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DIGBY’S
FINAL RESULTS
We care that’s why we specialize
1) Strategy Overview1) Strategy Overview
2) Round by Round Analysis2) Round by Round Analysis
3) Financial Overview (Final Results)3) Financial Overview (Final Results)
4) Success and Failures4) Success and Failures
5) Conclusion (what was learned)5) Conclusion (what was learned)
OUTLINE OF PRESENTATION
STRATEGY OVERVIEW
We care that’s why we specialize
Maintain presents in both segments
Differentiate by excellent design, high awareness and accessibility
R&D to keep designs fresh and exciting
Constantly improving size and performance to keep pace
with the market
Initial Strategy – Broad Differentiator
Ultimate Strategy – Follower Strategy
Advantages:Take advantage of pioneer’s positioning
mistakesTake advantage of pioneer’s Product
mistakesTake advantage of pioneer’s Marketing
mistakesTake advantage of latest techTake advantage of pioneer’s limited
resources
Disadvantages:Lack Economies of Scale and ExperiencePioneer defines the rules of the gameLack Influence on customer choice criteria and attitudes
Ultimate Strategy – Cost Leadership
AdvantageMore cost effective than its
competition
DisadvantageAll operations must be as efficient as possible
ANALYSIS OFROUND 1 TO ROUND 6
We care that’s why we specialize
Round 1 – The PlanRound 1 – The Plan
Research and DevelopmentResearch and Development
Pfmm
Size Age MTBF
Daze 6.4 13.6 4.1 2000
MarketingMarketing
Daze
Price $33
Promo Budget $1500
Sales Budget $2000
Sales Forecast 1600 units
Assumed the current positioning was Assumed the current positioning was suitable for Year 1. suitable for Year 1.
Dino will be in production until end of Dino will be in production until end of Year 2Year 2
Low Promo Budget due to high Low Promo Budget due to high investment costinvestment cost
ProductionProduction Increased Daze Automation from 3.0 to 6.0Increased Daze Automation from 3.0 to 6.0 Invested in 2.0 Automation for DinoInvested in 2.0 Automation for Dino Bought 350 capacity for DinoBought 350 capacity for Dino
FinanceFinance Maximize equity issueMaximize equity issue Maximize acquisitions of debt Maximize acquisitions of debt
for heavy investment activitiesfor heavy investment activities Contribution Margin of 18%Contribution Margin of 18%
Results Overall Market ShareOverall Market Share
Low Tech (Daze)Low Tech (Daze) : 18% : 18% High Tech (Daze)High Tech (Daze) : 15% : 15% (Lower compared to (Lower compared to competitors)competitors)
SalesSales : $45,158,530: $45,158,530 Sales is at 5Sales is at 5thth placing, performance is very poor as placing, performance is very poor as compared to competitorscompared to competitors
Cumulative Profit Cumulative Profit : $1,953,380: $1,953,380
Net Profit Net Profit : -$531,807: -$531,807 Due to High Financing Cost & High Variable CostsDue to High Financing Cost & High Variable Costs
Stock PriceStock Price : $6.41 (Decrease by $5.47): $6.41 (Decrease by $5.47)Due to negative earnings and information asymmetryDue to negative earnings and information asymmetry
Emergency Loan : $4,168,836Emergency Loan : $4,168,836
Round 2 – The PlanRound 2 – The Plan
Research and DevelopmentResearch and Development
Pfmm
Size Age MTBF
Daze 6.4 13.6 5.1 20000
Dino 10.0 10.1 0.0 23000
MarketingMarketingDaze Dino
Price $30.5 $45
Promo Budget $2000 $1500
Sales Budget $1800 $50
Sales Forecast 1400 units 700 units
Reduced price (41% importance)Reduced price (41% importance) Based on experience, allocate high Based on experience, allocate high
amount on promo budgetamount on promo budget We do not need to create We do not need to create
accessibility for Dino in this round accessibility for Dino in this round because it will only be available at because it will only be available at the end of the around on Dec 23.the end of the around on Dec 23.
