Page 7 - CIMA SCS Workbook February 2019 - Day 1 Suggested Solutions

SUGGESTED SOLUTIONS

• Vita sticks to what it knows best, design and sale of fitness trackers; has not attempted to
manufacture units itself

• Suppliers are evaluated on an ongoing basis – should mean quality is maintained

• Large share of the fitness tracker market, at approximately 22% in 2018

• Global sales through diverse channels means not over-dependent on any 1
customer/country

• Good relations with shareholders through regular investor meetings, AGM and financial
reporting

• Investment in training staff who work for retailers so they have product knowledge

• Customer care helpline in operation 7 days a week – good customer service

• Attendance at technology conferences enables company to keep abreast of industry
developments

• Good management of foreign currency risk via hedging activities

• Maintenance of detailed risk register with Audit Committee involvement

• Robust product testing reduces risk of quality lapses and reputational damage

Weaknesses

• 2 main suppliers are at nearly full capacity – will need to expand supply chain in some way if
Vita is to continue to grow

• Not involved in smartwatches, which are growing at a faster pace

• No dividends historically or plans for the future; may lead to shareholder unrest

• Lack of proper balance at Board level, execs v non-execs

• High receivables days ratio (although funded by comparable payables days)

Opportunities

• Diversify into smartwatches, either through developing in-house (organic growth) or
acquire existing smartwatch manufacturer

• Innovation in areas of healthcare eg technology that measures cholesterol?

• Growth via acquisition of young, fast-growing competitors

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