GoPro Company Evaluation Sample Assignment

GoPro Company Evaluation

Strategy Proposal

Strategy Proposal

Our strategy for GoPro is to obtain a loan in the amount of $168,000,000 which will enable us expand and market penetrate into the market emerging in the Asian Pacific area as well as market development in the Americas and also Europe while making our products more affordable. This loan will cover the difference of COGS from our current manufacturing rate to the new one. We foresee that this action will cause our market share to improve at a steady rate which will in result cause our stock value to increase. In this outcome we will authorize 75,000 common stock in 2017 followed by 50,000 common stock in 2018 and finally 7,000 common stock in 2019 to the market which will hopefully allow us to pay our debt with the respected proceed in 4 years earliest 3 years. We assume that our net profit will increase by 100.34% from the most recent 10Q in 2017. We also assume that when we decrease the price of our products while simultaneously increasing customer value by making GoPro more affordable, sales will increase which will enable us to achieve our goal of economies of scale at a more rapid rate. In the short term we don’t expect our net income to improve substantially, however we project that three years after this plan launches we’ll achieve our goal of economies of scale which will decrease our price of our cost of goods sold per unit and therefor increase net profit!

Our Existing State

GoPro, the world’s most versatile cameras! GoPro helps people capture and share their lives’ most meaningful experiences with others-- to celebrate them together. Our vision; We dream. We have passionate ideas about what is possible in this world. Our passions lead us to create experiences and realities that expand our world and inspire those around us. Our mission is to enable you to share your life through incredible photos and videos by capturing, creating and sharing the world’s most GoPro perspective with versatile cameras. Our objective is to help people capture and share their lives’ most meaningful experiences with others--- to celebrate them together. Like how a day on a mountain with friends is more meaningful than one spent alone, the sharing of our collective experiences makes our lives more fun. When it comes to our strategy Social Media is our best friend! Whether it’s Facebook, Twitter, Vimeo or YouTube you can expect our top quality video cameras to be the first choice of selection when it comes to action, POV, or even just memory recording and production! Our aim when it comes to value is to create a high performance camera which can meet the condition requirements of the most extreme action sports while simultaneously maintaining a high quality image.

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Our products put the phrase “The sky is the limit” to the test. Featuring

  • wireless connectivity which enables the user to connect to his/her smartphone for remote access and editing
  • the capability to function efficiently and also effectively in extreme temperatures as well as those locations on planet earth where low pressures are present
  • sun radiation exposure for those who love those extra colors
  • a durable body which can handle the speed and friction of the craziest conditions and finally
  • mountable accessories which allow the user to use it almost anywhere on the earth including up to 40m below sea level where the high pressures and low temperatures are at their extremes.

With all this in mind, the sky is not the limit the depth of the oceans is!

Our Future State

In result of the needed change in strategy as well as the move to a new market Team 4 has decided that a change in our Mission is necessary. Not a major change but rather an addition of a couple of words. From the old Mission Statement of “Enabling you to share your life through incredible photos and videos by capturing, creating and sharing the world’s most GoPro perspective with versatile cameras” Team 4 has modified the Mission Statement to “Enabling you to share your life through incredible photos and videos by capturing, creating and sharing the world’s most GoPro perspective with affordable, versatile and top quality cameras.” The Vision statement “We dream. We have passionate ideas about what’s possible in this world. Our passions lead us to create experiences and realities that expand our world and inspire those around us” will remain the same. High quality to match extreme action that’s our value!

External Opportunities and Threats

After the appropriate research was conducted substantial opportunities as well as threats were found in which Team 4 believes GoPro should act on. Let us begin with the opportunities. As you may have already known Network marketing is on the rise and has been for the past seven years. As networking is the backbone of GoPro Team 4 believes that this organization should interact more frequently with its customers through the use of social media to realize and meet their desires. Not only will this make our customers happy but our customer value appreciation will most definitely be affected for the better. Another fantastic opportunity that was realized is the expected growth in the sports action camera industry. With this, it would be wise to partner up with more power sports for higher brand recognition in the POV action sports industry. Also, expanding to more countries would benefit GoPro’s brand recognition, especially in emerging markets. It would also be important to note that supposedly tourism is on the rise. A lowered GoPro price in the United States would be beneficial to GoPro in this scenario. Following this due to our media advertising being cost effective, after market penetration in the emerging markets an advertisement of our newly lowered prices will be mandatory.

No one likes threats so please allow us to deal with them ASAP! As you executives already know we are currently lacking in our investors support and excitement. A result that was generated is to use the experience that one can have with GoPro to target a new market location. We believe this is very crucial in keeping GoPro #1 in the action sports media industry. Following penetrating a new market will be the solution to our next problem which is the inability to generate consistent profit. In the newly invaded market our next goal is to of course increase customer value satisfaction by decreasing prices which will therefore help us reach our main goal of economies of scale. Due to our smaller size our competitors shouldn’t have a chance at competing with us, but only if we act ASAP!

