External Assessment
This section will analyze the key opportunities and threats that are vital for the company to consider in light of the future perspective. This assessment of external factors will be very crucial in suggesting the strategies for the future and shaping the road map for future goals.
Opportunities
Through assessment it has been observed that the company is growing and there are potential for growth in the industry as well but the company is not catering the right markets and does not possess the key element to grow. In this regard the company has a major opportunity in the form of global expansion especially in the European markets and also in Asia and Brazil. Since the company is facing challenge in the Scandinavian region, it is crucial for the company to search for new markets and extend its market share in the $55 billion industry. Although there are challenges to cater the customers as the products are not easy to sell but the company can leverage partnerships with banks to facilitate customers and also to boost sales.
Threats
The key threat for the company is the competition which is becoming intense and the brand name and margins of customers along with market share are hard to compete. Secondly, the company is facing hard time in marinating good and solid relationships with their selling partners due to the difficultly in selling the product which is quite expensive. This is important for the company as the company will lose a key channel for distribution and sales. This may threat to put the sales at jeopardy in the future.
Internal Assessment
The company is in the business of providing lighting and energy solutions to the customers which are changing rapidly with the passage of time. The industry is growing and also the customers and the demand for LED is growing. However, the previous component sand solutions require a significant time to be replaced completely. However, new opportunities and challenges are emerging for the players in the industry and becoming cost efficient is very important for the players. Aura is in the business of developing bulbs and is manufacturing bulbs from decades but has witnessed transformation and is focusing on competing with global multinationals.
VRIO Analysis
The company has some key strengths and weaknesses to consider which are vital for the future growth of the company. However, the key strength for the company that can leverage as a competitive advantage is the in-house production. The company has been focusing on producing or manufacturing in-house from the initial days but with time the in-house production has declined to a serious limit. However, the company is still producing 20% of its products in-house and is insisting to continue with in-house production.
This is not valuable for the company but such strength is also becoming quite rare as most of the multinationals are outsourcing manufacturing or considering cheep cost countries. Since the companies in the industry are seeking low-cost benefit which is putting damage in the quality, it seems hard that such strengths will be imitated in the future and also is non-substitute for the company as well.
Financial Performance
The revenue of the Aura light has been increased by 22% in the period 2012-2013, this gives the increase in the gross profit margin of 9% in 2013 (exhibit#1),on the other hand the net profit margin figure has been deteriorated during the period, it has been decreased by 5% (exhibit#1) this is mainly due to the extra interest expense in the year of 2013 and due to the expense of Aura light related to the research and development which become double in one year time. The current ratio and quick ratios of Aura light are in favorable condition as compared to the group results (exhibit#1).
The gearing ratio of Aura light is at low position about 13% (exhibit#1), this may be taken as an opportunity for future expansion as due to low gearing ratio Aura light can borrow more for future acquisition or production expansions. Secondly the company’s 4 times interest covering ratio (exhibit#1) can play an important role to motivate lenders to lend the Aura light for future expansion.Aura Light From a Light Bulb Manufacturer toan Energy Savings Solutions Provider Case Solution
Current Strategies
The company is using different strategies for different activities and is facing challenge in most of them. However, some of the strategies are working fine for the company and are providing strength to the company. The company is following no-extensive marketing and promotion technique to create awareness and is relying primarily on word-of-mouth and reviews. Besides that the selling model is direct and the company is partially leveraging partnerships with wholesalers to distribute energy solutions in which the company is facing challenge.........................
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