ProductionProduction Further investment in automation for daze from Further investment in automation for daze from
6.0 to 8.0 and; 6.0 to 8.0 and; automation for Dino 2.0 to 3.0 for Dinoautomation for Dino 2.0 to 3.0 for Dino Increased Dino’s capacity by 50Increased Dino’s capacity by 50
FinanceFinance Maximize equity issueMaximize equity issue Maximize acquisition of debtMaximize acquisition of debt
Results
Overall Market Share – Low Tech (Daze) : 17% Overall Market Share – Low Tech (Daze) : 17%
– – High Tech (Dino) : 12%High Tech (Dino) : 12%
Daze recorded the second highest market share. Dino had Daze recorded the second highest market share. Dino had been been
introduced on 23/12 and thus was only in the market for 8 introduced on 23/12 and thus was only in the market for 8 days.days.
SalesSales : $42,685,954: $42,685,954
Cumulative ProfitCumulative Profit : $810,817: $810,817
Net ProfitNet Profit : -$1,142,563: -$1,142,563
Stock PriceStock Price : $5.79 : $5.79 (Decrease by $0. 62)(Decrease by $0. 62)
Round 3 – The PlanRound 3 – The Plan
Research and DevelopmentResearch and Development
Pfmm
Size Age MTBF
Daze 6.8 13.2 3.2 20000
Dino 11.0 9.0 0.6 23000
MarketingMarketing
Daze Dino
Price $30.5 $45
Promo Budget $2500 $2500
Sales Budget $2000 $2000
Sales Forecast 1500 units 850 units
Maintained low pricingMaintained low pricing Increase promo and sales Increase promo and sales
budget for both products due to budget for both products due to unsatisfactory market shareunsatisfactory market share
ProductionProduction Further investment in automation for daze from Further investment in automation for daze from
8.0 to 9.0 and; 8.0 to 9.0 and; For Dino from 3.0 to 4.0For Dino from 3.0 to 4.0
FinanceFinance Maximize equity issueMaximize equity issue Maximize acquisition of debtMaximize acquisition of debt
Results
Overall Market Share – Low Tech (Daze) : 16% Overall Market Share – Low Tech (Daze) : 16%
– – High Tech (Daze) : 8%High Tech (Daze) : 8%
– – High Tech (Dino) : 6%High Tech (Dino) : 6%
Daze ranked 5Daze ranked 5thth highest market share. Dino suffered due to highest market share. Dino suffered due to bad bad
positioning.positioning.
SalesSales : $52,645,048: $52,645,048
Cumulative Profit Cumulative Profit : ($2,619,282): ($2,619,282)
Net Profit Net Profit : ($3,430,099): ($3,430,099)
Stock PriceStock Price : $2.69 : $2.69 (Decrease by $3.09)(Decrease by $3.09)
Round 4 – The PlanRound 4 – The Plan
Research and DevelopmentResearch and DevelopmentPfmm
Size Age MTBF
Daze 6.8 13.2 4.2 2000
Dino 11.0 9.0 1.6 2300
MarketingMarketing
Reduce Daze price because the market is Reduce Daze price because the market is highly competitive highly competitive
To use Dino to increase overall To use Dino to increase overall profitability profitability
Daze have achieved 100% awareness, Daze have achieved 100% awareness, scale down on promo budget while scale down on promo budget while focusing on Dinofocusing on Dino
Sales budget at optimumSales budget at optimum Sales forecasting is obtain by Sales forecasting is obtain by
anticipating total demand by each anticipating total demand by each segment and divide it among number of segment and divide it among number of competitors competitors
Daze Dino
Price $28 $42
Promo Budget $1400 $2500
Sales Budget $2000 $2000
Sales Forecast 1600 units 1000 units
ProductionProduction Production Schedule is a rough estimate on Production Schedule is a rough estimate on
sales forecast from Marketing departmentsales forecast from Marketing department No changes made on automationNo changes made on automation
FinanceFinance No changes were madeNo changes were made We hope that sales were forecasted We hope that sales were forecasted
accurately so that we do not run into accurately so that we do not run into
emergency loanemergency loan
Results Overall Market Share - Low Tech (Daze)Overall Market Share - Low Tech (Daze) : 19% : 19%
- High Tech (Daze)- High Tech (Daze) : 6% : 6% - High Tech (Dino)- High Tech (Dino) : 6%: 6%
Daze recording the second highest market share while Dino Daze recording the second highest market share while Dino recorded the lowest market share as compared to recorded the lowest market share as compared to
competitors.competitors.
