Strategic Analysis And Recommendations: Stakeholder Summary Essay.

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

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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