Business Case Study – Cctv

Case Study positive(p) CCTV (all details discussed in this case select urinate been taken from the total CCTV case take away as presented in Cases of entrepreneurship the venture creation process (Morse & Mitchell, 2005)) Student happen upon Katrina BinottoStudent Number S3172726 Course BUSM 2367 Business Enterprise One 1. If you were Jack running noose, what would you do rise Derwent Systems, based in Newcastle, UK, to extend its reach into Europe, or man historic periodment on the IPO?When assessing if Jack disunite should acquire Derwent Systems or contract on IPO it is would be best suggested to undertake a retread of the attractiveness and competitive position of the proposed encyclopaedism. One method of doing this is through the utilize of the Boston Consulting Group (BCG) Matrix. This matrix assesses the competitive position of the business in its authorized form, and the aspects of the proposed businesses, against their respective merchandise attractivenes s. (Robbins, et al. 2009) The BCG considered businesses in limits of a hard currency Cow, Star, Problem Child or Dog.The case study tells us that extreme CCTV is a growing comp whatsoever with specialized harvest-tides that catch positive bills flow for the business, which makes it a Cash Cow. Derwent, although they had difficulties with cash flow at the period sentence, commence a specific harvest-tide base and have a recognized brand name, which sits this business in the Problem Child vault of heaven of the Matrix. In order to develop a business which could blend a star, Derwent would be fitted to can the brand and leave alone recognition, and Extreme is qualified to provide the business the necessary cash flow to compass a possible Star business.thitherfore I believe that Jack side drum should invest into Derwent Systems as it will allow the acquisition of a recognized product with the ability to sustain positive cash flows assisting in dogged term sustainabil ity of the business. 2. Briefly outline the risks associated with your recommendation and how the company could manage these risks. There be risks associated both with acquisition and passing the fortune Not getting Derwent Will lose access to a game quality senior high performing product May risk commercialize saturation skill to provide competitive pricing organize for current product good deal out should competitors produce the same products Acquisition attempts Cash flow does Extreme have enough cash flow to support Derwent requirements in the short term Change management issues in merging businesses and associated staff cultural issues If competitors be already engaging in the foodstuff Extreme is trying to ascertain into do they have a market dominance Geographical issues managing businesses on two sides of the globe Globalisation and workforce diversity issues 3. List the benefits, and wherefore you believe they outweigh the risks Increased market sh ar su per index finger to bid the market more products Acquiring the good will of Derwent clients The additional ingenious property from Derwent look for and phylogenesis Additional staff and their knowledge and experiences force to proposed more competitive pricing structures as inputs may be cheaper as business will have great turn everyplace and thence may be able to purchase personas in book Economies of outgo not only for tangible inputs but labour inputs Increased borrow power with the intermingler of two businesses increased assets. 4. Analyse Extreme CCTVs competitive landscape using gatekeepers Five Forces Porters Five Forces consist of the following Supplier Power oThis component could be considered as high as with a turgidr vividness of component turnover Derwent could access better trading terms and stronger alliances with suppliers. This would resolve in more secure and competitive supply of components and with good relationship management, much(prenomina l) as ensuring on clip invoice holdment, Derwent may be able to become a preferred creditor. Consumer Power oQuality would be at the forefront of the consumers requirements and thus this component would be considered very high.Without reliable quality products Derwent would allow competitors access to their market, reducing their cash flows and product sales. Substitutes oThere be very few substitutes to CCTV. Any alternative products do not provide the same level of quality or access to the same features provided by Extreme (and Derwent) products, thus this factor is considered low. New Entrants oThe possibility of late entrants into the market is low due to the fact that a number of businesses atomic number 18 already participating in the market, and any new entrants would enquire a large upper-case letter, for research and instruction and product development. Rivalry oIt is possible that Pelco may link up with other competitors, such as reserved fancy, and their new co mpetitive power would be unknown at this time. Therefore this would be considered a metier risk as neither the new market nor the strategic boot of any competitors is known. 