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JUTTING EDGE Emily Edkins, Charles Hayes, Rosselle Sandoval, Timothy Tiernan Glo-Bus Team Written Report 4/15/2014

Strategy Formulation and Initial Implementation: One of the only constants in business is change. For this reason, Jutting edge came to the realization that we needed to slightly change our strategy to fit both the needs of the consumers in the market, and to be able to compete with other companies within the market for personalized cameras. Jutting Edge initially implemented a Focused Differentiation approach to the

marketplace and its competitors, which was implemented in attempt to produce a high-end product which fits a niche market within the overall market for cameras. Due to the fact that Jutting Edge was not meeting its internal and external expectations in terms of Earnings Per Share(EPS), Credit Rating, and Image rating, Jutting edge needed to analyze its competitors strategies to see where new opportunities for growth may arise. Due to the fact that Jutting Edge wanted to continue its operations in the camera industry, many changes in terms of strategies and components needed to be made. Jutting edge came to the realization that there was a large amount of competition between competitors to produce a high-quality camera, and we realized that we needed to slightly deviate from our original business plan. By doing so, Jutting Edge was able to generate better statistical results, and was able to compete in a slightly easier manner after these changes that were made. Jutting Edge saw the potential to increase sales and profitability by producing products that were in high demand and with slightly lower product components, enabling Jutting edge to drop the prices of its products throughout all regions. Jutting edge understood the importance of not completely changing its strategy, which is why Jutting Edge only initially changed product features on its multi-featured products.


Towards the end of Jutting Edges business cycle, we adopted a strategy of being a Best -Cost Provider. Jutting Edge saw the potential for a larger amount of market share and profitability by adopting this strategy, and also saw that some of our leading competitors largely benefited by using this strategy. This enabled Jutting Edge to sell and product a much larger amount of products, and although they were sold at a lower price it was much more efficient for our organization than our initial strategy. Because Jutting Edge deviated from our initial business plan and strategy as a whole, we were able to learn about many different strategies, as well as how those strategies can affect different entities of a company both internally and externally. Due to the fact that Jutting Edge slowly changed strategies over time, we were able to see slow and steady growth, which can sometimes be more beneficial for organizations than experiencing a large growth period followed by no growth or a slight decline. Because Jutting Edge has many internal employees with marketing experience, we started out the game by investing a large amount of money on advertising. Over time, we realized that due to the fact that we were operating in all areas and stores possible, we came to the conclusion that our advertising expense was slightly higher than needed. Due to this realization, Jutting Edge slightly lowered advertising expenditures, thus creating a slightly larger Earnings Per Share (EPS) number per year. At one point throughout Jutting Edges business cycle, we adopted an idea to take some strategies we generated ideas for and used North America as a test market for these brainstormed strategies. North America was used due to the fact that it was our companies smallest market,

JUTTING EDGE and we did see growth and improvement with the newly-developed strategy that we implemented in this small segment of the overall world market for personalized cameras. Due to the fact that Jutting Edges largest market was Europe-Africa, we followed this market closely to ensure strong performance relative to market share. We spent a slightly larger amount on this geographical location in terms of advertising throughout our business cycle, and realized the importance of performing well in this specific area. Our company formulated our initial strategic plan based on a focused differentiation strategy. Upon taking leadership of Jutting Edge in year 6, we began executing this strategy by investing in camera capabilities. In both the entry-level and multi-featured segment, we increased spending per camera and price per camera to make both lines higher quality, reflected in features and cost. We decreased the number of entry-level models from 3 to 1, aligning with our strategy to focus our resources on bolstering our multi-featured cameras. Additional spending funneled into advertising and an increase in percentage change in worker compensation. Adjustments to Strategy: During our time as managers, we evolved company strategy to align with the shifting actions of our competitors and changing market demands. In essence, our strategy transformed from one of focused differentiation to best cost provider. However, this transformation comprised many intermediate steps. Each year, we assessed the current situation, determined what was and was not working from a strategic perspective, and addressed pieces of our strategy that needed to adapt to unforeseen circumstances. Year 6: We decided to place high spending on camera components and features, higher prices for both lines, additional spending on advertising as our initial strategy was one of a focused differentiation. We focused on developing camera lines that would be competitively

