Developing Winning Competitive Strategies
Welcome to GLO-BUS. You and your co-managers are taking over the operation of a digital camera company that is in a neck-and-neck race for global market leadership, competing against rival digital camera companies. All digital camera makers presently have the same worldwide market share, although shares vary by company across the four market regions – Europe-Africa, Asia-Pacific, Latin America, and North America. Currently, your company is selling close to 800,000 entry level cameras and 200,000 multi-featured cameras annually. Prior year revenues were $206 million and net earnings were $20 million, equal to $2.00 per share of common stock. The company is in sound financial condition, is performing well, and its products are well regarded by digital camera users. Your company’s board of directors has charged you and your co-managers with developing a winning competitive, marketing strategy, one that capitalizes on growing consumer interest in digital cameras, keeps the company on the ranks of the industry leaders, and boosts the company’s earnings year after year.
Some Background Information
Your company began operations five years ago and maintains its headquarters in Lisle, Illinos,USA. It assembles all of its cameras at a modern facility in Ha Noi, Vietnam and ships them directly to cameras retailers (multi-store chains that sell electronics products, local camera shops, and online electronics firms) located in Europe-Africa, Asia-Pacific, Latin America, and North America. The company maintains regional sales offices in Milan, Italy; Singapore; Sao Paulo, Brazil; and Toronto, Canada to handle the company’s sales and promotion efforts in each geographic region and help support the merchandising efforts of area retailers who stock the company’s brand. Retailers endeavor to maintain ample inventories of camera models in their own stores and warehouses to satisfy shopper demand.
Seasonal Production and Seasonal Demand. Camera demand is seasonal with about 20 percent of consumer demand coming in each of the first three quarters of each calendar year and 40 percent coming during the fourth quarter holiday season. Retailers place orders for digital cameras roughly 90 days in advance of expected sales, so as to have ample numbers on hand to satisfy camera buyer demand in the upcoming quarter. Thus, during Quarter 1 they place orders for the cameras they expect to sell in Quarter 2; during Quarter 2 they place orders for the cameras they expect to sell in Quarter 3, during Quarter 3, they place orders for the cameras they expect to sell in the peak holiday season fourth quarter; and in Quarter 4 they order the number of cameras they expect to sell in Quarter 1 of the following year.
Assembly and Shipping. The company has a staff of people engaged in new product R&D, engineering, and design; this group has the capability to develop new and improved camera models as directed by top management. Once co-managers settle on the desired specifications and performance features for the company’s line-up of camera models, the needed parts and components are obtained from suppliers having the capabilities to make deliveries to the company’s Ha Noi assembly plant on a just-in-time basis. Cameras are assembled by four-person product assembly teams at well equipped workstations. Shipping department personnel ready retailer’s orders for shipment and stack them on the loading dock for pickup by independent freight carriers. The cameras are delivered anywhere from 3 days to 3 weeks later, depending on a retailer’s location and the means of transportation. The cost of boxing the cameras, packaging them for shipment, and freight averages $3 per camera. Many countries have import duties on cameras. Import duties in each of the four geographic regions currently average $5 for entry-level cameras and $10 for multi-featured cameras. Import duties are subject to change in upcoming years....