SWOT analysis Notes 1) We ve learnt that earlier manufacture was done by Jot in its home country itself, later

due to bulk orders and popularity they outsourced manufacturing to China because of cheap labour 2) Over 80% of Jots product sales are sold to retailers for 20 or less. 3) Jots bank has been very responsive to the companys needs for cash in order to fund its growth but has indicaJOT that at the present time it would not be able to provide any additional long-term finance. 4) As Jot builds up its inventory in preparation for higher levels of sales in quarters 3 and 4, cash flow is negative during the second half of the year. This is because outsourced manufacturing for the majority of all products occurs mainly from the end of quarter 2, during all of quarter 3 and the beginning of quarter 4. 5) Jots designers and sales team will have already decided on an indicative selling price, so the unit price to be charged to Jot by the outsourced manufacturing company is often the determining factor when making the decision of which outsourced manufacturing company to use. 6) Over 68% of Jots sales in the financial year ended 31 December 2011 were to these 7 customers based in Europe and the USA. The remaining 32% of sales are to distributors as well as small and medium sized retailers around the world. Jot currently has around 350 customers in total, including the 7 large customers.

Strengths 1) Certified products 2) A good team. a) Own in-house team of designers who are involved in designing toys that are unique, innovative and fun to play with. Also involved with researching the market trends, and establishing the availability of new innovative technology that could be incorporaJOT into new toy designs. Introduction of new designers each year Good designers are kept on but those that are seen as burnt out are let go. Headed by Alana Lotz
b) Research and development work on new product development. New products will be

fully tesJOT ready for the annual launch of Jots new range of toys. Thanks to this team (Innovation and customization happens ) bringing 5 new toys every year and customizing and improvising already existing toys 3) Licensed toys of popular films and TV programs ( 5-10% license fee) 4) Toys of 2 categories, a) Toys having Simple electronics that make a sound or enable movement. b) Advanced toys have simple programming with educational aspects and more interactive. 5) There is a high level of repeat business and a good level of understanding and commitment established between Jot, and its outsourced manufacturers based in China. 6) Jot enjoys: Readily available raw materials which makes the manufacturers easily manufacture toys. And application-specific integraJOT circuits (ASIC components) which are procured from specialist suppliers. Also on-going supply contracts with these specialist suppliers in place for several key components, which helps them to price their products competitively. 7) Effective way of clearing the inventories off the shelves(appendix1) 8) Product designs and product drawings are prepared using a standard CAD / CAM IT system. This allows direct interface with Jots outsourced manufacturers eliminating any delays and confusion over the exact product specification and design. 9) Logistics outsourced to global logistics company which operates with fast and efficient service. (appendix 3) 10) Importance given of its products exceeding, rather than simply conforming to, the required safety standards. 11) company has a diversified portfolio of products, which means that while some ranges are
underperforming, others are out performing. As long as technology allows them to spot successes and then to focus upon them, they have a competitive strength.

Weakness 1) Not into developing toys for age groups <1 year, 1-3 years and 8 years above 2) Seasonal sales, a significant proportion of sales occurring in quarters 3 and 4 3) Difficult decision to be made when placing orders with outsourced manufacturers, between ordering too much inventory and not selling it and the opposite of losing sales because of lack of inventory. 4) Dependent on sales to large retailers, which often do not pay until at least 60 days after the invoice date. Jot has little influence over these retailers and does not want to jeopardize future sales by chasing them too aggressively. 5) Problems in IT systems a) IT Consultancy Company appoinJOT some years ago provided systems of which some of them are not ideal and do not provide Jots management team with all of the data that it requires. There is also some replication of data between different IT systems which is a serious issue b) IT systems do not accept data directly from any of Jots other IT systems. (appendix 2) 6) CSR not yet officially published what it does or how it will improve its CSR plans. 7) Expensive toys for normal people (WTF??)

