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SKULLCANDY 1 Strategic Analysis of Skullcandy Mohammed Hussain Strategic Management Dated: January 10, 2019 SKULLCANDY 2 Executive Summary This report is to scrutinize the factors leading to drop off of sales volume of Skullcandy and investigating matters and recommendations that can lead towards re...

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Strategic Analysis of Skullcandy Mohammed Hussain Strategic Management

Dated: January 10, 2019

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Executive Summary This report is to scrutinize the factors leading to drop off of sales volume of Skullcandy and investigating matters and recommendations that can lead towards retention of the brand for the future. Skullcandy has faced a rollercoaster of success and downfall since its emergence as a brand. As Skullcandy's revenues increase, simultaneously, so are the competitors. Their net margin has decreased from 17% in 2007 to devastatingly 4% in 2014. The shares of their key competitors such as Apple and Sony have been increasingly raised respectively. Although Skullcandy has retained its market share by cutting its sales to low price channels in the whole market. Furthermore, the consumers' awareness of advanced technologies and innovations has led to a decrease in the brands' limited availability in stores. An increased number of Bluetooth ear devices that claim an alternate to headphones and earpieces, gave a prominent appearance that can go along with any gadget a person might possess. These certain factors might be a leading cause of the decreased sales volume of Skullcandy. The latest range of Skullcandy besides Skullcrushers with extreme bass amplification that the company claims to be "the ultimate DJ headphone" are the gender-based feminine products that come along with little wallets or fancy pouches. This range might be able to meet the challenges Skullcandy in order to achieve the increasing customer demands and requirements. Recommendation to Skullcandy for taking ample measurements for the promotion of new products along with the existing range of products in order to retain the stakes and revenue of the company. Ensure the availability of all products accessible to the majority of customers in conventional shops as well as music centers. Social media marketing should be taken into consideration at a crucial level.

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Company overview Skullcandy came into being in 2003. The brains behind the foundation of Skullcandy, Rick Alden grew this simple idea of novel branded products to a formally recognized company that designs, advertise and distributed audio products and gaming accessories in more than 80 countries providing a unique lifestyle inspiring youth towards creativity and owning audio brands for identity. His desire to reinvent the headphone came on a spree to ski-diving where he struggles to take a call as well as control his mp3. The idea he generated from this thought converted into the company's core products that include a variety of headphones representing sports aesthetics that can be used with smartphones as well as the mp3s. It also offers a wide range of styles expanding into products such as sports performance as well as partnerships with manufacturers to license the brand and enhance audio quality for better productivity and success rate. Skullcandy has maintained its repute by introducing novel items by reinventing the headphones with a distinct design as compared to the conventional designing as well as providing different gender-based products while claiming women to be having smaller features than men. The company has limited its sales centers to specialty shops such as snowboard shops and bookstores reach a limited number of consumers keeping the integral status quo of the company brand. While enjoying the perks of success for a number of years, sudden diversion of the owner to a new production line has affected the tracking history of the firm leading towards an unexpected downfall. Certain internal factors have been considered in this report leading towards the deviation in such a short stance. The company has an informal office setup with a small group of team members. It relies solely on the internal task force overlooking the significance of outsourced professional services. The greatest challenges the company has been facing at present is their competitors' influence and use of rapid marketing trends to support their

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brands whereas Skullcandy runs behind in their delivery time, the accuracy of products, marketing and the brand's launch time, above all, meeting customer's expectations. Mandate The sole purpose of Skullcandy's existence was an emphasis on product design and innovative items. This became the base for its mission statement "From new innovations in the science of sound and human potential to collaborations with up-and-coming musicians and athletes, Skullcandy lives to inspire life at full volume through forward-thinking technologies and ideas, and leading-edge design and materialization". This statement is based on a self-centered belief comprising of sum and substance of the company itself however a mission statement requires clarification of the goals and core objectives of a company. As Rhonda (2003) states that the mission statements should guide your company's short term activities and long term strategy, position your marketing and influence your internal policies. As Skullcandy yearns to be the world's leading vendor in innovative electronic products and its services, a serious revision of the statement can lead towards a purposeful track for further transformation and development of the company. Vision The idea behind Skullcandy was to create a brand that represented the young, aesthetically places, and athletic customers. The products were stocked in skate shops and music stores so as to keep the brand unique and inaccessible to the mass population. Skullcandy headphones also stood out for being fashion-forward, with bright designs emblazoned with the edgy skull logo, where many other brands were going for sleek, high-tech minimalism. The goal of Rick was to make headphones that "does not look like headphones". This innovative

