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Task

Your task is to write a report for the CEO setting out your analysis of the situation and making strategic recommendations.  In addition you have to create a Stakeholder Summary.

You have a choice for the Stakeholder Summary of either option 1 or option 2:

Option 1 – You should provide a Stakeholder summary that is based on the case study and forms an integrated part of your case study solution. It should summarise the impact of your recommended strategy on the key stakeholders.

Option 2 – You should analyse the power and influence of the stakeholders of ONE of the following companies and summarise your findings:

  • Harley Davidson
  • Toyoto
  • Tata Motors
  • Starbucks

With the exception of Venus Mobile all companies are profitable, with Mercury delivering the best performance over time as measured by cumulative total shareholder return, as shown in Table 1.

Table 1 – Key ratios at the End of round 6

 

Mercury

Saturn

Uranus

Jupiter

Neptune

Venus

Mars

Operating profit before depreciation

56.24

58.84

32.56

48.58

29.32

-107.04

41.16

Operating profit (EBIT)

52.46

54.24

28.58

39.82

25.18

-360.6

10.9

Return on sales (ROS)

39.97

41.05

22.57

25.23

16.79

-455.98

5.06

Equity ratio

91.63

92.03

68.84

79.62

60.83

67.13

84.71

Net debt to equity (gearing)

-80.73

-79.87

-28.54

-47.15

-63.77

-38.89

-47.22

Return on capital employed (ROCE)

37.08

34.84

49.13

22.79

24.13

-7.53

2.83

Return on equity (ROE)

30.93

28.26

59.91

17.36

27.35

-13.72

1.55

Earnings per share (EPS), USD

43.51

46.89

24.54

16.71

15.54

-9.97

1.24

Cumulative total shareholder

return (p.a.), %

24.7

23.3

12.6

11.5

14.1

-18.1

4.5

Table 2 – Summary income statement at the End of round 6

$ ‘000

Mercury

Saturn

Uranus

Jupiter

Neptune

Venus

Mars

Sales revenue

3,265,450

5,036,634

3,121,167

2,019,672

3,541,404

113,353

979,257

Costs and expenses

             

Variable production costs

654,045

721,448

623,965

370,025

970,875

0

1,094

Feature costs

204,475

424,830

176,848

96,935

266,457

1,894

27,443

Contract manufacturing costs

196,951

441,180

310,565

375,907

414,497

51,490

286,086

Transportation and tariffs

111,287

190,290

235,386

46,519

179,062

2,615

20,358

R&D

69,000

101,663

560,000

0

512,794

0

0

Promotion

66,000

44,000

70,000

13,700

25,500

22,000

82,000

Administration

127,323

149,756

128,278

135,453

134,030

156,687

159,212

Costs and expenses total

1,429,081

2,073,167

2,105,042

1,038,539

2,503,215

234,686

576,193

Operating Profit Before Depr.

1,836,370

2,963,467

1,016,125

981,133

1,038,189

-121,333

403,065

Depreciation

123,225

231,539

124,175

176,886

146,417

287,419

296,293

Operating Profit (EBIT)

1,713,145

2,731,928

891,950

804,247

891,772

-408,752

106,771

Net financing expenses

-69,659

-135,101

5,796

-6,395

2,028

106,317

-7,562

Profit Before Taxes

1,782,804

2,867,029

886,155

810,642

889,744

-515,069

114,334

Income taxes

477,503

799,294

181,730

301,111

295,049

1,795

64,816

PROFIT FOR THE ROUND

1,305,301

2,067,735

704,425

509,531

594,696

-516,865

49,517

During the last year forecasters have suggested that market growth rates will gradually decline over the next few years as the markets begin to mature. During round 6 Europe was expected to grow at a rate of roughly 15%, USA just under 20%, and Asia of over 30%. Also during the last year market research implied that particularly Europeans are highly appreciative of the highest technologies, along with the realization that Tech 3 has been badly received in the USA. Graph 3 shows the overall demand experienced by the manufacturers in each region in response to their marketing efforts.

Table 3 – Growth Rate by Region

Total Demand By region

R1

R2

R3

R4

R5

R6

USA

15%

10%

7%

2%

12%

16%

Asia

42%

15%

-2%

-9%

43%

35%

Europe

4%

-2%

0%

-16%

19%

30%

Global

22%

9%

0%

-8%

29%

29%

Demand for each technology differs by Region.  In Annex 1 to Appendix A there is data showing the demand for technology by Region experienced by the companies. Analysts have observed that the manufacturers do not necessarily understand the regional market segments and are focused on selling standard products globally.

