Jot toy案例分析.doc

Report for Jot-Toy This report is prepared by Team: Dui BuduiTeam member 1: Gong XingxingTeam member 2: Jing ZhichunTeam member 3: Zhao BingTeam member 4: Wang YuxuanTeam member 5: Li XinContent1. Terms of reference2. Introduction of Jot - Industry Background - Corporate Background3. External Analysis - PEST Analysis - 5 forces Analysis - 4Ps Analysis4. Internal Analysis - Financial Analysis 5. Comprehensive Analysis - SWOT Analysis6. Recommendation7. ConclusionTerms of reference Our group is appointed to write a reported to Jon Grun,Managing director of Jot,a toy company ,which prioritises ,analyses and evaluates the issues facing Jot and makes appropriate recommendations.IntroductionIndustry Background1、China has been the manufacturing center 86% of the worlds toys are made in China;2、The toy market is approximately divided into 4 sectors by childrens age .( There are babies under one year old, children aged 1 to 3 years , pre-school children of 3 to 5 years and children of school age of 5 years as well as upwards. ) Among them ,2 to 4 years old children receive most toys in quantity , 6 to 8 year age group spend the most money;3、 The current trend in toy sales is towards electronic toys and computer assisted learning.4、 Sales volume and short-term profits are influenced by films and TV fashion trends;5、The toy market is highly seasonal , around 30% to 55% of toy sales occur in the fourth quarter;6、Legal protection of IPRs is becoming increasingly important in todays global markets;7、Prototype toys and literature promotion are highly depended on the toy fairs ,both for large listed companies and small companies;Corporate Background1、The Jot brand was established in 1998 by husband and wife team Jon and Tani Grun. The company initially designed a small range of toys which were manufactured in their home European country. 2、By 2003, Jots products begin to ordered by many large toy retailers across Europe Commencing ;3、In 2004, Jot started outsourcing all of its manufacturing to manufacturing companies in China;4、The company had achieved substantial sales revenue growth each year;5、Jots key personnel include : Jon Grun Managing Director; Tani Grun Finance and IT Director;Alana Lotz Product Development Director; Sonja Rosik, Marketing Director; Boris Hepp Sales Director; Michael Werner Operations Director; Anna Veld - Licensing Director; Viktor Mayer - HR manager.External Analysis PEST AnalysisPoliticalChanges in product safety requirements Problems with product QQBreach of Jots IPRs and lose of sales from copied productsEconomicsRecession resulting in lower disposable income resulting in lower levels of salesIncreased wage rates in China resulting in higher outsourced manufacturer pricesCurrent economic conditions resulting in restricted finance being available from Jots bankersSocialChanging consumer tastes which could result in lower or higher sales for new productsChanging consumer tastes which could result in inventory write downTechnologicalIncreased cost of new technology and electronic chipsNew IT systems to help Jots management teamRisk of faults on key electronic components 5 Forces AnalysisKey elementsWeightAnalysisSuppliersMediumFactors increasing the force: 1、 All of Jots outsourced manufacturing companies do not work exclusively for Jot but manufacture toys, as well as other products, for a number of international companies. 2、components are subject to price fluctuations. Jot does not have any agreements with those specialised suppliers as all components3、 Licensed products now account for almost 10% of Jots sales, in terms of the number of units sold. A fixed license fee is paid to the licensor , and the fee is between 5% and 10% of Jots selling price to retailers. Factors lowering the force: 1、 Jot uses 20 off-shore outsourced manufacturing companies.2、There is a high level of “repeat business” and a good level of understanding and commitment established between Jot and its outsourced manufacturers based in China.3、Outsourced manufacturers based in China: wage rate increase, some company started to consider near-shoring. CustomerHighFactors increasing the force：1、Jot is very dependent on sales to large retailers, (which often do not pay until at least 60 days after the invoice date.)2、Over 68% of Jots sales in the financial year ended 31 December 2011 were to these 7 customers based in Europe and the USA.3、The level of sales achieved by many toy companies often depend on orders generated from buyers attending international toy fairs.Factors lowering the force: 1、Jot currently has around 350 customers in total, including the 7 large customers.CompetitorHigh Most toy retailers procure a range of products from many different toy companies. There is a wide range of companies, from small to very large multi-national companies.New entrantsHigh1、Electronic toys develop to be attractive to children ,some electronic manufacturers or computer corporations may start to exploit electronic toys and computer market .2、More and more students tend to playing online games.SubstitutesLow In many instances small changes can be made so that “copies” of the design do not breach the IPR. 4Ps Analysis1 、Product1) design Alana Lotz, Product Development Director. is responsible for researchingthemarket trends in toys globally and establishing the availability of newinnovative technology which could be incorporated into new toy designs. 2)production Jot has just finalised its range of new products for 2012, so as to allow time toproducmarketing literature and prepare prototypes ready for the global toy fairs being held in Januaryto March 2012 in various locations around the world. 