Case Study Description of Daktronics (E): Dividend Policy in 2010
In early March 2010, Bill Ritterath, Chief Financial Officer of Daktronics, Inc., was meeting in his office with Jim Morgan, CEO, and Alered (Al) Kurtenbach, Chairman of the Board, about increasing dividend payments to shareholders. Daktronics was the world's leading supplier of electronic scoreboards, large electronic display systems, and digital messaging solutions for use in sports, transportation and communications. The company had been going through a difficult period the past three years with the downturn in the national economy and the sudden reversal in the company's operating and financial performance. Sales were projected by security analysts to fall from a high of approximately $581 million in 2009 to an estimated value of $424 million for fiscal year 2010 ending in May [1]. Stock price had also fallen from a high of $38.66 per share on December 1, 2006 to $7.72 per share on March 3, 2010. But with the economy showing some signs of recovering from the recession, Dr. Kurtenbach thought it was time to review Daktronics' current dividend policy: "We can afford to return some additional cash to shareholders given our confidence that the company is turning around and business is improving." Cash balances were growing rapidly and the outlook for future cash flows was positive. In making the decision, Dr. Kurtenbach wanted it to be based on an assessment of the company's current cash position and future cash flow projections: "I don't want this dividend to reward short- term holders at the expense of our long-term shareholders" Dr. Kurtenbach asked Mr. Ritterath to make a recommendation at the next Board meeting (in four weeks) on a new dividend distribution, including both the amount and form of the distribution.
Swot Analysis of "Daktronics (E): Dividend Policy in 2010" written by Thomas J. Cook includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Kurtenbach Daktronics facing as an external strategic factors. Some of the topics covered in Daktronics (E): Dividend Policy in 2010 case study are - Strategic Management Strategies, Financial analysis, Financial markets, Forecasting and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Daktronics (E): Dividend Policy in 2010 casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, challanges to central banks by blockchain based private currencies, increasing commodity prices, cloud computing is disrupting traditional business models, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing,
supply chains are disrupted by pandemic , there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Daktronics (E): Dividend Policy in 2010
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Daktronics (E): Dividend Policy in 2010 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kurtenbach Daktronics, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kurtenbach Daktronics operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Daktronics (E): Dividend Policy in 2010 can be done for the following purposes –
1. Strategic planning using facts provided in Daktronics (E): Dividend Policy in 2010 case study
2. Improving business portfolio management of Kurtenbach Daktronics
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Kurtenbach Daktronics
Strengths Daktronics (E): Dividend Policy in 2010 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kurtenbach Daktronics in Daktronics (E): Dividend Policy in 2010 Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Daktronics (E): Dividend Policy in 2010 Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Cross disciplinary teams
– Horizontal connected teams at the Kurtenbach Daktronics are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Superior customer experience
– The customer experience strategy of Kurtenbach Daktronics in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Kurtenbach Daktronics has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Effective Research and Development (R&D)
– Kurtenbach Daktronics has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Daktronics (E): Dividend Policy in 2010 - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Kurtenbach Daktronics has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Kurtenbach Daktronics has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Diverse revenue streams
– Kurtenbach Daktronics is present in almost all the verticals within the industry. This has provided firm in Daktronics (E): Dividend Policy in 2010 case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Analytics focus
– Kurtenbach Daktronics is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Thomas J. Cook can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Organizational Resilience of Kurtenbach Daktronics
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Kurtenbach Daktronics does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Finance & Accounting field
– Kurtenbach Daktronics is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Kurtenbach Daktronics in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Kurtenbach Daktronics is one of the leading recruiters in the industry. Managers in the Daktronics (E): Dividend Policy in 2010 are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Finance & Accounting industry
– Daktronics (E): Dividend Policy in 2010 firm has clearly differentiated products in the market place. This has enabled Kurtenbach Daktronics to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Kurtenbach Daktronics to invest into research and development (R&D) and innovation.
