Lulucom Generic Strategy Case Study Help
In this section we would be examining the generic methods that have been used by Lulucom Generic Strategy to highlight locations which can be targeted for highlighting a competitive edge that can result in a sustainable development method for Lulucom Generic Strategy.
Focus Strategy: Niche Marketing
We have actually talked about 3 possible alternatives for Lulucom Generic Strategy which can be pursued in terms of niche marketing. Before we look at these alternatives, a discussion concerning why Lulucom Generic Strategy needs an alternative earnings growth design is shared listed below.
We have currently discussed how Lulucom Generic Strategy has 3 profits sources including its theatre operations, movie distribution and system leasing. As we take a look at the income statements for 2004 to 2007, we can observe disparity in regards to success and growth in incomes. A fall in net income especially in 2006 and 2007 recommends that business needs to focus on areas of growth which can assure consistency in income growth and success.
As we check out each of the earnings sources for Lulucom Generic Strategy, we can see how the system-leasing business of Lulucom Generic Strategy has dependency on the expansion of theatres and even then there is a limitation in terms of the number of theatres that can be opened.
As far as the theatre operations are concerned, incomes from this source are dependent on the variety of theatres that Lulucom Generic Strategy operates. Along with that, broadening the variety of theatres may result in high capital expenses for Lulucom Generic Strategy where the possibility of additional overheads in the form of interest payments on loans for capital investment might result in lower net success.
Franchises or Alliances:
We can see how the company has a long term debt of $ 160,000,000 if we look at Lulucom Generic Strategy balance sheet. We have actually currently gone over the financial obligation to possessions, liquidity and profitability of the company in the ratio analysis done earlier to assess the internal monetary position of Lulucom Generic Strategy which would provide additional clearness regarding the fact that increasing the long term liability is not a practical alternative for development. This brings us to the conclusion that Lulucom Generic Strategy is presently in a position where it requires to decrease its dependability on profits from theatre operations and needs to expand through alternative options which require lower capital expense and promise higher net profitability. One possible option that can be examined even more is to give franchises of Lulucom Generic Strategy or to have alliances with other business which can promote expansion with minimal capital expenditure. Nevertheless, the possibility of losing a total hold over the quality of services being offered might avoid further orientation in this direction.
If we check out Lulucom Generic Strategy position in its movie circulation company, we can see how there is a greater orientation towards producing documentary films. This does guarantee blood circulation Hollywood motion pictures which might lose their effect after the preliminary launch duration, the fact still remains that documentaries do not guarantee revenue growth especially as the market share for these documentaries is restricted to the exact same section. While Hollywood motion pictures are made in different genre, they likewise provide the possibility of producing high revenues within the preliminary days of screening. So focusing on documentaries in terms of broadening the film circulation company means limiting the number of releases to a couple of documentaries that may not be bring in more than the existing audience. This highlights the truth that in order to attract a greater number of audiences to Lulucom Generic Strategy theatres, it is necessary to increase the variety of movies that are launched under Lulucom Generic Strategy name.