JUTTING EDGE advanced and innovative by increasing several core and brand specific components for both Entry-Level and Multi-Featured cameras. We also decreased the number of models for EntryLevel and kept Multi-Featured models constant in order to focus the innovation to a specific set of models. Being that the products we were developing were meant to be more advanced, we decided to increase our technical support in order to supply our customers with any necessary problems to a seemingly unique product. The increase in technical support was only done in the North America region in order to once again focus on a specific region. And advertising increases were only seen in North America and Europe-Africa. Although our labor force is an important and valuable component to our strategy, in Year 6 we made no chances other than 2.0 percent increase in the base wage of each Jutting Edge member. Year 7: We decided to lay off several workers for the first and only time due to the revenues and expenses received from Year 6. Our reasoning was that our product was well constructed and although sales and market share wasnt what we expected, the loss in revenue was coming from an unnecessary expense in labor. Additionally, we decided to spend less on productivity and training being that once again our operating expenses were higher than the industry average for labor. Otherwise, all other functional areas remained constant. Year 8: In year 8, we made the decision to repurchase shares in order to increase our earnings per share. We also made the decision to decrease core and brand-specific components in both our Entry-Level and Multi-featured cameras. The decisions to do so was because we found that consumers wanted a less expensive and simplistic camera. Our products were differentiated to an extreme that didnt appeal to the profitable and larger camera buying clientele that existed. Although our features changed, we slightly increased our product research and development to

JUTTING EDGE not completely compromise the innovative products our company had initially wanted but rather find a happy medium for both the consumer and our mission. Year 9: Once again we repurchased shares in Year 9 but less than Year 8. We also increased the base salary from 2% to 5% to provide a supportive culture for our employees who truly are on the forefront of our operations. Additionally we increased the warranty of our products from 1 year to 2 to address the quality of our product in comparison to similar products in the market. Our actions in supporting our employees and backing up our products allowed for us to continue executing our strategy. Year 10: We decided for Year 10 to refocus our efforts on our companys image and the well-being of the community we serve. This was the first and only year we focused on the Green Initiative in order to participate in developing a corporate social responsible that ultimately we decided we didnt want to pay with debt. Year 11: Year 11 was an aggressive and proactive year for Jutting Edge. Our strategic actions included hiring many new workers, repurchasing shares, and increasing our MultiFeatured warranties up to 3 years. Year 12: Once again we repurchased shares in an effort to increase our earnings per share and display trust in our company to the public. We increased online retailers in North America by more than half and added additional retail dealer increases in every other region. Our strategic actions were to meet demands that were not met the previous year by being overly aggressive within reason. Year 13: As we continued to repurchase shares, Year 13 showed the largest net profit in comparison to a dismal Year 12 earnings. We decreased the cost per camera sufficiently enough to cover losses incurred from decreasing prices.


JUTTING EDGE Assessment: In terms of overall rank, Jutting Edge improved dramatically and repeatedly overcame setbacks over the course of years six through thirteen. Accomplishing this would not have been possible without continual analysis of changing industry trends, as well as frequent reevaluation of competitors strengths and weaknesses. In year six Jutting Edge was in eleventh place, but had risen to fifth by year nine. The firm slipped back to ninth in year ten, then back to fifth the following year. Jutting Edge fell again to eighth in year twelve, and once again rose to fifth for the final year, thirteen. For the entire course of time Jutting Edge was ranked seventh, which, while mediocre marks significant progress for a firm that started out second from last. Jutting Edge has remained true to its mission statement by being dynamic in response to demand and market trends, promoting sales globally, establishing a well-known name (Jutting Edge replaced its less catchy name, J Vista in year nine), and maintaining re liability in its products. Some of the financial objectives put forth by the board of directors were attained, while others were not. Jutting Edge was able to grow its earnings per share by eight percent or more in all years except ten and twelve. Returns on equity grew by at least fifteen percent for all years except nine, ten, and twelve. Stock prices failed to grow by at least eight percent in years seven, ten, and twelve, but did so in all other years. Jutting Edge maintained at least a B+ credit rating throughout, exceeding this in years seven, eight, nine, ten, eleven, and thirteen. The firm failed to achieve an image rating of seventy or above in all years except year eleven, and therefore was unable to become the leader in image rating by year ten as the board of directors had suggested. Jutting Edge was unable to capture the highest P/Q rating in the multi-feature segment.

