Forum adverts like this one are shown to any user who is not logged in. Join us by filling out a tiny 3 field form and you will get your own, free, dakka user account which gives a good range of benefits to you: No adverts like this in the forums anymore. Times and dates in your local timezone. Full tracking of what you have read so you can skip to your first unread post, easily see what has changed since you last logged in, and easily see what is new at a glance. Email notifications for threads you want to watch closely. Being a part of the oldest wargaming community on the net. If you are already a member then feel free to login now.

Hi,

I am currently working on my MBA and I am tasked to provide some information on the strategic issues affecting a publicly traded business.

I have selected GW for this exercise and I am currently reviewing five years worth of accounting information and working my way through all the information relating to the business.

Just as a bit of an information exercise can anyone give me their thoughts on what the five main strategic issues affecting GW at this time are and the likely affect over the next five years......all issues are welcome from Price Rises, to competition and even 3D printing etc.

Obviously I will do my own research anyway but some people here have considerable information about the miniatures / wargaming market and I just want to hear your thoughts, I believe these thoughts will allow me to direct my own research in a more productive manner.

Sorry if this post is a bit dry for Dakka, I would prefer to be talking about 40k but sometimes needs must.....

You can bullet point or discuss as you see fit.....

Over to you and thanks in advance.....

Lovepug






Automatically Appended Next Post:
sorry posted in wrong forum.....should be in dakka discussions - fail - can a Mod move because I don't know how lol

An easy fix.
.....

.. et voila !

best of luck with it all.

Thanks Red......appreciated

* Competition from rapidly growing companies GW refuses to acknowledge are threats

* Falling sales (only being covered by raiding prices and cutting costs)

* Lack of advertising other than stores which no longer seem to be in high foot traffic areas (see cutting costs above) and word of mouth (despite the number of disgruntled vets)

* The Hobbit license

* Hilariously bad policy of trying to sue over things like the idea of fur or halberds on models (particularly when they take such pride in their untouchable IP)

I think the main business goal of GW is to ensure Tom Kirby can retire to very well padded bank account

 SilverMK2 wrote:
I think the main business goal of GW is to ensure Tom Kirby can retire to very well padded bank account

This is the unfortunate truth. GW's leadership have no real personal stake in the company. Sure, they own stock, for which they get really nice dividend payouts every year, but none of them care about the company's actual product. Should GW collapse today, the only impact on the company's leadership is that they simply have to find a new job while they enjoy the millions of dollars they have already milked out of the company.

A look at GW's marketing or lack there of aside from their own magazine and shops could be interesting Looking at how it compares to similar sized and listed companies in the retail space.

These are the five main points that I personally think are GW's main strategic challenges. Some will no doubt disagree with the following.


1) Vertical integration which in combination with the thinning of traditional marketing channels (see point 3 below) incurs large costs with arguably poor ROI.

2) A stagnant, overly hierarchical corporate culture that stifles creativity among staff and leads to management over-emphasising the brand's strengths while glossing over their weaknesses.

3) Closing down marketing channels (e.g. shutting down facebook page, diluting White Dwarf content, lack of tournament support, lack of gaming in stores, etc) and overly aggressive legal defensiveness of the IP, which in combination damages the brand via alienating the customer and squandering good will.

4) Short term profit maximization at the cost of building long term revenue streams (e.g. price rises, profit used on dividend payouts as opposed to further reinvestment).

5) Over reliance on a single market segment (kids) at the expense of others (gamer 'veterans' and collectors). This leads to more long term revenue risk as it makes the brand heavily dependent on a single market segment, while neglecting possible lucrative revenue streams from other segments.
Magic the Gathering made it a point to identify their main market segments (gamers, collectors, etc) and strengthen the areas of the brand that would allow them to sell the IP to ALL of their segments. "Don't just sell the product to the kids, or the gamers, or the people who like the background and art. Sell to ALL of them if you can."


Good luck on the MBA.

An IP related company that seems to have little idea as to how the laws governing IP actually work. (They take folks to court for things that aren't illegal, and are then surprised when they do not win.)

Relying on 'Word of Mouth' advertising, while often annoying the folks that have those mouths.

A tendency to disguise loss of sales with an increase of unit pricing.

A lack of awareness of their competition.

The Auld Grump

Their biggest strategic challenge is, for me, ensuring there is an appetite for what they put out. It's not worth the costs involved if you're going to bring out a box of troops that nobody wants. I think that's why Dark Eldar took so long to come about and why Space Marines are the only force to get their core troop box re-done.

