laptops • desktop computers • tablets • apps€¦ · for its laptops, desktops, and tablets,...

2 © Korn Ferry 2018. All rights reserved.

About the Company

MESSAGE FROM OUR CEO

Welcome to Zenio. Our company was founded in 1980 and has been the pioneer in designing and building the best computers in the world. I’m particularly proud of our design teams, who continually advance not only the technical capabilities of our products, but also the appeal of them, to our loyal customers. Our success, which is founded on our world-class products, could not be accomplished without our excellent teams that touch customers on a daily basis. Without you, we would not see the high customer satisfaction that we have.

Our values are at the core of our culture. We emphasize the following around the world:

• We are committed to providing the best products to our customers.

• We are focused on treating all employees with respect and offering opportunities to grow.

• We are committed to providing a return to our shareholders.

• We are good corporate citizens and focused on protecting the environment.

• We are a global company, and therefore we should act globally.


PRODUCTS AND SERVICES

Zenio Product Portfolio

Zenio offers a range of computer products, including laptops, desktop computers, and tablets. To complement its line of computers, Zenio also produces applications.

• LaptopsZenio’s lines of laptops are sold under the banner of “Zenio-Viazar.” They are recognized for their light weight, fast processing speed, and attractive design features.

• Desktop computersThe company’s lines of desktop computers are sold under the banner of “Zenio-Arris.” They are recognized for their graphics, processing speed, and memory capacity.

• TabletsA relatively new product for Zenio, tablets are sold under the banner of “Zenio-Cella.” The tablets run a number of applications for business and entertainment.

• ApplicationsFor its laptops, desktops, and tablets, Zenio produces a number of applications that are used for office productivity (e.g., word processing and graphics) and entertainment (e.g., games).

Services

Zenio provides a number of services to its customers. These services include:

• Basic Warranty Covers parts and labor for one year with the purchase of any computer or tablet.

• Extended Service Agreements (Standard and Platinum) Cover parts and labor for three years. Unlike the Basic Warranty, these agreements also provide on-site servicing of the product. The Extended Service Agreements have a higher cost, but save customers the considerable time of having to send the product back to Zenio or an authorized merchant.

• Fee for Service Provided to customers who do not have a warranty.

• Consulting Services Provided to large customers (e.g., businesses and government institutions) for their information technology needs. The consulting services are also provided to individual consumers within Zenio’s flagship stores to help them get the most out of their products. Consulting services team members also provide training to merchants who are authorized to sell Zenio products.


Product Distribution Channels

ZENIO USES FOUR DISTRIBUTION CHANNELS TO SELL ITS PORTFOLIO OF PRODUCTS.Retail Stores

Zenio has relationships with a number of retail chains around the world. The company is selective in choosing which retail chains will sell its products. Zenio chooses retailers that reflect the brand and trains retailers’ sales associates on how to best represent Zenio’s products.

Flagship Stores

Zenio has over 100 flagship, or standalone, stores. They are the brand standard-bearers for Zenio, where customers are immersed in the Zenio experience. This includes access to prototypes, where customers can provide feedback to enhance the design, as well as the ability to customize their Zenio products.

Direct Sales

Zenio sells directly to large private- and public-sector organizations, which typically results in large-volume sales of 100 or more computers. These accounts are also serviced by Zenio’s training and consulting group, which is a part of the Services team.

Zenio.com

Zenio’s online store, Zenio.com, is popular with customers. Customers can buy all of Zenio’s products online. The website also provides access to customer support.

© Korn Ferry 2018. All rights reserved.

© Korn Ferry 2018. All rights reserved.6

Your District

SALES

You have three sales managers, and each has 11 sales representatives. Sales representatives are responsible for selling all products and services, and their compensation package (base salary and commission) is set up to reward them accordingly. The sales managers and their respective sales representatives are distributed by territory. As such, they sell to a diverse set of customers that include:

• Retailers that have been certified to sell Zenio products.

• Government agencies.

• Corporations with headquarters in the district.

