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 - – increasing government debt because of Covid-19 spendings, customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models, there is backlash against globalization,
there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, 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 -
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.
Innovation driven organization
– Kurtenbach Daktronics is one of the most innovative firm in sector. Manager in Daktronics (E): Dividend Policy in 2010 Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
Highly skilled collaborators
– Kurtenbach Daktronics has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Daktronics (E): Dividend Policy in 2010 HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Kurtenbach Daktronics digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Kurtenbach Daktronics has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
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.
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.
Low bargaining power of suppliers
– Suppliers of Kurtenbach Daktronics in the sector have low bargaining power. Daktronics (E): Dividend Policy in 2010 has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Kurtenbach Daktronics to manage not only supply disruptions but also source products at highly competitive prices.
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.
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.
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.
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 -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Daktronics (E): Dividend Policy in 2010, it seems that the employees of Kurtenbach Daktronics don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
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.
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.
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.
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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Kurtenbach Daktronics is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Daktronics (E): Dividend Policy in 2010 can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
No frontier risks strategy
– After analyzing the HBR case study Daktronics (E): Dividend Policy in 2010, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
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.
Skills based hiring
– The stress on hiring functional specialists at Kurtenbach Daktronics has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
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.
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 -
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Kurtenbach Daktronics can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
Leveraging digital technologies
– Kurtenbach Daktronics can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Kurtenbach Daktronics in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
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.
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.
Loyalty marketing
– Kurtenbach Daktronics has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Kurtenbach Daktronics can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Kurtenbach Daktronics has opened avenues for new revenue streams for the organization in the industry. This can help Kurtenbach Daktronics to build a more holistic ecosystem as suggested in the Daktronics (E): Dividend Policy in 2010 case study. Kurtenbach Daktronics can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
Manufacturing automation
– Kurtenbach Daktronics can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
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 -
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Kurtenbach Daktronics will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
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.
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.
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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Kurtenbach Daktronics can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Daktronics (E): Dividend Policy in 2010 .
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Kurtenbach Daktronics can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
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.
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.
Technology acceleration in Forth Industrial Revolution
– Kurtenbach Daktronics has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Kurtenbach Daktronics needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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.
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.