GLO-BUS Annual Report PDF

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GLO-Bus Annual report done with pictures from the GLO-Bus websites (Analytics Done) ...

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GLO-BUS Annual Report GMS 200-051 Industry 2 - D Company Jason Vamvakidis - 500964485 Andrew Banjongpanith - 500960073 Kaiyasid Sanoubane - 500985340 Dr. Sui Sui December 2nd, 2019

Table of

Contents

1. Review of Financial performance………………………………………… 3-6 a. Trends in the company's annual total revenues b. Trends in the company's annual earnings per share (EPS)

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c. Trends in the company's annual return on equity investment (ROE) d. Trends in the company's annual credit rating e. o Trends in the company's year-end stock price f. Trends in the company's annual image rating 2. Strategic Vision ……………………………………………………………. 6-7 a. A section describing the company’s strategic vision 3. Performance target forecasting …………………………………………… 8-9 a. This section shows what performance targets for EPS, ROE, credit rating, image rating and year-end stock price D - Company would set for each of the next two years (assuming the simulation were to continue). 4. Company’s competitive strategy in wearable video cameras……………. 9-11 a. A section that sets forth your company's competitive strategy in wearable video cameras in some detail 5. Company’s competitive strategy in camera-equipped drones………….... 11-12 a. A section that sets forth your company's competitive strategy in camera-equipped drones in some detail 6. Company’s production strategy ……………………………………………. 12-13 a. A section describing D - Company’s production strategy (as concerns use of overtime, outsourcing, and expansion of in-house assembly capacity) and workforce compensation/training strategy 7. Company’s finance strategy…………………………………………………. 13-14 a. A section describing D - Company's finance strategy (as concerns dividends, use of debt versus equity, stock issues/repurchases, actions to achieve/maintain a strong credit rating, etc.) 8. Competitors’ analysis ………………………………………………………… 14-15 a. A section showing companies you consider to be your strongest/closest competitors in wearable video cameras as of the last year or two of the simulation, and companies that are your strongest/closest competitors in the camera-equipped drones as of the last year or two of the simulation. 9. Strategy to ‘out-compete’ closest competitors……………………………… 15-17 10. Lessons Learned………………………………………………....................... 17-18

Brief review of the financial performance D - Company was part of Industry two within the Glo-Bus simulation. The company finished 5th after year 12. However, our company was battling for the top 3 companies throughout the years. Our final weighted average score was 92, but our highest score was at the end of year 7 with a weighted score of 104. Overall our company managed to be very competitive within the rest of

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the top companies being either 1st, 2nd or 3rd overall for most of the years. Our final investor expectation score was 102 while our best in industry score was 82. We managed to meet most of the targets set by the board for the biggest part but we fell short of the return on equity, which is why we were unable to keep up with the top 3 companies. We kept a high Earning per share finishing with a $9.33 per share, which is the highest in the industry. We believe that overall we performed well and if the simulation were to continue we would find a strategy to fulfill all expectations and regain our top company ranking. Review of Financial Performance

Annual Total Revenues: This graph represents the net revenues of our companies throughout the years. It is visible that the graph inclines gradually. This is a great display as it shows how the company’s revenues are increasing over time. The trends displayed are positive. You can see how our overall net revenues rose from just above $25,000 in the first year, all the way to about $70,000. According to the visible trends in the graph, we believe that the revenues of DCompany will rise even more.

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Earnings per share (EPS): This chart shows how the earning per share increased overtime for our company. This is calculated by using the net income divided by the outstanding number of shares. The graph shows a great increase over time, from an EPS of around 0.75 in year 5 to 7.1 in year 11. This is something really good as the smallest change in the EPS could affect the company as a whole. We want to increase this number over more. If the simulation were to continue we would aim to raise the number by making changes our net income positively or change the number of outstanding shares so we can maximize the EPS. Return on equity (ROE): As visible in the above graph, our return on equity started at around 14% and rose all the way to around 35% by year 7, however at that point we decreased our prices in order to raise our public image. This move wasn’t beneficial to us because our ROE started to decrease and reached 23.6% by year 11. If the simulation were to continue we would try to reverse this move and balance our prices so that ROE increases.

Stock Prices: The above graph shows a great linear relation from year 5 to 11. The increase in

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price is good as it shows the company is growing and therefore increasing in value. We focused on increasing these prices since year 5 and now we want them to have a steady increase while still focusing on other aspects of the business such as the ROE. Credit Rating: The graph shows how our credit rating has been steady throughout the years. This is because we decided to not get a loan until we needed to improve our factories by adding new workstations and increasing production space. That happened between years 9 and 10. As our profits were steady and in good numbers our created image went up even more as we were able to pay our loan on time.

Image Rating: We decline in value in the first year of business however we steadily increase from year 6 and on. This is because we focused on increasing the image by having competitive pricing in our products, that customers would like and also providing certain initiatives for our employees. We also engaged in activities like donating to charities as well as keeping our company “green”.