Although, thinking about it, getting young people involved in the game must be a task as well but word of mouth probably accounts for a lot of that. Like how kids with parents that wore Star Trek T-Shirts all either play Magic, D&D or 40K now they've grown up.

 Tannhauser42 wrote:

 SilverMK2 wrote:
I think the main business goal of GW is to ensure Tom Kirby can retire to very well padded bank account

This is the unfortunate truth. GW's leadership have no real personal stake in the company. Sure, they own stock, for which they get really nice dividend payouts every year, but none of them care about the company's actual product. Should GW collapse today, the only impact on the company's leadership is that they simply have to find a new job while they enjoy the millions of dollars they have already milked out of the company.

Gee, it is almost as though most of the major shareholders in a publicly traded company are in fact holding companies rather than individuals?

 Kanluwen wrote:

 Tannhauser42 wrote:

 SilverMK2 wrote:
I think the main business goal of GW is to ensure Tom Kirby can retire to very well padded bank account

This is the unfortunate truth. GW's leadership have no real personal stake in the company. Sure, they own stock, for which they get really nice dividend payouts every year, but none of them care about the company's actual product. Should GW collapse today, the only impact on the company's leadership is that they simply have to find a new job while they enjoy the millions of dollars they have already milked out of the company.

Gee, it is almost as though most of the major shareholders in a publicly traded company are in fact holding companies rather than individuals?

The problem, however, is that the shareholders won't care if GW goes under, as they've already made their money off of the dividends all these years. They have no personal stake in GW's continued success. GW is not like, say, Microsoft. Should Microsoft go under, that would screw a lot of people over, as the shareholders and corporate leadership have a personal stake in the company (i.e. they regularly use Microsoft products, therefore, they have a vested interest in keeping Microsoft successful).

 Kanluwen wrote:

 Tannhauser42 wrote:

 SilverMK2 wrote:
I think the main business goal of GW is to ensure Tom Kirby can retire to very well padded bank account

This is the unfortunate truth. GW's leadership have no real personal stake in the company. Sure, they own stock, for which they get really nice dividend payouts every year, but none of them care about the company's actual product. Should GW collapse today, the only impact on the company's leadership is that they simply have to find a new job while they enjoy the millions of dollars they have already milked out of the company.

Gee, it is almost as though most of the major shareholders in a publicly traded company are in fact holding companies rather than individuals?

Gee, it's almost as though lots of people don't buy into the idea that faceless a-moral profiteers owning all the stock in companies that produce stuff said people like is Great News.

My take on the five most pressing issues

1. Word of Mouth or GW store advertising only, it seems (not solid proof) that the customer base size is falling in what appears to be a growing market

2. Grumpy (with good reason) veterans bad mouthing (telling it like it is) the GWs policy's. More and more of an issue as the internet gets more pervasive with younger and younger folk

3. One trick pony: 40K still seems to be doing well, but fantasy seems to be doing poorly especially in the US and the Hobbit was a mistake

4. Competition, more financially sound competitors exist that are around for the long term potentially taking money that could be going to GW

5. Prices, yes it's sold as a premium product but the prices appear to high to be sustainable in the long term, especially as game (point) sizes are always increasing meaning you need more and more models to play 'the game'

The above inflation price rises every year

thanks guys.....

BCA man.....War soon? lol

#1 issue, from a new players view. GW has angered all of its customers. I've been in this hobby under a year, and in that time i have seen peoples attitudes against them go sour. If you anger your customer base nothing else really matters because sales will drop. I don't think i've ever seen such a one sided, negative view towards a a hobby product. They've shot themselves in the foot.

Ok, so five main strategic issues facing GW.

Their market share, as a proportion of units sold, not value is, I believe, deceasing (actual numbers proving this may be hard to come by). This is double threat to a company like GW as wargames do fall in to the "success to the successful" model (Peter Senge, The Fifth Discipline) in that in order to play a wargame you need an opponent who has made the same purchasing decision as you. This causes a reinforcing feedback as more people will chose to play Game X if they can get a match up> this causes them to choose Game x which make it easier to find a match up> causing a higher likelihood of a person choosing Game X> making it easier to find a match up. GW need to have and maintain a high market saturation (which is why they will not acknowledge their rivals, keeping their existing customers ignorant of the alternatives goes a long way to ensuring this saturation).

Change in retail habits and the growth of the internet sales channel, with the inheritance of a large chain of bricks and mortar retail outlets.

Reaching out to new customers (this dovetails into point 2 as the traditional method was hooking them in the shops, and to point 1 as GW historically got the kids before their rivals and then kept them, with the changing of the B&M channel is this still a goer?)