5. Analyse the opportunity using the First Screening fade INDUSTRY depth psychology What is the industry that addresses this market? oCCTV equipment Number of competitors ?Pelco ?Silent Witness Relative sizing of competitors oNo one competitors having a majority share in the market, which was highly fragmented. Pelco in Extreme CCTVs market space, from Southern calcium oSilent Witness Canadian public company, worldwide networks with good crops since 1995. MARKET ANALYSIS Is there a need? oIndustry had decided that CCTV use is a vital part of their overall security dodging and have experienced noteworthy benefits oThese benefits in specialized markets, such as government agencies and punitory facilities are not being taken up by the more reason business and consumer market. Customers? oThere is clear gather up for this product in government agencies, correctional facilities, and casinos proven by sales to date. More generalized usage of CCTV over time due to perceived and perhaps real reduction of abomination that has been experienced where CCTV is in use. What value do you add? oThe value added assistance be provided would be ?Integrated Day Night Cameras superb writ of execution ?Product Differentiation a perceived distinct edge by major distributors Product Life oThe product life expected from this aid would be durable, as once the set up was completed and confide built with customer they would be very unlikely to try a competitors product.The security provided and report card created by Extreme would intoxicate more at stake for the consumer and unless motivated by other means, such as additional services or major discounting, they would be loth(p) to try another service. What is the current market structure? oThe major competitors in this industry are ?Pelco, and ?Silent Witness. oFollowing are features of services already provided ?Pelco provides uniform products to Extreme, but at this time does not have the market reputation nor or they able provide a holistic product part as they are not able to provide an integrated camera. Silent Witness have a product range that is able to feat in varied operating conditions, but also do not currently provide a product that allows the quality of night stack recording. What is the proposed market size? oThe industry currently serves the following markets ?Families, ?Singles, and ?Couples of any age group. What is the markets growth potential? oThe potential market in stock(predicate) for this service is substantial, although it may be difficult to accurately predict. ?Gin feels that although the market is expanding he is unsure how far it will grow and what may film this growth. Key drivers for the growth would be the increasing acceptance of CCTV usage and the unify of technologies to strengt hen the security features of the products. What would be the proposed cost structure? oExtremes proposed product offering would be to provide Derwent products under the Derwent brand, but integrate the results of their research and development which had lead to the development of the even illuminator (UF500) with Extremes solar day/night camera. This would provide a preposterous product to the market. Pricing for this unique product could be set above the standard products and the pricing structure may allow scope to support ongoing research and development investments with a set portion of the profit against these products dedicated to this purpose. Advertising this to the customer may encourage their increased investment in the products Extreme would provide in general. THE NUMBERS Profits after tax? oCurrently Derwent profits after tax have been reducing, from $292,570 in 1998 to $159,111 in 2000. oExtreme has been experiencing good pecuniary growth since its first year of tr ading in 1997. It could be considered that after Derwent acquisition that profits after tax would still be positive and in fact do have a chance of growth if the market response to the integrated product is strong. Time to break even? oIt Gin purchased Derwent for $2. 6 million is would take somewhat 4 years for Extreme to break even against this purchase. This is assuming that their annual profits are approximately $692,000 remains constant and that all other factors such as pay scale and in direct costs remain constant. Time to positive cash? Positive cash flow would take some time longer than the estimated 4 years for break even. oWith the development of the desired product and ensuring its marketing and strategic placement would manage it would be possible to achieve positive cash flow very soon after good luck even. ROI Potential? oThe return on investment potential is able to be seen in this business idea, but the level of ROI achievable is not able to be determined at this time as market demand is unreliable at this time. Capital Requirements? oExtreme would require capital investment, through financing, to acquire Derwent. The asset base of Derwent, quoted in 2000 as being $2,353,113 in their financial statements, would provide a significant base for sourcing this finance. When considered as a tout ensemble business, i. e. Derwent and Extreme, there would be adequate assets to secure finance to complete the acquisition. The reflection necessitate by Gin would be the businesses ability to service this size of loan as part of normal operations. Exit Mechanism? oPossible live strategy would be to interchange off the Derwent part of the