Daktronics Company Analysis

Table of Contents

Introduction……………………………………………………………………………………………………….2

External Analysis……………………………………………………………………………………………….4

Internal Analysis………………………………………………………………………………………………..7

Problem & Solution……………………………………………………………………………………………9

Conclusion………………………………………………………………………………………………………..10

Appendix…………………………………………………………………………………………………………12

Works Cited……………………………………………………………………………………………………15

Introduction

        Since 1968, Daktronics has been reinventing the way people display. Daktronics is classified in the billboard and sign-manufacturing segment.  The firm is dominant in the sports market and is increasingly growing in the advertising display market.  With systems installed on six different continents and 100 countries, the company was recognized as a worldwide leader in design, manufacture, and a service of electronic displays for a variety of markets.  This industry manufactures billboards, scoreboards, retail store signage, and transit signs.  With the combined efforts of Dr. Al Kurtenbach and Dr. Duane Sander, Daktronics was born and electrified the view of many by pioneering the road to displaying billboards with electronics.  

        In recent years, Daktronics has been experiencing some set backs due to the aftermath of the recession and their misconception on growth management.  This poses as both an external and internal problem, and with the new age in technology arising, Daktronics cannot leave this unattended.  Internally, they had an experienced executive team but their revenues fluctuated depending on large orders such as stadium constructions and they had very little affiliation with small to medium sized market transactions that could have set stability for them.  Luckily, with their brand superiority and currently 43% market share dominance they had the opportunity to expand their target market overseas especially since the age of technology is at its peak.  

External Analysis

        Dr. Alfred Kurtenbach and Dr. Duane Sander, both coming from the same state, founded Daktronics in Brookings, South Dakota.  The name Daktronics actually originated from both the words “Dakota” and “electronics”.  Since then they have made huge strides from being the pioneers in electronic display signage to marketing around the globe.

        Considering the industry they are in one can say that it is attractive. The competition is slowly rising due to the technological age that is afoot.  Daktronics now faces 24 major competitors, which on a global scale, is not bad. Daktronics still has superiority mostly due to the fact that it was the pioneer for the digital signage industry.  Daktronics without a doubt dominates within its home front; USA, but is facing challenges overseas especially in China and South America.  For Daktronics, since most of their transactions are dealt with larger companies, they deal with an interesting set of challenges in regards to competitors. These larger companies typically negotiate with a number of other administrators and consultants to help make their decision for sale. With these consultants, their job is to save their company as much money as they can so when reaching out to suppliers (in this case companies like Daktronics), they choose the cheapest products and sometimes that may mean using different suppliers for one product.  Although this may seem appealing to the company’s pockets this also poses a problem because many times the company will not receive a fully integrated system and would need have to have technical help to resolve the synchronization issues.  Daktronics, as a premier quality supplier can use this to their advantage against their competitors because their customer would have to buy either all Daktronics or all of something else if they want to have a synchronized product.  Daktronics in this case has the advantage in buyer power.

        Daktronics as part of their strategy to break away from the country’s recessional state had to cut costs.  From this, Daktronics has come up with the “lean program”. The “lean program’s” primary efforts has been to focus on reduction of machine setup time partly through improved organization of raw materials and tools, standardization of parts and tools to reduce inventories, faster turnover of inventories by reducing lead times, and reduction of “over-designing.” These moves were intended to focus the program in manufacturing was reducing costs as well as time from order receipt to delivery and thus accelerating cash flow.  For materials such as LEDs, Daktronics focused on a limited number of suppliers because the company had developed relationships that assured quality control or because the supplier company customized the materials for the company’s applications. Management realized however that this could have an adverse impact on its business operations if they lose one of their key suppliers.  Even though for the most part Daktronics was self sufficient in order for them to operate more cost effectively that meant that they must depend on some outside sources.

        The threat of new entrants is low in this industry.  The digital signage industry was complex and difficulties arose in identifying entrants in specific segments. Eighty percent of entrants were local companies and were categorized as audio/visual or IT, not even digital signage.  The same thing goes for threat of substitutes, the complexity of the digital signage industry builds a lot of obstacles for simple substitutes which is really good for company’s like Daktronics.

        Another thing to take note when analyzing the external factors is the political-legal, socio-cultural, economical and technological environment in the digital signage industry.  In the political-legal sense, Daktronics have met their match when they tried to expand overseas.  In South America, the political issues chased Daktronics away and thus made it difficult for them to expand there being that many of the countries there are communist. Daktronics was considering committing to a joint venture in Asia but the legal constraints are too binding to be able to sprout its roots in such a technologically advanced region such as Asia. The socio-cultural grounds during this time are very fertile for a company like Daktronics to grow in a place like the U.S. But in places like China the cultural differences were pretty steep and it made it difficult for Daktronics’ sales team to have some influence there over already existing firms. Economically, Daktronics was not in such a good place. United States had just undergone the biggest economic depression since the Great Depression, noting the expensive material that is needed for Daktronics to produce their products this did not mix well.  As mentioned before, the age is now set in technology, smartphones, touch screens, simply a more vivid and interactive lifestyle.  Daktronics’ nature in business satisfies that completely.  As pioneers to almost all advancements in the digital signage industry with their LED displays, touch screens, video displays etc., Daktronics thrives when it comes to the technological aspect in this analysis.