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Deloitte Case Competition 2013
- 1. MAD HATS Corporate Operating Strategy Ryan Menges Mitch Ennis Beta Gamma Consulting Jackie Ruggiero February 1, 2013 Vik Chauhan
- 2. Agenda Goals Situation Analysis Recommendation Strategy & Operations Technology Human Capital Implementation Timeline Financial Analysis Strategy & Technology Operations Conclusion
- 3. MAD HATS currently faces many severe threats to growth 18-28 year old market saturation Lack of clear marketing strategy to reach new markets Limited e-commerce & unreliable IT architecture Nonexistent ERP system for operational efficiency Disconnect between business strategy and IT
- 4. The optimal solution involves strategic, technological, and human capital initiatives working together toward common goals Human Capital Technology Strategy Release New Hats Seasonally Create CDN for Short-Term Support Restructure for Efficiency Tie Hats to Specific Causes Establish Functional ERP System Empower Technology Team Expand Target Demographic Enhance E-Commerce Offerings Consider New Positions in Long-Run Develop SOA Functionality
- 5. The optimal solution involves strategic, technological, and human capital initiatives working together toward common goals Human Capital Technology Strategy Release New Hats Seasonally Create CDN for Short-Term Support Restructure for Efficiency Tie Hats to Specific Causes Establish Functional ERP System Empower Technology Team Expand Target Demographic Enhance E-Commerce Offerings Consider New Positions in Long-Run Develop SOA Functionality
- 6. Three obstacles currently inhibit attaining establish revenue growth goals 25% Annual Growth Saturation of Current Markets Narrow Product Offerings Limited Marketing Activities Current Sales Our Recommendation MAD HATS can overcome its current barriers to success by (1) frequently introducing seasonal hats, (2) tying hats to specific causes, and (3) actively marketing to a wider demographic
- 7. MAD HATS will introduce new hats seasonally to prevent customer disinterest and provide new marketing content Invest in Consumer Survey Proposed by Marketing Dept. Strategy Release New Hats Seasonally New Hat Released Marketing Campaign Tie Hats to Specific Causes Analysis Expand Target Transaction Demographic Donation Delivery Customer Delivery
- 8. Seasonal, limited-edition hats will inspire collections, brand loyalty, and justify higher prices Strategy Past Successful Strategy Implementations Release New Hats Seasonally Ty Toys: Beenie Babies Tie Hats to Specific Causes The Longaberger Basket Company Expand Target Demographic Hard Rock Café Branded Merchandise
- 9. Seasonal, limited-edition hats will inspire collections, brand loyalty, and justify higher prices Strategy Release New Hats Seasonally Tie Hats to Specific Causes Expand Target Demographic • Seasonal, limited-edition hats will benefit specific destinations • Related marketing materials will be created for each release • Promotes further humanization of the MAD HATS brand
- 10. Geographical and cultural elements of the final recipient will inspire each hat’s design Strategy Release New Hats Seasonally Tie Hats to Specific Causes Expand Target Demographic “Get to Give” Benefiting Impoverished Children in China
- 11. MAD HATS will leverage seasonal hat releases and a stronger human element to expand its target demographic Key Attributes Strategy Consumers aged 15-39 are 18-28 the most likely to support 45% companies with positive social impact Release New Hats Seasonally 28-38 Higher purchasing power 15% than younger counterparts Tie Hats to Specific 38-48 Socially-minded consumers Causes 0-18 10% are more likely to use social 23% 48+ media to help make purchase 7% decisions (59% v. 46%) Expand Target Demographic Recommended Actions • Utilize social media marketing to reach the older demographic • Minimize advertising cost through SEO and social media ads • Complete consumer market study to understand new targets
- 12. The optimal solution involves strategic, technological, and human capital initiatives working together toward common goals Human Capital Technology Strategy Release New Hats Seasonally Create CDN for Short-Term Support Restructure for Efficiency Tie Hats to Specific Causes Establish Functional ERP System Empower Technology Team Expand Target Demographic Enhance E-Commerce Offerings Consider New Positions in Long-Run Develop SOA Functionality
- 13. Implementing new IT systems will allow MAD HATS to optimize data storage, business operations, and strategic analysis Implement IT Conduct Formulate Plan Systems Analysis Strategy Implementation Evaluate Strategic ERP Current Action Plan Options Data Future Key Business Strategic Core Data Industry Plans Insights Decisions Direction Scenarios Internal Risk and Financial SOA Analysis Reward Plan Strategy Recommendation
- 14. Utilize CDN technology to support heavy holiday-season traffic in the short term CDN technology prevents website lag and downtime by Technology sending bandwidth through geographically-efficient servers Create Cloud CDN for Each user sees maximum content bandwidth Short-Term Support Establish Functional ERP System Develop SOA Functionality Enhance E-Commerce Offerings For every 100 milliseconds of load time improvement, Amazon.com increased its over all revenue by 1% Source: mashable.com
- 15. NetSuite ERP system will help collect and store financial, operational, and market-based information Technology Create Cloud CDN for Short-Term Support Establish Functional ERP System Develop SOA Functionality Enhance E-Commerce Offerings
- 16. NetSuite ERP system will help optimize all aspects of MAD HATS day-to-day operations Technology Create Cloud CDN for Short-Term Support Prevent donation losses or non-optimal shipments Establish Functional ERP System Analyze sales, operations, and marketing in real-time Develop SOA Streamline deliveries Functionality Manage non-profit partnerships Enhance E-Commerce Offerings Track production levels, inventory orders, and project life-cycle