GoPro CPM (Competitive Profile Matrix)

GoPro

DJI

SONY

KSF (Key Success Factors)

Weight

Rating

Score

Rating

Score

Rating

Score

Price

0.12

2

0.24

3

0.36

3

0.36

Product Quality

0.10

3

0.30

3

0.30

3

0.30

Global Expansion

0.11

3

0.33

3

0.33

4

0.44

Market Share

0.12

2

0.24

4

0.48

3

0.36

Financial Position (Revenue)

0.09

2

0.18

3

0.27

2

0.18

Customer Loyalty

0.11

3

0.33

2

0.22

3

0.33

Management

0.07

3

0.21

3

0.21

3

0.21

International Sales

0.12

3

0.36

4

0.48

4

0.48

Growth

0.09

2

0.18

3

0.27

4

0.36

Advertising

0.07

4

0.28

2

0.14

3

0.21

Total

1

2.65

3.06

3.23

Key External Factors Weight Rating Weighted Score
Opportunities
1. Middle class growth in the emerging world 0.08 2 0.16
2. High consumer brand recognition 07 0.07 3 0.21
3. Media advertising cost effective 0.05 3 0.15
4. Tourism is expected to rise 0.03 2 0.06
5. Sport action camera industry expected to grow 0.06 3 0.18
6. Analysts expect growth in the fourth quarter 0.04 3 0.12
7. Recent Partnership with Red Bull 0.02 4 0.08
8. Network market 0.02 3 0.06
Threats
1. Political election 0.07 3 0.21
2. Emerging smartphone industry 0.06 2 0.12
3. Sony’s size 0.09 2 0.18
4. Inability to generate consistent profit 0.10 2 0.20
5. Highly competitive and turbulent environment 0.06 3 0.18
6. Cameras do not get replaced as often as cellphones 0.05 2 0.10
7. Action cameras and drone market becoming more saturated 0.11 2 0.22
8. Problems with getting investors excited 0.09 2 0.18
Total 1.00 2.41

Internal Strengths and Weaknesses

When it comes to internal strengths GoPro is immaculate in its industry. We are trusted by film makers around the whole world both small and big. Our competitive advantage is not to be taken lightly, we are actually #1 in the action sports film making industry, this for sure is thanks to our experienced business units. We have a very large customer base with more than 5 million customers worldwide, this of course will increase if the appropriate decisions are made. Due to our smaller size relative to our competitors we are faster, more efficient and also more effective when it comes to decision making and implementation. To end on a good note, It’s also nice to know that in the past two years our Long-term Debt-to-Equity has increased from 0.01 to 0.07, (low leverage = more room for loans; we need loans) and we are highly liquid!

Of course every organization has its weaknesses, let’s discuss those in which we found. According to customers the prices of our products are too costly compared to other companies. This has to change ASAP; the customers are always right! This has resulted in the steady decline of our inventory turnover since 2014 when our Hero 4 model was released. We also don’t compete with any of our competitors. Due to the fact that Sony and Samsung are beginning to invade the action sports industry now more than ever we find that being proactive and using our size to our advantage is necessary. Also due to the decrease in inventory turnover since 2014 our Net Profit Margin has declined from 0.09 in 2014 to -0.49 in 2016. Change is mandatory!

Key Internal Factors Weight Rating Weighted Score
Strengths
9. Trusted company by film produces around the world. 0.06 3 0.18
10. High Competitive Advantage over other entities. 0.05 4 0.2
11. Has experienced business units in our industry. 0.06 3 0.18
12. Large customer base compared to competitors. 0.09 3 0.27
13. Smaller company in size compared to competitors 0.1 3 0.3
14. Past two years Long-term Debt-to-Equity has increased from 0.01 to 0.07 0.1 4 0.1
15. We are highly liquid 0.05 3 0.15
Weakness
Price of products are too costly compared to other companies. 0.18 2 0.36
Inventory Turnover has been on a steady decline since 2014. 0.12 1 0.12
Does not compete with competitors. 0.06 1 0.06
Net Profit Margin has declined from 0.09 in 2014 to -0.49 in 2016. 0.07 1 0.07
Rely too much on suppliers instead of self-manufacturing. 0.06 2 0.12
Total 1.00 2.11
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Step by Step Plan for Success (Nascar)

Nascar

  1. Contact Nascar HQ in Daytona Beach, Florida and request to schedule a conference with the board of directors on the date November 10, 2016
  2. Propose our written contract of sponsorship to executives
  3. If all goes well sponsorship should be initiated immediately (on the same day contract is signed). Time is not on our side!
  4. Ship out GoPro products to appropriate Nascar locations.

