Market Position Analysis

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Page 1 of 8 Capstone Experience in Integration & Strategy

AVP Strategy Audit—High-Level Analysis

Companies need to conduct a high-level analysis of their business strategy and operating performance. This includes analysis of its value proposition, market position, and competitive advantage; an internal and external environmental scan; a SWOT analysis; and a balanced scorecard.

In the previous module, you learned about how AVP prepares for a strategy audit. Now, review an interview with Larson-Garcia, president and co-owner, to learn more about AVP’s high-level analysis and their findings.

Analysis of the Company

Q1: Value Proposition

In what way does your value proposition differentiate you from your competitors?

Our Value Proposition stems from our ability to provide products to our customers in a way that differentiates us from our competitors. The following are just a few of the values that our company provides to differentiate itself from our competitors and make us a leader in our industry:

 We leverage our strong financial condition to enhance our ability to purchase large quantities of products that are deeply discounted. We pass those values on to our customers.

 We have developed an engineering staff that can provide custom solutions to standardized products that help meet targeted customer needs or specific customer requirements.

 We not only distribute for major manufacturers but with our engineering abilities create our own products that are unique and afford us to reach customers that our competition cannot.

 We have large inventories to support our customers with JIT (Just In Time) delivery. Many of our large customers enforce a JIT strategy and our ability to compliment this strategy with our inventories gives us a strategic advantage.

 We have a highly trained technical staff with longevity with the company. Our customers have worked with the same people and come to rely on that relationship as part of the value that we have to offer.

 Our company has been in business for over 20 years. We are typically awarded two to three awards per year from our largest vendors for our sales performance, making us a recognized leader in our industry.

 We are a small business woman-owned company. We have been certified by Women’s Business Enterprise National Council (WBENC), a recognized certification for vendors who receive opportunities based on their ability to use small business.

 We are ISO certified. International Organization for Standards (a family of standards related to quality management systems and designed to help organizations ensure they meet the needs of customers).

 We are able to reach customers around the world with a comprehensive Export Compliance Program and trained staff.

Q2: Market Position

How does your value proposition tie-in with market position?

Market Position is the process by which marketers try to create an image or identity in the minds of their target market for the company and its products. Our ability to translate the qualities of the value proposition as well as the ones listed below into our media (primarily our Web site) and drive this message to our customer base instills our branding and differentiation from our competitors.

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 Technically trained staff (Our company can solve your problem.)

 Large inventories (We can support your product needs.)

 Early payment discounts (1%10N30) (We can support your financial needs.)

 Terms and extended terms (N30, N45, N60)

 Discounts for volume purchases

 JIT delivery (Due to large Inventories)

 Certification (WBENC, ISO, International Traffic in Arms Regulations [ITAR]) (We can support your contract requirements.)

 Export capabilities (Ship Internationally, extensive Export Compliance Program, and trained export staff)

 We carry recognized brands: Sony, Toshiba, Hitachi, etc. (We carry brand products.)

Screen 2: External and Internal Environment Q1: 5 Forces

How would you explain the external environment of your company by applying Porter’s 5 Forces Model?

Bargaining Power with Suppliers: We have financial strength and an inventory strength platform that make us an ideal partner to our suppliers. They rely on us as a distributor to carry inventory.

Bargaining Power with Customers: We have a technical and service advantage. We have a knowledge bank that far exceeds that of our competition and our service levels are rated at the top of our industry.

Threat of New Entrants: There is always a threat to new entrants. The barriers to entry are low, however, entering alone does not make a company a valued supplier.

Threat of Substitute Products: There are substitute products in our products lines that come out very frequently. This usually happens in the later stages of a product life cycle when it has been deemed a successful product. However, the substitutes are usually not as successful and only capture a smaller portion of the market. As a defense, we usually try to capture the supplier on our line card to minimize the loss of business to a supplier outside our portfolio of products.

Competitive Rivalry within an Industry: The above all play a part in our ability to keep our customer base. There are four other major players in our industry to offer a similar value. However, it is our ability to play upon our differentiated capabilities that sets us apart and positions us ahead of our competitors.

Q2: Assessment

What form of organizational assessment do you conduct?

At the end of every year we do a top down assessment of our organization human resource needs. This would include the following:

 Management Assessment:

o Do we have the right management in place?

o Do we need additional managers?

o Is our management team equipped to handle the next year?

o Is our management team equipped to handle the next 5–10 years?

 Resource Assessment:

o Do we have the right employees in the right positions?

o Do we have enough employees to fulfill our mission and vision?

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Q3: SWOT Analysis

What were your findings related to SWOT analysis?

Strengths

o Financial strength

o Technical strength

o Certifications

o Export capabilities

o Inventory

o Custom product capacities

o Carry brand name products (Sony, Toshiba, Hitachi)

Weaknesses

Small niche market that is hard to grow and expand in to reach higher levels of revenue quickly.

Opportunities

New product innovations, more custom products, and new technologies being released (HD, Gige expanding).

Threats

External:

o We could lose a big supplier

o We could lose a big customer

o Our competitors are always at our customers’ door

o Acts of God, like the Tsumani last year that crippled our inventories

Internal:

o Loss of key managers or staff

o Loss of credit line (banking industry volatility)

Q4: Balanced Score

How did you apply the Balanced Scorecard to your company? What were your findings?

It is important to recognize that the Balanced Scorecard by definition is not a complex thing. Typically no more than about twenty measures are spread across a mix of financial and nonfinancial topics, and easily reported manually.

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Q5: Review

What were your findings related to the Balanced Scorecard?

We typically review our scorecard on a quarterly basis as part of our ISO Management Review process.