Opportunities

1) Participate in various global toy fairs being held in various locations around the world. 2) main markets are in Europe and the USA, but there is chanse to get new market places around the world; Russian and the Asian markets needs to be tapped. These two specific markets have a growing demand for the types of product that Jot sells. 3) High demand in USA for Jots products ever since the jots entry to US. 4) Should come up with innovative toys which have Extra learning dimension and teamwork
orienJOT toys and games which enhances childrens creativity through playing and learning

5) Should come up with a very unique online video user manual which lets the parent or kid know how to
use/play with the toy.

6) Develop new products. 7) Open its own retail outlet selling toys.

8) There are opportunities for joint ventures and strategic alliances. Eg with online
retail stores

9) The citizens of emerging nations such as China and India are getting wealthier and better
educaJOT. Consumers have more disposable income and leisure time, and both of these could increase over coming years. The types of goods and services retailed by the company could be markeJOT more aggressively overseas.

Threats 1) dependent on sales to large retailers, which often do not pay until at least 60 days after the invoice date. Jot has little influence over these retailers and does not want to jeopardise future sales by chasing them too aggressively. 2) Supply needs to be matched with demand in all the markets. 3) Completion from other toy manufacturing companies. 4) Computer games, TV , Play stations, Wii and other gaming devices. 5) Possible negative publicity. 6) The problem, and potential weakness, is that countries and trading communities tend to

impose quotas and tariffs in order to protect local manufacturing. Hope it doesnt happen here

Future changes: 1) Website in different languages 2)

3) Toy defect: - Fault in new flying spaceship toy As the insulation around the electrical circuitry was not designed to be sufficiently fire and heat resistant for the length of time the toy has sometimes been left to recharged, the toy flying spaceship is into lot of trouble. A new designer (Indy Kaplia) employed by Jot designed the toy and made the error. Michael Werner has indicaJOT: -. if Jot spends another 10 per unit on improved insulation the products will then be safe to ship out to customers. He also says that this work can be done quickly Boris Hepp is not okay with this idea. He says that many customers (including all the major retailers) are complaining and it would be better to write the product off completely so as not to further damage an already bruised reputation of the company. Now it is clear that there is no blame attached to the manufacturer. But the sales of the product have been too strong and hence it is not viable to write the product off. Sales figures : 1) Already sold: - i.e. 1200 units Jots customers have sold 1,200 units at a price of 84 = 100800 The product cost to the retailers was 40 x 1200 units = 48000 The product costs to make and distribute 24x 1200units= 28800

1) The initial manufacturing order of 6,000 units has already been made and delivered. 2) Number of units in inventory = 3200 units Additional Customization costs 10 Therefore total cost (new) 34 / unit Cost involved is 3,200 units x 34= 108800 (i.e. 32000 additional cost)

What we say : Its not a right thing to write the product off for the following reasons: 1) Its a really popular product and though a fault has been identified, instead of writing off the product the manufacturers must try to improve it. 2) a) For the 3200 units in inventory An additional cost of 10 / unit for improving the product is the right option and we suggest that the improvement must be done and the product must be sold in a new name, say like Super Flying Machine or Super Spaceship. By doing so customers and people will get to know that an improved version of the spaceship has been released in the market and they would not think much weather to buy the product or not. So improving the product would be a good sign which sends across a message to everyone in market that JOT is very sincere about the safety of customers, and it would not compromise for anything other than that. This can also be used for publicity of the company.

b) For the 6000 units already manufactured and delivered: Do no improvement in the product, change the package and include a warning message in the new package saying charging must be done for not more than 2 hours else, it might result in wreckage of the product. Here only the additional cost incurred will be the new packaging cost. This is the best way to protect the interest of both company and the customers and we as a company have given a reasonable instructions which the customers must follow or they will end up loosing their product.