Weaknesses Daktronics (E): Dividend Policy in 2010 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Daktronics (E): Dividend Policy in 2010 are -
Slow to strategic competitive environment developments
– As Daktronics (E): Dividend Policy in 2010 HBR case study mentions - Kurtenbach Daktronics takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Daktronics (E): Dividend Policy in 2010, is just above the industry average. Kurtenbach Daktronics needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Need for greater diversity
– Kurtenbach Daktronics has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Capital Spending Reduction
– Even during the low interest decade, Kurtenbach Daktronics has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Workers concerns about automation
– As automation is fast increasing in the segment, Kurtenbach Daktronics needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Interest costs
– Compare to the competition, Kurtenbach Daktronics has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Kurtenbach Daktronics supply chain. Even after few cautionary changes mentioned in the HBR case study - Daktronics (E): Dividend Policy in 2010, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Kurtenbach Daktronics vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Kurtenbach Daktronics products
– To increase the profitability and margins on the products, Kurtenbach Daktronics needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Kurtenbach Daktronics is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Kurtenbach Daktronics needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Kurtenbach Daktronics to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study Daktronics (E): Dividend Policy in 2010 has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Kurtenbach Daktronics 's lucrative customers.
Aligning sales with marketing
– It come across in the case study Daktronics (E): Dividend Policy in 2010 that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Daktronics (E): Dividend Policy in 2010 can leverage the sales team experience to cultivate customer relationships as Kurtenbach Daktronics is planning to shift buying processes online.
Opportunities Daktronics (E): Dividend Policy in 2010 | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Daktronics (E): Dividend Policy in 2010 are -
Building a culture of innovation
– managers at Kurtenbach Daktronics can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Developing new processes and practices
– Kurtenbach Daktronics can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Kurtenbach Daktronics can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Kurtenbach Daktronics can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Kurtenbach Daktronics can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Kurtenbach Daktronics can use these opportunities to build new business models that can help the communities that Kurtenbach Daktronics operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Kurtenbach Daktronics in the consumer business. Now Kurtenbach Daktronics can target international markets with far fewer capital restrictions requirements than the existing system.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Kurtenbach Daktronics to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Kurtenbach Daktronics is facing challenges because of the dominance of functional experts in the organization. Daktronics (E): Dividend Policy in 2010 case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Buying journey improvements
– Kurtenbach Daktronics can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Daktronics (E): Dividend Policy in 2010 suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Kurtenbach Daktronics can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Daktronics (E): Dividend Policy in 2010, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Kurtenbach Daktronics has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Daktronics (E): Dividend Policy in 2010 - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Kurtenbach Daktronics to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Kurtenbach Daktronics to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Kurtenbach Daktronics can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Daktronics (E): Dividend Policy in 2010 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Daktronics (E): Dividend Policy in 2010 are -
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Kurtenbach Daktronics business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Daktronics (E): Dividend Policy in 2010, Kurtenbach Daktronics may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Kurtenbach Daktronics needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Kurtenbach Daktronics is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Kurtenbach Daktronics high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Kurtenbach Daktronics in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Consumer confidence and its impact on Kurtenbach Daktronics demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Stagnating economy with rate increase
– Kurtenbach Daktronics can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Environmental challenges
– Kurtenbach Daktronics needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Kurtenbach Daktronics can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Kurtenbach Daktronics with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Kurtenbach Daktronics
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Kurtenbach Daktronics.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Kurtenbach Daktronics.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Kurtenbach Daktronics in the Finance & Accounting sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Daktronics (E): Dividend Policy in 2010 Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Daktronics (E): Dividend Policy in 2010 needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Daktronics (E): Dividend Policy in 2010 is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Daktronics (E): Dividend Policy in 2010 is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Daktronics (E): Dividend Policy in 2010 is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Kurtenbach Daktronics needs to make to build a sustainable competitive advantage.
