Strategic challenges and opportunities for CanGo Inc.

CanGo Final Report- Rev2

In 2006, Liz Bennet realized the lucrative and efficient scope of Ecommerce. Liz established an online entertainment company, CanGo Inc. that provided online video, audio, book and gaming-based entertainment. This business had a scope of capturing mass market of various market segments as it provided cheap entertainment opportunities in the current era of economic crisis and increasing inflation.

Despite of having a skilled team, CanGo Inc. lacks a concrete business plan. The long-term goals are vague and there are is a lack of clear strategic plan as to how those goals will be achieved. While a clear organization structure is present and hierarchal positions are well defined, too much centralized decision making prevails. Lack of proper communication channels results in uninformed decision making and employees are often left with little sense of clear direction. This means that there capabilities are not being utilized efficiently.

The online entertainment industry is getting saturated each day and competition is very tough. The increasing rate of uncontrolled piracy is adding extra competitive pressures. This calls for the organization to develop an aggressive marketing strategy in order to ensure its survival in the market.

Introduction

With the invention of World Wide Web, the corporate sector has evolved into new dimensions. The fast, quick, reliable, accurate and efficient internet systems of E-commerce have provided the world with new and unique business opportunities. More and more entrepreneurs are now taking keen interest in a completely online business rather than a conventional brick and mortar business. This has made the internet a multibillion dollar industry (Plant, 2000). It has also created more employment opportunities and has made lives of businesspersons, employees and the consumers much easier. Considering the lucrative opportunities offered by E-commerce, CanGo Inc. was established by Liz Bennet in 2006.

CanGo Inc. is a 100% online company that deals in providing E-commerce business solutions. The company specializes in online entertainment including books, magazines, and audio and video entertainment forums. The company aspires to make its mark in the online gaming industry as well. The company was founded in 2006 by Liz Bennet and it currently has four consultants. Since then, the company has strived to make its mark in the internet corporate industry. One of the company's major achievements includes being chosen as the Regent Business Leader of the Year in 2009. Having said that, the company still has a lot of weak areas that need to be worked on. The major pitfalls of the company include lacking a concrete business plan and serious issues with personal management.

SWOT Analysis

The SWOT analysis for CanGo Inc. is discussed under the following sections.

Strengths

CanGo Inc. is a 100% online establishment with zero brick and mortar existence. This makes the business cost efficient.

CanGo Inc. primarily caters to online entertainment industry. This is a highly profitable sector with an immense scope of growth. Online reading, magazines audio and video consumers are increasing everyday that provides CanGo Inc. with a broad consumer base.

CanGo. Inc. has a cohesive and well motivated workforce that is both skilled and innovative.

The type of business that CanGo Inc. is involved with has a scope of a lot of diversification.

Weaknesses

The most basic weakness of the organization is the lack of a concrete and cohesive business plan. Lack of business plan can pose serious problems in setting and achieving long-term strategic goals.

Despite of a well motivated and skilled workforce, CanGo Inc. is too centralized as far as decision making is concern. Often, it delays the decision making process.

Too much centralization and communication gap results in uninformed decision making. Decisions are not properly communicated to the workforce, which in turn results in lack of clear direction among employees.

Opportunities

The increasing accessibility of the internet around the world will enable the company to have an international consumer base and make its existence in other countries as well.

CanGo Inc. is planning to expand into the online gaming market. With the increasing trend of online social networking, this has immense profitability chances.

CanGo Inc. can come up with new and innovative forms of entertainment. This can include introducing interesting and innovating applications for social networking websites such as Facebook, or launching a social networking website of its own.

Threats

The online entertainment market is getting more and more saturated as more and more entrepreneurs are stepping in the industry.

The increasing piracy and easy availability of torrents attract people away from paid websites

Absence of a concrete business plan has resulted in a lack of concrete performance-based goals.

Lack of employee benefits might result in demotivation of employees in long-term.

Market Analysis

The internet entertainment industry is now a multibillion dollar industry that is highly saturated. As far as video entertainment is concerned, YouTube holds the largest market share with an almost monopolistic existence. Online gaming is getting more popular in the form of social gaming and the major market share is held by Zynga. As far as music and Ebook is considered, easy availability of illicit pirated material attracts people away from using paid legal websites. A good marketing strategy is needed in order to combat competitive pressures. Since the market is quite saturated with additional pressures of piracy, CanGo Inc. will have to offer something unique and innovative to consumers. The major market share of online entertainment industry is controlled by giants such as You Tube and Zynga. CanGo Inc. can combat this pressure by getting into joint ventures and collaborations. Also, if financially viable, CanGo Inc. can go for mergers and acquisitions in order to expand and minimize competitor's risk.

