case study skullcandy - strategic management by jack ng
TRANSCRIPT
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Skullcandy, Inc.
Prepared by: Jack Ng
Updated as at 23 Nov 2015 5pm
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NOTE to Students
• This is my effort to guide you in strategic management
• It is by no means a complete analysis • You MUST put in your own effort to
differentiate from others and achieve competitive advantage.
~ Jack Ng
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SkullcandySkullcandy, Inc. is a designer, marketer and distributer of audio and gambling headphones, earbuds, speakers and other accessories under the Skullcandy, Astro Gaming and 2XL brands.
Distributed in the United States and about 80 countries around the world.
A range of styles and price points and comprises sound products and categories, for example gaming and sports functionality, women’s as well as Wireless offerings, along with ventures with manufacturing companies to license its brand.
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Skullcandy
ASTRO GAMING holds 6 PATENTsASTRO Gaming, creators of premium video gaming equipment, today announced the issuance of U.S. Patent Number 8,602,892 directed to technology used in team-based LAN communication, which is used in gaming competitions and professional gaming circuits. The patented technology is employed in ASTRO Gaming’s Game Communications Exchange, more commonly known as the Team MixAmp™.
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Skullcandy
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SkullcandyThe Company operates in two segments: Domestic and International.
The National segment consists of Skullcandy and Astro Gaming merchandise sales to customers in the United States.
International segment comprises Skullcandy merchandise sales to customers in Europe, Asia, Canada and Mexico, which are served through the Organization ‘s joint venture and other geographic areas outside the United States served by its International businesses.
Why no Astro Gaming for Asia?
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Skullcandy
Why no Astro
Gaming for Asia?
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SkullcandySkullcandy (NASDAQ:SKUL) traded up 4.55% during midday trading on Tuesday, reaching $5.75. 85,802 shares of the company’s stock were exchanged.
Skullcandy has a 52 week low of $5.40 and a 52 week high of $11.83. The stock’s 50 day moving average is $6.01 and its 200 day moving average is $7.60. The firm has a market capitalization of $163.48 million and a P/E ratio of 23.28.
Posted by Scott Davis on Oct 28th, 2015
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Skullcandy• Net sales: $67.2 million vs. $58.1 million, up 16% (up 19% currency
neutral)• Gross margin: 41.0% vs. 45.3%, down 430 basis points (down 272
basis points currency neutral)• Selling, general and administrative expense (SG&A): $24.5 million
vs. $22.7 million, up 8%• SG&A expense as a percent of net sales: 36.4% vs. 39.2%• Operating income: $3.1 million vs. $3.6 million, down $0.5 million
(up 29% currency neutral) (Affected by Currency exchange)• Earnings per share $0.08, up 8% (up 29% currency neutral)
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Skullcandy"Our brands symbolizes youth and rebellion, and embodies our motto, 'Every revolution needs a soundtrack."
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PESTYou must develop your own full PEST analysis
Here are just some of my thoughts, not complete
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EconomicWhat are the facts?Fed puts December rate hike firmly on the agenda
The U.S. dollar rose sharply and yields for U.S. government debt soared in anticipation of higher rates.
Skullcandy's Q3 2015 results were negatively affected by currency issues in its International markets.
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TechnologySmartwatches and Smart Bands Dominate Fast-Growing Wearables MarketWearables Shipments to Hit 22 Million in 2014 up 129% from 2013
By 2018 over 250 million smart wearables will be in use, 14 times more than in 2013
What about smart phones?All these have great impact on the sales and direction of SC
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TechnologyData Analytics Help Brands and Retailers Monitor the Competition
And brands are now able to track what their rivals are doing on Instagram through a customizable mobile app.
The analytics firm's system also automatically combs through retailer sites to monitor how client brands measure up against competitors.
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TechnologyMobile broadband penetration has risen to 81.3% in the OECD area (23 July 2015)
Fiber-optic broadband 15.8 percent in the OECD area (2013).
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TechnologyThe European Commission is striving to push Europe toward a new broadband goal for 2020: 100 percent coverage at speeds of 30Mbps or better and 50 percent coverage at 50Mbps or better
High speed Internet Broadband lead to LAN Gaming
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Social / Technology
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Social / TechnologyGrowth in the use of mobile devices and increasing disposable income are projected to drive industry revenue growth in the nextfive years
Gartner Says Worldwide Smartphone Sales Recorded Slowest Growth Rate Since 2013Smartphone Sales Declined for the First Time in ChinaAndroid's Year-Over-Year Growth Rate at its Lowest(20 Aug 2015)
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Industry 5 Forces AnalysisYou must also develop your own 5 Forces analysis
Here are just some of my thoughts, not complete
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Industry AnalysisIntensity of Rivalry – High
Many competitors in the market: Audio-Technica, Beats by Dre, sennheiser, bose, sony, Shure, Grado
Barriers to entry are low in audio high tech industries
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Industry AnalysisIntensity of Rivalry – High
POLL: Beats vs Skullcandy vs Bose vs SonyDiscussion in 'The Vestibule' started by Hal-sephira, May 11, 2014.
This poll may not be representative
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Roughly, 600 headphone manufacturing businesses globally.
Increased CompetitionBranding is criticalMarket Saturation
Intensity of Rivalry – High
Industry Analysis
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Market…
Mature market, More intense competition
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…
Industry Analysis
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Market…
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Industry Analysis.
Define the buyers, end consumers? Distributors?
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Industry Analysis.
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Industry Analysis.
Example of substitutes: portable Speakers, blue tooth speakers, phones with built-in speakers, Music players with phone docking station.
Define the Industry here
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Industry Analysis.
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Industry Analysis.