- 17. MAD HATS will pursue service-oriented architecture to make all systems more flexible, more scalable, and easier to maintain; it better facilitates future growth and planning. Technology Create Cloud CDN for Short-Term Support Establish Functional ERP System SOA … Develop SOA Functionality Enhance E-Commerce Offerings
- 18. MAD HATS will enhance e-commerce offerings to optimize the online shopping experience after the ERP is stable Technology Create Cloud CDN for Short-Term Support E-Commerce Wave 3 Establish Functional ERP System Rich Technology Product Wikis & Loyalty Programs Develop SOA Applications Videos Functionality Enhance E-Commerce Offerings
- 19. The optimal solution involves strategic, technological, and human capital initiatives working together toward common goals Human Capital Technology Strategy Release New Hats Seasonally Create CDN for Short-Term Support Restructure for Efficiency Tie Hats to Specific Causes Establish Functional ERP System Empower Technology Team Expand Target Demographic Enhance E-Commerce Offerings Consider New Positions in Long-Run Develop SOA Functionality
- 20. MAD HATS will restructure several executive-level positions and add two new members of the leadership team Human Capital CEO Restructure for Efficiency President Empower Technology Team CIO COO CFO Consider New Positions in Long-Run VP Technology VP VP Human Director Strategy Marketing Resource Design Director
- 21. MAD HATS will restructure several executive-level positions and add two new members of the leadership team Human Capital New Positions • Director of Design--reports to VP Strategy, responsible for managing current products, designs hats for seasonal release Restructure for • Chief Information Officer—reports to President, manages all Efficiency information systems for MAD HATS strategy & operations Empower Technology Additional Structural Changes Team • VP Human Resources-now reports to COO instead of CFO • Director of Technology-formerly VP Technology, reports to CIO instead of COO Consider New Positions in Long-Run Action Items • Promote VP Technology to CIO, hire new Technology Director • Hire/onboard Director of Design • Facilitate transitional meeting between VP Human Resources and COO
- 22. MAD HATS will take specific actions to empower the technology team to integrate all aspects of the business Human Capital Restructure for Efficiency Empower Technology Team Consider New Positions in Long-Run • Creation of CIO position increases communication between President and Technology team • Expanding the team’s size will increase the scope of possible projects • Clearly communicating the corporation’s goals will help IT align their actions with general business strategies
- 23. When MAD HATS has additional available capital, 3 new Human Capital additions will enhance current initiatives Human Capital Design Technology CIA Team Team Restructure for Efficiency Implement Ensure faithful Increase Empower Technology new features representation frequency and with e- Team of “Get to variety of hat commerce Give” claim releases function Consider New Positions in Long-Run Consider Mine better Facilitate additional information smooth product lines; from available transition into support data for long- external audits Director of term strategy Design plannning
- 24. MAD HATS will implement the recommendations over an 18-month period while considering holidays, release dates, and technology limitations
- 25. @Risk analysis shows the likelihood of project success is very high • There is an 87% likelihood we break even in our first year Breakeven • We will reach a sustainable profit over the 5 year period of over $15 million Profit • We will incur approximately $750,000 of new costs during implementation Costs
- 26. Detailed financial information shows the long-term viability of our recommendation 2013 2014 2015 2016 2017 Revenue $ 10,013,823 $ 10,684,239 $ 12,269,833 $ 14,745,466 $ 19,270,104 New Costs $ 757,000 $ 857,000 $ 857,000 $ 857,000 $ 857,000 COGS $ 6,400,000 $ 6,528,000 $ 6,854,400 $ 7,197,120 $ 7,700,918 Old Costs $ 2,190,000 $ 2,190,000 $ 2,190,000 $ 2,190,000 $ 2,190,000 Profit $ 666,823 $ 1,109,239 $ 2,368,433 $ 4,501,346 $ 8,522,186
- 27. MAD HATS must be aware of 4 key risks associated with our strategy Risk Overview Mitigation Strategy ERP Technology Select a widely-used, web-based ERP Incompatibility system supported by NetSuite Donations are Utilize ERP to track inventory, purchases, and donations; Hire Chief Internal Auditor Lost or Misappropriated when budget allows Wasteful Inventory Perform consumer market survey before Shortages or Surpluses introducing new hats to accurately forecast demand Uncooperative Restructure corporate leadership to Business Leaders encourage interaction between COO and CIO; regularly communicate corporate goals Severity Probability
- 28. The optimal solution involves strategic, technological, and human capital initiatives working together toward common goals Human Capital Technology Strategy Release New Hats Seasonally Create CDN for Short-Term Support Restructure for Efficiency Tie Hats to Specific Causes Establish Functional ERP System Empower Technology Team Expand Target Demographic Enhance E-Commerce Offerings Consider New Positions in Long-Run Develop SOA Functionality
- 29. Questions? Beta Gamma Consulting February 1, 2013
- 30. Appendix A: @Risk Cost Assumptions Strategy Marketing Campaign 50,000 Hat Design and Production 10,000 Consumer Survey 100,000 S Total 160,000 Tech SOA Short Term: CDN 5,000 ERP (NetSuite) 387,000 E-Commerce tools 100,000 Testing & Design 25,000 Data Transfer 5,000 T Total 522,000 Human Cap CIO 25,000 VP Tech 70,000 Staff Training 10,000 Deisgn Dir&team 70,000 HC Total 175,000
- 31. Appendix B: @Risk Output
- 32. Appendix C: @Risk Output