Glo-Bus Company Analysis - Research Paper Example

?Running Head: Glo-Bus Company Analysis The Glo- Bus Company is a fully automated simulation where the team leaders are divided in teams to run a digital camera in a head to head competition with other companies. It competes globally with other companies. The major challenge for this company in trying to craft and execute a competitive strategy which will result into a respected brand image, keeping their company in contention for global market leadership, and producing financial performance. This is measured by its earnings per share, stock price appreciation, credit rating and return on equity investment and this calls for a proper strategy. The Glo-Bus application was an intriguing and challenging venture starting in the simulation where the team leaders were positioned well with good strategy and strengths in the first years. Despite the challenges in the first years, it struggled to adapt to the increasingly changing market conditions. Eventually, it gained an insight which would help in its future strategy formation and execution efforts (John, 1997). Strategy As a co-management team, a plan of attack was formulated quickly to enable the company compete effectively with its competitors. A plan conference was then decided upon with all the managers of distinguished image. The company felt that this would be its most convenient opportunity for its team leaders to talk over its strategies which would help them come up with a plan of attack. This conference led to the birth of the company’s vision statement and I quote, “Distinguished imaging strives to be the global market leader in reliable technological and advanced digital cameras. We are focused on customer satisfaction on quality technological products and seeking to be the number one in the digital imaging technology” (John, 1997). By having this vision statement put in place, the team leaders worked with the notion of being unified in to a cohesive and coordinated effort. From a strategic perspective, they decided to offer quality products at a cheaper cost unlike the other companies. Its major goal was to use the best cost provider strategy in providing good to excellent product qualities but at a cheaper cost. This strategy has enabled the company compete with Beacon camera and Capture camera respectively in the sixth year. Its goal was to offer a quality entry level camera at a cheaper cost plus a higher quality multi feature camera at a reasonable price. This was only during that year alone but in the next year, the company would adapt a new strategy which included a combination of focused market niche differentiation and low cost strategy to be applied (John, 1997). Strength One of the quickest ways in trying to achieve the best cost strategy was to invest in a high quality workforce and major on the employee output. This was coupled with paying their employees at the high end of the pay scale and rewarding them in exchange for reaching a higher level of output. This was because with a higher input, it would definitely lead to improved product production and quality. Unlike its competitors, this would definitely be a plus to them hence compete effectively as can be seen in year seven. As a result of this logic, the company did not invest in the first three years in warranty periods as it expected the quality of the products to maintain lower quality claims. Therefore, in hindsight, the company might have missed a great opportunity in offering an extensive warranty programs at a lower claim rate due to the quality products. As a result of this, a corporate citizenship program was implemented by increasing the employee conditions and the community efforts in the following years respectively (Jennifer, 2000). As part of the initial product strategy, focus was on offering a strong number of camera models and concentration was initially on developing features of entry level cameras. This was definitely to offer a strong market share. A decision was made not to enter the multi feature cameras in the Asian market but focus on those markets where there is a greater share of the cameras. This decision maybe would have enabled them to protect spreading their resources to thin but in hindsight, the company would have benefited from investing in the multi feature cameras in the Asian market (Jennifer, 2000). Weaknesses In the following year, strides were made in creating a better differentiated, and strong quality multi feature camera but the company lost grounds in the entry level camera, no longer having the lowest price point. The competitors, Beacon camera and capture Camera Company had stronger warranty programs. This was a greater challenge. In year seven, the warranty programs were not increased but kept to the strategy which was adopted in year six. Year eight and nine can be seen as the beginning of the company’s downward trend. It continued in its action plan of producing high quality products at a low cost of the digital cameras but in the coming year especially in year nine, the company had to be reactive to the changing market conditions and the stiff competition. The company was loosing grounds to the Beacon and the Capture camera companies and hence needed to find a way to regain grounds again. Another strategy can be put in place and decision was made on a sound way to deal with turbulent market conditions which would lead to change (Jennifer, 2000). The major problem here was in year eight and nine respectively and the company was lacking in their warranty periods in both models plus the technical support was not sufficient as compared to the other two competitors. This then could be solved by extending the warranty periods and bolster technical support for three good years. The other two competitors were also providing a differentiated product to increase their market share. Beacon and Capture camera companies started increasing their PQ ratings more specifically in the multi level cameras and also strengthening their warranties. This could have been as a result of under estimating reactions and commitment of their competitors in the first years (Jennifer, 2000). Opportunities The company started so well in the first years but in the following years, it started loosing grounds. Due to this, it needed to react to the changing market conditions in order to compete effectively. This would lead to taking a mostly reactive approach. The company learned that it doesn’t have to stick on to its early action plan but respond to the actions of its two competitors. There is an opportunity of reacting to the competition and evolving a strategy (Brown, 2000). A new strategy of low cost products and niche differentiation strategy could work best now. The objective here is to maintain the company’s market share as well as minimizing costs and maximizing profits. The toughest challenge here remains on how to reduce costs of the product while at the same time remain at 3.5 star PQ rating on the entry levels cameras while at the same time grow the multi feature camera to 4.5 star PQ rating. The best way to increase the company’s PQ was to increase its R&D expenditures. This would then not mean cutting costs using staffing reductions but increase price point for the multi featured cameras. The capital structure continued to be strength as the debt to enquiry ratio was better than industry average. The advertising expenditures can also be reduced in both North and Latin America and this money can be distributed to the R&D on the multi featured cameras. More features can also be added to the multi feature line in order to increase the PQ ratings. The key to successful strategy is to come up with more than one differentiating strategies to act as a magnet in drawing customers while in return yield a lasting competitive edge. In years 11 and 12, the company can chose to utilize outsourcing, overtime and additional employees in order to meet the production goals. In year 12, the company can also increase capital by issuing stock (Brown, 2000). Threats Reflecting back on the first two years, this team was initially well positioned. It had several areas of strength which made its two competitors to adapt to their strategy. Challenges started to rise when the two competitors started to execute its plan. This can be seen in the 7th year when a great challenge was seen from the capture camera company with a strong multi feature camera. They offered a less multi feature model at a better quality. Offering an equally good or better product at a lower price, Capture camera out executed them hence this could be seen as a threat to them (Brown, 2000). Recommendations The team leaders here closed year 12 with very low EPS, low ROE but of course with a credit, A-. This was an image rating to 77. If the company was to continue with the competition in the 13th year, then it would need to engage raising capital by issuing stock. It had also to enter in to a strong recovery mode. In year 12, the number of models were cut back in both the multi featured camera and entry level so in year 13 more emphasis would be made on improving the rating of the entry level and the multi featured cameras from a PQ rating of 3 to 4 in the entry level and PQ of 5 in the multi featured cameras. The labor costs still need to be kept low as well as the administrative costs since they have a negative impact on the profits of the company (Bill, 1997). References Bill, M. (19970. Strategic Information Management: Challenges and Strategies in Management. London: Library association. Brown, L. (2000). Management Practices. Oxford: Oxford University Press. Jennifer, R. (2000). Management of work Practices: The Quest for Competitive Advantage. Oxford: Oxford university press. John, F. (1997). Crafting and Executing Strategy. New York: McGraw-Hill Read More