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Go Pro Consultation...

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GoPro Consultation MAN 3025 Group Project #2 Group 98 Clay Asplundh; Haley Becker; Kori Diemer; Alexander Gerhardt; Nicholas Moreno; Megan Rueth

Executive Summary The report below provides an analysis of the current challenges, funding, and future direction of GoPro, Inc. Although GoPro is renowned in the action camera market, they have recently struggled to get adequate funding due to investors worries as GoPro’s stock is currently under $10 and has been as low as $7.24. GoPro has also suffered from their attempt into the drone market with Karma, which has been plagued with production problems and poor reviews. GoPro’s future as a company hinges on its ability to gain a portion of the drone industry to encourage the continued investment into GoPro. The report finds that for GoPro to further itself into the drone industry GoPro needs allocate more funds into R&D to help create more innovating and better-quality products that can better compete with DJI who have a higherquality product that contain more feature for the same price. GoPro also needs to reduce the wasteful spending from upper management, in order to better allocate funds within the company.

What are the key managerial challenges facing Nicholas Woodman and Go Pro, Inc.? There are quite a few different types of challenges that Go Pro is facing. One of the most major challenges they are facing deals with their management. One of the key issues is that they have a lack of strategy when it comes to making big decisions. When they decide to offer a new product they do not consult anyone about the price or the marketing needs; they just introduce a product to the market and wait to see what happens. Additionally, the CEO Nicholas Woodman was the highest paid CEO in 2014 and was spending his income on many luxurious items, which shows that he was not trying to keep the funds in the company to help it grow. This misuse of fund continued as they overpaid for many things while they had a lot of incoming revenue and did not think about the fact that they might need funds when they hit a plateau. Who are Go Pro’s main stakeholders? What role do they play in determining Go Pro’s future plans? The largest stakeholder of Go Pro is its founder and current CEO, Nicholas Woodman. He holds the majority of voting power in the company and his shares are valued at $1.2 billion at the IPO price. Other notable stakeholders involved with the company include Anthony Bates, Sharon Zezima, Kenneth Goldman, and Peter Gotcher. The early institutional investors of Go Pro were Riverwood Capital, Steamboat Ventures, and the venture investment arm of Disney who invested a combined sum of $88 million in 2011. The following year, the Chinese electronics manufacturer Hon Hai Precision Industry Company (aka Foxconn) invested $200 million into Go Pro. This hefty investment allotted Foxconn a 8.88% stake in the company and raised the company value to $2.25 billion in 2012. These early investors are no longer the top institutional stakeholders. Currently the top two institutional and mutual fund investors are the Vanguard Group and Blackrock Fund Advisors, owning a total of 9.67% of the company. Unfortunately, many investors fled from GoPro due the company’s downturn in recent years. The stock share price dipped under $10 in January 2017. Without funding from investors, GoPro may not have the funds to face rising costs and finance their ideas to return to profitability, such as pouring capital in to research and development seeking out talented individuals in Bucharest. There is a lot of pressure on GoPro to regain success in order to satisfy investors so that they can continue to attract capital and stay in business into the future. Without money, GoPro could not fund any of its ventures. One of GoPro’s main stakeholders is its Board of Directors. Members of the Board of Directors such as Nicholas Woodman, CEO, Kenneth Goldman, director, and Peter Gotcher, director, and more will play a large role in the company’s next steps. They have the responsibility of setting calculated overarching goals that will lead the company to long-term success, approving important decisions, and determining the pay rate of top firm members. Other stakeholders like lenders and employees are looking towards the Board of Directors to make careful decisions that will help the company begin to turn a profit again. The Board of Directors will be one of the main players responsible for developing goals that will determine if GoPro is capable of putting out a quality product that is competitive with similar products on the market coming into the future. The GoPro Board of Directors should continue to focus their efforts on R&D so that they can attempt to overcome design flaws with their drones and other products. Coming into the future, company executives and managers should be cautious not to rush the release of any product as quality assurance is key. Proper management can help ensure that proper procedure is

being followed at every part of the product design and marketing process. GoPro will need to overcome their negative association due to the failure of their Karma drone and its battery issues. Drones are a natural next progression for GoPro as an action camera company, however, they will need to differentiate themselves from other companies in the market and keep up with market trends in order to gain a competitive edge. GoPro cannot just keep lowering its prices in order to compete, as this is just a race to the bottom. It is important that major stakeholders with a role in forming or approving major decisions, such as owners and members of the board of directors, consider quality as well as the relevant needs and desires of their target audiences. How has globalization affected Go Pro’s competitive position? Globalization has had both positive and negative effects on GoPro’s competitive position throughout its history. Many beneficial effects from globalization occurred during the company’s initial stages. This included global outsourcing and financing from investors overseas. GoPro was able to improve its competitive position due to the availability of supplies and lower labor costs resulting from the use of a Chinese company for manufacturing. This benefit continued through the company’s initial stage of growth as it expanded its outsourcing to multiple countries and established suppliers that specialized in this technological development. On the other hand, the increasing trend towards a growing global economy has forced GoPro to compete with more and more well established and technologically advanced companies from other countries. One of their large global competitor, DJI, has greatly decreased GoPro’s competitive position in the drone market. This negative effect resulted from DJI’s competitive prices, advanced quality, and consumer perception of the two companies. Overall, globalization has been a contributing factor to the recent difficulties that GoPro has had in increasing the company’s profitability. Now that GoPro has expanded after its initial success, any changes will take longer to implement while competing companies across the globe enter into the action camera market. If you were the CEO of GoPro, what are the three most critical things you need to accomplish as a manager? GoPro originally burst onto the market with huge popularity because their product allowed users to film things never before possible. The problem that GoPro is now facing is the lack of new innovation from the original GoPro to the newer models. This leads to users not buying the new models, which kills their current and future revenue. If I was CEO, my number one goal would be to create new innovations on the GoPro models that sets it apart from the previous models. Without creating better models GoPro will never be able to last and I would outline to the company that new innovation on the GoPro is priority number one. As CEO, another critical thing I would prioritize would be improving manufacturing. GoPro is a premium item due to its technology but GoPro needs to find a way to lower its price. Along with creating a better product, an emphasis on finding ways to make the product cheaper by improving the manufacturing line would be another top priority. The final thing I would hope to accomplish is secure an identity for the company. With recent struggles, I would bring GoPro back to its roots and focus on improving the GoPro camera before branching out into drones and other devices. GoPro should re-establish an identity of an action camera company and focus itself on its core. This would give the company a set of clear goals and gives employees direction on what to accomplish.

Works Cited

https://www.fool.com/investing/2018/01/13/is-management-really-to-blame-for-goproswoes.aspx https://www.inc.com/magazine/201802/tom-foster/gopro-camera-drone-challenges.html https://www.forbes.com/sites/briansolomon/2014/06/30/gopros-nick-woodman-becomes-2billion-man-as-stock-shoots-higher/#25005e58196a https://www.investopedia.com/articles/insights/081216/top-5-shareholders-gopro-gpro.asp...