Business Case Study – Cctv

Case Study radical CCTV (all details discussed in this topic aim collapse been thinkn from the essential CCTV persona study as presented in Cases of entrepreneurship the casualty creation process (Morse &038 Mitchell, 2005)) Student come upon Katrina BinottoStudent Number S3172726 Course BUSM 2367 Business opening move bingle 1. If you were Jack separate, what would you do discover Derwent Systems, trading floord in raw(a)-sprung(prenominal)castle, UK, to extend its relegate into Europe, or focus on the initial dispatchering?When assessing if Jack sn are should acquire Derwent Systems or focus on IPO it is would be best suggested to undertake a reexamination of the attractor and hawkish prepare of the proposed erudition. One method of doing this is done the wont of the capital of Massachusetts Consulting Group (BCG) Matrix. This matrix assesses the belligerent position of the pedigree in its reliable form, and the aspects of the proposed dividing lin ees, against their several(prenominal) mart attractiveness. (Robbins, et al. 2009) The BCG considered affaires in terms of a Cash Cow, Star, Problem Child or Dog.The case study tells us that natural CCTV is a growing comp both with specialise re let gos that produce positive money course for the ancestry, which makes it a Cash Cow. Derwent, although they had difficulties with notes ascend at the current cartridge holder, set about a specific harvest-time base and harbour a recognized brand name, which sits this affair in the Problem Child compass of the Matrix. In order to develop a business which could become a star, Derwent would be satis featureory to suffer the brand and interpret recognition, and native is able to volunteer the business the necessary currency f low-spirited to achieve a practicable Star business. because I imagine that Jack Gin should invest into Derwent Systems as it will fight down the accomplishment of a recognized yield with the ability to sustain positive cash flows assisting in long term sustainability of the business. 2. in brief outline the risks associated with your recommendation and how the comp whatever could care these risks. thither are risks associated both with acquisition and passing the probability Not getting Derwent Will lose access to a racy feeling uplifted do harvest-home May risk foodstuff saturation force to provide competitive pricing complex body disclose for current return arena should contenders produce the same returns encyclopedism chances Cash flow does essential take for enough cash flow to support Derwent requirements in the short term agitate management issues in merging businesses and associated faculty cultural issues If opponents are already engage in the food foodstuff Extreme is assay to assure into do they lease a grocery dominance Geographical issues managing businesses on cardinal sides of the globe Globalisation and workforce diver sity issues 3. List the benefits, and why you believe they outweigh the risks Increased commercialize place plow Ability to offer the grocery more products Acquiring the good will of Derwent customers The extra Intellectual lieu from Derwent question and knowledge Additional module and their knowledge and experiences Ability to proposed more competitive pricing social systems as input signals whitethorn be cheaper as business will lead greater turn over and thusly whitethorn be able to purchase percentages in batch Economies of scale not only for literal inputs but labour inputs Increased acceptance power with the shuffler of twain businesses outgrowth assets. 4. Analyse Extreme CCTVs competitive landscape usingPorters cardinal Forces Porters Five Forces consist of the following Supplier precedent oThis component could be considered as high as with a larger legal age of component turnover Derwent could access bettor job terms and stronger relationships with suppliers. This would result in more reliable and competitive come out of components and with good relationship management, such(prenominal) as ensuring on time invoice payment, Derwent whitethorn 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 really high.Without reliable character products Derwent would result competitors access to their foodstuff, reducing their cash flows and product sales. Substitutes oThere are very a couple of(prenominal) substitutes to CCTV. Any alternative products do not provide the same take 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 new entrants into the market is low collectible to the fact that a payoff of businesses are already character referenceicipating in the market, and any new entrants would strike a larg e capital, for look and exploitation and product development. Rivalry oIt is assertable that Pelco may immingle with somewhat other competitors, such as dull happen, and their new competitive power would be unknown at this time. Therefore this would be considered a medium risk as neither the new market nor the strategical direction of any competitors is known. 5. Analyse the opportunity using the First Screening decease INDUSTRY abstract What is the sedulousness that addresses this market? oCCTV equipment Number of competitors ?Pelco ?Silent Witness sexual intercourse coat of competitors oNo one competitors having a majority share in the market, which was highly fragmented. Pelco in Extreme CCTVs market space, from Confederate California oSilent Witness Canadian popular company, worldwide networks with good growths since 1995. MARKET ANALYSIS Is in that respect a need? oIndustry had inflexible that CCTV use is a vital part of their overall security strategy and have experienced hearty benefits oThese benefits in specialised 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 demand for this product in government agencies, correctional facilities, and casinos be by sales to date. More generalise usage of CCTV over time ascribable to perceived and perhaps real diminution of crime that has been experienced where CCTV is in use. What respect do you add? oThe value added operate be provided would be ?Integrated twenty-four hours Night Cameras superb performance ? ware Differentiation a perceived perspicuous edge by major distributors return Life oThe product life anticipate from this serve up would be durable, as at once the set up was commited and corporate trust built with customer they would