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technology required to be persistent with the sound quality that skull candy provided. The company's major goal was to be efficient in providing customer service while retaining them and added profitability in terms of growth and quality. The gender-based products have an eyecatching feature that included small wallets or pouches along with the sound products. The company's major goals include extensive research in technology so as to compete for the external market to its fullest. Values The values and assets of the company specify orientation towards loyal and reliable customer care while representing an intolerable attitude towards product quality. These factors play the role of survivors for the company and its stakeholders. Being integral towards employees and the consumer population, playing fair and full compliance with the law, rules and regulations is the core of any successful company. Working as a team, having direct meetings in order to inculcate a design to its actual model and product is crucial for the company. As the manufacturer of Skullcandy product is an external source, it requires reliability, trust, diversity, excellence in communication, best problem-solving skills to maintain the relationship and future contracts. Stakeholder Analysis The stock market is an unpredictable area where Skullcandy has experienced instability and epic fluctuations in their stock prices. When internal factors and strategic actions become unstable, there is a remarkable change in any investors' perceptions and decisions. The downfall that the company faces has affected them at their financial performance. The investor's area of interest is the liquidity of their shares that are not capitalized in any stagnant stock hold.

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Skullcandy needs to commit to a promising future prospect in order to revive the life of the company. Flexible policies are required to keep the investor interested in the shares. Accessible services for dividends and customer advisory operations might do the needful. For international affairs, companies need to consider fluctuations in exchange rates that are adamant from either side. Shipment expenses, taxes can lead towards higher rates of a single product when exported internationally. Internal Analysis Strength. 

Innovative Designs. Their designs have been popular among their clients. Skullcandy is an initiator of creativity and their major target audience is the youth who is fond of innovation and novelty items are always ready for consuming unique stuff. Hence providing such novel items can keep the customers curious and eager for more each coming day.

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Employee Recognition. As Skullcandy has an informal and small business setup, it makes easier for employers to maintain direct contact and provide additional support to the employees.

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Exclusive Products Line. While placing their products in skateboard shops and music stores limited the mass customer, it encourages their items to be exclusive. Hence it targeted a special market instead of spreading the items in different locations.

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Marketing through celebrities. Ambassadors of Skullcandy were the high-end celebrities who were paid through contracts to flaunt about the exclusive items. Such celebrities are idealized by a young population and make them yearn for the items they utilize while performing.

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Teamwork. Teamwork in Skullcandy is specified to a strict step by step process from hiring professionals to designing, getting manufactured products and then working on the graphical art and pallets of the product.

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Motivated Staff. Every employee is individually recognized for his efforts that make them motivated throughout the year. They are given the opportunity to make their own brag sheet which eventually becomes the basis of their annual increments.

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Traveling with the staff. Alden took his staff for a trip in 2006. It is a vital learning phase for everyone as they get to understand each other, getting awareness regarding one's strengths and weaknesses. This could be a good alternative for annual leaves as the employees could relax and enjoy stress-free time together.

Weaknesses 

Limited audience. Skullcandy has limited their customer targets to music lovers and athletics oriented people. Audio products are utilized by every person owning a smartphone, mp3. Tablets or laptops, hence, every electronic technology requires audio accessories.

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Manufacturing process. Skullcandy gets its products manufactured from China. The process itself gets the length and expensive in terms of offering competitive rates locally as well as internationally.

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Durability. As the shipment arrives from China, there are certain amendments to be made on the products as well as bear the damage charges.

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Up gradation of products. Developing technology and designing needs brainstorming and step by step processes whereas people get accustomed to the older versions of the products until then.

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Availability of the products. While marketing about the products to be offered, the clients are not patient enough to wait for a long duration for a product to get launched. The company needs to ensure the availability of the products in the market is synchronized with their advertisements.

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Marketing strategies. Skullcandy relies mostly on sponsorship marketing that limits the target audience. Using advanced modes of advertising can assist in gaining larger attention towards their brands.

Opportunities 

Research. The company's initiative of using research and manufacture products according to the needs of the population has turned the history of the company to a greater extent. Touching the feminine population and focusing on Alzheimer's patients for providing aids as the studies have strongly correlated their relaxation with music.

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Packaging. As their products are highly innovative, creative packaging can lead to attracting customers towards their customers as they have implemented this method with their exclusive collection of women's products that come along with a wallet or a fancy pouch.

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New Products under one brand. As Skullcandy has made recognition of its brand name with their launch of headphones and hands-free earphones, the launch of various new innovative items could provide better opportunity to retain their brand in the world.

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Employee Satisfaction. Skullcandy has a great review for staff recognition and their performance. Implementing productive strategies for the employees and using them for marketing purposes could change their company's perspective amongst the consumers.

Threats

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Competition. Skullcandy has faced threats from its competitors at every level as their products can be easily imitated by anyone. Major brands like Apple, Beats by Dre etc has caused from 17% revenue downfall in 2007 to 4% in 2014.

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Advanced Technology. The competitors have used an ample amount of technology and advancements offered with the products such as connectivity through Bluetooth has made wires useless. People prefer one ear device for every gadget they own.