Sales managers typically retain sales responsibilities for a few large customers. In addition, they are responsible for:

• Establishing and meeting territory revenue targets for sales of products and services.

• Managing sales-related expenses.

• Coaching and developing sales representatives.

• Assisting with major sales deals and customer dissatisfaction or problems.

• Partnering with the service manager in the territory to ensure customer satisfaction.

© Korn Ferry 2018. All rights reserved. 7

SERVICE

You have three service managers, and each has eight senior service technicians, in addition to a number of service technicians. Service technicians repair Zenio products and provide training to retailers and large customers. Zenio provides product support through its own technicians and through local service partners. The local service providers address the needs of the individual customers, while Zenio service technicians address the needs of large organizations.

Service managers are responsible for:

• Establishing and meeting territory service metrics (e.g., customer satisfaction, service-related expenses, service response time, and service repair time).

• Managing the direct service team, as well as relationships with contract service partners.

• Managing inventory.

• Coaching and developing staff, including those in Zenio’s flagship stores.

• Partnering with the sales managers in the territory to ensure customer satisfaction.


Industry Trends and Challenges

OVERVIEW OF THE INDUSTRYProducts

The personal computer has moved beyond a device to increase productivity into something that has become a part of an individual’s lifestyle. Enhancements in performance continue. For the discerning consumer, brand is an important part of the buying decision, and people are willing to pay a premium for it. Computer tablets run entertainment and other applications similar to the personal computer; however, sales are driven even more by brand loyalty. In order to maintain this loyalty, companies need to continually refine and enhance tablets, as well as provide applications that will maintain consumers’ interest in using the product. This requires ever-increasing speed to market. However, this speed needs to be balanced against the quality of the applications.

Competition

Competition in Zenio’s industry is very fragmented, with a number of different companies competing for market share and leveraging different strategies. In general, competition in the industry occurs around the following dimensions:

• Some compete with low-cost business models and cost leadership. They promote commoditization and develop strategies to reduce product differentiation in the industry. This has been a significant driver, particularly within entry-level computer lines.

• Although technological advantages are short-lived, companies that are consistently first to market with new product innovations can have distinct advantages. This can be risky in that sometimes companies misinterpret the demand for the product.

• Some companies compete through their geographic size and scope, developing global supply chains and broad geographical reach. The size and scope allow companies to achieve greater economies of scale and reach new emerging markets.



Industry Trends and Challenges

OVERVIEW OF THE INDUSTRYProducts

The personal computer has moved beyond a device to increase productivity into something that has become a part of an individual’s lifestyle. Enhancements in performance continue. For the discerning consumer, brand is an important part of the buying decision, and people are willing to pay a premium for it. Computer tablets run entertainment and other applications similar to the personal computer; however, sales are driven even more by brand loyalty. In order to maintain this loyalty, companies need to continually refine and enhance tablets, as well as provide applications that will maintain consumers’ interest in using the product. This requires ever-increasing speed to market. However, this speed needs to be balanced against the quality of the applications.

Competition

Competition in Zenio’s industry is very fragmented, with a number of different companies competing for market share and leveraging different strategies. In general, competition in the industry occurs around the following dimensions:

• Some compete with low-cost business models and cost leadership. They promote commoditization and develop strategies to reduce product differentiation in the industry. This has been a significant driver, particularly within entry-level computer lines.

• Although technological advantages are short-lived, companies that are consistently first to market with new product innovations can have distinct advantages. This can be risky in that sometimes companies misinterpret the demand for the product.

• Some companies compete through their geographic size and scope, developing global supply chains and broad geographical reach. The size and scope allow companies to achieve greater economies of scale and reach new emerging markets.

9

Trends in the Industry

• Scarcity of talent: There is a true war for talent, particularly in relation to individuals who have design skills within the marketplace and those who have general management experience. Higher salaries have been the method of choice to retain talent, but companies need to be increasingly creative.

• Expansion of e-commerce: E-commerce has become more popular over the years, as consumers are more willing to choose products online. E-commerce sites have become profitable; however, customers are becoming more demanding, with expectations for fast delivery becoming a more important part of the customer experience.