A recent report from market analysts highlighted that there were a number of unserved market segments but with no indication as to the likely size of the demand in each segment. The results are summarised in Table 4 and the source data is provided in Annex 1 to Appendix A .

Table 4 – Current Products and Pricing by Segment

Handset Segment

Basic

Mid-range

Premium

Tech

Number of Features

1-3

4-7

8-10

Tech 1

USA ($)

300

225 - 820

Asia (Rm)

1,800-4,500

1,720

Europe (Euro)

350-800

199-240

Tech 2

USA ($)

400-110

328-370

Asia (Rm)

4,500-6,000

2,720-3,600

Europe (Euro)

500

270-750

Tech 3

USA ($)

520

Asia (Rm)

3,500-6,500

Europe (Euro)

260-575

Tech 4

USA ($)

Asia (Rm)

3,299

Europe (Euro)

400-600

Table 5 – Number of Production Plants in the USA and Asia.

Number of Plants

R0

R1

R2

R3

R4

R5

R6

Mercury US

12

12

12

12

12

12

12

Mercury Asia

 

2

3

4

4

Saturn US

12

12

12

13

13

13

14

Saturn Asia

 

4

6

6

8

Uranus US

12

12

12

15

15

15

15

Uranus Asia

2

2

2

2

Jupiter US

12

12

12

12

12

12

12

Jupiter Asia

 

1

2

4

6

Neptune US

12

12

12

14

14

14

14

Neptune Asia

 

3

3

4

4

Venus US

12

12

12

12

13

15

15

Venus Asia

 

1

9

9

Mars US

12

12

12

16

16

22

22

Mars Asia

 

4

4

Total Plants US

84

84

84

94

95

103

104

Total Plants Asia

12

17

33

37

Total

84

84

84

106

112

136

141

In the Asia market place a number of Chinese hi-tech firms have been talking publically about entering the phone market using locally developed technology and manufacturing capacity.

The current situation in terms of the Production Capacity (excluding outsourcing) of the 7 firms and the demand that they are experiencing is shown in Graph 6.

Additional production capacity is available by outsourcing manufacturing to contract manufacturing firms with specialist capabilities and plants dedicated to mobile phone manufacture. Table 6 shows the use of outsourced manufacturing by each company during Round 6; the total volume equates to over 33 manufacturing plants.

Table 6 – Use of Outsourcing – Round 6

 K units

Mercury Mobile

Saturn

Uranus

Jupiter

NEPTUNE

Venus Mobile

Mars Telecomm

Total

USA

Tech 1

1,778

100

400

2,278

Tech 2

690

1,821

1,836

85

800

5,232

Tech 3

1,050

1,050

Tech 4

0

Total  USA

690

1,821

1,050

1,836

1,778

185

1,200

8,560

Asia

0

Tech 1

99

500

599

Tech 2

1,084

85

700

1,869

Tech 3

1,182

650

1,836

3,668

Tech 4

1,777

1,736

3,513

Total Asia

1,182

1,777

1,734

1,836

1,736

184

1,200

9,649

Global Total

1,872

3,598

2,784

3,672

3,514

369

2,400

18,209

Table 7 – Venus Financial Performance

 

R0

R1

R2

R3

R4

R5

R6

Market capitalization of the company (m USD)

5,490

7,879

10,799

10,343

7,673

3,854

2,856

Shares outstanding at the end of round (k shares)

30,000

30,000

40,000

40,000

41,000

41,817

51,817

Share price at the end of round (USD)

183.0

262.7

267.0

258.6

187.2

92.2

55.1

Average trading price during the round (USD)

150.0

183.0

197.0

270.0

252.3

183.5

74.4

Dividend yield, %

0.00

0.00

0.01

0.00

0.01

0.02

0.01

P/E ratio

34.8

16.8

49.7

81.4

20.1

n/a

n/a

Cumulative total shareholder return (p.a.), %

0.0

43.5

21.5

12.2

0.57

-12.8

-18.1

Operating profit before depreciation (EBITDA)

31.8

44.8

28.1

13.4

37.7

-103.3

-107.0

Operating profit (EBIT)

19.5

37.6

20.2

7.1

29.7

-263.0

-360.6

Return on sales (ROS)

13.1

26.9

15.9

8.8

25.2

-270.5

-456.0

Equity ratio

55.1

67.7

86.3

86.3

75.9

71.8

67.1

Net debt to equity (gearing)

30.7

-33.4

-80.6

-75.5

-43.9

-47.4

-38.9

Return on capital employed (ROCE)

21.6

46.9

10.1

2.6

9.7

-10.7

-7.5

Return on equity (ROE)

27.2

52.6

9.8

3.8

10.2

-14.8

-13.7

Earnings per share (EPS), USD

5.3

15.7

5.4

3.2

9.3

-13.

