M/s Digby's Business Strategy Analysis

M/s Digbys Business
Strategy Analysis
Business Avenue, 4214,

Postal code 80.250-210 / Singapore
+65 3836 55 55
+65 9685 55 55
www.SOS.com
M/s Digbys Business Strategy

Analysis
Agenda
Digby Company Profile
Sensor Market in 2012
Current Scenario - 2016
Production Learnings
Sales & Marketing Learnings
Research & Development
Learnings
Finance Learnings
TQM & HR Learnings
Analysis
Digby Company
Profile

Analysis
Sidd Ravishankar
Head R&D
Researc
h&
Devp
(R&D)
Shirish Bansal
CEO & Head Finance
Productio
n
Finance
DIGBY
Total
Quality
Mgmt
(TQM)
Shashank Shinde
Head TQM & HR
Varun Mahajan
Head Production
Sales &
Marketin
g
Human
Resourc
es (HR)
Robin Agarwal
Head Sales & Mktg

Analysis
Sensor Market in
2012

Analysis
Market Scenario - 2012

Sensor
Manufacturers in
Market
Market Share
Market Cap
No. of
Products
Markets Served
Andrew
16.67 %
$ 69M
Low, Trad, High,

Prmn, Size
Baldwin
16.67 %
$ 69M
Low, Trad, High,

Prmn, Size
Fair Market
Chester
16.67 %
$ 69M
Low, Trad, High,

Prmn, Size
Digby
16.67 %
$ 69M
Low, Trad, High,

Prmn, Size
Erie
16.67 %
$ 69M
Low, Trad, High,

Prmn, Size
Ferris
16.67 %
$ 69M
Low, Trad, High,

Prmn, Size

Analysis
Current Scenario 2016

Analysis
Financial Statistics
Market Share
Andrews; 14%
Ferris; 23%
Baldwin; 15%
Erie; 15%
Chester; 20%
Digby; 13%
Sales Breakup
Share Price
34.25
30.88
26.15
14.48
2010
2012
2014
12.12
2016
2018

Analysis
Digby Products
Traditional Segment
Daze
Low Segment
Dell
High Segment
Dave
Performance Segment
Size Segment
Dot
Dune

Analysis
Production
Learnings

Analysis
Production Head
We are looking at
maximum market share
after 4 years and we
shall go full steam to
increase capacity in the
initial years.
Hopefully we shall be
able to take advantage
of a growing market !
Mr. Varun Mahajan
Analysis
Production - Learning # 1
Capacity should be increased only considering short term
market growth and not long term market growth as it also
carries depreciation cost
FY 2012
FY 2013
Add fixed capacity in small increments as the demand

grows !
Analysis
All other players sold off capacity and hence had more cash
at hand for investments.
FY 2013

Analysis
Conservative approach followed in selling off excess

capacity
FY 2013
FY 2014
Correct your errors in the first shot !

Analysis
Due to cash crunch owing to excess spending on increasing
capacity, Digby fell short of cash to Automate their plants
resulting in lower contribution margin and higher costs in
years to come
FY 2012
FY 2013
Cost control is extremely important !

Analysis
Poor Plant Utilization
200%
180%
160%
Ideal plant utilization
140%
- 198% of the plant capacity
120%
Optimum Capacity
Utilization
100%
Industry Average
Utilization
Digbys Plant utilization 80%

60%
level was 72% in 2013 and
40%
increased to 160% in 2016
Digby Average
Utilization
20%
0%
This showed Digbys over spending on plant expansion in

the first years resulted in poor Asset Turnover Ratio

Analysis
Poor Forecasting led to unsold inventory. Tradeoff between
Stock Out and Inventory carrying cost was not calculated
FY 2013

Analysis
Poor Forecasting led to unmet market demand as all
companies had stock out
FY 2015
Market Demand
> 1.8
Total Capacity

Analysis
Sales & Marketing

Learnings

Analysis
Sales & Marketing - Learning # 1

Higher Customer visibility
comes at a price !
100% Customer
Awareness & 100%
Accessibility
75% Customer
Awareness & 75%
Accessibility
Less than 50%
Customer Awareness
& Less than 50%
Accessibility

Analysis
The product with a higher Customer Survey Score (CSS)

tends to outsell the others which have a lower CSS
AR Policy
Promotio
n Budget
Custome
r Buying
Criteria
CS
S
Sales
Budget

Analysis
Pricing needs to be done carefully within a band that

attracts the customer
Market will not accept your product if it is priced beyond a

certain limit
$38.5
FY 2015

Analysis
Research &
Development
Learnings
Analysis
Research & Development Learning # 1

Timely release of product is CRITICAL
in gaining market share and competitive
advantage
FY 2013

