Cloud Views
December 2020
Introduction
Cloud Views is a company that assembles high quality wearable or mountable video cameras and camera-equipped drones in our facilities base in Taiwan. Once developed, assembled, and tested, our products are shipped to multi-store chains and online retailers. These retailers sell electronics to a variety of local retail stores that sell cameras or outdoor equipment or sporting goods where customers would want action-capture cameras to video their outdoor and adventure experiences. Our company began its operations five years ago and has been an extraordinarily successful and profitable business. In the past nine years, Cloud Views has developed and undertook several strategic actions that boosted our overall performance against rivals in the same strategic group industry. These strategies evolved and improved the company’s earnings per share, return on equity, stock price, image rating, advertising measures, and the overall quality of our products. These factors severely impact buyer choices of choosing Cloud View’s products over our rival competitors such as Atlas Technologies, Beyond Vision, and Digital Discovery.
Company Vision
Cloud View’s vision is to be able to provide high-quality drones and cameras to as many people as possible to grow our consumer interest. Our company strives to provide quality products that diversify amongst all people’s unique needs. Cloud Views focuses on making products that satisfy our customers and keeping them loyal to our products. Cloud Views embellished this by pursuing a low-cost strategy for low-cost providers. Our company aspires to give customers a commendatory product while also executing lower costs against our competitors. Our core values include integrity, accountability, respect, safety, loyalty, reliability, teamwork, and customer focus. The market consisted of 4 total groups who all approached the business differently. These groups were: i) Atlas Technologies ii) Beyond Vision iii) Digital Discovery During our first couple of decisions rounds we were direct competitors with Atlas Technologies, but during the final few years we have been competing more with Beyond Vision since they restructured their business going for a lower cost. Our goal was to develop a winning competitive strategy that capitalizes on growing consumer interest in action-capture cameras and UAV drones to improve the company’s overall performance year-after-year. This was done through pursuing a low-cost strategy for low-cost providers. The company made its moves to outcompete rivals and improve company performance and market standing. Changing market conditions caused us to adapt to a best-cost provider strategy since we could sell our drones for more money as we grew. The decision periods represented a year and throughout years one through five, the decision entries were automatically entered. The first sets of decisions that were made for the company were years six and seven and those were practice rounds.
Company Performance
Year 6
The practice round showed that a low-cost strategy was effective at massing market share but needed to have facilities capable of meeting demand. Upon closer research, we opted to adopt the low-cost strategy and aimed to make improvements to our facilities to weaken the blows from the market. These choices coupled with abilities we developed over the practice rounds such as ways to gain mass market share and maintain it as well. During this process we made improvements to our production facilities in the way of robot upgrades which allowed for cheaper and faster production times to build up to the growing demand we created, as well as expansion of our production floor to increase our current production maximum unit output. We as a company sought to do this to best serve our target markets in Asia and Latin America. (See Appendix A).
Year 7
In year 7, we wanted to continue to act as the low-cost provider and protect our increasing market share. Having a growing group of customers and a large chunk of market share allowed us to raise the drone prices in the Asia-Pacific region to $1,050. We also made the decision to buy the robotics upgrade which would allow us to meet demand more efficiently. Our only real competitor at this point was Atlas Technologies. They attempted a similar low-cost strategy which turned our strategy into more of a best-cost provider strategy since we have an average quality product at a less than average price. To combat being undersold by Atlas Technologies, we had to lower our Europe/Africa region’s camera pricing to $200. We believed that many groups were focusing more effort on the camera market which left little to no competition in the drone market. While we had a very successful drone strategy, the camera market was more competitive, and we found ourselves already making defensive positions. (See Appendix B).
Year 9
During this decision-making, we opted to capitalize on our expanding market share to raise drone prices in Latin America to $1,050 per unit. This was driven by our desires to equalize our overall standing financially in satisfied markets we are leaders in to compensate for the lack of success in other regions where the competition was stiffer. Even given that challenge we decided to prioritize drone production given the severe lack of competition to slow us down, so naturally we made the best effort to thrive in the high reward market of drones. We spent much of our disposable income on added upgrades to the drone production line to further assert our hold on the growing market during this time. This strategy was tested well when Atlas Technologies tried to undersell us but the ability, we have previously developed at this time hardly affected our drone market. Toward the end of the decision, we realized how vital buying back stock was, so we began slow and repurchased two hundred and fifty shares back. (See Appendix C).
Year 9
In year 9, we were comfortable staying with the same strategy, and we did not think it was the right time for any offensive attacks on any of our competitors. The market conditions for both markets have not really changed from year 8 allowing us to attempt to grow our market share even more. While we wanted to continue to grow our drone market share, we also needed money, so we increased our prices in the Europe/Africa region to $1,150 and in the Asia/Pacific and Latin America regions to $1,100. While it was nice to have such a large amount of drone market, we needed to be able to produce enough to meet the increased demand. The increased revenue from year 8 allowed us to add 30 new drone stations and pay off our remaining loans. While the drone market is where the bulk of our success has been, we were still growing steadily and wanted to keep with the same strategy until market conditions changed. With our growth each year we also must increase our marketing budget to match the growth. (See Appendix D).
