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Paiva Baldwin October 2, 2010
“We certify that we are the authors of this “paper” and that any assistance we received in its preparation is fully acknowledged and disclosed in the Annotated Bibliography section of the paper. Specifically, we have cited any source from which we used data, ideas or words, either quoted directly or paraphrased with the paragraph.”
Names of those submitting this paragraph:
Timothy J. Dobiac James C. Murphy Eduardo A. Paiva
We want customers to know about our great products and have a positive experience when they choose us. we aggressively seek to position our products at their ideal location each year. This entails making necessary improvements to each product’s performance and size. We strive to keep each product unique. Second.1 Qualitatively Our company’s current generic strategy is broad differentiation. In accordance with our strategy.000. our company seeks to maintain at least one product in each segment to satisfy the diverse customer preferences. 2. In the sensor industry. by having the best R&D department in the industry.1. We have sought to differentiate our products in a number of ways. in 2014 we invested $2. Our higher . performance and size. customers’ needs vary according to the five market segments: traditional. high end. the goal is to be above 90% in both categories in four years. Although we are still working on building up our awareness and accessibility.2 2.1 COMPANY SITUATION ANALYSIS Evaluation of the Current Strategy 2. our products have excellent designs.000 in concurrent engineering and our R&D cycle time has improved by approximately 38%. First. we have been able to charge a premium price for our products. Customers are willing to pay a higher price because our products are unique and well positioned within their respected segments. tailored to its segment’s customer buying criteria. Thus. we seek a competitive advantage by primarily having products with superior attributes. Due to successful implementation of our broad differentiation strategy. In order to accomplish our strategy. Specifically. we invested aggressively in TQM initiatives that have significantly enhanced our R&D cycle time. Finally. we have sought to improve our business’s value chain activities. we are striving to have excellent awareness and accessibility for our products. Bid and Buddy have one of the highest MTBF ratings in their respected segments. low end.
867 2.9% 22.496 36. This is an extraordinary feat since we managed to increase sales at a higher percentage than our competitors while only introducing one new product during this timeframe.4 75 16.7% 3. we have been able to lower labor costs.352 $40. but to obtain attractive profits. while doing what is in the best interest of our stakeholders: customers.7% $11.5% 8.3% $17.2% $2. we have invested in recruitment and training to attract and keep high quality employees.1% 2.648 $72.56 2013 $151.1 55 4. Finally. Therefore.1% 42.9% 63.386 8.1.3% 2. Equally impressive is our ability to maintain a steady contribution margin amid lower prices and .055 32. In fulfilling this objective. Here at Baldwin company. we have sought to control costs by competitively expanding our products’ capacity and automation.855 35. we understand that perhaps the best way to differentiate ourselves is with our people. bright and motivated employees within the industry.4% 11. which ranges from 9-20 % annually. stockholders and employees. we will always seek to have the most talented. our vision is premium products for all segments in the industry. This is important in satisfying our stockholders and having a higher return on equity.98 2012 $124. In addition.3% 2.3 prices enable us not only to cover our costs. In short. 2.3 54 19. turnover. and achieve higher worker productivity.72 Net Sales Gross Profit Contribution Margin Net Income Net Margin Return On Assets (ROA) Current Ratio Days of Working Capital Return on Equity (ROE) Share Price Sales growth is well above the total sensor market growth.285 7.2 Quantitatively 2014 $206. The 37% increase in sales from 2013 to 2014 was striking since we also increased our market share.298 $55.
2. We have a product in all segments and each product is positioned competitively in its respected segment. reflecting a strong balance sheet position. We managed to balance investments in capacity improvements as our Sales forecasts for increased product demand developed. the results have been continuous improvements to our net margins year over year. Consequently. . Moreover.4 fierce competition. the current ratio and days of working capital measures are higher or comparable with the sensor industry.2 SWOT Analysis 2. the goal of our company is to continue to succeed in being cost effective and well managed in future years. Furthermore. due to our performance we have had a higher per share value year after year on our stocks. ROE increased in 2013 and 2014 by 16% and 20% respectively indicating our vigorous performance. Competencies. The timing of these investments reflects in higher than average ROA as compared with our competitors. especially Return on Assets (ROA). Modest to aggressive investments in promotion. In summary.1 Company Resource Strengths. sales and production over the next four years will secure our place as an industry leader. 2. Return on Equity (ROE) and share price are clear indications we have rewarded our investors. ROA for year 2013 and 2014 are well ahead of our competitors. and Resource Capabilities Well-executed strategy: We have experienced increasing profits the last four years and we anticipate to continue this trend. The outcome of our favorable margins has translated into strong balance sheet positions.