company should Gin be unable to operate this part of the business. oShould t require a more significant exit from the market then Extreme could sell components and intellectual property to competitors. Value? oStrategic value of the business would be high when established. It would have a solid loyal client base, est ablished branding and market reputation. It would be able to achieve market discordentiation needed to provide some assurance of long term sustainability in the market. backside YOU AFFORD TO PLAY? Production be? oProduction costs would differ mingled with operating locations, i. e. Derwent and Extreme factories, as input costs may differ due to the differing localities, i. . northeastern America and UK. oEconomies of scale could be achieved in bulk purchase of inputs however the logistical issues associated with movement of stock between geographical locations may actually increase costs should this strategy be employed. This would have to be carefully considered. Marketing Costs? oAs the market in North America currently does not appreciate the Derwent product it would be detailed to demonstrate through marketing the benefits that there products, and Extremes on trying to enter the market, would have for them. Encouraging distributors and consumers to try the product would be critical in being able to break into the market. Distribution Costs? oDistribution costs needed to be considered would be movement of input components, where are the distributors and their clients, and would there be a head office hierarchy set up or would the two arms of the Extreme business, i. e. Derwent and Extreme, be seen as equals in the company structure and thus have equal responsibilities and dispersion strategies would be determined by each location instead of a one size fits all approach. Prices? Pricing structure would need to be competitive with other competitors where product services and capacity is similar, where there are distinct difference between what the competitor can offer and what the new Extreme business could provide the market then the ability to shake up inflated prices, limited to the value perceived by the consumer, would be would become available. These potential increase profit margins on specific products could be utilise either as investment into research and development or to downplay the cost of borrowing.It would be dependent on any marketing strategy that would be linked with the pricing structure. Costs? oBulk buying where possible would match the best way to minimize costs for this business and achieve any economies of scale. Distribution Channels? oIt would be seen that existing distribution channels to be used to promote and sell the products. As the attractiveness of the product became greater then new distribution channels would open. oAn alternative distribution would be to use the companies own resources.The staff would have the background knowledge on the development of the products and the strategic missions and values of the business and would be able to circulate these as part of their marketing strategy. Barriers to Entry? oEntry into this market at this time is favorable as there are not many competitors and Extreme already holds product differentiation with its current product range. oThe ability t o merge research and development from the two businesses would provide a great opportunity to emerging markets globally. Legal/Contractual/Intellectual Property. There are definite intellectual property issues with this merger and then management of research and development results through this business and the proposed merger. oLegal contracts and possible supply and logistic contracts would need to be facilitated to provide opportunity for efficiencies. Contacts and Networks? oContracts and networks already in place for both businesses would be used in the first instance, and then with increase attractiveness of produce new networks and contacts would be developed. It is also evident within the case study that participation at trade shows would provide key opportunities to expand current networks.THE MANAGEMENT TEAM The Extreme structure would remain in its current form. With the proposed retirement of Duffy, Gin would need to find an appropriate management squad to continue oper ations of the Derwent arm of the business. FATAL FLAW/RISK world of a Fatal Flaw oThere are possible fatal flaws in this proposal ?Cost of borrowing required capital to acquire Derwent. ?Ability to establish a suitable management team to continue Derwent operations. ?The need to establish two geographical locations for operations the logistical issues that this may create. stave culture issues and how Derwent staff would be received and integrate with Extreme employees. Risk? oThere is a risk in this proposal in that the cost of capital required to start up the business may be prohibitive to entering the market, although the use of a merger with a business that has established distribution channels and market would reduce this risk overall. BIBLIOGRAPHY Morse, Eric A, and Ronald K Mitchell. Cases in entrepreneurship the venture creation process. Thousand Oaks SAGE Publications, 2005. Robbins, S, R Bergman, I Stagg, and M Coulter. Management. 5th . Pearson Australia, 2009.