Year 10
Beginning in this round of decisions, we as a company decided to eliminate our loans and this improved some measures, but others ended up suffering. The total revenue increased but our R.O.E suffered a small drop as a result. The increase in revenue allowed us to upgrade more of the production capabilities to further make use of the influx of money to better keep up with the further growing demand. To help add depth to our camera line we put two additional models for a total of three camera models on the market from our offerings which dropped the P.Q. for cameras to 4.3. Along with the addition of models, we were forced to make a price increase to meet our investor expectations across the board to satisfy those. The price changes came in the way of an increase to $240 dollars per camera unit in North America and $220 in every other region. The drone prices also were forced to rise to: $1,200 dollars per drone in North America and $1,250 in the European and African markets we service, and even after everything that had happened during this round we came out on top and swiped all special contracts from our competitors in all the markets. (See Appendix E).
Year 11
At this point, we have been going strongly with a successful strategy. We decided to keep our prices where they are since we were relatively unaffected by having to raise them. Taking the special contracts from Atlas Technologies in the previous was beneficial for us to gain competitive power against them as well as weaken them. We were able to keep our special contracts in North America and Europe/Africa but did not retain the others. This was not a huge problem for us since Atlas Technologies did not gain them either. We continued to invest in workstations to meet the demand since we would pay a much higher price if we had to pay for overtime. We have put a lot of effort into meeting investor expectations, so we continued to buy stock back to help our return on equity. Up until this point there had not been any real market shakeups, but Beyond Vision started strictly focusing on market share even if it hurt their investor expectations. This greatly affected us because while we originally strived to be a lowcost provider, as we grew, we became more of a hybrid of a best cost and low-cost provider. This left us vulnerable to attack if one group wanted to undercut us and meant we ended up sacrificing some of our business to Beyond Vision. (See Appendix F).
Year 12
Beyond Vision continued to gain market share with a lower priced product, but because we had been so successful in the beginning, we did not look into the loss of market share too closely. Since we were hit hard in year 12 by Beyond Vision’s change of strategy, we needed to shift our marketing plan along with other parts of our business strategy to meet investor demands. Trying hard to meet investor expectations, we raised the price of cameras to $250 in North America and Europe as well as $230 in Asia and Latin America. We also raised drone prices to $1,350 in North America and Europe and $1,250 in Asia and Latin America. Still trying to keep up with investor expectations, we took out a 10-year loan of $100,000 to buy back 1,000 shares of stock. Taking all of these precautions to meet investor expectations ended up backfiring on us since we did not evaluate our market enough to realize what competitors were doing. (See Appendix G).
Year 13
Year 13 is when we realized the changes Beyond Vision caused in the markets and that we needed to do something about it quickly. After looking at our facilities and numbers, we decided that the best idea would be to become a true low-cost provider like Beyond Vision but do it better. Undercutting Beyond Vision even more than they undercut us meant we had to sacrifice investor expectations, but because we realized the change in market conditions so late, we were already struggling to meet them. Since we had to invest in our facilities and workstations so early, we were able to keep up our product quality and even raise it to 5. We dropped our camera prices to $230 in North America, $210 in both Europe/Africa and Asia/Pacific, and $200 in Latin America. We also dropped our drone prices to $1,100 across the board. Doing this obviously destroys all investor expectations numbers, so we bought back 500 shares of stock so that we would at least have something to work with. Changing our strategy makes Beyond Vision our new rival, and pretty much the only person we were worried about at this point. (See Appendix H).
Year 14
For year 14, we wanted to double down on our market share grab which allowed our business to explode again as it did in earlier rounds. This was brought to fruition because we have the most efficient facilities for production so we can afford to under sell everyone and keep quality up. The prices of our product needed insignificant amounts of tweaking to best embody the low-cost strategy that we as a company have been trying to keep during the duration of the choice round. The price increases previously mentioned added revenue plentiful enough to allow us to begin heavily investing in ourselves as an entity to improve our image rating. We also won bids on all special contracts except in the Asia/Pacific region. One final thing we did was make it a mission to buy back as many shares of stock as we could without increasing our debt. (See Appendix I).
Year 16 and further
The prediction for year 15 strategy wise is that we intend to keep our current strategy as it is going well but we want to start relaxing it a bit so it can bring in more money. We are going to raise the drone price in the Asia/Pacific region to $1,150 so that it is no longer draining money. We want to sell $1,100 shares of our stock since it is cheap now and it will not be cheap for long. The projections that we have for the future are that we will have our first year to break net revenues of a million. We also hope to see bid wins in both North America and Latin America. (See Appendix J).
Year 16 and further
Ideally, we would like to keep to our strategy and follow a similar trend from year nine to eleven. This is likely what is to be expected, barring any other sudden changes to the market like what Beyond Vision did. Something that we aren't able to do it in the simulation that we were attempt in the real world is cooperation between companies, our most important core competency is our efficient production side allowing us to produce more products at a lower cost despite our lack of R&D funds, cooperation with other companies by means either buying them as whole or buying and their production end and producing their products for them under contract would benefit us both greatly, they would have reduce cost on their production end be and be able to focus elsewhere, well we would gain access to their R&D investments making us even more efficient as well make additional money by selling to them. (See Appendix K).
Lessons Learned
Based on previous years' performance, there are a few things our company has learned from that will change our strategic moves and actions in the future. One thing our company noticed was that it would have been more ideal to let the debt be paid off naturally in the future and invest in capital stock, instead of paying off the debt. Another feedback on our performance would be that if a single company decides to start underselling others instead of pursuing the investor's expectations, it is suicidal not to counter it. Looking at past decisions and learning from those decisions, whether good or bad, is crucial to helping our company move forward to make better strategic choices that overall improve our company's performance and profit
Reason
This is my Capstone Project for my Business major. I am quite proud of how it turned out. It was a group project I did most of the work on. I didn't actually write most of the paper since I was the only one who knew what we were doing I was more just providing information for my group members to rearrange in functional format.