Sample Business Studies Paper on Digby Company Report

Digby Company Report

Introduction

Digby is a well know company with its main core values formed from the precepts of profound integrity, transparency and teamwork. This company has the potential to turn around the various economic sectors towards achieving their desired goals through the innovations in the information technology.

Purpose of the report

This report is solely aimed at addressing the needs of various stakeholders of the company who include: investors, employees, customers, suppliers, the directors and managers among others (Maynard 84). These stakeholders need to understand the performance of the company. Investors are interested in information on the financial position of the firm with regard to their investments as employees’ interest is triggered by their wages. Thus this instinctive scrutiny is done on the company performance to discern its profitability, the market coverage and the production efficiency of the company. The marketing strategies developed over time are also explored in this context. This is with the main aim of knowing the real position the company in terms of performance.

Analysis

The Company’s Financial Performance

Digby limited has been successful in making profits as reflected in the appendices I which is a summary of the financial position of the firm. The company has continuously grown to make substantial profits over the years it has been in operation.

Analysis and Decisions on Research and Development

The market and other trends affecting the market are a great challenge to the business. The customer base within the company keeps on fluctuating however, the fluctuation is not much to affect the performance of the firm in terms of profitability (Maynard 527).

This is a very lucrative venture and several competitors have come up posing a challenge to the firm. To cope up with this, the company decided to continuously engage itself in extensive research and development activities to come up with processes and procedures that will keep the company products up and running in the market despite the competition.

The company came to a concrete conclusion that the drop was in the manufacture and supply of the digital cameras that the company used to make. This was because the expected return on as calculated for the last 4 years is about 6%, which is definitely below the overall cost of capital, additionally, the volatility of the prices of the gadgets in the market is very high as depicted by a standard deviation of 2.09887. Again when combined with other products in the portfolio, it increases the overall risk portfolio by 1.3242. The impact of the removal of the digital camera was seen in the reduction of cost of manufactured and hence the overall profitably increased considerably as depicted in the graph presented in the appendices II.

From the graph as from the third month when the digital camera was manufacture was dropped, there has been a tremendous increase in the general portfolio return owing to the fact that the costs were reduced considerably. The competitors in the market reacted to this by lowering the prices of the other gadgets like the television but due to the high reputational standards that we have built over the years, we still held realized better returns. The company is now focused in looking for means and ways of venturing into the communication industry whose profitability index is relatively high and the less risky as depicted the various historical data.

Analysis and Decisions on the Market and Competitive Strategy

The company has for quite some time been involved in e-marketing in order to expand its market segment. The company to this effect has created an e commerce website, which in its real sense has created a platform of communication with different clients around the world (Maynard 478).

The company practices Porter’s competitive strategy in its competition strategies. It has completely differentiated itself by branding its products well to make them unique in the market. It also takes note of effective leadership strategy and ensuring proper management of its processes and employee leadership.

There is also need to cut down the cost of operation in the business to make the company products affordable in the market (Maynard 484). The major challenge exerting a lot of pressure on the cost of goods is the cost of production. The company is in the continuous process of researching for cheaper technological methods and processes that lowers the cost of producing products.

This was a good timing when the technology was in its inception and the competitors were still quite oblivious of it. This has widened the clientele base from the last year’s 40% of the market to this year’s 76% this has been seen the increased sales throughout the year as shown in the appendices IV.

From the graph presented in appendices IV, there is a clear indication that since the inception of the electronic marketing in the year 2013, there has been a great shift of sales. This has been attributed to the high clientele base that the company has got through this new invention and innovation in marketing. Even as the rival companies major on the target marketing, the strategy we laid down has proved its worth as formidably strong. The company now fosters to expand its website to the benefit that it will still extend it territory and gunner more clientele base the electronic industry.

Analysis and Decisions on Production

The company have been projected to be 40 million Dollars, the actual sales realized was worth around 36 million Dollars. The deficit below the projection after thorough scrutiny was realized to have occurred due to the delays created in the production circles; this gave the competitors to have the advantage of increasing their sales by producing more of the electronic (Maynard 462).

To curb this menace, the old method of getting the optimal order quantity was abandoned, as we could not clearly predict the production variation. To ensure total quality management, the company has exorbitantly embarked on the use of the just in time approach to ensure that the problems of variations in the production cycle is absolutely dealt with and hence a high standard total quality management (Maynard 483).

Additionally, to ensure increased work force, the production centers have been computerized to the extent that there is efficient and effective inspection of the employees as they work to ensure that there is no idle time in the production area. The company now looks forward to increasing its production capacity by 36% to meet the demand of the market that is a project for next year.

Analysis and Decisions on the Financial Aspect of the Firm

The company income has been considerably high over the years. This is attributed to the high performance index that is depicted over the years. In this year, the company earned an after tax profit of 4.6 million Dollars which is considered a 25% increase from the last year’s return. The percentage was a strong profit margin of 21% this is also due to the fact that the company restructured its operations that considerably reduced its expenses. As it stands now the company has a current ratio of 2.534 hence the company is capable of meeting its current financial obligations. The company’s capital structure is as shown in the appendices III.

From the pie chart presented in the appendices III, it is very evident that the company is less leveraged and hence the company is at a good position to invest. The leverage only presents 12% of the whole capital structure and most of the capital as shown by the chart emanate from the shareholders equity and the retained earnings. This is an indication of a strong capital structure, which would see the company surge forward without any encumbrances.

The normal payout ratio still stands at 56% and the company has plans of increasing the ratio in the near future to the benefit of the shareholders. Point in time, it is quite imperative to note that the excellence of the financial structure has been sharpened by the dedicated management and a formidable team of workforce who try through thick and thin to measure up to the stipulated objectives (Maynard 55). The company now focuses on a wider range of income sources through which it will use to boost is economic stance. 

 “It is true that achievement is the satisfaction of hard work but working smart beats all basic of logic” (Maynard 22) and this is the key fact that this company is rooted in.

Works Cited

Maynard, Jennifer. Financial Accounting, Reporting, and Analysis. Oxford: Oxford Univ. Press, 2013. Print.

Appendices

Appendices I: The Performance of Digby Limited Company

ROS 11.80%
Asset Turnover 1.86
ROA 21.98%
Leverage 1.13
ROE 24.91%
Sales $ 357,405,023
Variable Costs $ 241,760,362
EBIT $ 68,454,465
Profit $ 42,159,995
Cumulative Profit $ 122,289,359
Stock Price $ 168.67
Market Capitalization $ 367,108,389
Working Capital $ 88,776,026
Days of Working Capital 90.7
Free Cash Flow $ 57,569,550
Plant and Equipment $ 211,500,000
Total Assets $ 191,768,146
Plant Utilization 173.13%
Traditional Segment Share 12.85%
Low End Segment Share 19.40%
High End Segment Share 35.34%
Performance Segment Share 35.44%
Size Segment Share 41.00%
Overall Market Share 24.92%
Complement 1300
Overtime 0.04%
Turnover Rate 9.99%
Productivity Index 100.00%


Appendices II: Monthly Trend of Company Returns

Appendices III: The Company Capital Structure of Digby Ltd

Appendices IV: The Company Sales over the Years