Strategic Vision The company: At D-Company, we believe that we are a company that is prepared to do whatever it takes to get

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to the top while being the best role models for future generations. As of year 5, when the new managers (us) took over, this has been our main goal. Our business goal, however, is to create a product that is known in the world for being the best in its class. Our unique camera sets out the standards for what our company has to offer as we try to gain loyal customers all over the world. To achieve that we kept competitive prices between the high-end products and lower cheaper market products while having a good warranty on all our products. That is why all our products come with a 120-day warranty. Dependability is another goal we try to maintain with our products.

The Workers: Workers are why our company is running the way it is. Without them, no products would be made and for that, we are very grateful. We treat our workers with the same respect we have for each other that way we receive the same kind of respect back. Within our facility, we invest spaces for our employee wellbeing, spaces where employees can take a break when necessary. We value family very much within D-Company and for that, we treat everyone like we would our families. The Costumers: With no customers, there are no sales and with no sales, there is no profit or D-Company at all. That is why we highly value our customer base. We make products of good quality for a good price so consumers can gain the most out of their purchase. We also have a good warranty for our products. We also donate a lot of money to charities and provide the world with another “Green initiative” company. Our Future:

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D-company invests heavily in advertising so that consumers know exactly what they are buying and we strive to provide the best product for the best price. We will continue to steadily grow while improving our company step by step as we go.

Performance Target Forecasting Earning per share: As visible in the above table, our EPS has steadily increased over time. From year 5 all the way to year 11 we increased our EPS from $0.75 all the way to $7.10 in year 11. The increases in-between have been generally at around $1per year which shows steady

growth. We anticipate that if the simulation were to continue for another 2 years, our earning per share would keep growing steadily at the same pace. Although our EPS might not be the highest as of year 11 we believe that a more “slow and steady wins the race” mentality. We believe that if the simulation continues no other company will be able to grow as steadily as us and therefore give us a competitive advantage. We also kept the EPS higher than the investor expectation in all years keeping the board and investors happy and satisfied. Return on Equity: Although our ROE was very high in years 6 and 7, we saw a great decline as the ROE went from 35.6% in year 7 to 23.6% in year 11. WE saw this decrease because we

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changed the way we operate and decided to invest more of our resources towards our image rating in order to be more competitive in the market but as our image rating increased our ROE decreased. If the simulation were to continue we believe we can raise our ROE by essentially reversing what we did and balancing out our image rating and our ROE. Therefore, we believe that we will increase these numbers as time progresses. Credit rating: Our credit rating remained above expectations as we decided that a loan was not necessary until later on. When we did decide to invest some more in our business by getting a loan, we made enough profit to pay off the loan and therefore increase our image rating. Following that pattern, we believe we will be successful in the future. We believe we should focus on making money rather than borrowing the money to invest in our business.

Image Rating: Our image started off low as we focused on keeping up our EPS and ROE.

As you can see we started at a rating of 66 in year 5 and steadily increased to 77 by year 11. However, we want to aim to get the rating to 100. That way we'll be sure that our customers our appreciate our efforts and more importantly our products. This can’t be done in our year, but it is one of our long term goals. We want to achieve it in the next 5 years assuming it is steadily increasing and we invest some more time and resources into pleasing our customers. Stock price: As you can see on the table on page 7, it has steadily increased and in some years went up by up to $20 per share. Following those trends, we believe that as long as our earning per share keeps rising, then our stock price will also keep rising and we expect an increase if the simulation were to continue.

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Company’s competitive strategy in wearable video cameras The business strategy we used to sell the most drones as a start, was to differentiate our product from our competitors by designing a multi-feature product that is high quality and gives customers great value for the money they are paying. Each year that our company grew, we tried to improve the overall quality of our products to gain an even bigger customer base. The type of marketing we decided to use is known as the “total quality management”. This management methods suggest that we provide a product that has high standards in quality and also reinvesting money into upgrading the product more in the future years. On average we provided a significant upgrade each year and every two years we would give a major upgrade. This is what kept us on top of the market and having one of the best selling products in our starting years. Once our company was competing at the top of the market, it became a matter of stability and keeping our place. The stability strategy we used was meant to keep our product in the top of the market. It was meant to keep our course of action without actually making noticeable changes in the product and prices. We tried to not make decisions that could massively change the direction of where the business is going. Once the product was established and we had set a reasonable price, we had to continue to offer our customers and make small changes to satisfy the consumers needs and attract more customers while making some small profits. We decided to not focus on one geographical region but instead focus on areas where the currency was looking to rise and therefore add more value to our products. The south american market did that mostly which allowed us to sell our product for a price slightly higher than other regions. We also tried to raise the price of the product every year which may not have been the best move. Instead we should have kept the price lower for a longer period of time so we can gain a bigger customer base. Then we could have raised the prices to get a bigger profit margin for the product. Our

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prices were between the higher end products and the lower cheaper products. That allowed us to have a “perfect price” or sweet spot, which led us to the top for 2 years. After year 9, we had trouble because we weren’t focusing on the features of the camera, but ended up more focused on other components which made us spend too much money on other components instead of features for the product. Furthermore, instead of having a very low labour cost we decided that providing an environment where employees are treated with respect and aren’t cheaply paid, would result in our company having a better image. We believe that having a positive image is very important so we used that to our advantage and tried to focus on the image instead of low labour costs.