An example of that review follows:

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AVP—Management Review Form

Review Date: 2/13/2012

Coverage period: January 2012

Attendees: Carolynn Larson-Garcia, President/CEO

Sonja Walker, Vice President Operations

These Minutes Completed By: Carolynn Larson-Garcia Date: 2/15/2012

1. Follow-up on action items from previous management reviews.

N/A.

2. Are there any changes needed to the quality policy?

There are no changes to the Quality Policy.

3. Status of the quality objectives:

 Inventory accuracy

 Customer shipment accuracy

 Internal paperwork performance

 Quarterly Vendor delivery performance (these 2 look alike)

 Customer Satisfaction “On-Time” Shipments (these 2 look alike)

Inventory accuracy

Calculations:

It was determined that inventory accuracy would be calculated using the following parameters:

 Quantity percent (%) per vendor

 Dollar percent (%) per vendor

 Quantity percent (%) per total inventory

 Dollar percent (%) per total inventory

Reporting:

 It was determined that a form in Excel format would be developed.

 The inventory physical is to take place on April 2, 21012 and presented at the April 6 ,

2012 Management review meeting

 Results from 1/20/2012 inventory will be filed at April 6, 2012, Management Review Meeting on new form.

Responsibilities:

 Operations Manager is responsible for the inventory physical

 Director of Compliance is responsible to complete the form

 Operations Manager and Director of compliance are responsible to present completely and accurately researching any discrepancies and providing reasons for overages and shortages

 Operations Manager and Director of Compliance are responsible for providing solutions to prevent inventory discrepancies.

It was determined that the warehouse would be shut down for physical inventory on April 2, 2012.

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Customer Shipment Accuracy

It was determined that customer shipment accuracy would be calculated using the following parameters:

Calculations:

Using the Filemaker, Aegis Business System, Return Material Authorization (RMA) screen calculate the number of RMA’s per specified period based on “Originated Date” field.

Determine the following:

 Percentage of RMA’s to total shipments

 Percentage of Warranty Repairs

 Percentage of Non-Warranty Repairs

 Percentage of Evaluations

 Percentage of Customer Accommodation

 Percentage of Sales Errors

Reporting

 It was determined that a form in Excel format would be developed.

 The customer shipment accuracy would be presented at the April 6 , 2012 Management

review meeting

Responsibilities:

 Director of Compliance is responsible to complete the CSA form.

 Operations Manager and Director of compliance are responsible to present completely and accurately researching any discrepancies and providing information relative to customer shipment accuracy.

 Operations Manager and Director of Compliance are responsible for providing solutions to prevent shipment discrepancies.

Internal Paperwork Performance

It was determined that measures of performance for Internal Paperwork Performance would be generated during the April 6, 2012, Management Review Meeting.

Quarterly Vendor Delivery Performance

Calculations:

Data collected from Filemaker, Aegis Business System using:

o Debit Memo Screen

o Purchase Screen

o CAPA Form

o Supplier Evaluations

o Number of “on time” delivery

o Percentage of “on time” delivery

o Number of late delivery

o Percentage of late delivery

Reporting

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A form will be made by the Director of Compliance

The form will be completed by Operations Manager and Director of Compliance

Reason for late delivery and prevention

Responsibility

Operations Manager and Director of Compliance

Customer Satisfaction “On-Time” Shipments

Calculations:

Data collected from Filemaker, Aegis Business System using:

Aegis Orders Screen

Number of late shipments

Percentage of late shipments

Reporting

A form will be made by the Director of Compliance

The form will be completed by Operations Manager and Director of Compliance

Reasons for late shipments and preventative measures

Responsibility

Operations Manager and Director of Compliance

4. Are there any changes that could affect the quality management system?

The QMS is underdevelopment and will be finalized before the ISO Audit which is schedule for June 2012.

5. Are there any QMS Documentation changes?

The QMS is underdevelopment and will be finalized before the ISO Audit which is schedule for June 2012.

6. Results of internal, customer & third party audits

No audits were conducted within the review cycle.

7. Status of corrective & preventive actions

Corrective and preventive actions are under development and will be finalized before the ISO Audit schedule for June 2012.

8. Customer feedback & satisfaction

The customer feedback questionnaire is complete.

Action items:

 Load on Survey Monkey

 Insert link into Corporate Website header

 Insert in all email footers

Timeframe & Responsibility

The Actions Items are to be completed by, April 6, 2012, by Operations Manager.

9. What actions are going to be taken for improvement of product related customer requirements?

 Panasonic contract signed

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 Added Subcontractor Pacific X-ray

 Videos to website to improve customer knowledge of how to use products

10. Supplier Quality Activities

The supplier evaluations, surveys and approved buyer’s list are still under development and will be completed by June 2012.

11. Are there any Equipment resource needs?

The following equipment was identified as a need:

 Router for California

 T1 line for California

 New Computer for California

 File cabinets

 Server

12. Are there any Personnel needs?

None at this time.

13. Personnel updates

Personnel updates were as follows:

 Added Operations Manager

 Added Assistant to the Vice President of Sales

 Added Quality Administrator

14. Are there any recommendations & opportunities for improvements?

A comprehensive list will be presented at the next meeting April 6, 2012.

15. Assign Action Items

 D&B Report

 Forms designed for above mentioned items

 Missing serial numbers in sales history database

 Security items

 Risk Management, Sprinklers in warehouse, file cabinets, server

 Employee handbook

 Bonus structure of VPs

 Employee reviews every 6 months

 Physical Inventory

 Job Descriptions

16. Other business discussed

Marketing- new USA Website.

List of financial objectives that need to be covered for next meeting