Daktronics Company Analysis

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Internal Analysis

The one factor that really helped Daktronics was their core competencies. Their major core competencies are their focus on research and development, integrated systems, and sales & marketing. These core competencies are what drive the company as a whole to be successful. The research and development aspect is backed up by their impressive array of engineers that work diligently to provide the latest technology quality for their products. Daktronics pride themselves in being the pioneers in this industry and uses that momentum to their favor by consistently releasing the newest products in the industry. The VRIO framework for research and development is valuable and rare. Having integrated systems is huge to Daktronics because that gives them leverage not only with buyer power and supplier power but it keeps their synergy amongst their products which helps sustain their strong brand image. The VRIO framework for the integrated systems is valuable, rare, inimitable, and organizationally structured well. Sports Marketing is what started Daktronics and is what pumps their existence. One of their main focuses and what makes Daktronics who they are is sports marketing. Sports Marketing made up 40% of Daktronics’s sales. The VRIO framework for this competency is valuable. Altogether these competencies of Daktronics reinforce their goal in “having solutions to fit the customers needs, make reliable products people can depend on, and provide committed customer service.” This would ultimately have Daktronics up to becoming the billion dollar companies and increase profit for their shareholders.

Daktronics has strengths that can be used to reach their goals. These strengths are economies of scale, innovative culture, brand name, and their technology. Due to Daktronics’ size they are able to have a cost advantage. They are innovative in their culture because they are typically the first to come out the latest product. For example they were one of the first to come out with LCD display boards, the first to come out with color display boards, and amongst the first to have video display-this also plays along with their advancements in technology. Their brand name is due to their consistent quality and their years in this industry.

Their weaknesses lay in their high debt burden ($11.3M of long term debt, 5.5% of its shareholders equity), work inefficiencies, and cost structure compared to their competitors. Their debt burden can be attributed to the recession that the economy has just experienced and the cost of goods sold which according to the financial data of 2010 was around 70% of their sales. This domino effects into their work deficiencies, Daktronics wanted to cut unnecessary costs by any means. Due to this the made up a “lean program” to save money while manufacturing their products. Their cost structure compared to their competitors was pretty high which if it were lower would have allowed them for higher sales volume.

Their opportunities rise in their innovation, in providing new services/products, in new technology, and emerging markets. Their threats lay in the bad economy, international competition, government regulations in other countries, and consumer change in product taste.

To put this together into a TOWS analysis, the following can be said. Their reputable name and innovative culture can be used towards the opportunity to produce new services/products. Those same strengths can be used to make an innovative way for consumers to make their own products that way their ever-changing wants or needs may be satisfied as well. Weaknesses that can be minimized using the opportunities that were identified can be acquiring a company like Telegra in order to penetrate into the challenging international market. Weaknesses that can be minimized to avoid threats, for Daktronics would be to minimize work deficiencies in order to help them stay afloat in the already bad economy.

Problem and Solution

The overall struggle with Daktronics is to push through after the recession. Not only were they dealing with the recession but now they were being hit by multiple ways as well like the rise in technology advances (that can actually work in their favor), new international markets, and the constant race to be the first to release the latest technology. Daktronics had a differentiation business level strategy because of this using their competitive strategy of being the “first mover” as a crutch. However, Daktronics, being one of the first in the industry must be aware that after a certain point which is probably coming soon they will mature so maybe focusing on cost might be a better option for them while still maintaining their consistent quality might keep them above in the competition. Daktronics also engaged in a directional strategy on a corporate level in which they have integrated fully to gain buyer power and supplier power that was they could be more cost efficient and have more control in such a dynamic industry.

Daktronics should consider a global strategy when dealing internationally. Through the global structure, they can separate product group structures in each geographical area and thus still maintain synergy amongst their products. This will benefit them by achieving economies of scale and having a cost advantage which as mentioned before is what they want to start moving towards since they are hitting that maturity state. Much like McDonalds, Daktronics needs to know that they are number one in this industry and own it not only in the U.S. but else where as well.

Conclusion

After extensive analysis through PEST, Porters Five Forces, VRIO, SWOT and TOWS strategic methods, our best solution for Daktronics is focusing on SharePoint. To be the world leader at entertaining and informing customers through dynamic visual and audio communication, they've adopted SharePoint. It gives them competitive advantage, which helps to differentiate themselves from other competitors. SharePoint is a web application framework and platform developed by Microsoft. First launched in 2001, SharePoint integrates intranet, content management, and document management. Daktronics' focus would be video displays, scoreboards, electronic message centers, sound systems, hoist systems, creative content using SharePoint. Through PEST analysis we were able to determine that Daktronics has the ability to assimilate, construct, and reconfigure internal and external capabilities to keep up with constantly changing innovative market. It’s shown us the kinds of political, economic, social and technological forces they will face in the marketplace. Porters Five Forces analysis gave us a better