JUTTING EDGE Overall, Jutting Edge was successful in satisfying the strategic goals set forth by its board of directors. The company was able to gain consumer trust and credibility in both the entry-level and multi-feature markets. Promotions and advertising were adjusted dynamically year-by-year to create brand awareness in the context of the most current industry trends. In addition, corporate social responsibility was gradually increased to reflect the companys value and contribute to brand image. Key Learnings: As managers of Jutting Edge, we have learned several key concepts to enhance company success and managerial decision-making. Evolving company strategy in response to competitors actions and industry trends is critical, and strategic initiatives must be continuous evaluated. Managers must be aware of changing dynamics in the industry and make strategic decisions as to resource allocation based on internal capabilities. Our initial strategy in action provoked poor performance, and we realized that to ensure financial stability and long-term success we needed to change our strategy and tactics. Our team learned to strike a balance between maintaining company values and transforming the companys strategic direction. We provided competitive compensation and fringe benefits to our employees each year, which increased labor productivity and maintained the firms healthy culture as the companys broad strategy changed. Identifying the invaluable resource of our Jutting Edge employees, we invested in PAT training, unit incentives, and compensation consistently above industry average. Over time, we found it more cost-effective to produce units in-house at overtime hours rather than outsource due to productivity levels. Our management team learned never to rely solely on projections based on historical performance of competitors. The company experienced negative percentage variances every year

JUTTING EDGE in terms of actual versus projected performance measures. It served us well to collaborate as a management team and decipher the industry landscape to make proactive strategic decisions based on our own interpretations. We learned that it takes a delicate balance to achieve both solid financial performance and a high image rating. Finding the equilibrium spending per camera and wholesale price remained an ongoing challenge as we attempted to reap sufficient profits while maintaining a high image rating. Our time as managers has reinforced the power of integrating different perspectives into managerial decision-making. Each member of our management team provided unique insights as well as technical and creative skillsets. Working as a cross-functional team enabled Jutting Edge to overcome challenges and push toward meeting goals both financially and innovatively. Advice for Future Management: We recommend the following actions for the future success of Jutting Edge: Best Cost Strategy Tactics: To align with the companys new best-cost provider strategy, we recommend evolving from a global company to a transnational company in how management sets prices, promotes product lines, and engages with the local consumer in respective countries. Specific tactics include continuous re-pricing and product feature benchmarking in light of industry averages and forecasted trends from both the low-cost and differentiated providers in each location. We recommend increasing advertising spending in tandem with the introduction of discounts, which will spur interest from the value-conscious buyer. To maintain a sustainable competitive advantage with regard to its people and transnational strategy, the company must embed good resource allocation practices.

JUTTING EDGE Finding the sweet spot of the best cost provider strategy entails predicting future moves of competitors and always being one step ahead. We recommend increasing spending on advertising, technical support, and labor productivity incentives to drive and maintain sales. Employee Compensation: We further recommend continuing to provide competitive compensation and benefits to employees. Allocating substantial financial resources to labor aids in retention and productivity of the labor force. Employees are a key company resource, and employee turnover is expensive. To minimize layoffs and enhance performance, management would do well to attract and retain good employees through offering competitive base pay and incentive packages. Paying the labor force competitively reinforces the companys strategic investment in its people. Follow the Data: Our management recommends assessing global industry trends each quarter and adapting spending accordingly. Advertising expenditures and discount windows should match competitor levels to keep the companys product and image relevant within competitive retail space. As the production facilities adapt from producing elite cameras at the high end of the price spectrum to best-cost cameras targeted at the value-conscious buyer, embedding total quality management practices into future strategy will stimulate constant improvement. Strike a Balance between Long-term and Short-Term Goals: Being proactive and responsibly reactive when necessary is important to uphold immediate financial performance and stimulate long-term capital gains. Our team recommends that future management pursues the companys market share growth incrementally yet ambitiously, building from its current foundation with stretch goals in mind.

JUTTING EDGE Continuous improvement and good change management leadership practices can be pursued through benchmarking and innovative attitudes toward product design and customer satisfaction. Comprehensively, Jutting Edges progression over the past eight years demonstrates the companys willingness to evolve strategy, make difficult decisions to provide value and meet global expectations, and ask questions about the future of the industry as a whole and competitors attitudes toward distinct market segments. The insights we have amassed as managers will be a competitive resource for the new management team.