• Shorter product life cycle: Given that technology rapidly changes, with faster processing speeds, enhanced graphics, and new applications, the lifecycle of products has been shortened.



Zenio’s Strategies and Initiatives

STRATEGIC POSITIONING AND RESOURCES

Zenio distinguishes itself in the marketplace by providing the highest-quality, best-performing products. While the company does not attempt to be “trendy,” it still produces products that are meant to complement the lifestyle of its target consumer base—that is, individuals who are affluent or strive to be affluent. Zenio works hard to promote and drive this brand image in the marketplace, selling value over price.

Zenio counts among its strategic assets:

• Strong brand loyalty; many customers remain with the brand for decades.

• Award-winning design teams.

• Strong relationships with service partners.

• A product portfolio that can target multiple price tiers.

• World-class training and consulting for retailers and large organizations.

• Strong relationships with retailers.

• Flagship stores that are a magnet for consumers who enjoy the newest technology.


RECENT PERFORMANCE

Last year, Zenio’s revenue grew by 7.5%, which is slightly above the industry average. Many analysts believe that Zenio’s focus on balancing form and function, as well as selling on value, positions the organization well in the marketplace.

Zenio’s senior management team has stated that this year will involve a strong push to drive growth. The team believes that a substantial portion of this growth will come from the introduction of the new Tablet product line. While tablets typically have been seen as a consumer product, Zenio is driving toward introducing tablets into the commercial market. The company sees tablets replacing desktop computers and laptops. At the same time, cost control and operational efficiency remain priorities to ensure growth in operating income. Balancing these goals will continue to be a challenge for Zenio’s leadership.

KEY STRATEGIC PRIORITIES• Increase marketing to promote the brand image and value of the products.

• Capitalize on the fast-growing small- to medium-size business market segment.

• Continue to improve operational efficiency and drive down costs.

• Expand the use of partnerships to pursue growth opportunities and greater cost control.

• Develop talent to prepare employees for future leadership roles.

• Enter fast-growing adjacent market segment.

• Compete on value over price; do not strive to be the low-cost provider.

• “Work with a global mindset.” Paul Zenio has made it imperative for all employees to consider how they can capture best practices from others and to share best practices around the globe.

11


Regional Directors

Senior Management Team

Global Sales and Service

Paul ZenioChief Executive O�cer

Janet StoneExecutive

Vice President

Products

Raphael ValenciaExecutive

Vice President

Supply Chain Management

Irene BerglinChief Financial O�cer (CFO)

Finance

Erin O’ConnellChief Talent

O�cer (CTO)

Human Resources

Jackson JonesExecutive

Vice President

Global Sales and Service

Elena AlvarezSenior Vice President

Global Accounts

Nathan PeakeSenior Vice President

Zenio.com

DivisionalVice President

Latin America

Lee TorbikDivisional

Vice President

North America


Australia &New Zealand


EMEA


Asia


Japan

Regional Director

Region V

Regional Director

Region VIII

Regional Director

Region I

Regional Director

Region III

Regional Director

Region VI

Regional Director

Region IV

Dale DuncanRegional Director

Region II

Regional Director

Region VII

Hayden KielChief Information

O�cer (CIO)

Information Systems

Megan FrankGeneral Counsel

Legal

(next chart)

Divisional Vice Presidents


Region II

District 5

Sam Reynolds

Regional Manager

Marketing

Terry Bainbridge

Regional Manager

Human Resources

Clark Ramstad

Regional Manager

Finance

Claude Basset

Regional Manager

Product Training

Lynn Kleck

Regional Manager

Supply & Distribution

JJ Kearns

District Manager

District 1

Florence Chen

District Manager

District 2

Carlos Garcia

District Manager

District 3

Marty Borson

District Manager

District 4

Kathy Bronson

AdministrativeAssistant

Casey Baker

Service Manager

South

Roger Kent

Service Manager

Central

Matt Christopher

Service Manager

North

Pat Monroe

Sales Manager

South

Margaret Weber

Sales Manager

Central

Robin Stewart

Sales Manager

North

8

SeniorService Techs

8

SeniorService Techs

8

SeniorService Techs

9

Service Techs

11

Service Techs

9

Service Techs

11

SalesReps

11

SalesReps

11

SalesReps

Alex AndrewsDistrict Manager

District 5YOU

Dale DuncanRegional Director

Region II


Zenio FinancialsDistrict 5 Operating Results

Year-to-Date, Quarter Ended June 30

(All figures in thousands U.S. dollars, except where noted)