Contract of Sponsorship Agreement w/ Nascar

Dear Executives,

After the appropriate research was conducted it has been found that it will be beneficial for both entities (Nascar and GoPro) if a partnership is formed and realized. This written Contract of Sponsorship is to verify that all actions taken after a successful bond is formed between the two entities listed above (Nascar and GoPro) will abide by the following set of guidelines as well as rules.

It is foreseen that when a sponsorship between the two entities listed above is formed and launched successfully brand recognition, customer awareness as well as growth and also an increase in revenue and net profit will soon follow and impact both GoPro and Nascar for the better.

This written Contract of Sponsorship Agreement requires that GoPro be the official POV action video camera for Nascar at all events and promotions. This means that all “in car point of view” shots will be taken, recorded or even streamed using only GoPro products. This contract also requires that during all events and promotions GoPro be advertised and realized as “The Official Action Camera of Nascar”. During POV viewings “Provided by GoPro” is also required to be visible at the bottom right hand corner of the screen.

When it comes to cost we are offering to provide GoPro cameras to Nascar at an amazing deal of 40% off. This discount is only available to the sponsored which in this case is Nascar. Cameras bought through this promotion may not be resold or given away under any circumstances unless an update of this written agreement is generated. Failure to obey this will result in termination of this contract as well as GoPro pursuing the appropriate legal action depending on the scale of violation.

Upon agreement of this contract a sponsored Nascar will continue to receive the special discount listed above as well as the permission to name GoPro their official action sports camera for the following (1) one year which in this case will be November 10, 2016 at 12:00am – November 10, 2017 to 11:59pm when then another conference between Nascar and GoPro will commence on that following Monday November 13, 2017. Between the dates November 11, 2017 12:00am and November 12, 2017 11:59pm Nascar will still be considered under contract, however this may or may not continue depending on the conference that follows the following day.

By signing this document, Nascar agrees to all the above and conforms that the entity will obey all of our (GoPro’s) requests listed above to the best of their ability. Agreement of privacy is also included in this contract (Nascar may not share anything that is on this contract with anyone outside of their business unless legally required.

Signature(s):

Date:

Step by Step Plan for Success (Discovery Channel)

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Discovery Channel

  1. Contact Discovery Channel HQ in Silver Spring, Maryland and request to schedule a conference with their board of directors on November 11, 2016.
  2. Propose our written contract of sponsorship to their executives
  3. If all goes well in in the conference sponsorship should be initiated immediately.
  4. Ship out GoPro products to appropriate Discovery Channel locations.

Contract of Sponsorship Agreement w/ Discovery Channel

Dear Executives,

After the appropriate research was conducted it has been found that it will be beneficial for both entities (Discovery and GoPro) if a partnership is formed and realized. This written Contract of Sponsorship is to verify that all actions taken after a successful bond is formed between the two entities listed above (Discovery and GoPro) will abide by the following set of guidelines as well as rules.

It is foreseen that when a sponsorship between the two entities listed above is formed and launched successfully brand recognition, customer awareness as well as growth and also an increase in revenue and net profit will soon follow and impact both GoPro and Discovery for the better.

This written Contract of Sponsorship Agreement requires that GoPro be the official POV action video camera for Discovery Channel at all events, promotions and during all airings of any and all TV shows that will be found on Discovery Channel. This means that all POV shots will be taken, recorded or even streamed using only GoPro products. This contract also requires that during all events, promotions and TV airings GoPro be advertised and realized as “The Official Action Camera of Discovery”. During POV viewings “Provided by GoPro” is also required to be visible at the bottom right hand corner of the screen.

When it comes to cost we are offering to provide GoPro cameras to Discovery at an amazing deal of 40% off. This discount is only available to the sponsored which in this case is Discovery Channel. Cameras bought through this promotion may not be resold or given away under any circumstances unless an update of this written agreement is generated. Failure to obey this will result in termination of this contract as well as GoPro pursuing the appropriate legal action depending on the scale of the violation(s).

Upon agreement of this contract a sponsored Discovery Channel will continue to receive the special discount listed above as well as the permission to name GoPro their official action sports camera for the following (1) one year which in this case will be November 11, 2016 at 12:00am – November 10, 2017 at 11:59pm when then another conference between Nascar and GoPro will commence on that following week on Tuesday November 14, 2017. During the days November 12th – 13th this contract may still be active however no changes will be made until the following conference on November, 13, 2017.

By signing this document, Nascar agrees to all the above and conforms that the entity will obey all of our (GoPro’s) requests listed above to the best of their ability. Agreement of privacy is also included in this contract (Nascar may not share anything that is on this contract with anyone outside of their business unless legally required.

