STRATEGY ANALYSIS OF YEAR 8

GROUP 4 - INDUSTRY 11- COMPANY D

A. INDUSTRY OVERVIEW:

I. Action - Capture Camera:

1. AC Camera overview:
In general, average wholesale prices in Year 8 were much higher than in Year
7. It was $236 in comparison with $221, increasing more than $10. AC Camera
demand this year ( in 000s of AC Camera) is higher than forecast about 1.5%.
Assembly capability industry-wide was adequate to satisfy year 8 demand as well and
the units assembled/sold/shipped was up by 8.6% from last year. However, in the next
3 years, the demand for AC Cameras is expected to increase by about 6.3% annually,
while this number was usually 7.0% in the previous years.
P/Q ratings had slightly increased this year while Features remained the same.
The increase in P/Q ratings showed that most of the companies had enhanced their AC
Camera features and as a result, industry average P/Q ratings was 4.4, while in last
year, this number was only 3.9.

2. Action - Capture Camera Benchmark:

There are no changes of AC Camera components and features in comparison
with last year. In total, Year 8 production and assembly cost of AC Camera was
$176.26.
R&D cumulative expenditures reached $105,000,000 with again, additional
$20,000,000 this year. The workforce statistics showed insignificant changes.
Moreover, there were a small decrease of operating profit margin in some specific
region as North-America and Asia-Pacific. Whereas, in Europe-Africa and Latin-
America, this number had slightly increased.
3. Financial Performance:
The highest net revenues of AC Camera belongs to the North-America market
again with $82,994,000. Europe-Africa is right after it with $81,187,000 and this
market still keep the highest operating profit margin rate which is 29%. Whereas,
Latin-America is still ranked lowest in terms of revenue with only $42,170,000. In
total, we had $256,285,000 of net revenues, contributing 47.44% to the whole
company income.

Even though our company is still doing well and gaining a high profit this year,
however, there are no significant raises in AC Camera market share, 16.4% for actual
demand as well as total units assembled and shipped. Then, we are thinking about
another marketing and sales strategy in other to approach this segment market.

II. UAV Drones:

1. UAV Drones overview:

Overall, the average wholesale prices in year 8 were much higher than year 7: The
Demand Forecast numbers (in 000s of UAV drones) globally were -0.6% lower than
forecast. Assembly capability industry-wide was not able to satisfy year 8 demand, so
that there was just a clearly raise in price this year (from $1277 to $1351). In the next
3 years, the demand for UAV Drones is expected to increase by about 10.9%
annually.
UAV drones’ performance features had been adjusted to be more suitable for the
industry demand as well as the company's financial statement. Therefore, the P/Q
ratings and features had slightly increased (from 4.3 to 5.0 for P/Q ratings and from
4.6 to 5.0 for features).

2. UAV Drones Benchmark:

The parameters of those features such as image sensor size and image quality the same
drone quality was kept. The workforce payoff and other statistics had slight changes
for a suitable average price in the market. Moreover, the delivery and marketing cost
for each unit sold had increased due to the new marketing strategy to push more sales.
R&D cumulative expenditures reached $75,000,000 with additional $15,000,000 this
year. The workforce statistics has no significant changes. In total, Year 8 production
and assembly cost of UAV Drones was $1,029,780.
It is believed that next year, UAV drones could gain more customer attraction
throughout the new marketing campaign and gain more profit but still keep at a
reasonable cost.
3. Financial Performance:
The highest net revenues of UAV drones belongs to the North-America market with
$101,076,000. The second runner was the Europe-Africa market with $98,101,000.
Whereas, Latin-America was still ranked lowest in terms of revenue with only
$35,254,000. In total, we had $283,911,000 of net revenues, contributing 52.56% to
the whole company income.
Total market share for UAV Drone in all markets continually falls from 17.8% to
17.1%. To be more specific, the market share in Europe - Africa, Asia Pacific and
Latin America markets decreases by approximately 2% compared to last year.