c) Nothing much can be done for the already sold 1200 units other than JOT making an announcement in its website saying .flying spaceship toy must not be left charged for more than two hours at a stretch They should make sure that this announcement reaches the customers who have already purchased the toy, sooner before the second edition of the same toy is out in the market. These are the measures JOT will be advised to the issue of flying machine toy

3) Launch of new range of products: - Launch of new range of toys for 9 11 age group Launching new range of toys is nothing new to JOT as it has always been innovating and improving the toys that it manufactures. From a past couple of years, at least 5 new products have been brought into market by JOT every year and it has plans to bring 10 new toys every year in the market in next 5 years. But JOT has not started manufacture of toys for age group of 8 and above. Alana has plans to enter this segment in a whole new way which the company never thought about. Its very true that the children in this age group demand a greater sophistication from their toys, So Alanas idea is to start a Smartphone application that has both gaming and educational aspects, for the Children for this segment. What we say: We agree with what Mr. John Grun says. Its better for JOT to not take this idea into consideration, at least for the present time. Reasons being: a) JOT is a toy manufacturing company, creating applications for Smart phones is just not what JOT actually does. It defeats the whole purpose of being a toy manufacturing company. b) Too much of competition already in Smartphone app segment, there are already a lot of applications which are similar to what Alana had thought about, but very few number of such apps have become popular. c) It is a whole new area that JOT knows nothing about. d) The probability of kids having access to Smartphones is really less. They might play such games only if a parent or an elder would give these kids their mobile. Though the idea might seem optimistic, its better to not to continue with it as the company might have to pay a big price for entering an unknown market. What the company can do here is To come up with new toys which satisfy the needs of the kids aged 9-11, or Not enter this segment of age group 9-11 at least for now.

4) Late delivery of Christmas product

Gull- a manufacturing company and suppliers for JOT which is situated in China has not been able to meet its obligation to deliver the 2,400 units that had been ordered for delivery on 4 November 2012. Boris Hepps suggestion cannot be taken into consideration at this point of time; as such issues are common in business. It is not advisable at all to cancel the contract with gull at this moment, as the delivery of the rest 25% of the goods would anyways be made by the 15th of December (considering that the Christmas season is still on ).Also ,in business such discrepancies are inevitable at certain points . So neither the contract with the supplier should be cancelled, nor they must be asked to pay any compensation. For a sustainable growth of a business, a good relationship is essential between supplier and the company. What JOT can do is: a) If rest of the goods are delivered on 15th December itself: It can claim for a discount on the 25% of the late supplies GULL is delivering. The rest of 25% of supplies must be sent directly to the customers of JOT by GULL itself. GULL must make sure that the rest of the supplies happen on time. b) If rest of the supplies are not delivered on 15th December then: JOT can claim compensation as GULL was unable to keep up its promise for the second time. In case targets are not achieved, and supply to JOTs customers was not made, then it is best to share the product more equally among all the JOTs customers. After this particular occurrence JOT must make an additional clause in the contract ascertaining the compensation that needs to be paid by the outsourcing company incase of such happenings of late delivery.

1) Market growth potential: PEST analysis Political: Economic: -

Laborforce:815.3million(2010); agriculture10.2%,industry46.9%,services43%(2010est.). Exports:$1.581trillion(2010est.: Imports:$1.327trillion(2010est.)

Socio-cultural factors: a) Population: - over 1.4 billion 2011 b) Sex ratio: - 51:49 (m/f) c) Age structure (Yrs) a) 16.6% 0-14 b)15-60 70.14% c) 13.26 60+ & Literacy rate:- 92.8%(2010 Technological: -

2) Competitiveness in market Porters 5 force analysis 1) 2) 3) 4) 5) Rivalry Threat of substitutes Buyer power Supplier power Threat of new entrants and entry barriers

3) current strategic approach Porters generic strategy analysis

4) Potential strategic development Ansoffs growth vector matrix

5) Position and power of the key stakeholders Mendelows stakeholder analysis matrix

6) key drivers of the revenue and profit Critical success factors