Participant guide, bản tiếng Việt có chỉnh sửa – Welcome to GLO-BUS. You are taking over the – Studocu

Welcome to GLO-BUS. You are taking over the operation of a company that is in a neck-and-neck race for
global market leadership in two product categories: action-capture cameras (comparable to those designed
and marketed by global industry leader GoPro) and unmanned aerial view (UAV) drones that incorporate a
company designed and assembled action-capture camera. Your company competes against rival
companies that design, assemble, and market these same two products and that are run by other members
of your class. All makers of these two products—action-capture (AC) cameras and UAV drones—compete
head-to-head in four market regions across the world—Europe- Africa, Asia-Pacific, Latin America, and
North America, and all companies currently have the same unit sales volumes, revenues, and global
market shares in both product categories.

In the most recent year, your company had worldwide sales of 840,000 action-capture cameras and
140,000 UAV drones. Prior-year revenues were $334 million and net earnings were $15 million, equal to
$0 per share of common stock. The company is in sound financial condition, is performing well, and its
cameras and drones are well-regarded by buyers. Your company’s board of directors has charged you with
developing a winning competitive strategy—one that capitalizes on growing consumer interest in action-
capture cameras and UAV drones and improves the company’s overall performance year-after-year.

Your first priority as a GLO-BUS participant should be to absorb the contents of this Participant’s Guide and
get a firm grip on the character of the market for action-capture cameras and UAV drones, the operations of
your company, the cause-effect relationships affecting various aspects of your company’s operations, and
the procedures for participating in the exercise.

How the GLO-BUS Exercise Works

GLO-BUS is a PC-based exercise, modelled to reflect the real-world character of the globally competitive
market for AC cameras and UAV drones. The operations of your company and the companies run by other
students in your class are patterned after those of actual enterprises that design, assemble, and market AC
cameras and UAV drones. Cause-effect relationships and revenue- cost-profit relationships are based on
sound business and economic principles. GLO-BUS enables you and your co-managers to apply what you
have learned in business school and to practice making reasoned, businesslike decisions aimed at
improving your company’s overall performance. Everything about your company and the competitive
environment in which your company operates has been made “as realistic as possible” in order to provide
you with a close-to-real-life managerial experience.

Each decision period in GLO-BUS represents a year. The first set of decisions you will make is for Year 6.
You will make decisions each period relating to the design and performance of your company’s two
products (21 decisions), assembly operations and workforce compensation (up to 8 decisions for each
product), pricing and marketing (7 decisions for cameras and 6 for drones), corporate social responsibility
and citizenship (up to 6 decisions), and the financing of company operations (up to 8 decisions). In addition,
there are 9 entries for cameras and 8 entries for drones involving assumptions about the competitive
actions of rivals; these entries help you to make useful forecasts of your company’s unit sales (so you have
a good idea of how many cameras and drones will need to be assembled each year to fill customer orders).
Plus, there is accounting and cost data to examine, import duties and exchange rate fluctuations to
consider, and shareholder expectations to satisfy. Video Tutorials for each decision page will help you get
started. And there are Help sections for each page that provide valuable information about each decision
entry, important cause-effect relationships, and decision-making tips.

Complete results of each decision period become available online about 15 minutes after the deadline for
each decision round. Detailed information and feedback provided in the Camera & Drone Journal, the
Competitive Intelligence Report, and the Company Operating Reports provide essential information about
each company’s performance, assorted industry outcomes, updated demand forecasts, your company’s
competitive standing vis-à-vis rivals, and other statistics that enable you to determine what actions to take
to improve your company’s performance in upcoming decision rounds.

The decision round schedule developed by your instructor indicates the number of decision periods that
you will be running the company. You should use the practice round(s) to become familiar with the software,
digest all the information provided on the decision pages and in the reports, and get a glimpse of what to
expect before your management team’s decisions start to count.

The Corporate Lobby page functions as your “gateway” for all GLO-BUS activities—click the buttons at the
top to see everything that is available. Plus, the Corporate Lobby page reports the latest interest rates and
exchange rate impacts. Take a couple of minutes to familiarize yourself with the features and information on
your Corporate Lobby page, all of which will come into play during the exercise. The Recommended
Decision Procedures link (Participant’s Materials button) is especially worth a few minutes of your attention.

performance, brand recognition, and so on. All competing companies are thus presently on an equal footing
in all respects.

