Nov 17th 2000

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INTERNATIONAL INNOVATIONS, INC.

• Nov 17th 2000
• Business Strategic
• Plan
• University of Hawaii College of Business
• and Administration
• Ke Cao, Frederic Folliard, Jing Xu, Jing Zhang

2
Company profile

• 1995 - manufacturer representative
• 1997 - SnapSight one-time-use camera
• 1998 - Mitsubishi exclusive distributor
• 1999 - Sales revenue 3.65 million
• 5 employees, 35 sales representatives

3
The Owner and Organization

• Owner Mr. Joe Ganahl
• Organization Chart

4
External Analysis

• US economy

Mitsubishi big-screen TV SnapSight Camera
5
Mitsubishi Big Screen TV

• Oligopoly industry
• Competition
• Restricted Market

6
Snapsight- 35mm Cameras Film in One

• Industry
• Competition

• Industry
• Competition
• International
• Legal
• Technological

7
Industry

• Single use cameras sales next 6 years projected
  compound growth of
• 10-15.
• Oligopoly industry, few large competitors, high
  barriers and it is extremely competitive.

8
Competition

• Two dominant players Kodak and Fuji Film in this
  segment (20-25 market share each).
• Wal-Mart, Kmart and many supermarket and mass
  marketing chains put their own stamp or label on
  these cameras.
• (Key fact Discount stores 42.3 of U.S. sales,
  2000 PMA report).

9
International markets

• On a global basis, the emerging markets represent
  25 of all film sales and likely will expand by
  double digits.
• Because of the relative cheap price, there are
  opportunities in emerging economies like Asian
  countries.

10
Legal environment

• ELMSFORD, NY, June 3, 1999 Fuji Photo Film
  U.S.A., Inc. announced that the United States
  International Trade Commission (ITC) has issued a
  general exclusion order that bars importation
  into the United States of all one-time-use
  cameras that infringe patents held by Fujifilm.
• Protected U.S. market / legal advisory.

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Technological

• The digital camera industry is the fastest
  growing and most competitive.
• Online photo imaging was a 113 million industry
  in 1999, rising exponentially from 10 million
  the previous year, according to Lyra Research..
• Taking any photo industry market share away.

12
Internal Analysis
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Financial Analysis - Profitability

• Super sales growth 70 (1999), 53 (1998)
• Poor profit margin 1.15 (1999), 0.57(1998)

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Financial Analysis - Liquidity

• Current ratio 1.07 (1999), 1.06 (1998)
• Quick ratio 0.76 (1999), 0.40 (1998)
• Negative cash balance -37,673 (1999), -13,172
  (1998)

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Financial Analysis - Activity

• Inventory turnover 14.81 (1999), 15.29 (1998)
• Asset turnover 4.04 (1999), 7.9 (1998)
• A/R turnover 5.83 (1999), 31.32 (1998)

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Financial Analysis - Leverage

• No long-term debt, no interest expense
• Debt to asset ratio 88.97 (99), 78.68 (98)
• Debt to equity ratio 368.96 (99), 806.22 (98)
• High return on equity 0.42 (99), 0.21(98), 2.30
  (97)

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SWOT Analysis
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SWOT Analysis

• Strength
• Solid vertical relationship
• Innovative RD (i.e. special feature development)
  
• Cost-effective International factory
  (China-Snapsight)
• Weakness
• Profitability cash flow
• Insufficient marketing resources
• No patent protection

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SWOT Analysis

• Opportunities
• RD intensity (low-spending)
• U.S. booming economy
• International expansion
• Threats
• Pressure from strong competitors
• Easy to copy the technology
• Digital camera boom - new product advances

20
Corporate and Business strategies
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Corporate strategies

• Growth strategy
• Proprietary SnapSight means future
• Stability strategy
• Mitsubishi exclusivity

22
Business level strategies

• Interinnovations management strategic options-
  Two choices
• Cost- leadership
• Differentiation
• REMEMBER
• To become a leader in definite target markets.

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Business level strategies

• Solution To adopt a Focused Differentiation
  Strategy
• Snapsight will serve and add specific functions
  aimed at specific customers.
• It will ensure market leadership and
  profitability within specified boundaries in a
  large and growing industry.
• To become a leader in definite target markets
• Thats a strategic fit for the next 5 to 10
  years.

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Functional Strategies

• Marketing
• Management
• Financing
• Information system
• International

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Target Marketing

• Improve product design - Eye-catching
• Aggressive promotions - ad, media mix
• E-commerce marketing - develop platform for
  E-commerce
• Distribution - narrower selection
• Market research - consumer tastes

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Management

• Accounting Activity-Based-Cost system
• Human resources management
• Operation Manager Marketing specialists,
  outsourcing

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Financing

• Aggressive debt financing
• Support future SnapSight expansion
• Improve cash flow (tax effects)
• Bookkeeping separately
• Mitsubishi exclusivity vs SnapSight
• Cash Flow statement

28
Information system

• Long-run Interactive Information System
• Advantages - integrated accounting,
  communications and marketing
• Developing step-by-step simple structure

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International

• Global approach
• South America, Eastern Europe or some Asian
  countries are favorable for international
  expansion
• Synergy benefits
• First-mover advantage

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Conclusion

• Interinnovations to expand current business with
  integration of stable and growth strategic
  planning.
• It is recommended to plan Snapsight business with
  focused differentiation strategy to sustain
  competitive advantage and use related marketing
  plan in the process in both national and
  international markets.
• More financial resources will be needed to
  sustain company growth with the help of some
  external financing, sooner or later.
• The use of technology will facilitate success as
  a result of efficient cost-management and
  communications within the company scope of
  business operations.

Interinnovations strategic planning
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-Question time-

• Please, feel free to ask any questions regarding
  Interinnovations strategic development
  presentation.