Issues Related to Company Strategy - Essay Example

FILMPRO: THE 3-YEAR STRATEGIC PLAN Introduction Glo-bus is a computer based exercise model adopted by the company inorder to gain competitive advantage over its competitors in the concerned industry. Film Pro focused on implementing this model in its business operation. This model will assist the concerned company in determining the cause effect relationship of the business. It is headquartered in United States; it began its operations before five years. The company is engaged in providing latest and updated model camera to its multi store chains and online electronic firms located in the areas of Asia pacific, North America, Latin America and Europe- Africa. The demand of camera is seasonal in nature. The retailers generally place the order for camera to the company 90 days in advance. The order placed by the retailers in Quarter 1 with the expectation of selling it in Quarter 2, the order placed in Quarter 2 is sold in Quarter 3. The most important factor influencing the concerned company to adopt this Glo –bus model is it involves battle of strategies implemented in the competitive market place. The main objective of the concerned company in applying the Glo-bus model in its business is to provide valuable decision making practice and assist the company in taking adequate decision depending on the situation or circumstances. Issues related to Company Strategy The concerned company encounters various marketing and financial problems related to designing strategy for the company. The main financial issues encountered by the company are determining the cash position of the company. The company focused on manufacturing cameras that contains many features but the problem associated with it is that the buyers are more price sensitive in buying multi featured device as compared to the single feature camera. Therefore the cost strategy is required to be adopted on the basis of the price charged by its competitors. Film Pro also faces the problem of exchange rate adjustment. Since the amount received must be converted into Taiwan currency and then in terms of US dollar. The company experiences problem in carrying out its business in Taiwan and maintain the financial statement in United States. The company faces the risk of fluctuations in the exchange rate. The concerned company wants to track the number of retail stores, outlets in a particular geographic regions that are willing to display the brand of the concerned company. The extent of technical service offered also creates a problem, since the users of the device are sometimes unable to use the device properly and need technical support from the company. The technical support is provided in the website of the manufacturer, therefore the customer encounters problem in receiving technical support by visiting the manufacturers website. The brand name and reputation is enjoyed by the company who experiences highest share in the market. The company faces intense competition in the market, as there is large number of competitors in the industry. Therefore in order to gain competitive advantage the concerned organization is required to focus on various competitive strategies. Recognize stakeholders and their relationship to the strategy The important stakeholders of the company are the retailers, consumers and manufacturers. The aim or the endeavor of the retailer is to maintain various inventories of camera with varying models in their stores or outlets and warehouses in order to satisfy the demand of their prospective customers. There are wide number of retailers who are engaged in selling varieties of cameras in the market. There are approximately more than 50,000 retailers scattered all over the world who are engaged in selling cameras. The strategy adopted by the company in introducing and implementing the Glo-bus model is, this model assist the retailers in detecting the model which is in high demand in the market and the brand which preferred by most of the customers. Since there are large number of retailers existing in the market whose main aim is to attract more number of customers in their stores or retail outlets by displaying new models of camera in their stores. The buyers are very sensitive towards buying camera; they generally prefer to purchase the camera with differentiated features and high brand value. Therefore the company focuses on providing multi feature in its device for attracting its customers and creating huge demand for its camera in the market. Glo- bus will help the retailers in gaining competitive advantage over other retailers. It will assist the concerned company in targeting customers in those areas where the potentiality of sale is more and it will also assist the customers in attaining new and differentiated feature. Chosen strategy Film pro focused on adoption of competitive strategy by implementing the Glo- bus computer based model in its business. The application of this model will assist the company in decision making process and gain competitive advantage over its competitors. The strategic vision of the concerned company is to capitalize in the advancement in technology and creating high appeal for its cameras among the consumers in the market. The concerned company aims at gaining competitive advantage over its competitors dealing in the same industry. Film Pro dedicated its effort in introducing new and improved model on the basis of fixed interval of time, restyles its camera bodies, upgrades its internal camera software. In order to restrict its competitors from acquiring the market, it focused on pricing and cost differentiated strategy. The concerned company continuously focuses on the number of retailers it can target to promote its brand, the advertising expenditure for promoting the brand in the market, the discount that it will offer to its retailers during the period of promotion, the warranty period, brand image and reputation of its product or brand in the market (Thompson, Stappenbeck, Reidenbach, Thrasher & Harms, 2015). Return on equity is considered as an important factor in determining the income derived from the shareholders investment. It measures the profitability of the business. The concerned company is expected to generate 15% or more than 15% return on equity annually for a period of 5 years. The favorable return on equity indicates that the company is able to use its equity financing effectively for the growth and development of the