Digimaxcon: The Case of the Shrinking Margins
DigiMaxCon (A): The Case of the Shrinking Margins1
It is late spring and time for the DMC management team to begin the planning cycle for the next fiscal year. While CEO Tom Grant has always preferred the tried and true business strategies from Michael Porter (cost leadership, differentiation and market focus), he knows the executive team needs to be creative to set the path for the future of the company during the new planning cycle. In this highly competitive global market, DMC will face many challenges in choosing a strategic plan for the next five years. The current strategic plan includes a goal of increasing electronic component sales while establishing a more stable sales pattern and margins, but this goal is not going well. Grant passed the challenge on to his functional VPs, but he knows he has to keep a hand in to guide the overall direction and be able to sell the chosen direction to the board of directors. All functional areas in the company will have a part to play in a change in strategy, so he needs to ensure all areas are involved in the decision process. Grant is not sure what that direction should be, or even how to define the overriding problem the company now faces. In spite of the many challenges of competing in a global industry, they have to determine how to successfully compete and grow business margins.
Company & Industry Background
DigiMaxCon (DMC) is one of the survivors of the computer component evolutionary competitive wars of the late twentieth century. In the late ‘70’s and early ‘80’s countless companies evolved to design and manufacture the essential components of the rapidly emerging computer market. Computers went from monstrous and expensive corporate computer centers run by obscure specialists in large corporations and institutions to becoming essential for nearly every organization and, not much later, to the desktops of most workers and educators.
Many design engineers moved from company to company or formed their own
It is late spring and time for the DMC management team to begin the planning cycle for the next fiscal year. While CEO Tom Grant has always preferred the tried and true business strategies from Michael Porter (cost leadership, differentiation and market focus), he knows the executive team needs to be creative to set the path for the future of the company during the new planning cycle. In this highly competitive global market, DMC will face many challenges in choosing a strategic plan for the next five years. The current strategic plan includes a goal of increasing electronic component sales while establishing a more stable sales pattern and margins, but this goal is not going well. Grant passed the challenge on to his functional VPs, but he knows he has to keep a hand in to guide the overall direction and be able to sell the chosen direction to the board of directors. All functional areas in the company will have a part to play in a change in strategy, so he needs to ensure all areas are involved in the decision process. Grant is not sure what that direction should be, or even how to define the overriding problem the company now faces. In spite of the many challenges of competing in a global industry, they have to determine how to successfully compete and grow business margins.
Company & Industry Background
DigiMaxCon (DMC) is one of the survivors of the computer component evolutionary competitive wars of the late twentieth century. In the late ‘70’s and early ‘80’s countless companies evolved to design and manufacture the essential components of the rapidly emerging computer market. Computers went from monstrous and expensive corporate computer centers run by obscure specialists in large corporations and institutions to becoming essential for nearly every organization and, not much later, to the desktops of most workers and educators.
Many design engineers moved from company to company or formed their own