SalesSales : $57,863 : $57,863 Increase by 9% with Daze contributing to the overall sales.Increase by 9% with Daze contributing to the overall sales.
Cumulative Profit Cumulative Profit : -$2,243,932 : -$2,243,932
Net Profit Net Profit : $375,350 : $375,350 Increase by 11%Increase by 11%
Stock PriceStock Price : $2.67 (Decrease by $0.02): $2.67 (Decrease by $0.02)Digby has shown poor successDigby has shown poor success
Round 5 – The PlanRound 5 – The Plan
Research and DevelopmentResearch and Development
Pfmm
Size Age MTBF
Daze 7.2 12.8 2.6 2000
Dino 10.9 9.1 1.7 2300
MarketingMarketing
Prices are maintained after observing Prices are maintained after observing competitors pricingcompetitors pricing
Dino promo budget have been scaled down Dino promo budget have been scaled down while maintaining sales budget for both while maintaining sales budget for both productsproducts
Sales forecasting is obtain by Sales forecasting is obtain by anticipating anticipating total demand by each segment and total demand by each segment and divide divide it among number of competitors it among number of competitors
Daze Dino
Price $28 $42
Promo Budget $1400 $1400
Sales Budget $2000 $2000
Sales Forecast 1800 units 1200 units
ProductionProduction Production Schedule is a rough estimate on Production Schedule is a rough estimate on
sales forecast from Marketing departmentsales forecast from Marketing department
FinanceFinance Repurchase common stocks and retire long term Repurchase common stocks and retire long term
debt to increase ROE debt to increase ROE
With sufficient profits at hand, we hope With sufficient profits at hand, we hope
we do not run out of money because it we do not run out of money because it would lead to emergency loan.would lead to emergency loan.
Results
Overall Market Share - Low Tech (Daze)Overall Market Share - Low Tech (Daze) : 17% : 17% - High Tech (Daze)- High Tech (Daze) : 3%: 3%
- High Tech (Dino)- High Tech (Dino) : 20%: 20%Daze market share fell taking the third position. Dino Daze market share fell taking the third position. Dino
market market share rose and came second right before Ace. share rose and came second right before Ace. SalesSales : $88,831,677: $88,831,677 Sales peaked to the highest after 5 years. Sales peaked to the highest after 5 years. Cumulative Profit Cumulative Profit : $9,386,384: $9,386,384 Net Profit Net Profit : $11,630,316: $11,630,316 Profits rose by 200% from the previous yearProfits rose by 200% from the previous year
Stock PriceStock Price : $17.47 (Increase by $14.79): $17.47 (Increase by $14.79)Post a record high because of high ROE and EPSPost a record high because of high ROE and EPS
Round 6 – The PlanRound 6 – The Plan
Research and DevelopmentResearch and DevelopmentPfmm
Size Age MTBF
Daze 7.2 12.8 3.6 2000
Dino 11.6 8.4 1.6 2300
MarketingMarketing
Prices are maintained Prices are maintained Both sales budget and promo budget for Both sales budget and promo budget for
Dino and Daze are maintainedDino and Daze are maintained Sales forecasting is obtain by anticipating Sales forecasting is obtain by anticipating
total demand by each segment and divide total demand by each segment and divide it among number of competitors it among number of competitors
Daze Dino
Price $28 $42
Promo Budget $1400 $1400
Sales Budget $2000 $2000
Sales Forecast 2000 units
1500 units
ProductionProduction Production Schedule is a rough estimate on Production Schedule is a rough estimate on
sales forecast from Marketing departmentsales forecast from Marketing department
