus on what’s most important. “The balanced scorecard is one of the most successful, endurable management concepts in recent years, but it is also frequently misunderstood” (Olve, 2004, p.1). The final unit 4 evaluation indicated that the company had many strengths on the balanced scorecard. Second in overall performance, we were the industry leader in financial performance, marketing effectiveness, human resources, manufacturing productivity and financial risk. The team strategy was to discuss the current status regarding each of the simulation components such as the financial section for needed adjustments and the manufacturing section for upgrades while endeavoring to keep the Paradigm Ltd.’s balanced scorecard optimized with that of the industry benchmarks for each quarter.
- The final unit 4 evaluation indicated that the company’s weaknesses were in market performance and asset management. In addition, consumers felt pricing was high in both target markets according to market research. The team strategy was to discuss the current status regarding each of the simulation components such as the financial section for needed adjustments and the manufacturing section for upgrades while endeavoring to keep the Paradigm Electronics’ balanced scorecard optimized with that of the industry benchmarks for each quarter.
- The final unit 4 evaluation indicated that the company was the market leader in the Workforce market and second in the Traveler market. We were second in overall market share with 27% of the market.
- At the end of quarter four several industrial financial ratios indicated overall low averages. They were Net Profit Margin, which indicated that net income was on average, a negative balance (-6.11) in regards to sales. Return on Assets (ROA-8.85) indicated that on average (for the year) the company’s resources were not proficient in generating revenues. Return on paid in Capital (-14) indicated that after tax operating income was not in balance with the overall value of the capital investments for the company at years end. Both the Sales Force Expense Account ($581,354) and Sales Office Expense Account ($350,000). Accounts total ($931,354) dollars. It seems these large expenses are not helping to generate revenues as effectively as they could. One challenge the team encountered in the forth quarter included trying to add engineering software to the product targeting Workhorse. This made the product overpriced for the Workhorse market and they were less satisfied with the product than in the previous quarter. In addition, we created a heavy demand for the product with effective marketing and sales staff, but were unable to meet the demand in quarter three. This caused ill will and a loss of customers for the forth quarter.
- The team reviewed market research, industry averages and financial tools to determine our direction. The “idea is to collect and review information at a pace that makes for better decision-making” (Rucci, Jr., p.14). Looking for trends and variances over quarters helped identify issues that need to be addressed. Reviewing cash flow, income statements and balance sheets helped insure we are meeting our organization goals in a financially smart way. The company’s computer designs need to be reanalyzed for more market compatibility. Operating Profit needs to be reanalyzed and adjusted so that it is more that 19.3 % above Operating Expenses. Investment Capital (CD’s) needs to be used more effectively to produce further company assets, e.g. improved Financing Activities. Capacity Costs need to be more accurately aligned with sales activity. Net demand needs to be addressed for a positive decrease in demand shortages and effective turnaround regarding ill will. The Mercedes market proved more lucrative to sales interest over the long run than anticipated( Mercedes Top 8- Black Star GL=100, Quantum PCII=100) and as a result it could be advantageous to Paradigm Ltd. to invest more R&D and advertising to seize a larger share of this segments profit in the future. The Quantum PCII needs to be researched more effectively for customer demand preferences and advertising illumination. This PC Computer is popular, however the exact software packaging included with the standard sales brand needs to be analyzed further with regard to its popularity within its most effective sales segments. Production cost need to be adjusted lower because at the end of the fourth quarter Production costs decreased Revenues by nearly 65%. Year End Net Income equaled (1,498,315) however; just Inventory Holding Cost and Excess Capacity Cost together total (558,247) Important Stats: Net Profit Margin average year- end balance (-6.11) Return on Assets (ROA-8.85) Return on paid in Capital (-14.07) Research and Development Expense @120,000 and Advertising Expense @303,890 The Sales Force Expense@ (581354), Sales Office Expense@ (350000) Total (931,354) Operating Profit is merely 19.3 % above Operating Expenses Mercedes Top 8- Black Star GL=100, Quantum PCII=100 Production costs decreased Revenues by nearly 65%. Year End Net Income equaled (1,498,315) Inventory Holding Cost and Excess Capacity Cost together total (558,247) In designing a new product for the Mercedes market, we will address their top needs: fast and powerful, can efficiently do multiple tasks, can link with other computers, easy on the eyes, and high storage capacity. Applications will include engineering/design, manufacturing process control, data management and word processing software. We will return to the 3rd quarter product design for the Workhorse market.
- In addition to product changes, we will ensure the manufacturing process produces excess inventory to meet orders and lower customer ill will. According to market research, the price for the Workhorse product needs to be lowered. In addition, removing the engineering software (and creating a new product for the Mercedes market) will increase our financial strength.
- Every successful business needs information on their industry, customers and industry. Bont and Hamersveld (2007) explained “today, organizations, when making key decisions, are mindful of the importance of ensuring that they understand the views and opinions of current and potential customers and know what competitors are doing in the marketplace” (p.3). This critical information can help to identify important trends, reduce business risks and identify new opportunities. Therefor we will continue to invest in market research. In addition, we will invest in expanding our manufacturing plan to meet the customer demand of our products. Finally, we will invest in research and development of products and financial strength through investments.
- The Market Share report indicates that the Paradigm Electronics Ltd. company’s computers did not meet with ‘New Product’ success as hoped for with respect to the company’s chosen segments. According to a somewhat dated yet still relevant article in the Journal of Marketing; research conducted by Crawford (1977) supports the fact that a major cause of New Product failure is –‘superior product uniqueness’- to and including factors such as improper planning, inadequate timing a predilection towards over-enthusiasm and hastening to market. The strategies outlined in the direction we will take will increase our market share and brand judgment.
- Paradigm Electronics will see an increase in sales, gross margin and revenue. This will increase our financial strength. In addition, better inventory control and investments in plant capacity will increase our asset management.