Actual YTD Plan Prior YTD % Increase/ Decrease

$ % o

f Re

ven

ue

$ % o

f Re

ven

ue

$ % o

f Re

ven

ue

vs. P

lan

YT

D

vs. P

rior

YTD

PRODUCT REVENUE & EXPENSES

Product Revenue* 16,605 100.0% 17,312 100.0% 15,070 100.0% -4.1% 10.2%

Cost of Goods Sold 10,362 62.4% 10,820 62.5% 9,494 63.0% -4.2% 9.1%

Product Gross Margin 6,243 37.6% 6,492 37.5% 5,576 37.0% -3.8% 12.0%

Product Operating Expenses

Salaries/Commissions/Benefits 1,661 10.0% 1,679 9.7% 1,492 9.9% -1.1% 11.3%

Travel & Entertainment 312 1.9% 304 1.8% 290 1.9% 2.6% 7.6%

Advertising/Other 189 1.1% 191 1.1% 172 1.1% -1.0% 9.9%

Total Product Operating Expenses 2,162 13.0% 2,174 12.6% 1,954 13.0% -0.6% 10.6%

Product Operating Margin 4,081 24.6% 4,318 24.9% 3,622 24.0% -5.5% 12.7%

SERVICE REVENUE & EXPENSES

Service Revenue* 7,850 100.0% 8,432 100.0% 7,711 100.0% -6.9% 1.8%

Cost of Services

Fees to Service Partners 3,062 39.0% 3,288 39.0% 2,969 38.5% -6.9% 3.1%

Service Labor & Benefits** 1,256 16.0% 1,265 15.0% 1,195 15.5% -0.7% 5.1%

Parts & Supplies 1,201 15.3% 1,282 15.2% 1,195 15.5% -6.3% 0.5%

Fleet/Warehouse/Other 463 5.9% 485 5.8% 463 6.0% -4.5% 0.0%

Total Cost of Services 5,982 76.2% 6,320 75.0% 5,822 75.5% -5.3% 2.7%

Service Gross Margin 1,868 23.8% 2,112 25.0% 1,889 24.5% -11.6% -1.1%

Service Operating Expenses

Advertising 86 1.1% 87 1.0% 86 1.1% -1.1% 0.0%

Other General and Administrative 55 0.7% 55 0.7% 54 0.7% 0.0% 1.9%

Total Service Operating Expenses 141 1.8% 142 1.7% 140 1.8% -0.7% 0.7%

Service Operating Margin 1,727 22.0% 1,970 23.4% 1,749 22.7% -12.3% -1.3%

DISTRICT EXPENSES*** 329 1.3% 329 1.3% 315 1.4% 0.0% 4.4%

DISTRICT PROFIT 5,479 22.4% 5,959 23.1% 5,056 22.2% -8.1% 8.4%

* Product Revenue and Service Revenue include an internal transfer of the Basic Warranty revenue from Products to Service. ** Service Labor & Benefits includes overtime pay.*** Includes District Manager expenses and overhead allocated by corporate.Note: Service Agreement revenue is recognized over the life of the contract, not solely during the period in which the contract is sold.Note: Due to rounding, numbers shown may not be an exact match to those calculated.