FinanceFinance Repurchase common stocks and retire long term Repurchase common stocks and retire long term
debt debt
Paid dividendsPaid dividends
Results Overall Market Share - Low Tech (Daze)Overall Market Share - Low Tech (Daze) : 19% : 19% - High Tech (Daze)- High Tech (Daze) : 2%: 2%
- High Tech (Dino)- High Tech (Dino) : 20%: 20%Daze market share rose again from the previous year whileDaze market share rose again from the previous year whileDino’s market share is the sameDino’s market share is the same
SalesSales : $103,559,431: $103,559,431 Cumulative Profit Cumulative Profit : $24,737,163: $24,737,163 Increasing profits from previous years contributed to higher Increasing profits from previous years contributed to higher cumulative profitcumulative profit
Net Profit Net Profit : $15,350,779: $15,350,779 Profits rose marginally based on prior yearProfits rose marginally based on prior year
Stock PriceStock Price : $29.71 (Increase by $12.24): $29.71 (Increase by $12.24)Stock price rose higher but the increasing at a slow pace Stock price rose higher but the increasing at a slow pace
FINANCIAL OVERVIEW
We care that’s why we specialize
Digby’s Net Profits: Round 1 - 6
($532) ($1,143)($3,430)
$375
$11,630
$15,351
($4,000)($2,000)
$0$2,000$4,000$6,000$8,000
$10,000$12,000$14,000$16,000
Sale
s($'0
00)
Round 1 Round 2 Round 3 Round 4 Round 5 Round 6
Sales Comparison
Digby’s ROS, ROA, ROE: Round 1 - 6
-100%-80%-60%-40%-20% 0% 20% 40% 60% 80%100%
Percentage (%)
Round 1
Round 2
Round 3
Round 4
Round 5
Round 6
ROS, ROA & ROE
Return on Sales (ROS) Return on Asset (ROA) Return on Equity (ROE)
Digby’s Asset Turnover: Round 1 - 6
1.3
0.9
0.7
0.9
1.8
2
0 0.5 1 1.5 2
Round 1
Round 2
Round 3
Round 4
Round 5
Round 6
Asset Turnover
Digby’s Market Share: Round 1 - 6
16.90%13.90% 14.70%
13.90%
18.40% 18.70%
0%
5%
10%
15%
20%
Perc
enta
ge (%
)
Round 1 Round 2 Round 3 Round 4 Round 5 Round 6
Market Share
Digby’s Stock Price: Round 1 - 6
Stock Price
$2.67
$17.47
$6.41 $5.79$2.69
$29.71
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
Round 1 Round 2 Round 3 Round 4 Round 5 Round 6
($)
Market Share (as at Round 6):Digby vs. Competitors
Stock Price (as at Round 6):Digby vs. Competitors
SUCCESSES & FAILURES
We care that’s why we specialize
Decisions We Regret of Taking… Pricing
Very low price for low tech Drastic drop in high tech price Loss of higher profit potential hence
loss of higher cumulative profit
Low Tech Pricing
0
5
10
15
20
25
30
35
40
Andrew Baldwin Chester Digby Erie Ferris
Companies
Pri
ce Low Tech Pricing
High Tech Pricing
34
36
38
40
42
44
46
Andrew Baldwin Chester Digby Ferris
Companies
Pri
ce Series1
Decisions We Regret of Taking…
Positioning Overestimated Dino’s ideal positioning
Loss in sales Emergency loan Higher Inventory Loss of market share
Worst Year- Round 4 followed by Round 3
Doing The Right Things…
Realize our mistakes and take appropriate actions
Positioning For Dino its near the edges of the inner circle
Capital Structure Lower debt to reduce high interest payment
High Automation Helped to reduce price and still maintain a
good contribution margin
Best Year- Round 5
Doing The Right Things…
Starting all over again Positioning Dino-inside the inner circle rather
than out of it Price
Study Competitors and adjust price accordingly
Production Capacity To Be Optimistic and increase
production capacity
CONCLUSION
Market is unpredictable
It is vital to analyze competitors persistently
Each department is not able to function independently – requires countless coordination