-9.9

Table 8 – Market Share (%)

 

R0

R1

R2

R3

R4

R5

R6

Total

14.29

15.37

12.20

13.37

10.83

0.87

0.33

               

Tech 1

14.29

16.34

17.10

13.24

8.66

0.55

0.07

Tech 2

0.00

11.62

0.00

13.58

15.05

1.69

1.14

Tech 3

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Tech 4

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Manufacturing Plants

Venus has 15 plants in the USA and 9 in Asia but in Round 6 they produced nothing at all. It also has under construction 2 plants in the USA and 2 in Asia so in Round 8 will have 17 US plants and 11 Asia plants. This lack of plant utilisation is unsustainable and requires urgent action. Venus needs a strategy that makes effective use of these resources.

Table 9 – Production Report

Venus production (k units)

R0

R1

R2

R3

R4

R5

R6

USA

             

Tech 1

4889

4640

4483

3106

1864

   

Tech 2

 

851

 

2174

2248

69

 

Tech 3

             

Tech 4

             

Asia

             

Tech 1

             

Tech 2

         

36

 

Tech 3

             

Tech 4

             
             

Venus Contract manufacturing (k units)

R0

R1

R2

R3

R4

R5

R6

USA

             

Tech 1

60

   

70

70

100

100

Tech 2

     

5

5

85

85

Tech 3

             

Tech 4

             

Asia

             

Tech 1

     

60

60

99

99

Tech 2

     

39

39

85

85

Tech 3

             

Tech 4

             
             

Venus Capacity usage %

R0

R1

R2

R3

R4

R5

R6

USA

             

Tech 1

74

70

68

47

26

   

Tech 2

 

13

 

33

31

1

 

Tech 3

             

Tech 4

             

Free capacity

26.00

17.00

32.00

20.00

42.00

99.00

100.00

Production costs for Venus’s competitors are shown for Round 6 in Table 11.  No recent data is available for Venus. Table 10 shows the cost of production of Tech 1 in the USA.

Table 10 – Tech 1 Production Costs in the USA

Tech 1 – US Plants

R0

R1

R2

R3

R4

R5

R6

Mercury

115

79

70

69

61

55

55

Saturn

115

77

72

66

69

55

53

Uranus

115

78

79

87

87

62

58

Jupiter

115

77

71

69

70

63

Neptune

115

82

90

80

67

Venus

115

78

70

69

73

Mars

115

88

77

91

91

87

89

US Average

115

79

73

76

77

67

65

 

Table 11 – Round 6 Production costs

Production cost per unit (USD)

Mercury

Saturn

Uranus

Jupiter

Neptune

Venus

Mars

USA

Tech 1

55.33

53.36

58.06

67.29

88.68

Tech 2

112.57

108.19

177.33

96.87

Tech 3

97.89

Tech 4

Asia

Tech 1

44.27

41.80

60.13

80.62

Tech 2

236.60

Tech 3

142.93

138.42

Tech 4

   

466.82

 

Tech 1 Demand - USA

             

Demand

R0

R1

R2

R3

R4

R5

R6

Mercury

1,204

2,024

1,604

1,183

1,215

1,214

1,598

Saturn

1,204

1,071

2,030

1,184

1,375

1,484

1,578

Uranus

1,204

523

261

201

215

1,259

1,663

Jupiter

1,204

1,047

1,095

778

693

664

0

Neptune

1,204

205

196

841

842

771

1,316

Venus

1,204

1,055

1,120

496

345

0

0

Mars

1,204

1,290

2,185

1,056

877

798

681

USA Total

8,428

7,215

8,491

5,739

5,562

6,190

6,836

Tech 2 Demand - USA

             

Demand

R0

R1

R2

R3

R4

R5

R6

Mercury

0

295

301

1,002

1,245

1,156

1,572

Saturn

0

418

499

1,326

1,542

1,606

1,697

Uranus

0

306

374

6

0

1,045

1,378

Jupiter

0

270

239

833

926

871

844

Neptune

0

289

238

1,157

970

847

1,189

Venus

0

Task

Venus Mobile is a part of manufacturing industry and it produces mobile phones which are distributed across the globe. Mobile phone industry is growing at huge rate because of the increased consumption and demand. Major factor behind enhanced consumption and the demand of the smartphones is increasing population. In this industry, customer bargaining power is at its peak due to huge number of manufacturers and distributors of mobile phones are available in this industry. Venus Mobile is one of those mobile manufacturers and under this report, current strategies used by the organization will be discussed. Along with the current strategies, recommendations in relevance with the strategies will be provided to enhance the organizational performance in the global market. Organization is struggling since last two years and for enhancing the organizational performance in the market, strategic advisor has been appointed for advising the Chief Executive Officer of the organization for adopting the appropriate and effective strategies for the organization so that organization could regain its lost position in the market. Under this report, external analysis of the organization and the whole mobile industry will be covered and along with this, internal analysis will also be covered for evaluating the factors through which organization could enhance its performance.

