Jazmin Harb
10/08/12
Midterm #1
1. WAVES Inc. is a California-based firm that specializes in the manufacturing of high- end
surfboards. WAVES was started in 1997 by Andy Irons, the current CEO, who is a skilled surfer
and surfboard shaper. Although the company experienced tremendous growth in its first four
years, sales have since leveled off, costs have increased and the company is running short on
cash. WAVES has hired you as a consultant to provide advice regarding its future direction.
Answer each question below.
a. After a long conversation with Andy you realize his planning is day-to-day and he
doesn’t have a sense of what WAVES is, what it stands for, where it is going, or how it
will get there. Help provide some strategic direction for WAVES by guiding Andy
through the steps of the Strategic Management Process and the key elements of strategy.
(25 points)
In order to have a profitable business, you should have a original plan with directions where you
want to go, how you are going to and why you are in the market.
Vision Our Company not only will make high quality surfboards, but it will also provide a highend customer service.
Mission Our Company will provide the best quality at the lower price for surfer boards.
Strategic analysis
Internal
Finance, Marketing, Operation, Management ( Customer Service)
External
Political  tax policies and the regulations that the State of California has.
Economic The economic right now its going through a resetion stage.
Socio-cultural The lifestyle for our customer would be surfer trend. The
weather.
Technological the board maker.
Environmental there is a high waste that has to be cleaned up afterwards.
Legal  consumer laws and design trademarks.
Strategy
Arenas The product category for WAVES is the surfing industry. The stores have to be
located either in the West or East Coast. They can only be the geographic areas we can sell our
products. The channel distribution will be through a retailer strategy procedure. Our target
market are surfers. The value-creation Strategy will be Good quality for a lower price.
Vehicle We could do a joint Venture right now that we are already on the business but
yet we have no clue of how it works, we can joint venture with a surfer or an investor who wants
to invest more money in the company so we can hire a professional in the topic.
Differentiators The product will look like any other high quality surfboard with the
difference that you can design the background of the board, and pick the color and the type of
wood you would like the board to be.
Staging It would take a long time for the company to get new products in the market , and
I don’t think they want to expand any sooner than in a period of 4 more years.
Economic Logic if they decide to buy the new machine or to transfer to West Virginia, I
think we can offer a lower price through scale of advantage by having cheap labor and not to pay
for cleaning after the waste.
Implementation level
Strategic leadership
b. WAVES shapes all their surfboards by hand, which is a very time- and cost-intensive
process. Andy recently heard about a patented machine that shapes materials (and
perhaps surfboards) automatically. Andy and his negotiating team are about to travel to
Florida to meet with the patent-holder to get a demonstration of the machine and discuss
purchasing exclusive rights to the patent. Help Andy evaluate this potential resource
using the VRINE model. Hint: check out chapter 3 for more information about how the
VRINE model is used to evaluate a firm’s internal resources. (25 points)
The Test
The competitive
The performance
implication
implication
Is it valuable?
Permit allow the firm No
yes
to meet a market
demand.
Is it rare?
Scarce relative to
Produce more
yes
demand.
surfboards faster.
Is it inimitable and/ or Super difficult.
Competitive
yes
no substitutable?
advantage
Is it exploitable?
Yes.
No
Yes
c. Their trip to Florida proved futile. However, on a white-water rafting side trip to West
Virginia, the negotiating team had a chance meeting with a high-ranking West Virginia
government official. After hearing about the high labor costs that WAVES is paying in
its California manufacturing facilities, the government official encouraged them to
consider relocating their manufacturing facility to West Virginia and ship to the coastal
regions. Although West Virginia is a landlocked state and has no market for surfboards,
they have relatively low environmental standards and extremely cheap labor. The
government official assured the team that disposing of toxic waste from the
manufacturing process “would not be an issue.” This proposal generated much
excitement among the top management team who had been battling the California
environmental laws for some time. The firm’s ethics officer, however, was less
convinced. He argued that such a move would be “exploitive”, and lead to layoffs at the
manufacturing site in California. The top management team has asked you for assistance
in analyzing how this decision would influence WAVES’ key stakeholders in this
decision. (25 points)
I think this decision would affect not only the stakeholders in California, such as
employees, but it would also affect stakeholder in West Virginia because their
environment will get affected and the government its not even going to ask for any
regulation to take care of the waste.
California stakeholders are going to lose their jobs, just because the stand of living in
California is more expensive therefore the minimum wage is higher than the one in W.
Virginia. It is not fair to the employee that the company will still operate in California
and all their sales are going to be from there, but the company is taking the jobs away and
making the unemployment rate go a little bit up.
On the other hand, The stakeholder from W. Virginia will get more jobs available, but the
price they might have to pay there would be higher than their gains. It might ruin their
ecosystem by the company not having to take care of the waste its produce.
Unfortunate, the stakeholder has little bit to say regarding their decision. Unless, they
stop buying their product’s until they go back to California.
d. In your latest conversation with Andy, he told you that he is considering moving into the
DVD-production business. He has always wanted to create and sell DVD’s of “surfers
shredding huge waves.” However, Andy doesn’t even know if the DVD-production
industry is attractive. Advise Andy on the factors that make industries more or less
attractive. (25 points)
Rivarly
Substitute
New entrants
Buyer power
Supplier power
SPORTS VIDEOS
favorable
favorable
favorable
favorable
Unfavorable
DVD MAKERS
Non favorable
Non favorable
Non favorable
Non favorable
favorable
I think the Sports videos have a more power on the DVD makers.