Protection of the IP. With the epic fail of "Spots the Space Marine" and the costly debacle with Chapter House Studios failure here waters down their core business (point 1 is impacted here also) and could impact the value of any future licences, which leads on to point 5

Licencing opportunities, with the change in focus given the death of their previous Licence owner (I can't recall the name) GW have switched to licencing to many, usually smaller, companies. At a guess this is to spread the risk and impact of any single one failing (again). Royalties made a big chunk of GWs profits in previous years and represents a very low risk option. Is the buiness model right, are they going far enough, could they go too far? (Space Marine games are one thing and arguably grow the brand and market, but Space Marine plushies? Tau bobble heads? Khorne flakes? glow in the dark bight wizard condoms? Slannesh themed "Gentleman's special interest films"?)

Koppo - well considered and thanks....

 Tannhauser42 wrote:


The problem, however, is that the shareholders won't care if GW goes under, as they've already made their money off of the dividends all these years. They have no personal stake in GW's continued success. GW is not like, say, Microsoft. Should Microsoft go under, that would screw a lot of people over, as the shareholders and corporate leadership have a personal stake in the company (i.e. they regularly use Microsoft products, therefore, they have a vested interest in keeping Microsoft successful).

Hopefully the OP has some understanding of business and understands the structure of a Plc, and what its business aims and pressures are.

I hope the OP also does some real research, for instance of pricing and how it's changed over the last decade. It would be great to have some rigorous investigation, rather than the fanciful claims seen on some fora. Obviously GW prices have gone up, it would be great to see by exactly how much.

I presume also the OP will compare GW's performance with the leisure goods sector in general, and make some comparisons, and hope there will be real figures on how GW's rivals are doing.

1. Withdrawal from the market place. In the past year, GW dropped it's specialist games and before that, they dropped historicals and long before that, they dropped many other games (Talisman, Gorka Morka, etc). Many of these competed with other companies of similar games. This has led them to have a more niche business with less to compete against which may be an indicator of inability to compete.

2. Price hikes and dependency on loyalty. This is something that Apple did in the 90s after Windows 95 (or was it NT?) cut deeply into their market share. This resulted in the company dieing a slow death as they expected customers to stay loyal and accept higher prices while removing the chaff so to speak. Their products became riddled with bugs and viruses and eventually became less than 5% market share when they had previously dominated the market. A lot of parallels can be drawn here.

3. Losing talent. GW has been dropping talent from their designer's pool for some time now. These people are now in businesses that are competing with GW.

4. High dividends. GW has been paying out high dividends for some time now. This capital could have gone to reinvesting in itself and staying competitive with other brands by revamping their old products, expanding or keeping prices competitive.

5. Inability to grow. GW has failed to show significant growth in the past 4 or 5 years by barely keeping up with inflation. They outright lied in their financial report this year when reporting their real revenue from year to year. In the face of pulling every trick in the book, they still cannot increase their revenue beyond inflation.

6. Poor business tactics. They don't advertise, relying on stores to attract people. They are highly aggressive in defending their IP to the point of blindness rage. Spots the Space Marine anyone? Over emphasis on design in products. This one is a bit harder to prove, but GW has been moving towards a very gimmicky way of designing products. Back when Space Wolves came out, everything was wolf mania. Blood Angles, everything had to be prefixed with blood. Necrons got an even bigger monolith, Khorne got a big dude with an axe on wheels and now Space Marines are getting bigger clunkier suits of armor. It speaks of an overtaxed IP and limited creativity in a business that thrives on creativity. It's as if products are being designed by a marketing team giving key points on what makes a model a space marine and not an eldar, rather than a developing team that is imagining a model to fit a faction.

Maybe it's different elsewhere, but I've noticed the modelling hobby as a whole dry up over the last 10 years.
There are very few hobby shops left and those that are still going tend to focus on RC.

Everyone wants to be entertained via computers, they're tidy, easy to use (set a game up and play), take less space, can be played straight away without having to build the setting and playing pieces first. Easy access to a wide range of people around the world so you're not stuck for finding a local person to play with.
Long term I see GW focussing more on gaming licences as the computer gaming fanbase is going to be larger than the tabletop gaming fanbase - not everyone likes playing pieces, let alone has an interest in assembling and painting them. It's also more expensive to get into the tabletop game.
A console has to be bought before computer games can be played but most people already have a console already so that's not a barrier to getting into 40K computer games.

Lovepug13 wrote:
Koppo - well considered and thanks....