3)brand Jot brand name is synonymous with quality electronic toys. Jots products are innovative and appealing to the targeted age groups 4) licensed toys Jot currently has 12 product lines which are licensed products from popular film and TV programmes for the manufacture and sale of toys.2 、Price These are Jots selling prices to toy retailers. Most of the retailers will then sell these toys at a large mark-up, which can be as much as 50% to 100%.3、 Promotion The launch plans for new products and the marketing support Jots customers receive can have an impact on the reaction of buyers at the global toy fairs. A significant volume of sales ordersarise directly from these toy fairs4、 PlaceJot currently has three warehouses, two in Europe and one in the USA. Usually all products are shipped from each of Jots outsourced manufacturers directly to one of Jots three warehouses. Internal AnalysisFigure: A company in 2007 DuPont analysis system diagramFinancial Analysis Return on Equity24.6%Other income categories of indicatorsother financial condition categories of indicatorsReturn on total assets5.02%Equity Multiplier5.77Sales margin2.49%Total Assets Turnover2.0211 - asset-liability ratio 82.7%82.7%Net profit246Sales9866Total assets4885.5Total assets5378Total liability4446 Sales Net profit margin reflects the companys sales revenue level of profitability. Sales Net profit margin is relatively low or lower, indicating that the companys costs and expenses is high or rising, should further analyze the reasons for increase in operating costs or the company is a sale, is excessive operating costs or investment income decreased in order to better the companys business situation to judge. Sales revenue 98.66 million, but because of the cost of sales and administrative expenses inadequate controls, the cost is too large, resulting in net profit of only 2.46 million, in 2011 the companys net profit margin is only 2.49%, a very low level of post-tax profits. Current asset turnover and total asset turnover assets of the company are to measure operational efficiency indicators, in general, the higher the rate of current assets, total asset turnover is also higher. Company 2011 total asset turnover of 2.02, indicating that although the company net profit is low, but its total asset turnover is high, high operational efficiency companys assets, sales ability, asset utilization efficiency. The average equity multiplier larger more debt, liabilities brought more leverage benefits, the higher the return on equity. However, if the equity multiplier is too large, it means that the more corporate debt, the greater the risk enterprise, the higher the interest rate required by the creditor. Companys average equity multiplier of 6.09, leverage benefits large, although bear high risk, but also to the shareholders brought high yields.Statement Analysis1、Statement of Financial Position Key financial data are as follows：Items2011year2010yearGrowthInventory54247015.32%Receivables4065317328.11%Cash2129-27.59%Non-current assets7507214.02%Asset5378439322.42%Current liability2846210735.07%Liability4446370719.94%Retained earning80255644.24%Total equity932686ss35.86%(1) of their own balance sheets and asset changes show:The assets of the company in 2011 than in 2010, an increase of 22.42%, Asset growth in accounts receivable and inventory of more liquidity compared to last year decreased 27.59%. Enterprises should strengthen the control of accounts receivable, and actively reduce inventory and increase liquidity.(2) the enterprises own liabilities and owners equity position and change description: Liabilities and shareholders equity from looking at the proportion of total assets, the companys current liabilities ratio was 52.91%, long-term liabilities and owners equity ratio was 47.08%, indicating that the capital structure of enterprises at risk. Current liabilities, an increase of 35.07%, operating aspects of the current liabilities of the changes caused by the growth in current liabilities was mainly caused by an increase in accounts payable business aspects of current liabilities increased. 2011 and 2010 accounted for structured liabilities Long-term liabilities ratio was 35.99%, 43.16%, somewhat lower than last year of the data showed that the corporate structure of long-term debt ratio decreased. Raise the proportion of surplus reserves, indicating that companies have a strong business strength enhancement Friuli desire. Retained earnings increased by 44.24% compared to, indicating that companies then adds a certain surplus. Retained earnings attributable proportion of structured liabilities also increased over last year.2、Income StatementStatement of comprehensive incomeYear ended 31December2011Year ended 31 December2010 GrowthRevenue9866837117.86%Cost of sales (6719)(5615)Gross profit3147275614.19%Distribution costs(552)(478)Administrative costs(2044)(1825)Operating profit55145321.63%Finance income 1312Finance expense(213)（201）Profit before tax351264Tax expense(at30%)（105）（79）Profit for the period24618532.97%Profit composition: The company achieved a total profit of 246,000 yuan, compared with an increase of 17.86% over the same period last year, of which operating profit 551,000 yuan, accounting for a total profit of 223.98%; investment income = 13,000 yuan, accounting for a total profit of 5.28%. Net profit growth than revenue growth, indicating enhanced profitability. From the above data analysis, enterprises should improve its financial position and improve profitability, strengthen the management of accounts receivable, formulate a reasonable credit policies to enhance the customers credit analysis, in order to strengthen the accounts receivable turnover; strengthen sales and administrative expenses expense control, further improve profitability.Comprehensive Analysis SWOT AnalysisStrengths Successful and fast growing companyGood product designsProfitable company High growth in sales revenue(almose18%last year)Expanding geographical markets Experienced and committed management teamGood safety record on its productsWeaknesses Dependent on just 7 customers for 68% of sales revenueDependent on product designers and key employeesReliant on outsourced manufacturersLack of integrated IT systemsHighly dependent on customers changing preferencesSeasonal business with peak sales in quarters 4Dependent on Jots senior management team and a loss of any member would have serious consequencesWeak IT systems which do not provide all of the required management informationOpportunities Higher sales of BEEP and its accessories Reduction in unit cost of outsourced manufacturing of BEEP due to higher volumes Improved cash flow if debt factoring is agreed or if discounts are offered to Jots customersImproved control over outsourced manufacturers To invest in IT solutions in order to improve the quality of data for decision makingThreats Forecast breach of Jots bank overdraft limit in November 2012Cash flow difficulties as a result of forecast higher sales Reduction in net margin due to cost of discounts or factoringPoor conditions at many of Jots outsourced manufacturers factories which could lead to reputational damage to Jot brand Potential loss of sales for product DD unless a new outsou