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Industry C60304: Digby

This analysis focuses on the strategic research and development (R&D) initiatives directed at high-end and low-end product segments. It highlights the prioritization of addressing market demand fluctuations, history of production decisions, and investment in automation to maintain competitiveness. With an emphasis on adhering to industry standards and adjusting age considerations, the report outlines challenges faced in capacity planning and profit margins. The future outlook suggests increasing investments in both size and high-end segments, as well as addressing high interest costs hindered by past debt strategies.

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Industry C60304: Digby

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Presentation Transcript

  1. Industry C60304: Digby Katie Guiheen, James Bello, Viola Hang, Gracious Adai

  2. The Strategy

  3. Research and Development • Cutting High End and Performance products • Focusing R&D investment in three segments • Following industry standard in general • Staying in perceptual circle • Adjust according to age and other criteria • Age consideration • High priority for Low End • R&D cycle time • Low End last revise longer than expected -2years • Discontinued current Low End product

  4. Traditional Marketing = Market Leader = Sold Out

  5. Low End Marketing = Sold Out

  6. Size Marketing = Market Leader = Sold Out

  7. Production Decisions Units Produced vs. Units Sold • Units produced was based off a calculation of our current market share increased by 2-3% with the new market forecast • Invested in automation early • Exceeded competitors by 0.5 • Mitigated labor problems • Invested in benchmarking

  8. The Margin Problem Traditional Low End Size • Capacity didn’t follow industry demand or production • Low end was a constant guessing game • Focused on high ROA in traditional and size • Looking forward: • Traditional largest success • Increase investment in size and high end

  9. Capital Structure • Issuance of more Debt than Equity resulted in high interest costs • Stock price hurt badly in early rounds, factor for issuing debt instead of equity • Retired old debt with new debt, never tried to pay debt off early • Repurchased 3.6M shares in round 8

  10. EBIT, Profit, Interest Expense • High Int costs in the later rounds hampered profits in combination with low contribution margins and less sales • Round 7: 9.5M IntExp • Decision in round 5 to raise 40M in debt drastically increased interest expenses

  11. Thank you for your time.

  12. Appendix A

  13. Appendix B

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