Cheers I'd really recommend Peter Senge's "The fifth discipline" if you've not already come across it. The models he proposes in it are really useful in understanding the dynamics involved in the sort of complex systems in which a company or companies exist in. The GW dynamic is pretty similar to the one eBay has, in that people will use the popular/successful auction site, which in turn makes it more successful/popular than its competitors. For both eBay and GW the first mover advantage is/was important. For eBay it was being the first in existence (of any note) in a market place (note this tends to be regionally based, eBay failed to crack some national markets). For GW it is being the ubiquity of being the "gateway" game in to wargaming, they move in on the kids first. Ask most wargamers how they started and they will have an Ork or Orc somewhere near the start of their story.

For me this is probably the greatest threat as they don't currently have a low cost entry game like Necromunda, Heroquest, Space Crusade or that other one, (you know, the one with the tiny dice) anymore. Their competitors are hitting that price/barrier of entry space and I think the thing that is stopping that being a major problem for GW at the moment is that there are so many of them they cancel each other out and don't get to that critical mass where you could say with some confidence "I have just moved to this random town, I can probably get a game of X in this week and there is probbably a club nearby".

Again, good luck getting the figures to back up your analysis and ideas. I'd love to read your work once you've submitted it, post up a link if you can.

Games Workshop has targeted the school to young teen market, as its main selling area. Often ignoring the older more established gamer, collector.
Priced it's kits/models in the upper price bracket.
But it's target market has very little income.

Most finding it hard to gain employment.

http://www.bbc.co.uk/news/business-19997182

http://www.newsday.com/business/teens-struggle-to-find-summer-jobs-1.5622854

http://www.thenation.com/article/154478/sorry-kids-no-jobs-here#

Wrong models aimed at the wrong people, at the wrong prices.

And we all know three wrongs don't make a right.

 loki old fart wrote:
Games Workshop has targeted the school to young teen market, as its main selling area. Often ignoring the older more established gamer, collector.
Priced it's kits/models in the upper price bracket.
But it's target market has very little income.

Most finding it hard to gain employment.

http://www.bbc.co.uk/news/business-19997182

http://www.newsday.com/business/teens-struggle-to-find-summer-jobs-1.5622854

http://www.thenation.com/article/154478/sorry-kids-no-jobs-here#

Wrong models aimed at the wrong people, at the wrong prices.

And we all know three wrongs don't make a right.

I concur, but I think this is all a symptom of the biggest challenge, which is how to reconnect with and open communication with it's customer base.

All these wrongs stem from the fact they apparently have no feedback mechanism, so are essentially launching stuff they think their customers want off a cliff and then seeing if it flies.

This also then reinforces a culture of playing it safe, much like the big Hollywood studios, why risk something different when you can make Generic Action Film Franchise Sequal 5 for a guaranteed, albeit likely moderate success?

 azreal13 wrote:

 loki old fart wrote:
Games Workshop has targeted the school to young teen market, as its main selling area. Often ignoring the older more established gamer, collector.
Priced it's kits/models in the upper price bracket.
But it's target market has very little income.

Most finding it hard to gain employment.

http://www.bbc.co.uk/news/business-19997182

http://www.newsday.com/business/teens-struggle-to-find-summer-jobs-1.5622854

http://www.thenation.com/article/154478/sorry-kids-no-jobs-here#

Wrong models aimed at the wrong people, at the wrong prices.

And we all know three wrongs don't make a right.

I concur, but I think this is all a symptom of the biggest challenge, which is how to reconnect with and open communication with it's customer base.

All these wrongs stem from the fact they apparently have no feedback mechanism, so are essentially launching stuff they think their customers want off a cliff and then seeing if it flies.

This also then reinforces a culture of playing it safe, much like the big Hollywood studios, why risk something different when you can make Generic Action Film Franchise Sequal 5 for a guaranteed, albeit likely moderate success?

Very good point, during the chapterhouse case they actually stood up and said they had no market research to back their claims up didn't they?

That can't be a good thing.

1) Falling perceived value: GW stores in the past provided brushes/paints for customers to use, stores were open longer hours, had more staff etc. With those being removed the customer is seeing less and less justification for the premium price GW is charging for their product. The premium could be justified in the past because they had store fronts with a dedicated staff and services which no one else provided (albeit limited to GW-related activities). So their value chain has been reduced by the removal of those services.

2) Reservation prices: As prices continue to increase, GW is beginning to reach if not exceed current customer's reservation prices, this means either falling or ceased purchasing of products. Falling sales volumes are being combatted by raising prices, only exacerbating the issue. This is a cyclical issue which must be broken by re-establishing another value adding model to the business.