be very unlikely to try a competitors product.The security provided and reputation created by Extreme would see more at stake fo r the consumer and unless motivated by other means, such as additional service or major discounting, they would be averse(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 run already provided ?Pelco provides similar products to Extreme, but at this time does not have the market reputation nor or they able provide a holistic product range of mountains as they are not able to provide an conflated camera. Silent Witness have a product range that is able to operation in vary operating conditions, but also do not presently provide a product that allows the quality of night peck 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 probable? oThe potential market available for this service is substantial, although it may be difficult to accurat ely predict. ?Gin feels that although the market is expanding he is unsure how far-off it will grow and what may scram this growth. Key drivers for the growth would be the change magnitude acceptance of CCTV usage and the merge of technologies to corroborate the security features of the products. What would be the proposed personify structure? oExtremes proposed product offering would be to provide Derwent products under the Derwent branding, but integrate the results of their explore and development which had lead to the development of the eventide illuminator (UF500) with Extremes solar day/night camera. This would provide a strange product to the market. Pricing for this unique product could be set above the bill products and the pricing structure may allow scope to support ongoing research and development enthronizations with a set grammatical constituent of the profit against these products dedicated to this purpose. Advertising this to the customer may encourage th eir emergenced investment in the products Extreme would provide in general. THE NUMBERS Profits by and by appraise? 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 trading in 1997. It could be considered that after Derwent acquisition that profits after tax would electrostatic be positive and in fact do have a medical prognosis of growth if the market response to the compound product is strong. time to break even? oIt Gin purchased Derwent for $2. 6 million is would take approximately 4 years for Extreme to break even against this purchase. This is assuming that their one-year profits are approximately $692,000 dust constant and that all other factors such as pay scale and in direct be 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 des ired product and ensuring its merchandise and strategic placement would manage it would be possible to achieve positive cash flow very soon after breaking 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, by financing, to acquire Derwent. The asset base of Derwent, quoted in 2000 as being $2,353,113 in their monetary statements, would provide a significant base for sourcing this pay. When considered as a whole business, i. e. Derwent and Extreme, there would be adequate assets to secure finance to complete the acquisition. The consideration needed by Gin would be the businesses ability to service this size of loan as part of normal operations. Exit Mechanism? oPossible exist strategy would be to sell 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 accordingly Extreme could sell components and intellectual property to competitors. rate? oStrategic value of the business would be high when established. It would have a solid faithful client base, established branding and market reputation. It would be able to achieve market preeminence needed to provide some assurance of long term sustainability in the market. CAN YOU AFFORD TO PLAY? labor be? oProduction costs would differ among operating localizations, i. e. Derwent and Extreme factories, as input costs may differ due to the differing localities, i. . Northern the States and UK. oEconomies of scale could be achieved in bulk purchase of inputs however the logistical issues associated with feat of stock mingled with geographic locations may actually increase costs should this strategy be employed. This would have to be carefully considered. Marketing Costs? oAs the m arket in North America currently does not appreciate the Derwent product it would be critical 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 pecking order 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 distribution 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 charge inflated prices, moderate 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 minimise the cost of borrowing.It would be dependent on any marketing strategy that would be link with the pricing structure. Costs? oBulk buying where possible would represent the best way to defame costs for this business and achieve any economies of scale. Distribution Channels? oIt would be seen that breathing distribution channels to be apply 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 a nd values of the business and would be able to communicate these as part of their marketing strategy. Barriers to Entry? oEntry into this market at this time is favorable as there are not many another(prenominal) competitors and Extreme already holds product differentiation with its current product range. oThe ability to merge research and development from the two businesses would provide a great opportunity to emergent 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 employ in the first instance, and then with increase attractiveness of produce new networks and contacts would be develo ped. It is also evident within the case study that participation at look at shows would provide key opportunities to expand current networks.THE MANAGEMENT TEAM The Extreme structure would remain in its current form. With the proposed loneliness of Duffy, Gin would need to find an conquer management team to continue operations of the Derwent arm of the business. FATAL FLAW/ assay Existence of a Fatal disfigurement oThere are possible fatal flaws in this object ?Cost of borrowing call for 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. Staff 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 quick-scented Publications, 2005. Robbins, S, R Bergman, I Stagg, and M Coulter. Management. fifth . Pearson Australia, 2009.