District 5 3rd Quarter and FY Forecast

(All figures in thousands U.S. dollars, except where noted)

Third Quarter Forecast

Third Quarter Plan

Third Quarter Full Year Plan

$ % o

f Re

ven

ue

$ % o

f Re

ven

ue

Fore

ca

st %

vs

. Pla

n

$ % o

f Re

ven

ue

PRODUCT REVENUE & EXPENSES

Product Revenue* 8,916 100.0% 9,808 100.0% -9.1% 37,278 100.0%

Cost of Goods Sold 5,564 62.4% 6,130 62.5% -9.2% 23,299 62.5%

Product Gross Margin 3,352 37.6% 3,678 37.5% -8.9% 13,979 37.5%

Product Operating Expenses

Salaries/Commissions/Benefits 936 10.5% 951 9.7% -1.6% 3,616 9.7%

Travel & Entertainment 178 2.0% 172 1.8% 3.5% 667 1.8%

Advertising/Other 105 1.2% 112 1.1% -6.3% 418 1.1%

Total Product Operating Expenses 1,219 13.7% 1,235 12.6% -1.3% 4,701 12.6%

Product Operating Margin 2,133 23.9% 2,443 24.9% -12.7% 9,278 24.9%

SERVICE REVENUE & EXPENSES

Service Revenue* 3,821 100.0% 4,165 100.0% -8.3% 16,910 100.0%

Cost of Services

Fees to Service Partners 1,490 39.0% 1,624 39.0% -8.3% 6,595 39.0%

Service Labor & Benefits** 634 16.6% 633 15.2% 0.2% 2,549 15.1%

Parts & Supplies 588 15.4% 637 15.3% -7.7% 2,579 15.3%

Fleet/Warehouse/Other 237 6.2% 246 5.9% -3.7% 985 5.8%

Total Cost of Services 2,949 77.2% 3,140 75.4% -6.1% 12,708 75.2%

Service Gross Margin 872 22.8% 1,025 24.6% -14.9% 4,202 24.8%

Service Operating Expenses

Advertising 45 1.2% 46 1.1% -2.2% 180 1.1%

Other General and Administrative 29 0.8% 29 0.7% 0.0% 114 0.7%

Total Service Operating Expenses 74 1.9% 75 1.8% -1.3% 294 1.7%

Service Operating Margin 798 20.9% 950 22.8% -16.0% 3,908 23.1%

DISTRICT EXPENSES*** 178 1.4% 188 1.4% -5.3% 712 1.3%

DISTRICT PROFIT 2,753 21.6% 3,205 22.9% -14.1% 12,474 23.0%


Zenio Financials

District 5 Service Revenue and Profitability


Actual $

Plan $

Variance from Plan

%Prior

$

Variance from Prior

%(All figures in thousands U.S. dollars, except where noted)

REVENUE

Basic Warranty 514 554 -7.2% 498 3.2%

Extended Service Agreement 4,402 4,634 -5.0% 4,316 2.0%

Fee for Service 2,201 2,501 -12.0% 2,223 -1.0%

Consulting Services 734 743 -1.2% 674 8.9%

Total 7,851 8,432 -6.9% 7,711 1.8%

SERVICE GROSS MARGIN

Basic Warranty 108 116 -6.9% 100 8.0%

Extended Service Agreement 1,012 1,068 -5.2% 993 1.9%

Fee for Service 616 770 -20.0% 626 -1.6%

Consulting Services 132 158 -16.5% 171 -22.8%

Total 1,868 2,112 -11.6% 1,890 -1.2%

Product Revenue and Service Revenue include an internal transfer of the Basic Warranty revenue from Products to Service.Note: Service Agreement revenue is recognized over the life of the contract, not solely during the period in which the contract is sold.Note: Due to rounding, numbers shown may not be an exact match to those calculated.