3) Quality control issues: further to the point of falling perceived value, this is not helped by the release of sub-par products at a premium costing. Written releases show editorial issues which are not caught before production and could be helped by hiring a dedicated editor. In the past, independent retailers of their products have refused to sell products on the grounds of severe quality issues.

i don't think lack of marketing is actually a key issue. Marketing doesn't directly equate for direct sales. Also the cost to make a massive difference to the bottom line would be astronomical, marketing isn't cheap, even if you take into account the Halo effect.

Word of mouth is a successful driver especially if little timmy at the store brings 2 of his friends.

Case in point - HomeBargains ( TJ Morris ltd) has grown astronomically in the last 10 years ( and has the split off of B&M Bargains) neither of these companies market at all and are still showing growth and managed to get where they are without marketing.

I think that if GW did start down this route would actually pose a key risk to the company and the profit margins ( likely to cause price increased which would be unpalatable to attracting the new customer)


I feel one of the biggest issues is price ( note not the price rises as such) The reason for this as that the mst profitable customer group is the new buyer for GW, especially the 11-16 year olds. While per head they may not spend as much as the older gamer the volume of newly acquired customer makes this more profitable.

As the parents/grandparents/ other relatives will most likely be the purchases for this group they need to keep pricing in a similar price bracket to other hobbies for this group ( ie video games etc) if they go to far over this parents wont buy as they wont perceive the product value.

cammy wrote:
i don't think lack of marketing is actually a key issue. Marketing doesn't directly equate for direct sales. Also the cost to make a massive difference to the bottom line would be astronomical, marketing isn't cheap, even if you take into account the Halo effect.

Word of mouth is a successful driver especially if little timmy at the store brings 2 of his friends.

Case in point - HomeBargains ( TJ Morris ltd) has grown astronomically in the last 10 years ( and has the split off of B&M Bargains) neither of these companies market at all and are still showing growth and managed to get where they are without marketing.

I think that if GW did start down this route would actually pose a key risk to the company and the profit margins ( likely to cause price increased which would be unpalatable to attracting the new customer)

The counter to that is that GWs biggest growth occurred when they had the lord of the rings tie in magazine, which was in every newsagents and had tv advertising.
Anecdotal but it's how I and a few others I know first discovered the hobby.

 loki old fart wrote:
Games Workshop has targeted the school to young teen market, as its main selling area. Often ignoring the older more established gamer, collector.
Priced it's kits/models in the upper price bracket.
But it's target market has very little income.

Most finding it hard to gain employment.

http://www.bbc.co.uk/news/business-19997182

http://www.newsday.com/business/teens-struggle-to-find-summer-jobs-1.5622854

http://www.thenation.com/article/154478/sorry-kids-no-jobs-here#

Wrong models aimed at the wrong people, at the wrong prices.

And we all know three wrongs don't make a right.

The problem with this analysis is that it assumes that the traget is the money in the pocket of the "school to young teen market", as you put it. You state that these people have very little money because they cannot find jobs.

However the "school to young teen market" is aged 11 to around 14 (15-17 being mid teen and 18-19 late teens). The news stories you quote relate to the mid to late teens. In fact "school to young teen market" is almost by definition not counted as unemployed, because they are at school, and actually too young to be employed. I'm sorry but your analysis does not add up.

The target is actually the £ in the pocket of said school kids parents, which has taken a knock but is now on the road to recovery (albeit a shaky and tentative one). This upper price bracket is only of importance in relation to other products and services that may target that same £. For this don't compare infinity or Warmahords as these are hidden from the market due to the targets naivety, rather compare a PS4 (£350) or a PS4 game (around £50). Once you do that the entry price of a Dark Vengeance box plus (£61.50) and a tac squad (£23) starts looking very reasonable. Add in that a PS4 game is pretty much dead once the last boss is dead but 40k is possibly forever the actual long term cost looks less.

I remember the 90's with the horrible garish bright boxes made to appeal to the kids. It was the right market for GW then (same business model as now) as proved by their rapid growth and I don't see why it would be the wrong market now. The problem is that I no longer fall in to that market and so feel abused and ignored by a company that seemed to love me so much when I was a young lad with no mortgage. [Insert dodgy priest/scout leader/choir master/PE Teacher joke here]

This does not mean the market GW targets is the wrong one. I'd go as far to say that GW targets the right market, at the correct prices against the competing products and the models appeal to that market (Termitubbies anyone? Actually that is a joke, but Marines do appeal to the 14 year old in me).