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Connection with the world. Social media has gained significance of oxygen in the field of marketing. With numerous amounts of brands in the limelight, Skullcandy needs to make its way through the sea of social media in order to survive in the international market.

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Distraction. The owner of any company treats his company as a child. However, when the owner gets distracted into other opportunities, the emerging company faces huge threats for survival. Taking sensitive decisions can become a risk to companies that have caught attention in such a short duration.

External Analysis Political Analysis Changes in any political scenario impacts business, especially on an international level. The companies and brands are subjected to follow the political guidelines as well as they're supposed to maintain a firm standard of the laws set out by the government with consistency.

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Likewise, many different international markets across the world have a dissimilar set of guidelines and principles that are either relaxed or are either inflexible. With changes on the government level, policies of inflation and laws are revised, hence, inflation causes an effect on the sustainability of any product. As Skullcandy deals with across the border manufacturers, ample amount of consideration is to be implemented regarding cross border situations that are starkly different depending on the political constraints, therefore, Skullcandy has to stay in accordance with all those policies and changes so that they can adapt to all those changes accordingly. Economic Analysis Any country's economic conditions impact greatly on any kind of trade or business. As the recent economic recession has plagued the economy of the world, Skullcandy needs to streamline their production and sales, similarly, marketing campaigns of the brands have suffered greatly as the economy has taken a drastic turn. Skullcandy faces havoc being a small company itself, it is difficult for it to undergo downsizing on an internal level and brainstorm ideas to penetrate into the market retaining their diminishing profits. Skullcandy could still use the economic conditions as a favor to their industry as, despite recession and inflation in the countries, people still listen to music, use earphones for calling their loved ones while enjoying a cup of tea or any other task of interest with their hands. The increased labor cost that Skullcandy provides to the dealers of China could be cut down by dealing with local manufacturers. Social Analysis Headphones and accessories are a must-have in the era of social media as video calling and learning online had become an essential part of people's lives. Music is a source of

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meditation, relaxation exercises as well as entertainment for people of all ages. In this modern era people prefer to live in their own comfort zone in their leisure time and use gadgets with earphones to listen to recitations, poetry, songs or tutorials. Skullcandy can deliver them their peace of mind through proper branding as it is an unbiased product that cannot get any controversial responses based on different social values and customs. The company's headphones already found an untapped niche among snowboarders, skateboarders, and action-sports enthusiasts that were limited to buy branded ski boards or kits. Technological Analysis With the arrival of the new technology and its miraculous advancements, companies have completely integrated themselves with all the recent changes that have taken place in order to inculcate modernism into their brands. In order to maintain an up to date attitude, all areas of life have turned themselves into a growing trend that has become the need of the hour i.e. social media. With a bombardment of engagement of posts and staying connected with the consumer family, it is pertinent to stay online and alive on social media. It takes moments to make or break a brand on social media. Customers' word of mouth is the review of any specific product today. Skullcandy has made its way into social media with its Facebook page and websites. The company needs to ensure what aspects it needs to keep in mind so as to engage people for utilizing the products they launch and to stay ensure that the customers' stay engaged and updated with the upcoming attractions. Legal Analysis A company is prone to follow law and order rules strictly while abiding by the rules, the company needs to clearly specify their health and safety laws and higher bass and amplitude

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could cause hearing impairment and deafness in certain cases. Listening to loud music might cause heart issues. The products have to be in accordance with the Discrimination laws stating unbiased descriptions and marketing strategies. The company's human resource profile is clearly stated and employee benefits are ensured by Skullcandy. Skullcandy needs to spend a fortune from its sales and revenue to protect Consumer protection laws and copyright laws of the company. Environmental Analysis While increased awareness is being spread among the people for protecting the ozone layer and keeping the earth green as endangerment through global warming has increased to a greater extent, in such case, plastic body of the products, lead and lithium is dangerously difficult to dispose of from the environment. It has been under discussion by environmental activists that enforced the teams to debate on laws regarding pollution and recycling. Skullcandy faces high manufacturing costs with respect to factories causing pollution in China. Electricity rates increase when fuel is used instead of greenhouse gases. The stigma attached to catchy and stylish products is that they are ought to be expensive that makes the consumer think twice to buy Skullcandy products.

References Rhonda, A. (2003). The Successful Business Plan: Secrets & Strategies. 4th edition. The planning shop publishers. 61. Annual report SKULLCANDY, INC. (2015). ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year

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ended December 31, 2015, retrieved from http://www.annualreports.com/HostedData/AnnualReportArchive/s/NASDAQ_SKUL_2 015.pdf Elizabeth, S. (2015).The research that's driving a turnaround at Skullcandy. Retrieved from https://www.fastcompany.com/3049136/the-research-thats-driving-a-turnaround-atskullcandy...