Company’s competitive strategy in camera-equipped drones

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Company D’s competitive strategy in camera-equipped drones was to start with a moderate performance/quality rating where the camera is a 4.6 out of 10. We priced the cameraequipped drones depending on the currency exchange rate in each region. As you can see from the statistics below each currency grew slowly, but Euros fluctuated a little from year 8-10. We

watched these trends and decided on the price in each region, we had the prices low at the beginning because we figured it would help with revenue where if the price is low and quality is high. Every period we would look at our competitors’ prices to try to match or beat their price to increase our revenue. With our marketing with the drones, we tried to keep our operating profit

margin above 25% to keep our profit fairly high, as you can see above our drone market share from each region increased each period because the amount we invested into website product displays/info, search engine advertising, and retailer recruitment/support budget each yearly period.

Company’s Production Strategy Company D’s production strategy at the start was to budget increasing amounts of

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funding in our production costs each period to keep allow our revenue to grow while. This resulted in a moderate level of a profit margin because of the gradually increased funding we budgeted. For our cameras and drones, our costs were at the industry average. With our cost being industry average and it being high quality, it allows for lots of revenue from satisfied customers which then we can invest our profit into production costs. We also funded best practices and assembly quality incentive because it is important to where it allows less material to be lost and have a better quality Overtime – To keep our company’s costs minimized we tried to have no overtime. Our strategy was to always slowly expand the workstations every period so we would not run into any problems for overtime assembly and having a shortfall in production. With having no overtime, we are allowing for workers to construct better quality products for our buyers without wasting any material and losing quality. Employee Training – From the start, our organization didn't budget a great deal of our revenue into training for employees so our expenses would be diminished, thus we could acquire a higher profit. Every year, as we stayed profitable, we steadily raised our training budget, until remaining consistent after Year 8. This has a beneficial outcome, as it made workers increasingly equipped and expanded their efficiency, which brought more units being accessible available to be purchased.

Company’s Financial Strategy Company D’s finance strategy was to first produce a product that was low cost and high quality, this allowed for a great level of revenue to be flowing in the first couple of periods. This

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allowed us to re-invest our profits into training and expanding our production facilities which resulted in upgrading our quality and efficient use of materials, thus saving cost and also increasing our revenue. With going with our low cost and high quality strategy, our EPS as you can see below, increased steadily over time which allowed our company grow for a long-term improvement. Our company had the highest EPS during years 8 and 9, which shows our investments into training and expanding our production facilities works in the long term. Also,

our company re-invested our profits into the marketing our products, we would invest a small amount of profit into website product displays/info, search engine advertising, and retailer recruitment/support budget. This allowed our product to be known to all which brought up our ROE and resulted in a very high ROE in years 6 and 7 as you can see below, but it declined because we switched over our investments to help out our image rating. For our company’s stock prices, it steadily increases over the 6-year span and will continue to grow because of the right

direction we set our company to go, for an example we improved our image rating by shifting some of our investments into Corporate Social Responsibility and also improving our credit rating by not borrowing the money thus instead we had the mentality to just make the money to re-invest into our company.

Competitors’ Analysis AC Camera Segment In Year 11, Company D’s strongest competitor’s included Company B, Company J, Company A

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and Company C from strongest to closest respectively. Company’s B was Company D’s strongest competitor, holding the largest market share percentage in each of the regions it operated in which can be accredited to their marginally higher brand reputation rating in comparison with the rest of the industry. Although Company B’s P/Q rating is below the industry average, they were able to maintain a higher market demand due to brand reputation and lower wholesale pricing than the industry average resulting in the most sold AC Camera Units Sold in each region. Company J, the second strongest competitor was able to hold higher market share than Company D because of their emphasis in advertising budget. Company D and Company J are similar in Brand Reputation but because of Company J’s higher advertising budget and offering more models they were able to charge higher than industry average wholesale pricing which resulted in a larger market share. Company A, another close competitor to the aforementioned companies was able to hold higher market shares than Company D in Year 11 because like Company B, they had a high Brand Reputation rating but also the highest P/Q rating in the industry allowing them to have higher demand than Company D. Company C was Company D’s closest competitor in Year 11 and were able to hold higher market share despite demand loss because they were able to emphasize their presence in the North America region with a higher advertising budget unlike Company D, despite offering similarly pricing. UAV Drone Segment Company C held the highest market share percentages in Year 11 across all regions of operation because they chose to increase website displa...