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Big button/Picture perfect

strategic mgmt final presentation

J. Fernando Galeano R.

on 1 May 2010

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Transcript of Big button/Picture perfect

Our Vision To create a prosperous digital camera company that is a global market industry leader. Through a strong ethical corporate culture we will sustain a positive environment for all of our stakeholders in the years to come. Big Button is the best-cost provider committed to innovation, employee excellence, high productivity and strong value chain. Our company strives to exceed industry averages with low prices in order to dominate the Europe Africa and Asia Pacific markets. We pride ourselves on our affordable quality and efficiency that drives economies of scale.

Strategy Product Line Production Costs (Entry Level) Production Costs (Multi Feature) Labor Ratio Analysis Five Force Analysis + Competing sellers are active in making fresh moves to improve their market standing and business performance
+ Buyer Demand is growing slowly
+ Rivals are of roughly of equal size and competitive capability
+ Low buyer switching cost

Strength of rivalry (+) Potential of New entrants (-)

- The pool of new entrant candidates is small
- Cost entry is high
- Buyer demand is growing slowly
- Highly competitive industry

Power of the Buyer (+) + Buyer demand is weak and declining
+ Buyer switching costs to competing brands are low
Best-Cost Provider

Core Competencies

Hire most productive temp workers

Work stations
No outsourcing

Consistent number of models
Feature always met or exceeded industry averages
Investment in continuous improvement and design for steady increase in performance ratings
FINANCIALS Power of suppliers (-) •- Threat of backward integration
•- Good supplier substitutes exist
•- Switching costs to alternative suppliers are low
Threat of substitutes (+) •+Good substitutes are readily available or new ones are emerging
•+Substitutes are attractively priced
•+End users have low costs in switching to substitutes
S W O T Strengths Strengths - Year 14 Weaknesses Opportunities

Threats Value Chain "Overall Big Button is committed to create a strong ethical corporate culture . This means that our employees are highly compensated for high productivity work producing high quality products" 3 year outlook
+ Big Button Picture Perfect Picture Perfect’s Mission and Vision
Product Line
Value Chain
5-competitive forces analysis
SWOT analysis
Financial Analysis
Three Year Outlook
Agenda Picture Perfect improves the quality of people’s lives through the convenience, high quality, and affordable price of our camera’s to be used by everyday people. Recognizing our responsibilities as a dominant camera company, we will devote ourselves to ensuring each and every customer can purchase their camera of choice without having to inconveniently stray from their busy lives. We will enhance our consumers quality of life through our professional service and superior products.
Our customer’s satisfaction is our priority. Entry Level Camera strategy - Operated Facilities at full capacity.
Focused on finding the right combination of full-time employees, temporary employees, outsourcing, and overtime to increase the efficiency of facilities.
Focused on increasing sales volume to reduce marketing, administrative, and research and development costs per unit.
Low-Cost Provider Strategy
Picture Perfect was the low-cost provider in the industry in years 12-15.
Multi-Featured camera strategy Best-Cost Provider Strategy

P/Q rating of 4 stars with a warranty of 6 months
Only one other company had a P/Q rating of 4 stars and Picture Perfect’s camera was cheaper and had a longer warranty.
Focused on Tech Support.
Operated facilities at full capacity.
High sales volume.
Product Line Entry Level camera
Multi-Featured Camera 14 megapixels
22x optical zoom
9 features
2 models
4 PQ rating
Average Price = $400
7 megapixels
3x optical zoom
2 features
4 models
2.5 PQ rating
Average Price = $140
Net Revenues Earnings per share Return on Equity Stock Price Operations Research and Development
-Picture Perfect: $0.94 per unit
-Industry Average: $0.93 per unit
-Industry High: $3.89 per unit
-Picture Perfect: $34,691 per worker
-Industry Average: $33,898 per worker
-Industry High: $41,203 per worker
Cost of Assembly ($ per unit)

-Entry level
Picture Perfect: $71.57(Low) Ind. Avg.: $86.94 Ind. High: $148.85
Picture Perfect: $254.87 Ind. Avg.: $278.84 Ind. High: $448.56
Outbound Logistics/Distribution Year 15, 4 Q Sales and Marketing -Marketing Costs: $90.4 million, closest competitor: $54.9 million

-Year 15 Advertising in 4 Markets (Avg.)
Picture Perfect: $3,637,500 per Qtr., Industry Avg.: $1,837,750 per Qtr.
Highest Advertising Budget in each market segment

-Year 15 Promotions in 4 Markets (Avg.)
Picture Perfect: 1.25 promotions, 1 week, 12% discount
Industry Average: 1.575 promotions, 1.5 weeks, 11.5% discount

Picture Perfect: 1.25 promotions, 2 weeks, 13.5% discount
Industry Avg.: 1.55 promotions, 1.675 weeks, 13.5% discount

Service -Year 15-Warranty Period in 4 Markets (Avg.)
Entry-Level Segment
Picture Perfect: 90 days, Industry Avg.: 1 year
Multi-Featured Segment
Picture Perfect: 6 months, Industry Avg.: 1 year

-Year 15- Tech Support in 4 Markets (Avg.)
Picture Perfect: $1,375,000 per Qtr., Industry Avg.: $465,000 per Qtr.
Five Competitive Forces Strength of Rivalry=Strong Force (+) Strong Factors
Competing sellers are active in making fresh moves.
Buyer costs to switch brands are low.
Rivals are dissatisfied with their current market share.
Buyer demand is growing slowly.
Weak Factors
None Threat of Entry=Weak Force (-) Strong Factors
Industry members are entering geographic areas where they currently do not have a large presence.
Weak Factors
The pool of entry candidates is small.
Entry barriers are high.
Industry members will strongly contest the efforts of new entrants entering the market.
Buyer demand is growing slowly.
Substitute Products=Strong Force (+) Strong Factors
New substitute products are emerging.
Substitutes have comparable performance features.
Weak Factors
None Bargaining Power of Suppliers=Weak Force (-) Strong Factors
None Weak Forces
Industry members account for a big proportion of suppliers’ total sales.
Seller switching costs to alternative suppliers are low.
Picture Perfect is a threat to integrate backward into the business of suppliers.
Seller partnering with selected suppliers provides a win-win relationship.
Bargaining Power of Buyers=Strong Force (+) Strong Factors
Buyer switching costs to competing brands or substitute products are low.
Buyers have the ability to postpone purchases until later if they do not like the present prices.
Weak Factors
Buyers purchase the item infrequently and in small quantities.
A seller’s brand reputation is important to some buyers.
SWOT Net Revenues Earnings Per Share Return On Equity Credit Rating Stock Price Image Rating Financials Big Button
Picture Perfect Entry Level Market Share Multi-Featured Market Share Leveraged Management Buyout Strategy •Low-cost in entry level :
-Low-cost provider while maintaining industry average quality
•best cost in multi-featured Product line: Nick
Same P/Q ratings for both entry level and multi-featured
Reduce product lines to 6 total for entry level (each company has 3 cameras)
Reduce price of multi-featured camera to $440 for year 16
Price for entry level: $145
-Increase market share in all markets
Continue aggressive marketing strategy •Value Chain core competency •Long-term contracts with retail stores -Forward integration into camera stores:
Expand product line to include photo printers and digital photo editing software
Acquisition strategy (small struggling niche companies)
-Investment in R&D to strive for innovation
Combine budgets and increase 5%
Financial 3 Year Outlook Stock- more than $250
ROE- more than 60%
Charitable donations: $5,000,000
Improved working conditions: picture perfect
Q & A
Full transcript