B. COMPETITOR ANALYSIS:

Competitive Intelligence Reports — Comparative Competitive Efforts

🔻North America:

I.Action-Capture Camera

⇒ According to the data, we can see that:

- Our company price base was higher than the Industry average, which was the
highest price in the market - at $283. Among with the high price, our P/Q was
also highest with 5.1 stars. But, in this year, compare to other company’s P/Q,
our price seems got a little bit high.
 - Our company’s Brand reputation was in the average through the rival company
with 71.
- Our Retailer Support was almost equal to the Industry average and was in the
middle range compare to the rival Company.
- Our company didn’t invest much on Website Displays, but it was not too low
compare to Industry average.
- Our Sales Promotion and Promotion weeks were likely same to the rival
Company.
- Our Warranty Period was in the middle range in this market, same to company
A and company E.
- For the Demand for ACC, the rate shows that our consumers’ demand was in
the last range, which was 12.6% less than the Demand of Industry. Same does
our ACC units sold.
- Our Market Share is very low, in the last range, got 2.5pts lower than Industry
average.
✦ Overall, we got a market share of 17.5%, which is the last position in the
industry.

⇒ What we learn from our competitor:

- Our company is still at the top of the industry. But in this year, our market
share was very low compared to the rival company.
- Overview, other companies have increased their P/Q rate, especially company
C.

=> We should discuss again and offer a more reasonable price to fit with the
market. We should have a clearer plan for the direction and segmentation for
customers that we want to make the largest consumer market, to adjust the
more fittable P/Q rate.
II.UAV Drone

⇒ According to the data, we can see that:

- Our company got the highest price in the Industry with $1550.
- We were among the companies with the highest rate of discount to online retailers
of 15%.
- Our company product-quality rating of this product was in the second range with 5.5
stars.
- We increased the number of models for UAV drone: 3 models, while the rival
company decreased their model to 2 models.
- We invest the least in website display and search engine advertising, and got a big
space compared to the highest invest company
- We pay 154.87$ per unit for retailer recruitment, which is in the middle range in the
Industry.
- Our warranty period lasts for 120 days which was equal to company B and was the
shortest period of rival companies
- The demand for our product comes from 2 sources: directly from the company
website and 3rd-party retailers.
+ The demand for drone directly from the company website is the lowest
of all.
+ The demand for drone from the 3rd-party retailers was in the middle
range.
=> To sum up, our Demand for drone was still the least of all
✦ Generally, our company has a 17.6% market share ratio in the industry for UAV
drone products at Asia-Pacific market, dropped down 1.5%.

⇒ What we learn from our competitor:

This week, our company’s market share decreased compared to the previous year and
got a big space to company A. This shows that we have to make an adjustment to our
price and P/Q rate, to make it more reasonable to sell.

🔻Europe - Africa:

I.Action-Capture Camera

According to the data from Competitive Intelligence Report, we can see that we still
had the lowest market share with only 16.2% in this market.
- We had a competitive advantage about P/Q Rating in industry average with 5.1 stars.
And the strong spending on Retailer Support with 8.74 $ per unit, we are taking a
competitive advantage in this segment. Besides, we also had a competitive advantage
with sales Promotions.
- However, our company had a price-based competitive disadvantage of +20.6%. In
terms of Advertising Budget and Websites Displays, compared to Industry Average,
we didn’t have a competitive advantage with -14.9% and -16.1% respectively. In
addition, we can clearly see that our competition for Warranty Period was below the
industry average in North America with 120 days.
- The total demand and units sold for AC Camera was $250 500.

=> Our company’s competitive disadvantages in the AC Camera segment had equally-
sized negative impacts in causing our company’s market share to be 3.8 % points
below the regional average.
★ Next year, in this market, we should pay attention to Advertising Budget, and
Websites Displays.

II.UAV Drone

⇒ According to the data, we can see that:

- Our company had a competitive disadvantage on price-based 13.5% and product-
quality rating with 5.2 stars. Our price is the highest price with the quality only lower
than company E.
- Our Website Display was 2,500 which was 5.4% lower than the Industry average.
- Our Search Engine Advertising was 2,500 which was 25% lower than the Industry
average.
- Our Warranty Period lasts for 120 days, which was 37.5% lower than the industry
average. It got a big space compared to Company C, but likely the same with the rival
Company.
- Our Drone Units sold in both direct and 3rd-party retailers are quite high but it was
still penultimate.
- Our Market Share was in the last range, 2.7% lower than the Industry average.
⇒ Learn from competitor:
Company A and Company C had the highest market share as:
- We can see that Company A had the lowest price, but their P/Q rating was very
high when considering their price.
 - Company C had the lower price with the lowest P/Q rating, but they invested
more in Website Display, Search Engine Advertising, Retailer Recruitment and
Warranty Period.
=> To gain the higher market share, we should decrease our price a little bit and
invest more in Website Display and Search Engine Advertising