Apple, Skullcandy Faces Competition in Zound Industries
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Industry Analysis.
MUZIK - First pair of “smart” headphones are attractive, work wirelessly, and even let you share what you’re listening to on Facebook or Twitter, thanks to four programmable smart buttons right on the ear cup. You can even control the volume and playback using swiping gestures on that same ear cup.
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Industry Analysis.
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SkullcandyOpportunitiesTechnological Innovation in wearables, phonesRecognition of opportunity in Action SportsLAN Gaming
ThreatsHighly competitive industryPerceived utility of competitor's product
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Marketing Video
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Marketing Video
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Core CompetenciesStrong management support of the new CEO Hoby Darling in 2013 in rebuilding the team and employee morale in order to make a great company. Darling was the general manager of Nike+ Sport
Darling believes that success is about getting people engaged in producing amazing products and telling stories, and it is through these emotional, authentic stories you tell that your customers connect passionately with your brand and your products.
rebuild the base— the people, values, and culture —which would then result in remarkable products and an emotional, authentic connection with consumers, which would inevitably produce financial results.
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Core CompetenciesCulture: Company executives also stopped working in offices and now occupy cubicles with the rest of the team to increase communication.
In Darling’s view, the strategy is working: Employees are engaged authentically with the brand and customer. The products are more about being disruptive with how "Sal" and "Aaron" experience audio versus just optimizing. And Skullcandy is starting to tell emotional stories.
New Skullcandy Human Potential Labs, a.k.a. the “Boom Box”. This state of the art facility studies the effects of music on individuals and focuses on discovering ways to unlock human potential through music.
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Core CompetenciesIn-house research crew is led by three-time Olympian Emily Cook and supported by our talented teams of artists, athletes, engineers and industrial designers. To accelerate our learning, we’ve also teamed up with the most influential research minds at the intersection of the mental, physical and musical worlds. Our committee consists of experts from a variety of specialized fields including Dr. Andy Walshe, Director of Redbull’s Global Athlete Development Program; Dr. Leslie Saxon, Executive Director of Body Computing at the University of Southern California; and Dr. Nichole Detling, renowned Sports Psychologist and Ph.D who consults with an impressive array of professional athletes.
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Core CompetenciesASTRO GAMING holds 6 PATENTs
The Team MixAmp facilitates team communication at professional LAN gaming competitions by providing teammates with zero-lag, full-duplex voice communication seamlessly mixed in with each gamer’s individual game audio.
The Team MixAmp also provides broadcasters and tournament hosts with the ability to tap into and broadcast to their viewers live team chat and game audio during gaming competitions as popularized by the “Listen-In with Astro” segments seen at many gaming tournaments over the years.
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Core CompetenciesSkullcandy CEO Hoby Darling highlighted what worked during the quarter. "Our product innovation, demand creation and distribution strategies are resonating with Skullcandy and Astro consumers around the world." Darling said. He continued:
Our deep relationship with our consumer, coupled with our ability to be nimble and quick to market allows us to serve our consumer innovative and creative products that align with current trends. Our new Skullcandy wireless ear buds and headphones are a great example and an awesome addition to our existing product lineup that already includes several of the best-selling styles at retail. Strong sell-through of our new wireless products and increased year over year sales of our traditional wired products contributed to Skullcandy being the number one chosen headphones in the US for the fourth consecutive quarter.
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Core Competencies
The focal point would be culture, with the other two company pillars of people and values built into Skullcandy’s everyday operations. Everything from the office layout to the type of team member hired at Skullcandy to the relationships between individuals — both inside and outside the office — was going to be different. (from Mark Burns article)
Culture
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"We believe we have revolutionized the headphone market by stylizing a previously-commoditized product and capitalizing on the increasing pervasiveness, portability and personalization of music.”
Core Competencies
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value chain analysisPlease construct one
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Value Chain AnalysisMarketing & SalesStrong branding and PR e.g. Skullcandy Partners with Expert Skydiver Andy Stumpf in World Record Breaking Jump.
Using Data Analytics measuring where it stands against the competition. Skullcandy relies on HookLogic to provide aggregated data from a network of retail sites including Target, Walmart, Costco, Macy's and Best Buy and ensuring that Skullcandy products, for example, are prominently displayed in ads alongside rivals.The system lets Skullcandy see how many people viewed its product pages across a category. Skullcandy then promotes those pages further
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Value Chain AnalysisR&DWith innovation at the forefront of the company's mission, Skullcandy continues to expand its technology and research pursuits. The mission comes to life through an in-house product development team and Skullcandy's new Human Potential Labs, a program that seeks to understand how music, science and technology can unlock human potential.
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HRSkullcandy Recognized in OUTSIDE Magazine as One of the Best Places to Work for 2015.
Skullcandy encourages employees to lead an active lifestyle, are eco-conscious, and prioritize giving back to the community.
"The companies recognized in this year's Best Places to Work list are the gold standard for stellar work environments that seek to empower their employees both in and out of the office," said OUTSIDE Online Editor Scott Rosenfield.
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Differentiation Strategy?
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Cooperative Strategies
Skullcandy collaboration with iconic Australian fashion brand MINKPINK. Targeting at women (Nov. 19, 2015)
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Cooperative Strategies
Skullcandy Partners with Expert Skydiver Andy Stumpf in World Record Breaking Jump (Nov. 2, 2015)
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One Last Thing
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Stay Hungry, Stay Foolish
• Stay Hungry - Never be satisfied, and always push yourself further.
• Stay Foolish - Do the things people say cannot be done.
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“Don’t ever let someone tell you, you can’t do something. Not even me.”~ Chris Gardner – On Pursuits Of Happyness