In upcoming years, the managers of all companies will undertake strategic actions to boost the
performance of their respective companies—these actions will involve altering prices, product performance
and quality, advertising, and other competitively-relevant factors that impact buyer choices of which
company’s brand to purchase. The differing actions of competing companies will almost certainly result in
substantially different cross-company unit sales volumes and market shares in all regions of the world
because the actions of some companies will prove more effective in attracting buyers than the actions of
other companies. Companies that succeed in outcompeting rivals in the sales of either cameras or drones
or both will gain sales and market share at the expense of rivals. Some companies will suffer losses of
sales and market share in cameras and/or drones in one or more geographic regions—despite striving (or
hoping) to do the opposite—because they are outcompeted by one or more rivals offering what buyers
consider to be more attractive products.

Bigger sales and market shares, of course, do not necessarily equate to better profitability and overall
performance than below-average sales volumes and market shares—firms that sell top-quality products at
premium prices often have smaller unit sales volumes and smaller revenues, yet their profits and returns on
investment may well be greater than those of firms selling less expensive, lower-performing products to the
mass market. Moreover, each competing company’s production and other operating costs for cameras and
drones are certain to change over time, as managers of the competing companies pursue different actions
to operate efficiently and build a competitive advantage linked to lower costs or better product quality or
some other factor that yields competitive advantage. It remains to be seen which companies will end up
being the most profitable and achieving the best overall performance.

The company has regional facilities in Milan, Italy; Singapore; Sao Paulo, Brazil; and Dallas, Texas to
conduct the company’s marketing efforts in the four geographic regions of the world market, to support the
merchandising efforts of regional retailers who stock the company’s action cameras and UAV drones, and
to process camera/drone warranty claims (including making needed repairs).

Assembly and Shipping : The company assembles cameras and drones usually within two weeks of
receiving an order and strives to ship an order no later than 2-3 days after assembly. No camera models or
drone models are assembled in advance, warehoused in company facilities, and then used to fill incoming
orders.

The company has a staff of people engaged in product R&D; this group has the capability to develop new
and improved models of cameras and drones as directed by top management. Once company co-
managers settle on the desired specifications and performance features for the company’s line-up of
camera and drone models, the needed parts and components are obtained from suppliers having the
capabilities to make deliveries to the company’s Taiwan assembly site on a just-in-time basis, thus
eliminating the need to maintain inventories of parts or components.

The company has two buildings for assembling products at its Taiwan site—one for cameras and one for
drones (the drone assembly process also includes assembly of an action-camera model having features
and specifications suitable for use in camera-equipped drones). Both cameras and drones are assembled

by four-person product assembly teams (PATs), with each PAT performing the needed tasks at its own
assigned workstation. Shipping department personnel package orders for shipment and stack them on the
loading dock for pickup by independent freight carriers. The cameras are delivered to buyers anywhere
from 3 days to 3 weeks later, depending on a retailer’s location and the means of transportation—
shipments to distant retailers are shipped via a combination of air and ground freight and those to
customers in select parts of Asia are shipped by ground freight. The cost of boxing cameras, packaging
them for shipment, and freight averages $5 per camera. Shipping costs for drones, most of which are air
freighted to customers and delivered within 5 to 10 business days after receipt of the order, average $
per unit.

Many countries have opted to impose import duties on cameras and drones sourced from Taiwan. Going
into Year 6, import duties equal 4% of the average price the company charges customers in Europe-Africa,
and 6% of the average price being charged to customers in both Latin America and the Asia-Pacific; there
are no import duties on either cameras or drones shipped to customers in North America. Import duties in
all four regions of the world market are subject to change in upcoming years.

Competitive Efforts: To capitalize on ongoing technological advances and the pipeline of product
enhancement capabilities flowing from the company’s expenditures for product R&D, each year the
company typically changes the specs for important components, adds/modifies performance features,
upgrades the internal software, makes assorted other design-related changes, and introduces new and/or
improved models. In addition, strong competition from rival companies pushes management to make price
and marketing adjustments to improve buyer appeal for the company’s camera/drone models and to
enhance the company’s ability to compete more effectively.

Stock Listings: The company’s stock is publicly traded on the NASDAQ exchange in the United States.
The closing price in Year 5 was $12 per share. The company’s financial statements are prepared in accord
with generally accepted accounting principles and are reported in U. dollars. The company’s financial
accounting is in accord with the rules and regulations of all authorities where its stock is traded.