such as Concurrent Engineering and Quality Function Deployment Effort. we invested in several TQM initiatives.5 Higher product automation: Our highly automated production lines allow us to have fewer workers and thus reduce labor costs in our operations. High Plant utilization: By aggressively working our plant assets.2 Company Resource Weaknesses and Competitive Deficiencies Higher material costs than key rivals: Our company has not focused on reducing material costs. we are better able to manage our fixed costs. We stand at a disadvantage when compared to our key rivals. Strong balance sheet: We have one of the lowest debt-to-equity ratios in the industry. Adequate financial resources: Our company has the resources it needs to continue growing our business and payoff our loans. thus boosting our market share and profits. we had the highest profits because we did a better job managing our costs. banks are eager to help us expand and our company has the highest bond rating at BB. We were able to reduce R&D cycle time by 38% and obtain an industry best by well over 23%. In 2014.2.676. over the next four years. For example. 2. Although our company did not have the highest sales in 2014. we had cumulative profit of $31. Consequently. Reduced R&D cycle time: Our company has a distinctive competency in reduction of R&D cycle time. .697.02%. Over the next four years. we expect profits to continue between $15-20 million each year. this distinctive competency will allow us to be the first-mover in the sensor industry and capture strategically important sales. This allows us to achieve higher profits per employee. Andrews company has currently reduced its material costs by 2. Over a four-year span.
2. we will be strategically positioned to introduce at least one additional product.2. our company lags behind its key rivals in customer awareness. This would potentially allow for greater control and leveraging our products.2. Backwards integration: Our company is considering the opportunity to integrate backward into controlling our own supplies. Narrower product line: Three out of the four rivals offer more products than our company. 2.6 Weaker product accessibility: Our company’s distribution capabilities lag behind key competitors in four of five segments. Over the next four years. Product-line expansion: Our company has the opportunity to come out with some new products. this could cause a loss in market share. the power of substitute products will most likely be moderate to strong. A lower accessibility will cause our product’s December Customer Survey score to drop and we will lose sales. Industry growth: The sensor industry is projected to continue growing globally over the next four years by more than 13%.4 Threats to Company’s Future Well-being Increasing competition from substitute products: In approximately five to seven years. The sensor industry’s attractive growth and profit potential is attracting additional competition from substitutes.3 Company Market Opportunities Market share openings: Company Digby seems to be fading which will allow for greater market share. Each customer that is not aware of our products is a lost sale. . In the next four years. Lower awareness compared to rivals: Except for the Performance segment.
and cheaper products. Customers increasingly expect smaller. we focus our attention to delivering the most relevant product in the least amount of cycle time. size.3. 2.7 Fierce competition between sellers: Due to the level of competition between rivals.3 Analysis of Company’s Price and Cost Competitiveness 2.3. The price we determine for our sensors is completely based on how relevant the product meets the customer’s demand for performance.1 Value Chain Diagram Primary Activities and Costs: Support Activities and Costs: TQM Initiative Human Resources Management Finance and General Administration 2. profit margins may lessen. This tactic allows our company to have elevated prices translating into higher margins. and reliability.2 Value Chain Analysis R&D: Due to the new and updated product expectations of the sensor industry. the R&D department is the key primary activity in our company’s value chain. A well-executed strategy is the best weapon against this threat. Hence. faster. Growing power of customers: The sensor industry is a technological one. .
The company strategy is to maximize product awareness without experiencing diminishing returns on the promotion expenditure. Production: Cost savings in this activity occurs especially in the area of labor rates. Distribution / Sales and Marketing: The area of distribution is interrelated with the sales and marketing activities. By investing in programs such as Quality Initiative Training. the cost savings are derived by effective expenditures on sales promotion and sales force elements. with sales force we strive to maximize customer accessibility expenditures without experiencing diminishing returns. We plan to balance plant capacity and employee complement needed with 2nd shift and 1st shift overtime.5 million. In particular. TQM: One of the most profitable investments is in reducing our cycle count for new and updated products.8 Supply Chain Management: The principal activity where our company is successful in reducing cost is in the area of inventory management. and complement level. Thus the promotion expenses on average for each of our products are not higher than 1. we are able to achieve higher profitability per employee and lower costs. On plant automation. the level at which diminishing returns occur. By conservatively investing in plant capacity and complement. below the level of 3 million where diminishing returns are experienced with one product ($4. thus lower inventory carrying costs. capacity. The focal point for labor cost reduction is determined by plant automation. Likewise. We forecast the units produced to be less than 30 days supply in inventory. our company strategy is to have the highest automation (80% automated) for low end products and 50% to 60% automated for all other products.5 million for each segment). These approaches to labor costs allow our labor rate to be competitive versus the industry. The company calculates with caution as to not stock out and lose sales in the process.5 million. Concurrent . The sales force expenses on average for each product is under 2.