🔻Asia Pacific:

I.Action-Capture Camera

At this market, we had the lowest market share with only 15,7%.
- We still had a competitive advantage about P/Q Rating in industry average with 5.1
stars. And the strong spending on Retailer Support with 8.06 $ per unit, so we are
taking a competitive advantage in this segment.
- However, our company had a price-based competitive disadvantage of +19%. In
terms of Advertising Budget and Websites Displays, compared to Industry Average,
we didn’t have a competitive advantage with -28.5% and -25.7% respectively.
- The total demand and units sold for AC Camera is $206 000.

=> Our company’s competitive disadvantages in the AC Camera segment had equally-
sized negative impacts in causing our company’s market share to be 4.3 points below
the regional average.
Company A and C had the same business strategy of dumping the market, so they had
competitive advantage about the price and they were at top of market share as well. =>
next year, in this market, we should pay attention to sales promotions and Websites
Displays. Besides, we can consider decreasing the price.

II.UAV Drone
In this year, we didn't have the highest P/Q Rating. The increase in the number of
models made our company disadvantage in competition.

- However, our company had a competitive advantage of product-quality rating with

the highest rank being 5.2 stars. Besides, we also had competitive advantage about
Discount to Online Retailers.

- However, company D had a price-based competitive disadvantage of +8.5 %.

Besides, we also had competitive disadvantages in Website Displays, Search engine
advertising and retailer recruitment.

- The total demand and units sold for UAV drone was the same (35 600 units)

According to the data from Competitive Intelligence Report, we can see that Company
A and C had the lowest price. In terms of Company C, they had a lower price and P/Q
rating than ours but they invested more in website display and Search Engine
Advertising. Therefore, they had more UAV Drone Units Sold than us. => Next year,
in this market, we should pay attention to Search Engine Advertising and Websites
Displays.

🔻Latin America:
I.Action-Capture Camera

⇒ According to the data, we can see that:

- Our company price base was higher than the Industry average, which
was the highest price in the market. This made us have small market
share. Along with the high price, our P/Q continued to be the highest
one.
- Our retailer support was a bit higher than the industry average.
- Our company was in the bottom range in the website displays section.
- Our Sales Promotion and Promotion weeks were likely the same to our
rivals.
- Our Warranty Period was the shortest one, same to company B and E.
- For the Demand for ACC, the rate shows that our consumers’ demand
was the smallest one, which was 23.9% less than the average demand of
this industry, same as our ACC units sold.
- Our Market Share is at the bottom of the list, with only 15.2%.
⇒ Learn from competitor:
- Company C got the highest market share because: their Warranty Period was
longest upto 1 year - 360 days, their Retailer Support, Advertising Budget and
Website Displays were also highest. Company C spent much on Marketing but
their price was low, leading to their ACC units sold and market share was
highest.
- Company A’s P/Q was 3.7 stars with the price 215$, which was quite cheap.
Company A got high Promotion Weeks, Promotion Discount and Warranty
Period. Those things make them have competitive advantages, which leads to
their high market share.
⇒ If we want to increase the market share, we have to decrease our cost and
increase Retailer Support, Advertising Budget and Website Displays.
II.UAV Drone
⇒ According to the data, we can see that:
- Our price for Drone in this market was quite high compared to the others - the
second range, 7.2% higher than the Industry average.
- Our P/Q is the highest 5.1 star, which was only lower than company E.
- We did not spend much on Website Displays,Search Engine Advertising and
Retailer Recruitment.
- Our Drone Units sold in both direct and 3rd-party retailers were low.
- Our Market Share was also the smallest and 3.9% lower than the Industry
average.
⇒ Learn from competitor:
Company A and Company C had the highest market share as:
- We can see that Company A had the lowest price, but their P/Q rating was
high.
- Company C had the lowest price and P/Q rating, but they invested more in
Website Display and Search Engine Advertising, Retailer Recruitment.
- They had long warranty period.
=> To gain the higher market share, we should decrease our price a little bit,
push more on marketing.
In sum up, overall across 4 markets North America, Europe - Africa, Asia-
Pacific and Latin America, we still didn't get the high market share for both
products. Therefore, next year, company D needs to promote and pay attention
to website displays, search engine advertising.

