Kompan: Profitability

Résumé du document

When competitors is mentioned it is in the Danish market and when comparing to how Kompan is globally there is shortly described their market position and situation on the American market and which competitors they are up against in this geographical segment. The focus for the industry lies on the Danish market.

To answer question 2 there is used concentration level to show how the playground industry is placed in this matrix. Also it is described what stage in the business cycle the company is placed in.

Question 3 makes it necessary to mention reasons for driving change and how Kompan can react on this. This will be explained by using the description of "Megatrends" and "Drucker's seven sources of innovation". It is followed by an explanation how ABM/ABC could be used to fulfill these processes considering upstream- and downstream-processes, complemented by an example of a 4 field customer matrix.

Extraits

[...] Customers are looking for environmental friendly produced products. The industry and company has to face the challenge to produce their playgrounds in this way and still keep the costs low. The last chosen Megatrend with high impact is urbanization. More and more people are about to leave the country side and moving into the cities. Space for all inhabitants becomes a luxury and is mostly reserved for flats and places to live. Available areas for exercises in the fresh air are expensive and have to be used efficiently. [...]

[...] Furthermore Kompan offers the product line which includes electronic features to their playground. An important fact regarding attractiveness for children, but also regarding attractiveness of Kompan itself. These trends and changes can be also found in “Drucker's seven sources of innovation”, especially in demographics, changes in perception, mood and meaning and new knowledge. This means to think out of the box for the company. It is the question how to transform real life demand into a playground. You can see Kompan's achievements in their “concept studies”. [...]

[...] Unprofitable customers can be made to profitable ones. For doing this they have to be categorized in a 4-field matrix by relating the cost-to-serve to the gross-profit: http://www.emeraldinsight.com/content_images/fig/3000190305002.png Depending on the position of the customer procedures like pricing, usage of different technology, ordering, and distribution can be used to bring the customers above the profit/losses line. ABM/ABC takes cost categories and cost drivers like number of units, material, labour hours and sales orders under consideration to get a whole overview of the customer profitability. [...]

[...] Furthermore it has to be shown how key activities of the company can be managed by using Activity Based Management/Activity Based Costing, in the following ABM/ABC. Scope: When competitors is mentioned it is in the Danish market and when comparing to how Kompan is globally there is shortly described their market position and situation on the American market and which competitors they are up against in this geographical segment. The focus for the industry lies on the Danish market. Models/theory: To answer question 2 there is used concentration level to show how the playground industry is placed in this matrix. [...]

[...] While the Profit margin is at 9 per cent. Low Return on sales and profit margin indicates that Kompan uses a large part of revenue on maintaining total operations. In 2011 Kompan used 801.8 million DKK per cent on production costs equillivant to 56,6 per cent of revenue and 26 per cent on distribution. The high distribution cost is due to Kompans focus on strengthening the distribution chain[2]. Return on sales going up with 2 per cent is a good indicator that Kompan is growing efficiently. [...]