Production

Production department of Venus Mobile is following the general techniques while they required to adopt advanced techniques for making their products unique and advanced from its competitors’. In this term, organization could implement the product differentiation strategy for enhancing the performance of the organization. Product differentiation is the process which is used to highlight the unique features added in the product and with this, organization could easily segregate its products from its competitors and this will help them to attain competitive advantage and the demand for the product would also be increased.

Marketing

Marketing department is responsible for enhancing the demand of the organizational products and services through spreading awareness amongst the target audience through various mediums. Advertisement and promotion are the two basic components of marketing which plays crucial role in terms of spreading awareness amongst the target audience in relevance with the product. Newspaper, magazines, pamphlets are certain sources of print medium advertisement and digital media platforms, social media, email marketing, etc. are certain digital marketing tools.

Human Resource Management

This department is responsible for meeting with the employees’ needs. Fulfilment of employees’ needs, identification of requirement of the people in the organization, motivating them towards the work, developing bonus and other policies, etc. are crucial activities of HRM department. HRM is also responsible for maintaining the decorum of the organization which can influence the employees towards attaining the goals set up by the management of the organization.goals and the objectives.

Stakeholder Summary

Venus mobile is a customer electronic goods manufacturing organization majorly known for producing innovative and advanced mobile phones with innovative and unique features. Since last two years, organization’s products were not approaching to the customer’s expectations. Lifecycle of industry and product includes various stages. Introduction, growth, maturity and decline are certain crucial stages for an industry. In introduction stage of mobile industry, black and white phones were introduced at high prices. Further, mobile industry expands and demand of the mobile phones was increased and at that time, these were used as a wireless communication system along. In the growth stage, number of mobile phone companies was increased. After the growth stage, mobile industry is currently enjoying maturity stage (Piekkari, Welch & Welch, 2014).

Toyota Motor Corporation is a multinational Japanese company engaged in manufacturing of automotive vehicles and its engines. Across the globe, organization has approximately 4 lac employees which are serving for the organization in order to enhance their performance in the global market.  Toyota Motor Corporation is on the peak position in terms of producing automotive vehicles. The company was founded in 1937 by Kiichiro Toyoda and it produces vehicles under five brands including Toyota i.e. Hino, Lexus, Ranz, and Daihatsu. The first passenger car was introduced in 1936, the Toyota AA. Toyota Motor Corporation has huge share holdings amongst the global automotive sector and with this, organization stands on the second position in terms of revenues in the global automotive sector.

Toyota was on the third position in 2005 in terms of automotive manufacturer. American General Motors and Ford were on the first and second position respectively. While in 2011, Toyota ranked on the first position as the largest automotive manufacturer. In 2011, Japan faced several natural disasters through which Toyota Motor Corporation needs to face huge losses. Due to tsunami, organization faced 150,000 units loss while 240,000 units were damaged during flood. Apart from fuel based automotive vehicles, organization invented the idea of producing hybrid electric vehicles in terms of enhancing the performance of the organization in the global market. 

Identification of Key stakeholders   

More interest and huge influence

Shareholders and Customers

Huge influence and less interest

Government, labour union

More interest and less influence

Global Society and local communities

Less Power and less influence

Distributors, suppliers.

From the above table, stakeholders for the Toyota Motor Corporation could be identified. Internal stakeholders for the organization are shareholders, customers, employees, directors, etc. while all other are included in the external stakeholders for the organization. Internal and External stakeholders create impact over the performance of the organization in with their functionalities. Internal stakeholders’ needs and demands should be fulfilled in an appropriate manner with the view to attain its goals and the objectives. Customers’ demand in relevance with the product needs to be fulfilled for maintaining the appropriate position in the dynamic business environment. Interest and return over the investment by the shareholders should be provided in an appropriate manner with the view to retain the existing shareholders as well as to attract more number of shareholders for raising the funds. Apart from this, organization should also need to consider the policies and the rules described by the external stakeholders as these are capable enough to raise the funds for the organization.

Company Financial Performance

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