company. The company can generate adequate return on equity by applying the Glo-bus model. Earnings per share determine the ability of the company to earn on the basis on the number of shares it holds in the stock exchange. The concerned company focused on designing its strategy in such a way that it can generate a earning per share of 8% annually for the period of 10 years and at the rate of 4% annually thereafter. The expected earnings per share targeted by the concerned company can be easily achieved through the application of the Glo- bus model in its business operation. Credit rating plays an important role in determining the credit status of the company. The organization responsible for rating the company generally rates or ranks the company on the basis of their performance or activity. The companies are rated between A to C. Rating for a company is done by considering various factors which includes the financial performance of the company for last few years, its debt equity ratio, stock performance etc. The concerned company is expected to rate itself with B + to B grade. The application of Glo-bus model will assist the company in improving its financial position by increasing the demand for its new and improved model in the market. The stock price appreciation which is concerned with the performance of the company for the last few years and the image rating, the brand image or the reputation it occupies in the market assist in credit rating process of the company. The company is expected to achieve an image rating of 70 or more and achieve an appreciation in its stock price by 8% annually through 10 year (Saaty, 2001). Assumptions underlying the chosen strategy In order to achieve its target the company mainly focuses on the P/Q rating provided by the World Digital Camera Federation, since most of the retailers prefer those brands which is ranked or rated high by WDCF. The concerned company provides special promotion offer at each quarter in order to increase customer attraction, store traffic and sales, the promotion period is kept longer since it will bring more number of customers. The company fixes its advertisement to create its brand awareness among the minds of its customers. The company emphasized on providing camera with wide number of features. The companies with lower price, more advertisement expenses, longer special promotion and higher P/Q rating are generally preferred by the retailers. In order to implement this strategy for targeting the particular geographic regions, the manager of the concerned company is required to focus on the aspects such as employing lower cost that is charging lower price as compared to its competitors or rivals, employing or selecting a differentiation strategy by providing higher attributes than other brands available in the market, gaining sales in the areas where the company already has high sales, focusing on becoming the market leader in the particular industry, employing a strategy that provides more value for money i.e. providing four star digital cameras at a lower price as compared to the four star brand of its rivals or competitors in the market (Saaty & Vargas, 2013). Rationale used in developing the strategy Glo- bus is considered as the tool for achieving the target set by Film Pro. Since the market is highly competitive therefore application of this model will facilitate or assist the concerned company in gaining competitive advantage over its rivals. The four market region in which the concerned company is engaged in providing services mainly includes the Asia- Pacific, Europe-Africa, North America and Latin America. The concerned company is generating revenue of $ 206 million and net earnings of $ 20 million. This indicates that the company experiences sound financial condition .The company adopted suitable strategy in expanding its business and capturing more markets. The company implemented Glo-bus business model for increasing its revenue therefore it is expected that the company will be able to increase its revenue in the next three years consecutively. The retail unit sales of the concerned company are divided on the basis of four quarters for each year. The quarters indicates that the concerned company is able to increase its unit sales from quarter 1 to quarter 4 by more than 20%, this signifies that the unit sales of the brand is increasing and it is likely to increase significantly in the next three years. The concerned company is able to derive decent profit margin from its business operation. The entry level digital camera for wholesale price of $160 are available for a retail price of $ 300 or more and the multi featured camera at a whole sale price of $360 are sold at a retail price of $700. This increase in sale and profit provides the retailer to offer sale at a off of 10 to 20% off the regular price of the product and gain a decent profit margin (Ross, 2013). The profitability, revenue and the unit sales of the concerned company in the current year indicates that the company will be able to generate an increase in its revenue, profit and sales in the next three years. Conclusion The main success of this model is, it watches and observes the actions of its rivals or competitors in taking decisions for delivering the intended results. The concerned company mainly aims in capturing the majority of market share in the industry. Glo-bus model will assist Film Pro in applying the model and winning the strategies and target set by the organization within a specific period of time in the competitive market. It acts as a watch dog for the company in analyzing and monitoring the activities of the competitors. In order to sustain in this competitive market, decision making process plays an important role. Therefore the concerned company adopted this model which will assist in decision making process and gain competitive advantage over others. References Thompson, A. A., Stappenbeck, G. J., Reidenbach, M. A., Thrasher, I. F. & Harms, C. C. (2015). GLO-BUS: developing winning competitive strategies. New York: McGraw-Hill Education. Saaty, T.L. (2001). Decision making with dependence and feedback. New York: New York Public Library. Saaty, T. L. & Vargas, L.G., (2013). Decision making with the analytic network process: economic, political, social and technological applications with benefits, opportunities, costs and risks. New York: Springer Science & Business Media. Ross, S.M. (2013). Simulation. New York: Academic Press. Read More