THE WORLDWIDE MARKET FOR UNMANNED AERIAL VIEW DRONES

Worldwide unit sales of unmanned aerial view (UAV) drones are reliably projected to grow 15%- 17%
annually during Years 6-7, 12.0-14% annually during Years 8-9, 9.0%-11% annually in Years 10-11,
6% -8% annually in Years 12-13, and 3.75%-5% annually during Years 14 and 15. However, the
projected growth rates differ considerably by geographic region, as shown below.

Projected Growth of Unit Sales of Unmanned Aerial View Drones
Period Worldwide North America Europe-Africa Asia Pacific Latin America

Years 6-7 15.5%-17% 15.0%-17% 15.0%-17% 17.0%-19% 17.0%-19%

Years 8-9 12.0%-14% 11.0%-13% 11.0%-13% 14.0%-16% 14.0%-16%

Years 10-11 9.0%-11% 8.0%-10% 8.0%-10% 11.0%-13% 11.0%-13%

Years 12-13 6.0%-8% 5.0%-7% 5.0%-7% 8.0%-10% 8.0%-10%

Years 14-15 3.75%-5% 3.0%-5% 3.0%-5% 5.0%-7% 5.0%-7%

Note: As noted above in regard to the growth rates of action-capture cameras, actual growth of for UAV drone
sales within the forecast ranges varies from region to region. The forecast growth rates, while reliable, are not
guaranteed in the event the competitive efforts in the industry become significantly stronger or weaker than
the levels prevailing in Year 5.

Again, while company managers have to deal with uncertainty about where within the projected 2% growth
range the actual growth rate for drones for a particular geographic region in a particular year will turn out to
be, a forecast somewhere within a 2-percentage-point range is really a pretty good forecast!

Competition : Competition in the worldwide market for UAV drones differs somewhat from that for action-
capture cameras and is centered on price, product quality and performance, the number of models offered,
the relative appeal of rival company websites as concerns providing complete information about different
models and the ease of placing orders, the comparative amounts competitors elect to spend on search
engine advertising to help draw shopper traffic to their website (where a big percentage of drone sales are
transacted), the length of warranties, the relative success competitors have in attracting third-party online
retailers to display and merchandise their brand of UAV drones (and thereby broaden their access to
potential purchasers of drones), and brand reputation.

Performance/Quality (P/Q) Ratings Of Ac Cameras And Uav Drones

P/Q Ratings for Action-Capture Cameras: The World Digital Video Federation (WDVF), a well- respected
affiliation of camera industry trade groups and camera experts, tests the performance and quality of the
action-capture camera models of all competitors and assigns a performance-quality or P/Q rating ranging
from a low of 1 stars to a high of 10 stars to each company’s line of action- capture cameras—each
company’s star rating is reported to the nearest tenth of a star (i. 2, 4, 6). The WDCF’s P/Q ratings
are based on an array of factors: (1) image sensor size, (2) size of the LCD display screen, (3) image
quality of the pictures/video, (4) number of modes for videos and still photos, (4) camera housing, (5)
editing/sharing capabilities, (7) included accessories (such as capacity of flash memory card, rechargeable
batteries, a plug-in battery-charger, and carrying case) (8) number of extra performance features, (9) the
number of camera models a company offers, (10) a company’s cumulative spending on product R&D, and
(11) the amount a company spends annually on training for each of its camera-related PATs and improving
its camera-related assembly methods (since such spending can affect defects encountered and the need
for repairs). Ratings are updated annually.

Currently, the action-capture camera lines of all competitors have a 4-star P/Q rating. Competition among
rivals is, however, likely to result in different P/Q ratings for the camera offerings of different companies in
forthcoming years. This is because all buyers both within a geographic region and across the four
geographic regions do not prefer to buy precisely the same quality camera with precisely the same
performance features and pay precisely the same price. Diverse buyer preferences thus make it highly that
some camera companies will opt to cater to buyers shopping for low-priced action cameras having basic
features (and perhaps a P/Q rating of 1-3 stars), while other camera makers may decide to design cameras
to satisfy buyer preferences for a premium-priced, full-featured action camera (with perhaps a 7-star to 10-
star rating), and still other camera-makers may choose to target “middle market” buyers content with a
medium-priced camera having a P/Q rating in the 4-6 star range.

P/Q Ratings for UAV Drones: Three years ago, the Global Alliance for Safe and Responsible Use of
Commercial Drones was formed to help lobby government authorities responsible for regulating airspace to
establish drone-use regulations that would enable commercial enterprises to benefit from the rapidly-
advancing capabilities of aerial drones to provide valuable pictures and data. Membership quickly grew to
include drone manufacturers, the suppliers of materials and components used in the production of drones,
a wide variety of commercial enterprises and trade associations with interest in using drones for various
purposes, and organizations engaged in drone technology research. Two years ago, members of the
Global Alliance voted overwhelmingly to develop a methodology for rating the performance and quality of
the hundreds of brands and varieties of drones available for sale worldwide, but most especially UAV
drones suitable for a variety of commercial uses. Eighteen months ago, the first performance-quality or P/Q
ratings of UAV drones were released for posting on the Global Alliance’s website, along with the
methodology for determining the ratings. Ratings are a function of (1) the caliber of the built-in action-
capture camera, (2) the caliber of the built-in GPS/Wi-Fi/Bluetooth components, (3) battery life (maximum
flight time per charge), (4) number of rotors, (5) rotor performance and flight controller features/capabilities,
(6) body frame construction, (7) the caliber of the obstacle sensors, (8) quality of the camera stabilization

The Retailers And Buyers Of Action-Capture Cameras And Uav Drones

Action-Capture Camera Retailers : Worldwide, there are some 50,000 retailers of wearable (or
mountable/attachable), teacup-size video cameras scattered across the world—each of the four major
geographic regions of the world market has 12,500 retailers of action-capture cameras, some of which are
multi-store retail chains (100 per region), online electronics retailers (400 per region), and local retail
enterprises that sell or rent these cameras (12,000 per region). Retailers with store locations that also sell
cameras on their websites are not included in the online category. Multi-store chains account for the biggest
percentage of action-capture camera sales, with online retailers second and small local retailers third.
Retail markups over the wholesale prices run 50% to 100%; thus, the models of a company with 4-star-
rated action-capture cameras wholesaling for an average of $200 could retail for an average of $300-$400.
Such markups allow retailers to put selected models or brands of cameras on sale from time-to-time at 10%
to 20% off regular price and still make a decent profit margin.

Retailers typically carry anywhere from 2-4 brands of action-capture cameras and stock only certain models
of the brands they do carry, but in all four geographic markets there are around 20 “full-line” action camera
retailers that stock most all brands and models. Most all chain-store retailers carry at least 2 and often 3-
of the best-selling brands. The makers of weak-selling brands of action cameras have difficulty convincing
major retail chains to devote much display space and merchandising efforts to their models. Online retailers
are, however, more amenable to merchandising low-volume brands, especially those with relatively high
P/Q ratings (favored by buyers concerned about camera performance and quality) and/or minimal
performance features but ultralow prices (which are favored by bargain-hunting shoppers).

Online Retailers of UAV Drones: There are 100 online retailers of UAV drones in each of the four
geographic regions. Because your company sells its UAV drone models at the company’s own website in
direct competition with other online retailers of UAV drones, these online retailers are inclined to stock and
display your company’s brand of drones only if they can purchase your drone models at an attractive
percentage discount to the price being charged on your website. In other words, if you offer to sell online
retailers your models of UAV drones at say 20% off the price being charged on your website, then a greater
number of online retailers will be inclined to stock and merchandise your drone models than if you only offer
them a 10% price discount. Moreover, the bigger the percentage discount you offer to these online retailers,
the bigger the sales they will generate—discounts of 15% to 20% may result in 3rd-party online retailers
accounting for 25% to 35% of your company’s total sales volume. Generally, if your company’s price
discounts are under 10%, very few online retailers will purchase your drone models for resale on their
websites because their profit opportunities are minimal (even if they charge prices higher than your
company’s website prices in hopes of attracting buyers who have never visited your company’s website).

The Buyers of Action-Capture Cameras: People interested in purchasing a wearable video camera in
order to record their action adventures for personal viewing and also to share their experiences with others
(perhaps on Facebook or other sites) are generally quite aware that there can be big differences in the
prices and performance of the various brands of action-capture cameras. Many do extensive internet
research to educate themselves about the features, performance, and prices of different action- capture
camera brands and models. The World Video Camera Federation’s much publicized P/Q ratings are trusted

by people who are shopping for action cameras or already own one, and the Federation’s frequently-visited
website has detailed information concerning the results of its performance tests and the basis for its P/Q
ratings of each action-capture camera brand. Moreover, both the makers of these cameras and online
electronics retailers have extensive information on their websites about currently available models. There
are also assorted websites and publications that publish/post information about and reviews of new and
improved camera models. Consequently, it is easy for most potential buyers of action cameras to do
considerable comparison shopping before deciding which camera brand to buy—they tend to be quite
aware of the prices and P/Q ratings of different brands, the various retail locations and websites where
action cameras can be purchased, the warranties of competing brands, and the fact that retailers have
periodic weekly sales promotions that feature sizable discounts off the regular retail price. Potential buyers
also pay at least some attention to the media ads they see for various action cameras brands and their
purchasing decisions are to some degree influenced by these ads. Many price-sensitive consumers
shopping for their first action-capture camera are inclined to wait to make a purchase until the retailers of
these cameras in their geographic area have weekly sales promotions featuring discounted prices.

The Buyers of UAV Drones: Individuals and enterprises interested in purchasing a UAV drone for
commercial use are generally quite aware that there can be big differences in the prices and performance
of the various brands of UAV drones. many do extensive Internet research to educate themselves about the
features, performance, and prices of different brands and models of UAV drones. The readily available P/Q
ratings for various brands of drones compiled by the Global Alliance for Safe and Responsible Use of
Commercial Drones are considered trustworthy, and the Global Alliance’s frequently-visited website has
detailed information concerning the results of its performance tests and the basis for its P/Q ratings of each
drone brand. Moreover, both drone-makers and third-party online electronics retailers of drones have
extensive information on their websites about the currently available models they offer for sale. Because of
mushrooming interest in the features and capabilities of UAV drones, a growing number of websites and
media publications have begun posting/publishing articles about the features and capabilities of newly-
available drones and newsworthy developments in the drone industry. Consequently, it is common for likely
drone purchasers to do considerable comparison shopping before deciding which drone brand to buy—they
are familiar with the P/Q ratings of rival brands, the retail prices and information posted at company
websites and the websites of other online retailers of drones, and the warranties of rival brands. Potential
buyers also pay at least some attention to the search engine advertising they encounter when browsing for
information about UAV drones, and their decisions to ultimately purchase this or that brand are affected by
these ads.

cross-brand differences in wholesale price will have a bigger impact on unit sales and market shares in
Latin America and the Asia-Pacific than in North America and Europe-Africa.

2. P/Q Ratings

The vast majority of action-capture camera shoppers consider the widely-available and much-publicized
annual P/Q ratings compiled by the World Digital Video Federation to be a trusted measure of the
performance and quality of competing brands of AC cameras. Market research indicates buyers worldwide
consider the P/Q ratings of competing brands of AC cameras to be one of the two most important factors
(along with price) in shaping their choice of which action-camera brand to purchase. A company whose P/Q
rating is above the regional average P/Q ratings of rivals in a region enjoys an important competitive
advantage on the performance-quality aspect of its camera models. Likewise, a below average P/Q rating
constitutes an important performance-quality-based competitive disadvantage. The more a company’s P/Q
rating is above the industry average, the more that camera shoppers in the region are attracted to purchase
the company’s camera brand—unless the company’s higher P/Q rating is undermined by (1) unfavorable
comparisons against rivals on such other buyer-relevant features as comparatively few models for buyers
to choose among, a significantly weaker brand reputation, or a much shorter- than-average warranty or (2)
charging a price premium for the added performance-quality that buyers consider “too high” or “not worth
the extra cost.”

Market research further reveals that the buyers of action cameras in North America and Europe-Africa are
more sensitive to cross-brand differences in P/Q ratings than are camera buyers in the Asia-Pacific and
Latin America regions. Thus, when two brands of action cameras have slightly different prices and P/Q
ratings (and all other buyer considerations are, on balance, virtually identical between the two brands), then
a bigger percentage of buyers in North America and Europe-Africa will purchase the brand with the higher
P/Q rating while a bigger percentage of buyers in Latin America and the Asia-Pacific will purchase the
cheaper-priced brand—resulting in bigger sales for the camera brand with the higher P/Q rating in the
North America and Europe-Africa regions and bigger sales for the lower-priced camera brand in the Latin
America and Asia-Pacific regions.

However, beware of assuming the differing cross-region sensitivities to price and P/Q ratings mean buyers
in North America and Europe-Africa care little about price or that buyers in Latin America and the Asia-
Pacific care little about P/Q ratings. Camera prices and P/Q ratings matter greatly in all geographic regions.

3. Number of Models

Companies offering buyers a bigger selection of models than rivals enhance their company’s
competitiveness by giving camera buyers more opportunity to find a model well suited to their preferences.
Companies offering comparatively fewer models than rivals risk losing sales and market share to
competitors offering greater selection, unless they offset their narrower selection with other appealing
competitive attributes (such as a lower price, higher P/Q rating, longer warranties, and so on).

4. Advertising Budget

Media advertising is used to inform the public of the prices and features of newly introduced models, to tout
the merits of buying the company’s brand, and to inform shoppers of special sales promotion campaigns

and discounted sales prices. Even though retail dealers act as an important information source for
customers and actively push the brands they carry, advertising on the part of camera-makers (often done in
conjunction with the advertising efforts of retailers stocking its brand) strengthens brand awareness, helps
pull buyers into retail stores carrying the brand, and informs the public about the features and prices of a
company’s latest action camera models. The competitive impact of advertising depends on the size of your
company’s current-year advertising budget in each region. Companies whose advertising is above the all-
company regional-average gain an advertising-based competitive edge that positively impacts their
company’s regional sales volume and market share; the bigger the percentage competitive advantage, the
bigger the positive impact. Companies whose spending is below the regional average suffer from an
advertising-based competitive disadvantage that negatively impacts their regional sales and market share;
again, the bigger the percentage competitive disadvantage, the bigger the negative impact.

5. Sales Promotions (number of weeks)

Rival companies can run from 0 to 20 week-long sales promotion campaigns annually to tout their action-
capture cameras—all such campaigns involves offering retailers a discount of some size off the regular
price. Periodic sales promotion campaigns are of interest to retailers stocking the company’s models
because they call attention to the brand, spur consumer interest and store traffic, and help increase unit
sales. Market research indicates that the competitive impact of sales promotions depends on whether the
number of sales promotion events a company has annually is above/below the industry average in each
region. Companies having above-average number of sales campaigns gain a promotion-based competitive
edge that positively impacts their regional sales volume and market share. Conversely, a below-average
number of weekly promotions results in a competitive disadvantage that negatively impacts a company’s
regional sales volume and market share. The bigger the percentage competitive advantage/disadvantage,
the bigger the positive/negative impact.

6. Sales Promotions (% discount)

Retailers that are offered, say, a 15% discount off regular wholesale price on units sold during a sales
promotion event can be counted on to pass the savings along to consumers in the form of corresponding
sale prices of 15% off the regular retail price. In the camera business, just as in most other businesses,
bigger sales price discounts attract more buyers than smaller price discounts. Thus, promotional campaigns
involving sale prices of 15% to 20% off the regular price have substantially greater sales-enhancing impact
than promotions offering only 5 or 10% discounts, even if a company holds more sales with such small
discounts. In other words, the size of the discounts off regular price a company offers during sales
promotion events is a very crucial factor in determining the sales-enhancing impact of its promotional
campaigns, more so than the number of promotional events. Companies offering discounts above the
regional average gain a competitive advantage that positively impacts the company’s regional sales volume
and market share, with the size of the positive impact depending on the size of the competitive advantage.
Companies offering discounts below the regional average have a competitive disadvantage that negatively
impacts the company’s regional sales volume and market share, with the size of the negative impact
depending on the size of the competitive disadvantage.

7. Retailer Support Budget

promotional discount each company offered during these weekly sales promotions relative to the regional
average, and (5) each company’s expenditures to support the merchandising efforts of camera retailers in
the region relative to the regional average.

10 Period

Camera buyers, of course, find longer warranties more appealing than shorter warranties. A company
whose warranty period exceeds the regional average gains a competitive edge that positively impacts its
regional sales/market share, whereas a company whose warranty period is below the regional average
suffer a competitive disadvantage that negatively impacts its regional sales volume and market share. The
further a company’s warranty period is above/below the regional average, the bigger the positive/negative
impact.

11 Image (brand reputation)

The “image rating” for each company in the industry that is based on its P/Q rating for action-capture
cameras, its P/Q rating for UAV drones, its global market share of action camera sales, its global market
share of UAV drone sales, and its actions to display corporate citizenship and conduct operations in a
socially responsible manner over the past 4-5 years—a total of 5 factors. All companies had an overall
worldwide image rating of 70 at the end of Year 5. Image ratings/brand reputations are updated at the end
of each year, using the existing P/Q ratings, year-end global market shares, and information relating to the
social responsibility efforts of rival companies. Newly-released brand image ratings are widely-publicized
and become quickly known to buyers considering the purchase of action cameras and UAV drones.

Market research confirms that the prior-year company image ratings (brand reputations) of rival companies
have a moderately strong influence on the brand choices of camera buyers in the upcoming twelve months.
Thus, companies with prior-year image ratings above the industry average have a meaningful competitive
edge over rivals with below-average image ratings in attracting camera buyers to purchase their brand and
in recruiting additional retailers to stock and merchandise their camera models for a period of 1 year (at
which time new end-of-year company image ratings/brand reputations are released). The importance of a
strong brand reputation in attracting camera buyers is big enough that companies with comparatively weak
reputations must exert enough extra effort on the other 10 competitively relevant factors to boost overall
buyer appeal for their brand and overcome their image/reputation disadvantage. When weak image
companies significantly improve the overall buyer appeal and competitiveness of their camera models from
one year to the next, they can definitely win market share from strong image rivals despite having an image
rating disadvantage. Should companies with once-weak brand reputations continue to improve their overall
image ratings over a period of several years, they can definitely turn the liability of a weak brand reputation
into a strong brand reputation and competitive asset.

The Competitive Factors that Determine UAV Drone Sales and Market Share

Competition among rival makers of UAV drones centers around 9 factors:

1. Average Direct-Sale Price to Online Customers

Companies charging a price that is below the regional average gain a price-based competitive advantage
that positively impacts their regional sales and market share, whereas companies charging a price that is
above the regional average results in a price-based competitive disadvantage. The bigger the percentage
by which a company’s average retail price is below/above the regional average, the bigger the resulting
positive/negative impact on its regional sales volume and market share.

However, any company whose retail price is above the industry average in a region can partially offset or
even totally overcome its price disadvantage when it has a competitive edge over rivals on some or many
other important sales-determining factors—such as a P/Q rating that is above the industry average P/Q
rating, an above-average number of models, longer-than-average warranties, an above-average number of
third-party online retailers, above-average expenditures for search engine advertising, and an above-
average brand reputation. Price disadvantages become progressively easier to overcome as a company’s
P/Q rating rises further above the industry average. P/Q ratings that are 1-2 stars (or more) above the
industry average can command prices hundreds of dollars above the industry average because a sizable
fraction of the commercial enterprises that purchase UAV drones place a high value on the added
performance of drones with P/Q ratings of 7 stars and higher—perhaps as many as 5% of the world’s drone
buyers can be enticed to pay prices perhaps as high as $2,000-$2,500 for UAV drones with 9-star or 10-
star P/Q ratings. But the further a company’s price to retailers is above the industry average in a region, the
harder it is for a company to use enticements other than higher P/Q ratings to overcome rising buyer
resistance to higher retail prices for its drone models. Likewise, the further a company’s price is below the
industry average in a geographic region, the easier it becomes to offset any competitive disadvantages
relating to lower P/Q ratings, shorter warranties, fewer models, and so on.

One other price-related factor is also relevant**_. The purchasers of drones in Latin America and the Asia-
Pacific regions are more sensitive to price differences than are drone purchasers in North America
and Europe-Africa._** In other words, when the drone offerings of competing companies entail only minor
differences in P/Q ratings (and other factors that shape buyers’ brand preferences), then price differences
will have a bigger impact on unit sales and market share in Latin America and the Asia-Pacific than in North
America and Europe-Africa.

2. P/Q Rating

The vast majority of drone shoppers consider the widely-available and much- publicized annual P/Q ratings
compiled by the Global Alliance for Safe and Responsible Use of Commercial Drones to be a trusted
measure of the performance and quality of competing brands of drones. Market research indicates buyers
worldwide consider the P/Q ratings of competing drone brands to be one of the two most important factors
(along with price) in shaping their choice of which brand to purchase. A company whose drones have a P/Q
rating above the industry average thus has an important competitive advantage over rivals, whereas a
below-average P/Q rating constitutes an important competitive disadvantage. P/Q ratings that are more

5. Discount Offered to 3rd-Party Online Retailers

While exerting efforts to recruit third-party retailers and support their efforts to merchandise the company’s
drone models is important, the crucial inducement to securing the commitment of 3rd-party online retailers
to market a company’s drones is the size of the percentage discount off the price that a drone-maker is
selling drone models at its website. Understandably, third-party online retailers have zero interest in buying
a drone-maker’s models at the same price the drone-maker is charging at its website, then marking the
purchase price up by some percentage (10% or more to cover their own costs and allow for an attractive
profit) and trying to secure orders at prices above a drone maker’s website prices. Hence, a drone-maker
wanting to gain wider buyer access and additional sales volume through 3rd-party online retailers can do so
only by offering to sell its drones to these online retailers at an attractively large percentage discount off its
own website price. The bigger the percentage discount offered, the greater the number of 3rd-party retailers
that will agree to stock and merchandise a drone-maker’s brand. But, as should be expected, the bigger the
amount by which a drone-maker’s percentage discount offer exceeds the industry regional average, the
bigger the number of 3rd-party online retailers it will attract to sell its brand of drones in that region and the
greater will be the resulting regional sales volume and market share it achieves.

6. Search Engine Advertising

Search engine ads are a means of attracting more drone shopper traffic to a company’s website and
thereby helping achieve a bigger unit sales volume and market share in a region. A company whose
expenditures for search engine advertising is above the all- company regional-average gains a search
engine advertising-based competitive edge that positively impacts its regional sales volume and market
share; the bigger the percentage competitive advantage, the bigger the positive impact. A company whose
expenditures are below the regional average suffers from a search engine advertising-based competitive
disadvantage that negatively impacts its regional sales and market share; again, the bigger the percentage
competitive disadvantage, the bigger the negative impact.

7. Website Product Displays / Info

The level of expenditures for website enhancement is a proxy for the time, effort, and creativity that a
company puts into (1) posting periodically refreshed and visually appealing displays of its various drone
models, along with ample and useful information about each model’s features, capabilities, and
specifications, (2) providing site visitors with capability to create side-by-side model comparisons, (3)
enabling site visitors to post their reviews of particular models, (4) making it easy and quick for buyers to
place orders and pay for their purchase via credit card or wire transfer, and (5) providing good after-the-sale
product support to customers. Bigger than average expenditures for website expenditures attract more
website visitors because of the resulting enhanced visual appeal, functionality, features and information.
Many potential buyers make a point of visiting the company’s website to gather information about the
company’s models and research how the features, capabilities, and specifications of its models compare
against those of rival brands. Visits to a company’s website also enable customers to obtain needed
technical support, download apps and software updates for previously-purchased drone models, browse
product manuals, and discover how to file a warranty claim.

Companies whose expenditures for website displays are above the regional average have website display-
based competitive edge that positively impacts their regional sales volume and market share. Conversely,
below-average expenditures for website displays results in a competitive disadvantage that negatively
impacts a company’s regional sales volume and market share. The bigger the percentage competitive
advantage/disadvantage, the bigger the positive/negative impact.

8. Warranty Period

Shoppers for UAV drones find longer warranties more appealing than shorter warranties. A company whose
warranty period exceeds the regional average gains a competitive edge that positively impacts its regional
sales/market share, whereas a company whose warranty period is below the regional average suffers a
competitive disadvantage that negatively impacts its regional sales volume and market share. The further a
company’s warranty period is above/below the regional average, the bigger the positive/negative impact.

9. Company Image (brand reputation)

Just as with action-cameras, market research confirms that the prior-year company image ratings (brand
reputations) of rival drone-makers have a moderately strong influence on the brand choices of drone
buyers in the upcoming twelve months. Thus, companies with prior-year image ratings above the industry
average have a competitive edge over rivals with below-average image ratings in attracting drone buyers to
purchase their brand for a period of 1 year (at which time new end-of-year brand image ratings become
available and are widely publicized). The bigger a company’s image rating advantage or disadvantage, the
bigger the positive or negative impact on its sales of drones in the upcoming year.

Companies with comparatively weak brand reputations must exert enough extra effort on some (or many)
of the other 8 competitive factors to overcome a weak image disadvantage and boost overall buyer appeal
in order to increase sales and market shares above prior-year levels. Winning big chunks of sales and
market share away from rivals with strong image ratings in a single year is difficult. But it is certainly
feasible for drone-makers with below-average image ratings to nibble away at the business of strong-image
rivals, gaining 1 or 2 points of market share in a single year, (maybe more) if they significantly improve the
overall buyer appeal and competitiveness of their drone models relative to the models of rivals. Should
companies with once-weak brand images continue to improve their image ratings over a period of several
years, they can definitely turn the liability of a once-weak brand image into a strong brand image and
competitive asset.