Page 12 - MCS August Day 1 Tasks

CIMA AUGUST 2018 – MANAGEMENT CASE STUDY

These challenges are generating serious risks to the future success of players within the high end
camera manufacturing industry and while there is always likely to be a market for this
merchandise, it is the size and profitability of that market that is subject to doubt. For example,
57% of Montel’s profit is currently derived from compact and bridge cameras which are deed to
be either diminishing in popularity and/or having investment restricted in innovation by the
Montel board.

With revenue derived worldwide(for example 52% based on North America and Europe) is it also
essential that Montel has up to date and accurate information from these disparate market places
to facilitate crucial decisions surrounding its product range, distribution channels and market
presence. For example, Montel currently has only 18% of its revenue from Asia and as a result
may consider developing a further presence in this vast marketplace. This will also be applicable
to other overseas expansion opportunities.

These opportunities are fuelled by external pressures and are further complicated by changes in
consumer taste, market demand and technological advancement. This requires the need for
greater awareness of changes in consumer taste, improvements in technology and social and
economic pressures affecting disposable income. For example, sales from Montel branded shops
have not achieved budget in the last quarter which may prompt a review of costs within these
outlets potentially challenging the level of service provided and ultimately the Montel brand.

This makes for a complex trading environment and a need to understand how each factory and
distribution channel is progressing to facilitate decisions concerning Montel’s strategy if
maintaining market share by technical innovation and product quality is to be achieved. There is
also a high potential for dysfunctional decision making around the business if these units do not
have clearly agreed, communicated and goal congruent objectives to work toward.

On a segmental basis mixed financial results are depicted for 2018, and with the camera
manufacturing industry facing significant change the future seems challenging. Combatting these
changes will require significant reliance on tracking and evaluating performance over a wide range
of measurement categories, distribution channels and geographical regions to manage the risks
that these changes create.

3 KEY TOPICS

Key topics that this case would suggest are:

From an E2 perspective:

Environmental analysis
Montel has many challenges to face as result of changes in the environment in which it trades. A
thorough understanding of the effect of these on future strategy via PESTEL and Porters Five
Forces will be important.

Strategy options and choice
Given these challenges it will be important to consider options for the future direction of the
business. These could include decisions as to which markets or products should be invested in and
expansion options such as organic growth, acquisition or joint arrangements. Similarly the
evaluation of these options will be necessary in terms of their feasibility and “fit” with the
business.

8 KAPLAN PUBLISHING