Analysis

Product positioning must be as per
the needs/wants of the target segment
FY 2013

Analysis

Failed product transitioning in
Dixie
No R&D was conducted on Dixie

under the expectation that it
would drift into the Traditional
market segment
It ended up as an abandoned
product which was a misfit
everywhere
Product Transitioning needs to

be
PLANNED in advance
Analysis

R&D time depends on R&D being
conducted on various products
simultaneously
Continuous improvements should

be done on products every year
FY 2016

Analysis
Finance Learnings

Analysis
Finance - Learning # 1
Finance should not drive business, business should
drive finance!
- Prof Manish Agarwal
However, business should also hear out Finance..
Higher the Cash at hand,

Lower is the Risk to the
organization!
Poor prediction of cash at

hand resulted in an
Emergency Loan to Digby
and Andrews

Analysis
Inventory Carrying Cost

needs to be looked at as poor
sales results in a high
inventory carrying cost
Also, inventory at hand

results in a conservative
forecasting often resulting in
a STOCK OUT and lost market
potential in the following year

Analysis
CEO & Finance Head

We should follow our
tradition of issuing
dividends to our
shareholders
Im optimistic of an
increased market share
and increased stock
price in the coming
year
Mr. Shirish
Bansal
Analysis
Digby paid 4 million as dividend and the same year Digby

faced an emergency loan of 4.9 million
Digby should have reinvested to increase the value of the
firm as it did not have excess cash.
FY 2013
Customer is my CEO, who pays my salary; but I am not

a Slave !
Mr. Boman Moradian
Analysis
Debt/Equity ratio should always

be between 1.8 and 2.8
If the ratio is high one should go

for equity and if the ratio is low
one should go for loan
A company with a high D/E ratio

is seen as a risky company
Debt is not necessarily bad !

Analysis
Long term loan should be

used for plant & equipment
purchase, capacity increase
etc. for long term use
Current loan should be taken

to pay to suppliers or for
short term use
Wrong selection will lead to

unnecessary interest
Debt should be taken

according to requirement
Analysis
TQM & HR
Learnings

Analysis
Human Resource Learning # 1

Productivity can be increased
by:
Continuous Manpower
training
Spending on recruiting to
FY 2016
hire high caliber workers

Analysis
Total Quality Management

1 3 whereas the
No money spent onLearning
TQM initiatives in#
round
competitors in the industry invested heavily
FY 2015

Analysis
Total Quality Management

In spite of spendingLearning
on TQM in 2016,#
the1
demand for other
companies products increased
FY 2016

Analysis
#1.
#2.

Analysis
#3.
#4.

Analysis
#5.
#6.

Analysis
Lets now go to the Boardroom

Analysis
Thank You
Team D Industry C51962
-
Shirish Bansal
Siddharth Ravishankar
Shashank Shinde
Robin Agarwal
Varun Mahajan

Analysis

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M/s Digbys Business

Business Avenue, 4214,

M/s Digbys Business Strategy

M/s Digbys Business Strategy

M/s Digbys Business Strategy

M/s Digbys Business Strategy

Market Scenario - 2012

Low, Trad, High,

Low, Trad, High,

Low, Trad, High,

Low, Trad, High,

Low, Trad, High,

Low, Trad, High,

M/s Digbys Business Strategy

Current Scenario 2016

M/s Digbys Business Strategy

M/s Digbys Business Strategy

M/s Digbys Business Strategy

M/s Digbys Business Strategy

Add fixed capacity in small increments as the demand

M/s Digbys Business Strategy

Conservative approach followed in selling off excess

Correct your errors in the first shot !

Cost control is extremely important !

Digbys Plant utilization 80%

This showed Digbys over spending on plant expansion in

M/s Digbys Business Strategy

M/s Digbys Business Strategy

M/s Digbys Business Strategy

Sales & Marketing

M/s Digbys Business Strategy

Sales & Marketing - Learning # 1

M/s Digbys Business Strategy

Sales & Marketing - Learning # 2

The product with a higher Customer Survey Score (CSS)

M/s Digbys Business Strategy

Sales & Marketing - Learning # 3

Pricing needs to be done carefully within a band that

Market will not accept your product if it is priced beyond a

M/s Digbys Business Strategy

Research & Development Learning # 1

M/s Digbys Business Strategy

Research & Development Learning # 2

M/s Digbys Business Strategy

Research & Development Learning # 3

No R&D was conducted on Dixie

Product Transitioning needs to

Research & Development Learning # 4

Continuous improvements should

M/s Digbys Business Strategy

M/s Digbys Business Strategy

However, business should also hear out Finance..

Higher the Cash at hand,

Poor prediction of cash at

M/s Digbys Business Strategy

Inventory Carrying Cost

Also, inventory at hand

M/s Digbys Business Strategy

CEO & Finance Head

Digby paid 4 million as dividend and the same year Digby

Customer is my CEO, who pays my salary; but I am not

Debt/Equity ratio should always

If the ratio is high one should go