Signature(s):

Date:

Step by Step Plan for Success

Team 4 has found it necessary for GoPro to initiate a market penetration into the market emerging in the Asian Pacific area as well as market development in the Americas and also Europe. The specific locations we would like to penetrate into are Malesia, Singapore and also Australia. We have found that countries in the Asian Pacific region make up roughly 15% of our total revenue. We believe there is room for improvement here and following are the exact steps that should be taken.

  1. GoPro will need to apply for a loan in the amount of $168,000,000 to cover the COGS.
  2. GoPro’s great Long-term Debt-to-Equity of 0.07 makes us eligible for such a great move, (low leverage = more room for loans)
  3. Upon approval, funds will be used for production costs as well as shipping costs.

We have found it necessary that units in production in the Asian Pacific Region be increased from 800,000 to 1,000,000. (25% increase)

  1. By mid-November (November 16, 2016) production of cameras should commence for the following two weeks.
  2. During production GoPro should authorize 75,000 more common stock to the market. (Proceeds of stock will be used to repay debt)
  3. Shipment of GoPro’s will begin after these two weeks (end of November) when we will then ship to appropriate locations.
  4. Using air freight shipping speed costs $3,600 for all cargo weighing 250kg (max weight per flight).
  5. Each quarter we found it most efficient to ship every two weeks (25 planes or shipments every two weeks)
  6. Shipment cost will equal $2,880,000 for the year.
  7. Simultaneously while steps 4 – 6 are underway for the new emerging market GoPro should increase its production for Europe from 1,973,333 to 2,466,666 as well as in the Americas from 2,666,667 to 3,333,333. This will meet the new projected demand.
  8. In 2017 47,000 of the 75,000 stocks are forecasted to be outstanding at a price of $18 per stock
  9. In 2018 we will issue 50,000 more stock we forecast 20,000 will be bought at a price of $34 each
  10. In 2019 7,000 more common stock will be authorized. A forecast of 4000 is expected to be outstanding costing $52 each.
  11. By the end of 2019 we will have around 782,000 common authorized and 200,114 will be outstanding.

****These stock prices are found by taking the outstanding balance of the loan and dividing it by 4 years (payment plan). That number is then divided by authorized shares and the answer is the market value of each stock that should be reached by the end of 4 years in order to repay the debt. We then divide that number by 3 for three years (which is the earliest we expect to pay off the debt) and that gives us how much we should increase the stock by each year until the loan is repaid.****

Projection

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Financial Ratios

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References

http://futuresource-consulting.com/2015-07-Action-Camera-Infographic.html

http://www.slideshare.net/antreasch/the-mission-vision-values-and-strategic-capabilities-of-gopro

https://prezi.com/qkfsh4vklkmz/gopro-management-316/

https://klpetovello.files.wordpress.com/2015/03/org-theory-final-case-gopro.pdf

http://www.businessinsider.com/gopro-earnings-q1-2016-5

http://fortune.com/2016/05/06/gopro-shares-tanking-consumers/

http://www.investopedia.com/articles/markets/081415/how-ambarella-related-gopro.asp

http://www.fool.com/investing/2016/10/19/why-gopro-stopped-selling-the-hero-5-on-amazoncom.aspx

http://www.fool.com/investing/2016/10/19/why-gopro-stopped-selling-the-hero-5-on-amazoncom.aspx

http://blablawriting.com/gopro-inc-essay

http://www.sony.net/SonyInfo/

http://seekingalpha.com/article/2833216-a-quantitative-analysis-of-gopros-current-value

http://www.samsung.com/us/aboutsamsung/corporateprofile/visionmission.html

https://www.bloomberg.com/news/articles/2016-01-13/gopro-cuts-7-of-staff-sees-revenue-short-of-estimates

http://www.investors.com/news/technology/gopro-to-benefit-from-action-camera-market-growth-futuresource/

http://investor.gopro.com/press-releases/press-release-details/2016/GoPro-Announces-Second-Quarter-2016-Results/default.aspx

https://www.statista.com/topics/2713/gopro/

https://codyhulseyblogs.files.wordpress.com/2014/12/completesituationanalysisgopro.pdf

http://bgr.com/2014/09/29/gopro-hero4-black-vs-silver-vs-hero/

http://www.pocket-lint.com/news/138554-gopro-hero-5-release-date-specs-and-everything-you-need-to-know

http://www.fool.com/investing/general/2015/12/07/analysts-are-overlooking-gopro-incs-biggest-growth.aspx

http://www.nasdaq.com/symbol/gpro/pe-ratio

http://money.cnn.com/2014/10/14/investing/gopro-stock-bubble-burst/

http://www.marketwatch.com/investing/stock/gpro/profile

https://www.facebook.com/gopro/?fref=ts