Winnebago Case

Problems

Winnebago has several issues that the company should consider. The company has been experiencing back-logged orders, which could be resulting in customer dissatisfaction and lost sales. Each year the back-logged orders continue to grow. During peak sales times, Winnebago has a difficult time delivering orders at the same rate as the rest of the year.

Increasing gas and diesel prices, along with an uncertain economy are making consumers think twice about spending money on travel and leisure items. Consumers are lacking peace of mind and confidence in the economy and it is affecting sales in the Recreational Vehicle industry. As sales go down, dealers are placing discounts on their current RV inventories. This strategy is helping to move the older models, however it is causing profit margins to shrink.

Internal Analysis

Winnebago is the lead manufacturer of recreational vehicles, with a brand name that is synonymous with motor homes. In 2001, Winnebago had top sales of $681.83 million during the first 6 months and leading market share of 18.9% in the RV industry. Although sales have decreased since 2000 where they reached $753.38 million, Winnebago is still a very successful company. Winnebago can owe its success to many factors. Producing good quality products and excellent customer service are some of the main reasons this company is so successful. They have realized that employees, customers, and dealers play an important role in total quality management.

Winnebago's mission is to exceed customer expectations by continually improving their products and services. They follow some basic values called the four P's to achieve their mission; people, products, plant, and profitability. The company believes that employees are the strength of the company and promotes a teamwork environment. Winnebago's major production plant is located in Forest City, Iowa and includes 20 buildings that take up more than 2 million square feet, which contains the company's manufacturing, service and maintenance facilities. They also own satellite-manufacturing facilities at Hampton and Lorimor, Iowa, which add seven hundred square feet of operating space. There are three nine hundred foot assembly lines where motor homes are assembled and tested for quality control. Winnebago uses some of the most sophisticated computer-aided design/computer-aided manufacturing systems in the RV industry to design and test products.

Winnebago manufactures and sells an extensive line of RV's, under four different brand names, Winnebago, Itasca, Rialta, and Ultimate. There are three different kinds of RV's manufactured by Winnebago, Class A motor homes, Class B van campers, and Class C mini motor homes. Class A is a traditional motor home that range in length from twenty-three to thirty-seven feet long and can have a price tag of more than $250,000. Class B van campers are vans manufactured by Ford, GM, and Daimler-Chrysler to which Winnebago adds toilet, sleeping, and kitchen facilities. Class C mini motor homes are more compact, easier to drive, and are more fuel efficient then Class A motor homes and range in size from twenty-one to twenty-nine feet.

Traditionally Winnebago's target market has been the "woofies", well-off older folks over the age of 50 with discretionary income who enjoy leisure travel. With the aging baby boomer population and someone turning 50 about every 7.5 seconds in the U.S., Winnebago's market will be increasing at a rate of 350,000 people per month. With this huge market becoming available to Winnebago they will need to manufacture and market products that appeal to this market in order to continue to be one of the most successful RV manufacturers in the U.S.

Strengths:

-Brand name recognition

-Leader in the RV industry with 18.9% market share

-Teamwork environment

-Most technology advanced production facility in the RV industry

-Exceptional customer service and warranty package

-Produce high quality products

-High cash and retained earnings balance Weaknesses:

-Backlog for orders increased from 1,355 units in 2000 to 1,600 units in 2001

-RV's are not very fuel efficient vehicles

-Sales dropped from $753.38 million in 2000 to $681.83 million in 2001

-Sales incentives offered to sell existing inventory lowered operating income

Opportunities:

-Baby boomer population is aging and becoming part of Winnebago's target market

-Expansion of facilities

-Expand into new markets Strengths to take advantage of Opportunities:

-Use retained earnings to expand production facilities

-Use brand name recognition to expand into new markets and create more awareness in current market Overcome weaknesses by taking advantage of Opportunities:

-Expand production facilities to decrease the amount of backlog orders

-More marketing towards baby boomers to increase sales

Threats:

-Market is shrinking, sales are down by 17%

-Increase in the price of gasoline and diesel fuel.

-Weakening national economy

-Terrorist attacks Strengths to avoid Threats:

-Use brand name recognition to expand into new markets and create more awareness in current market Minimize weaknesses and avoid Threats:

-Produce more fuel efficient RV's

External Analysis

Winnebago is a North American leader in the production and sales of motor homes and has experienced substantial growth to become its industry leader. In 2001 Winnebago captured 18.9% of the industries market share to become the number one company in the industry for the first time in over 20 years and achieved this in part due to its successful sales of Class A & C models that were the top selling motor homes in the industry. Winnebago produced significant growth in 2000 and increased its market share 10% from 2000 to 2001,