2 3/.8 4/. Human Resources Management: We are able to achieve cost savings in HR by allocating a minimum of 45 hours in training per employee and a minimum of $2.2 8/.4.8 1/.1 7/.2 0. and CCE/6 Sigma Training.4 9/1.35 8/1. Consequently.00 7/.2 1/. Our company strategy is to maintain debt-to-equity ratio below 0.95 1.2 1/.1 Weighted Competitive Strength Matrix Key Success Factor Expertise in developing sensors with increasingly higher performance and increasingly smaller size Proven ability to improve the production processes of sensors Low-cost product design and engineering Breadth of product line and product selection Well-known and wellrespected brand name Strong.75 1/.4 Weighted Competitive Strength Assessment 2.5 6/.25 4/1 0. we have increased our productivity level and have an improved turnover rate.4 6/1.2 3/.2 8/1.0 5.05 0. Finance and General Administration: Balancing the debt and equity levels is the key to reducing interest cost.6 7/1.2 1/.7 8/. knowledgeable sales force and products with high accessibility Sum of weights Weighted overall strength rating Weight Andrews Baldwin Chester Digby Erie 0.8 2/.6 7/1.55 .25 7/1.4 0.15 7/1.8 6.75 8/2 7/1. we are able to be a first mover and charge a higher price for our products.9 Engineering.6 2/.000 in recruiting.1 5.1 1.7 0.15 9/1.7 5/. 2.5.1 8/.8 7/.6 7.
145 (Baldwin). Our competitive strength matrix also shows the areas where our company needs to improve in order to remain competitive within the industry. with Andrews positioned second. 4 (Digby). Over the past two years. and Erie in fourth. Our nearest competitor in the industry has only a 13. 101 (Chester). Another area of competitive strength is in developing sensors with increasingly higher performance and increasingly smaller size. Our reduced cycle times allow us to do this with greater regularity than any other company in the industry. These scores place each company in the exact same competitive position within the industry as our weighted competitive strength matrix. Our company has not focused on . Our company has three primary rivals in the industry. Our investments in TQM have reduced the R&D cycle times by almost 38%. is barely competing and cannot be considered a legitimate rival at this time. each positioned just behind us in the overall competitive strength matrix.2 Summarize the Major Learning Points from your Matrix Our competitive strength matrix shows that our company has the largest overall competitive strength rating and therefore has the strongest competitive position within the sensor industry. This is a huge competitive advantage for our company.4. the combined adjusted scores for each company in the industry were 135 (Andrews). Our strategy is to position all of our product at the most ideal level of performance and size within each segment. Chester in third. One company in the industry. indicated by the strong correlation between the weighted overall strength ratings and the Capsim adjusted scores for the past two years. 2013 and 2014. and 70 (Erie).10 2.54% reduction in R&D cycle times. Digby. The weighted overall strength ratings should be a fairly accurate representation of the sensor industry. Our competitive strength matrix show that our key area of competitive strength is our ability to improve the production processes of sensors.
If Baldwin maintains it’s current strategy. and they also have much greater R&D cycle times than we do. while maintaining other areas of competitive advantage.11 lowering the cost of product design and engineering and therefore trails each of our rivals in the industry. and raise the levels of awareness and accessibility. 2. • What steps should Baldwin take to ensure it remains the strongest competitor? In order to ensure our long-term competitive position.5. as long as we remain true to our strategy to reduce R&D cycle times. However. Strategic Issues Management Faces • Can Baldwin maintain its position as the strongest competitor? Yes Baldwin can. Baldwin must also regularly re-evaluate its weighted competitive strength matrix so that it is best able to design wise offensive strategies to exploit its rivals’ competitive weaknesses and design effective defensive strategies to curtail its vulnerabilities. . while maintaining a steady contribution margin • Are any rivals poised to take away Baldwin’s position as the strongest competitor? Andrews is best positioned to challenge us as the strongest competitor because they have a broader product selection than us while remaining competitively close in most other key success factors. reduce costs through careful inventory management. and continually produce products that are well-positioned in each segment. Baldwin needs to lower the cost of product design and engineering. Baldwin should also introduce one or more new products over the next four years in order to compete with rivals that currently offer more products. we should be well positioned to maintain our position has the strongest competitor. it will be difficult for them to suitably position all of their products in each segment since they need to apportion their R&D expenditures among a larger product line. Our company also trails each of its rivals in product awareness and accessibility.
differentiation attributes along the value chain. 2. R&D Cycle Time reductions. . The text provided the graph for the value chain diagram and provided a methodology for creating and interpreting a weighted competitive strength matrix.12 Annotated References 1. Crafting and Executing Strategy.com website provided specific information on the sensor industry and how to best implement our strategy of broad differentiation based off of the results from 2014. and threats.2). and the best routes to achieve competitive advantage with broad differentiation. weaknesses. www. and provided the specific results for backing up the reasoning in each category of the SWOT analysis. Lastly. Specifically. opportunities. Text and Readings by Thompson.1. and overall production information so that we could complete the weighted competitive strength matrix and analysis.capsim. the website provided information for each company’s labor cost reductions. the text gave us the differentiation themes. The website also provided the figures for the quantitative analysis (Section 2. and Gamble provided the framework for our broad differentiation strategy. The text also summarized each category of SWOT analysis and described what to look for in assessing our company’s strengths. Strickland.
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