C. STRATEGY ANALYSIS:

❖ Objectives of Company D - Industry 11:

We aim at a “more value for the money” strategy since we want our products to be
affordable for many people. The objective is to deliver superior value to buyers by
satisfying their expectations on key features/ performance attributes and beating their
expectations on price. From a competitive positioning standpoint, the advantage of
“more value for the money” strategy is lower costs than rivals in incorporating good-
to-excellent attributes, putting our company in a position to underprice rivals whose
products have similar appealing attributes.
Moreover, our company has a strategy aimed at being the market leader in both
wearable video cameras and camera-equipped drones. And for different geographic
regions, we pursue different competitive approaches. For example, in Asia - Pacific
and Latin America markets, the customers are more sensitive to the price, so our
company focuses more on promotion and sets lower prices. On the contrary, the
buyers of action cameras and UAV Drone in North America and Europe - Africa are
more sensitive to cross-brand differences in P/Q ratings than camera buyers in the
Asia-Pacific and Latin America regions. Thus, our company focuses on enhancing the
product quality in these two markets (North America and Europe - Africa) more than
the other markets (Asia - Pacific and Latin America).

I. Action-Capture Camera Design -Marketing

● In Asia - Pacific and Latin America markets, we target a strategy creating

high promotion and lower price than the other two markets.

● In North America and Europe - Africa markets, users tend to be concerned

more about the quality, so our company upgrades our wearable video
cameras. Moreover, we set a reasonable price and low promotion.

Generally, we expand our budget on sales promotions, retailer support, advertising,

website displays/info and warranty period to prompt buyers to visit a nearby retailer
of the company’s brand, provide information related to our products and obtain
needed after-the sale technical support, which helps customers easily access our
brands.

II. UAV Drone Design - Marketing

● In Asia - Pacific and Latin America markets, we aim to enhance our drone
quality. Furthermore, we have invested in website displays and search
engine advertising in order to boost our market share and attract more
customers.

● In North America and Europe - Africa markets, consumers are less sensitive
to the price elastic so we have planned to set a higher price than two other
markets. We also invest more in marketing strategy including website
displays, search engine advertising. The demand for UAV Drones in North
America is higher than other markets, so we offer more discounts to third
party online retailers in order to secure those retailers that sell our drones on
its website then we can widen our buyer access and additional sale volumes.

III. Compensation and facilities

We put more money into UAV Drones than the AC Camera workforce because the
production process of UAV Drones needs more time, more complexibility and
requires workers to have a highly qualified skill to complete the products. To be more
specific, our company decide to decrease the the attendance bonus for AC Camera
workers from $850 to $750. Instead, we raise the attendance bonus for workers in
UAV Drone segment.

Moreover, we didn’t invested in any of AC Camera Facility and UAV Drone facility
as we didn’t have the overtime production. Here are some investment statistics:

IV. Corporate social responsibility:

Our company carries out some activities that give back to the community through
renewable energy programs by spending $1500 on incorporating renewable energy
resources at Taiwan assembly facilities.

Beside social responsibility, our company also spends money on enhancing staff
welfare by offering cafeteria and on-site child care facilities for plant employees. We
take effort to increase working conditions such as safety equipment, improved lighting
and ventilation. Moreover, we also try to promote fair employment practices and safe
working conditions at supplier factories through institution of a supplier code of
Conduct and Compliance monitoring of suppliers.

V. Finance:

This year, our financial situation is still sustainable, so we don’t take the loans from
the bank. We repurchase 200k shares outstanding with the price of $114.98.
Furthermore, the stock price goes up 300% due to our successful performance in
year 8. Our company is spending budget on repayment of a 5-year loan of $14
millions with the interest rate 7.5%. To retain our image rating as well as build the
relationship with shareholders, we decided to pay a dividend of $1 per share. And here
is our income statement, balance sheet and cash flow statement of year 8.
 ❖ PERFORMANCE HIGHLIGHTS:

Generally, through this strategy, our company’s performance:

● Earning per share increases from $3.61 to $3.65 (higher than investors’
expectation)

● ROE has a fall from 41.4% to 33.1%, but still higher than investors’
expectation)

● Stock price decreases from $113.80 to $107.08

● Credit rating still keeps the same A level

● Image rating increases from 71 to 72.