Competitor's Analysis

As mentioned earlier, the online entertainment industry is getting more and more saturated each day. As far as online gaming is concerned, major competition comes from free online gaming sites such as Miniclip.com and social network gaming companies Zynga. It has been observed that social gaming on Facebook is getting much more popular than conventional online gaming. In order to compete, CanGo Inc. can collaborate with Facebook and develop social gaming just like Zynga. Social gaming also has an added advantage. It allows the gaming company to market other products of the company through the game and can promote the company to a large number of people registered on the social networking sites. Apart from that, CanGo Inc. also faces competitive pressures from websites that allow free downloading of pirated material and torrents (Lauden & Traver, 2008).

Marketing Strategy

Being a business that deals in the online entertainment, CanGo Inc. enjoys an edge of having a vast target market that can easily be segmented into various market segments. Apart from that this type of business also has a scope of a lot of innovation and diversification.

Target Market

Currently, the service range offered by CanGo Inc. includes online audio, video, gaming and reading services. This allows for a large number of targeted customers. Primarily, the market for CanGo Inc. will be segmented in two ways, which include gender and age groups. Segmentation according to income groups cannot be used because all services provided by CanGo Inc. will be easily affordable by all income groups since the company cannot afford to charge high prices due to competitive pressures. Many services such as gaming will also be provided for free.

Marketing Mix

The marketing mix of CanGo Inc. is discussed under the following sections:

Product

CanGo Inc. deals with online entertainment market. Their services include online video, audio, reading and gaming. Since level of competition is high in the market, CanGo Inc. will have to show a high degree of innovation in their services. It will have to come up with newer ideas that are not yet provided by other businesses. Gaming services provide a lot of room for innovation. Like Zynga, CanGo Inc. can collaborate with social networking websites such as Facebook, and provide free social gaming experience. The edge that social gaming provides is that firstly, it allows immense scope to promote the company. Secondly, the gaming in general can be free but gaming rewards can be sold for cash that assist in faster progressions in game. People who are too much into gaming buy these rewards without any reluctance, provided that the game offers them unique fun experience.

Price

Since the online entertainment market is highly competitive, CanGo Inc. will have to keep low subscription fee as far as video and audio downloading is concerned. While some websites that provide pirated material offer the facility of free downloads, CanGo Inc. cannot afford to do that as piracy is illegal and providing legal material for free will reduce the firm's profits. The weak side of downloading free torrents is that it poses a high threat of viruses and Trojans. CanGo Inc. can play on this weakness by ensuring that it provides quality and virus and Trojan free material. Online gaming, in general can be offered for free, however, cash payments can be charged for sale of game rewards.

Promotion

The best way to promote the CanGo Inc. services are by ensuring that the firm's official website appears in top search results of top search engines such as Google. This can be done by ensuring that the website's content is written using an excellent SEO language. The firm can also use social networking websites such as Facebook and other free gaming websites such as Miniclip.Com in order to promote its services.

Placement

The website will have to be easily accessible as well as searchable by the consumers. This can be done by ensuring that the firm uses a domain name that indicate the firm name along with the service that it provides for example www.CanGogames.com.

Financial Analysis

CanGo Corp. has survived well as far as financial aspect is concerned. It had not faced any cash flow problems so far. Initially, the gearing ratio was a bit high but with a low payback period of just two years, it managed to control the gearing. Proper management of weak areas can result in improved sales and reduced costs which will result in higher profitability. Although the business did not seem to have any cash flow shortfalls, the Current Ratios were consistently less than 1. This needs immediate attention as a current ratio of less than 1 would mean that the business can face serious cash flow problems in future. Gross Profit Margins of CanGo Inc. have been consistently very high, however, the Net Profit Margins are much lower in comparison to that. This is primarily due to high interest and tax payments. While taxes are out of the firm's influence, CanGo Inc. must try to reduce on interest payments on loans as a low net profit margin would mean that the profits contribute less to per unit of sales.

The financial statements of CanGo Inc. are given as follows: