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Strategies & Market Trends : The Rational Analyst -- Ignore unavailable to you. Want to Upgrade?

To: Dr. Link who wrote (1480)	10/22/1998 11:40:00 AM
From: HeyRainier	Respond to of 1720

This is a forum for exchaning ideas. As a Ph.D., you more than anyone should understand the value of a differing opinion; there is still much more to see about RADAF in the coming quarters, and I will wait patiently until then. RT PS. What is your Ph.D. in? Is it related to finance and investments?

To: Dr. Link who wrote (1480)	10/22/1998 12:52:00 PM
From: HeyRainier	Respond to of 1720

[ More RADAF ] Since you implied your expertise in RADAF by pointing out my "cluelessness" about the situation, I have some questions for you. Perhaps you can share your knowledge with the forum so we can make a more informed investment decision: 1. How long has RADAF marketed its Bass Fishin' line of products? I see from the Toys 'R Us website that 4 out of the 10 Radica games sold there are from the Bass Fishin' line. See toysrus.com and type in "Radica" to confirm. One of your very own Radica posters, a "Dennis M.," private investor and venture capitalist noted in a recent post the increasing competition from competitive offerings, and RADAF's relatively undiversified product base: "...HAS and MAT are much more diversified, whereas RADAF still appears to derive 50% of their revenue from the Fishin' line alone." (http://www.exchange2000.com/~wsapi/investor/reply-6119310) By using a little economic theory, with a little price cutting here and there via a price war, loss of market share to a lower priced competitor would be disastrous for RADAF, given their reliance on one key line of products. As for the next question, which is related to the first: 2. Do your expert comments take into consideration the Product Life Cycle theory? Where in the curve are RADAF's key products as we speak? Does it correspond roughly to the position found in the stock price (i.e. past its peak)?. Here's a little link on the Product Life Cycle: bah.com __________________________________________________________ Product Life Cycle Conrad Jones, (with Booz·Allen 1951-1985) reminisced recently about the birth of his famous Product Life Cycle theory. Although the theory has spawned hundreds of doctoral dissertations and business articles, and remained the Harvard Business Review's best selling reprint for 20 years, its inception was modest. Jones was the job manager on an assignment for S.C. Johnson in 1955, an important Booz·Allen client at that time. The company wanted a strategy for developing new products. Jones worked closely with Sam Johnson -- the great-grandson of the firm's founder -- who was staffed on his team. Late one night while the two young men were working, Jones pondered the issue of product development. Jones wondered if there weren't some explanation that could somehow capture the progressions that many people observed but didn't really understand. Many people had commented on the difficulty of trying to increase share of successful products. There was confusion and controversy between R & D, manufacturing, sales and marketing about accurately projecting demand, share and margins. Suddenly, Jones went to the blackboard and sketched out two axes and a curving trend line; it looked like a steep hill, leveling off in a plateau. This, Jones told Johnson excitedly, was what happened to products over time. Their "life-cycle" dictated that they be born, grow quickly, capture market share, then level off. The double curves, of profits out of phase with volume over time, demonstrated why new products must be introduced continuously. Companies could not grow indefinitely with the same product. Conrad Jones remembers ruefully: "This curve was not built on mountains of computer data. No one had any data of accuracy or comparability. The curve looked right, but I could only support it with a few industry statistics. I remember graphing the first 10 years of TV set production and 40 years of the automobile industry. Nonetheless, after collecting a transfile box of articles and conclusions, I felt confident enough to publicize my conclusions. "I was 31 years old and soon to know the ultimate in professional bliss: my creation, spreading around the world like wildfire, adopted as state of the art and becoming standard practice, with experts everywhere pontificating on my very words...." ______________________________________________________ Having 50% of your sales caught in one product alone is a dangerous thing for a company, particularly in the fickle world of childrens games. For example, even the mightiness of the Mighty Morphin Power Rangers couldn't hold back the economic forces of shifting demand. Here's another link, though it is more technology related: antitrust.org _______________________________________________________ C. Shortened Product Life Cycles Competition to be first on the market has resulted in shortening product life cycles, at least in high-tech industries. Hewlett-Packard Company's chief executive officer observed that the typical product life cycle today is 6-to-12 months, whereas 5 years ago the average product life cycle was 3-to-5 years. He emphasized that, to be successful, Hewlett-Packard "must continually invest in newer, cutting-edge technology." 3M measures its innovation through its annual sales of new products. Several years ago, the company targeted 25 percent of annual sales to come from 3M products on the market less than 5 years. 3M raised that goal, however, because "we have found out that that rate of innovation was not fast enough for today's markets, and we have raised it to 30 percent and [4] years, and . . . that isn't even enough." 3M's view today is that 10 percent of its annual sales should come solely from the new products introduced in the past year. __________________________________________________________ Food for thought. RT