District 5 Product Revenue and Profitability


Actual $

Plan $

Variance from Plan

%Prior

$

Variance from Prior

%(All figures in thousands U.S. dollars, except where noted)

REVENUE

Laptops 6,505 6,894 -5.6% 6,434 1.1%

Desktops 3,253 3,357 -3.1% 3,214 1.2%

Tablets 1,370 1,494 -8.3% na* na

Applications 5,992 6,121 -2.1% 5,919 1.2%

Transfer to Service** -514 -554 -7.2% -498 3.2%

Total 16,606 17,312 -4.1% 15,069 10.2%

PRODUCT GROSS MARGIN

Laptops 2,407 2,520 -4.5% 2,360 2.0%

Desktops 1,496 1,546 -3.2% 1,481 1.0%

Tablets 685 678 1.0% na* na

Applications 1,656 1,748 -5.3% 1,735 -4.6%

Total 6,244 6,492 -3.8% 5,576 12.0%

*New product line so there are no prior figures. **Product Revenue and Service Revenue include an internal transfer of the Basic Warranty revenue from Products to Service. Note: Due to rounding, numbers shown may not be an exact match to those calculated.


Overview of Competitors

Company Products & Businesses Other Information

MAGNUMTokyo, JapanFounded: 1945Revenue: $18.7 billionMarket Cap: $24.1 billionP/E Ratio: 28

Full range of personal computers and tablets.

Other businesses: Consumer electronics (e.g., home video and audio); cameras and camcorders; peripherals (e.g., monitors and projectors).

• Innovative user-friendly technology; rapid time to market with a wide range of features and options.

• Strong brand with stylish designs; markets products aggressively.

• Relies on multiple distribution channels; strong retailer relationships.

Palo Alto, CaliforniaFounded: 1992Revenue: $36.5 billionMarket Cap: $45.7 billionP/E Ratio: 30


Other businesses: Entertainment and productivity applications.

• Strong R&D investments in new products; products known for innovation and performance.

• Strong in high-end consumer products.

• Recent acquisition of Digimax (manufacturer of cameras).

ODYSSEYSan Jose, CaliforniaFounded: 1997Revenue: $28.6 billionMarket Cap: $29.2 billionP/E Ratio: 32


Other businesses: Cameras and cellular telephones.

• Primarily a computer company; significant growth in a short period of time.

• Sells mostly through an e-commerce channel; competes on operational and supply chain efficiency.

• Low prices, but lacks innovation and reliability.

Stuttgart, GermanyFounded: 1972Revenue: $10.7 billion Market Cap: $9.4 billionP/E Ratio: 26

High-end personal computers and tablets.

Other businesses: Satellite telephones; entertainment and productivity applications.

• Reputation for high-quality products.

• Known for cutting-edge designs that lead the market.

• High prices, but customers are very satisfied with the value.


Market Research

19

COMPETITOR COMPARISONOverall Commercial Customer Satisfaction Results

Pric

e

Relia

bilit

y a

nd

Dur

ab

ility

Perf

orm

an

ce

an

d Q

ualit

y

Fea

ture

s a

nd

Fun

ctio

ns

Bre

ad

th o

f Pro

duc

ts S

old

Qua

lity

of T

ec

hn

ica

l Sup

po

rt

Resp

on

sive

ne

ss

Tra

inin

g

On

go

ing

Co

st t

o M

ain

tain

an

d U

se

Cus

tom

er S

erv

ice

an

d A

cc

oun

t M

an

ag

em

en

t

Ove

rall

Valu

e

Company Products & Businesses Services and Support

3.6 4.8 4.5 3.4 4.5 3.5 3.2 4.2 4.8 4.7 4.1

MAGNUM3.5 4.4 3.7 4.5 4.6 4.3 4.7 4.7 3.6 4.8 4.6

3.0 4.2 4.8 4.8 3.9 4.6 3.3 4.0 3.4 3.1 3.8

ODYSSEY4.6 4.0 3.1 3.2 1.8 3.0 4.5 2.1 3.5 3.5 3.2

2.8 4.4 4.7 4.1 3.1 4.7 4.6 3.1 3.3 4.2 4.1

Scale: 1 (Very dissatisfied) to 5 (Very satisfied)


The information contained in this simulation, including names of organizations, products, and individuals, is fictitious. Any resemblance to actual organizations, products, or individuals is purely coincidental.


No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage or retrieval system, without permission in writing from Korn Ferry.

010220181116

laptops • desktop computers • tablets • apps€¦ · for its laptops, desktops, and tablets,...

Documents