● Total net revenue for both AC Camera and UAV Drone goes up from
$510,400,000 to $540,196,000.
 ● Total market share for AC Camera in 4 markets has a small rise from 16%
to 16.4%, but it is still low compared to the other rival companies. To be
more specific, only Asia-Pacific among the 4 markets slightly fall by 1%,
and the market share in North America goes up by 1.4% compared to last
year.

● Total market share for UAV Drone in all markets strongly decreases by
0.7% from 17.8% to 17.1%. Especially, the market share in Asia Pacific
dramatically decreases by 2% compared to Year 7.

In this year, our company intended to spend more money on marketing strategy,
particularly on promotions. We also invest more in both AC Camera and UAV Drone
facilities by installing more workstations and expanding spaces. As a consequence, we
have got some strategic highlights of year 7:

● Performance/ Quality rating of AC Camera retains 5.1 stars and P/Q rating
of UAV Drones goes down to 5.2 stars as we upgrade our drone number of
models this year.

● Compensation per PAT member increases slightly from $25,986 to $26,142

for AC Camera and rises from $26,012 to $26,684.

● Marketing cost for AC Camera has a small rise from $23.62 to $23.92 per
unit while UAV Drones grows up from $111.72 to $126.91 per unit.
 ● The operating profit our company gets from both AC cameras and UAV
Drones decreases compared to last year. To be more detailed, the operating
profit margin we gain from AC Camera and UAV Drones falls respectively
by 1.5% and 1.7%.

● ASSEMBLY AND FACILITY OPERATIONS

In year 8, our company invest $20 million for AC Camera and $15 million for UAV
Drone. We also spend our budget to invest in plant facility at $750,000 for both AC
Camera and UAV Drone.

SWOT:
 ● Strengths:

❖ Our company’s performance/ quality rating is quite high compared to

other competitors in the same industry.

❖ We have more experience in developing product quality following

the strategy “more value for the money”, so we can easily adapt to
new innovation if the company focuses on new product development
orientation.

❖ The EPS, ROE, stock price, credit rating and image rating of our
company is higher than investors’ expectation.

● Weaknesses:

❖ Our market share has a dramatic decrease compared to last year

❖ Our company has predicted the market share inaccurately which is
still lower than other companies in the same industry.
❖ Our company has offered a fairly high price for the customers
compared to the other competitors, which has led to losing market
share and customers.

● Opportunities:

❖ Become the first company to pioneer in developing products and

services under “More value for the money” strategy so that our
company can keep a vital presence in this Industry 11.

❖ Retain the Top 1 position in Industry 11 in the following years.

● Threats:

❖ In the following years, due to the objectives of improving and

developing our products, finance company D may not be stable,
which means we may be under the control of investors and we may
take a loan from the bank.

❖ Due to the high competition from others in the market, our company
may fail and go bankrupt.

D. STRATEGY FOR YEAR 9:

Due to the fact that market share of our company in year 8 is quite lower than other
rivals, we want to gain more market share in year 9. Our company comes to the final
strategy for our company in year 9:

- Our company strategy is “more value for the money” with the aim
of delivering superior value to buyers by enhancing the quality of the
camera and giving some discounts on price.

- We will focus more on North America than the other markets due
to its large market size.

- We have a strategy aimed at being the market leader in both

wearable video cameras and camera-equipped drones.

- If our company has excess cash on hand, we will use that cash to
make an early payment for loans in order to reduce the interest
payment in the following years. Additionally, we will try to
repurchase as much as shares outstanding because the stock price in
the early years is cheaper than in the following years.

- We adjust the price of both AC camera and UAV drones in order

to gain more market share.

- We will concentrate more on advertising (website displays/info

and search engine advertising) and giving promotions, discounts to
attract more retailers and customers to access our products.

+ AC Camera: we will boost our marketing strategy by increasing

sales promotions for this product to 16 weeks and spending more
on advertising budget in Europe - Africa market (25%).
+ UAV Drones: we put money into website displays, search engine
advertising and retailer recruitment.