GoPro likewise observed the chance to secure clients by building individual associations with its objective market. Even after this rally, GoPro remains cheap, trading for roughly 2.1 times sales. Because GoPro was the first company to specialize in small action cameras it had a competitive advantage from the start. Barney, J. These cameras offer high-resolution and time-lapse photography. It also released its quadcopter drone, KARMA in 2016 (GoPro, 2018). For the average user, having one GoPro is enough to last a number of years. Overall, the balance sheet is reasonable and does not have any particularly alarming component. So, what is the company's competitive advantage, and how will it leverage that in the future? This is because the methods of production lead to greater costs than that of competition, which affects the overall profits of the firm. Lastly, going direct-to-consumer also gives GoPro full control of the purchase experience. This occurred as research and development (R&D) costs fell by less than 10%, and general and administrative expenses (G&A) rose by more than 2% from 2019 levels. Ambarellais really the brains behind GoPro cameras and the app technology GoPro builds trails competitors'. The SWOT analysis of GoPro, Inc. just underlines this fact. GoPro's stock price dropped as a result of a loss of confidence by both consumers and investors. Amazing Business Data Maps. Rather, the GoPro subscription needs to focus on integration. In addition, going D2C would make the company leaner, which combined with lower inventory and average days holding inventory, may drive the GoPro stock price up. It's time for GoPro to pivot to become a software-first camera company rather than hardware-first camera company. GoPro can grow by continuing to develop its direct-to-consumer (D2C) store,gopro.com. Will Healy has no position in any of the stocks mentioned. What could it do to be more innovative and successful, and in doing so, fend off the low-cost competition? GoPro SWOT Analysis. Most of the competitors are trying to enter the lucrative segments, The firm has used it to good effect, details can be found in case exhibit, Provide short term competitive advantage but requires constant innovation to sustain, Alignment of Activities with Gopro Confidence Corporate Strategy. This can impact the long term growth of GoPro, Inc. Not highly successful at integrating firms with different work culture. ). So, what is the company's competitive advantage, and how will it leverage that in the future? will discount the previous models in hopes of getting rid of the inventory, squeezing GoPro's margins. 9, Issue 4, pp. And given competitors like Garmin (NASDAQ: GRMN) and Eastman Kodakentering the digital action-camera market, the concern is justified. Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. came from advertising and 5.98% of visits came from paid search, for a total of 7.62% of visits coming from pay-per-click (PPC). Academy of Management Executive, Vol. That's resulted in a loyal following, despite the competition. Our immersive learning methodology from case study discussions to simulations tools help MBA and EMBA professionals to - gain new insight, deepen their knowledge of the Sales & Marketing field, VRIO Analysis, case solution, VRIN Solution, Resource based Strategic Management- Value, Rare, Imitation Risk, Organization Competence, and more. Customer service Our list of competitive advantage examples continues with customer support & service. Since falling into penny-stock status one year ago, the maker of compact cameras for extreme adventurers has rallied. *Stock Advisor returns as of February 6, 2017. What is a GoPro? GoPro has multiple competitive advantages that make them this successful. Hardware isn't driving profitability or growth. The convertible debt has a $10 strike price, meaning that there is likely to be 10-15% stock dilution. Overall, the valuation of the company seems to lean slightly on the over-valued side, but maintains a hold consensus. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*. Compex is the nation's leading record retrieval provider. [Online], Available at: https://www.fool.com/investing/2017/03/27/what-is-gopro-incs-competitive-advantage.aspx, [Accessed on: 16th January, 2018]. Like GoPro, Garmin switched to the specialty market. Moreover, thanks to the Apple Watch, Apple now builds a product that can function under unstable conditions. What does the PEST analysis reveal about the action camera in 2017? High attrition rate in work force compare to other organizations in the industry GoPro, Inc. has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees. Moreover, with Apple and Samsung producing more products that are better designed for extreme activities, GoPro's competitive advantage faces a constant threat. The biggest issue facing GoPro is the small and limited customer lifetime value (CLV). This position is in charge of documents evaluation and processing. It is a handy technique to map out the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) GoPro, Inc. is facing in its current business environment. From a certain point of view, it looks like a high-growth business.. Legal Statement. These conditions allow the . The current asset ratio and liquid asset ratios suggest that the company can use the cash more efficiently than what it is doing at present. What are GoPro's resources? GoPro has $326M in cash with debt of $280M, some of which stems from leases, however, most of the debt comes from convertibles (. To this day (for better or worse) GoPro remains largely focused around their hardware. The biggest challenge for GoPro is that it doesn't seem to have much of an advantage in technology. No one knows what kind of revenue this new branch of the company will generate, and meanwhile, GoPro's longstanding competitive hardware advantage is shrinking: for years, GoPro was the. That's resulted in a loyal following, despite the competition. Since its 2014 peak of $86.97, the stock has dropped by 87.6% to $10.83 as of publication. And given competitors like Garmin (GRMN 0.68%) and Eastman Kodakentering the digital action-camera market, the concern is justified. Taking inspiration from Apple, I think GoPro can build subscription service offering unlimited cloud storage, automatic backups, easy-upload to social media, the Quik video-editing tool and seamless integration into the top video-editing softwares. GoPro's market cap is of 1.74B with a price-to-sales (P/S) ratio of 1.928, which is more than double its digital-camera competitors' (Sony, Canon and Nikon) average of 0.885 (YCharts). What are GoPro's resources? Although not perfect competitors, the comparison is still worth noting as GoPro seems to be in-line with its competitors (at least when using GoPro's quarterly P/E ratio). Compare GoPro to its competitors by revenue, employee growth and other metrics at Craft. The cameras are now powerful and indestructible, and are capable of 360 degree video, 5K resolution, 20MP photos, slow-motion and more (. GoPro, Inc. managers can use Porter Five Forces to understand how the five competitive forces influence profitability and develop a strategy for enhancing GoPro, Inc. competitive advantage and long term profitability in Photographic Equipment & Supplies industry. The evolution of cell-phone camera quality has pushed GoPro to have to focus purely on its niche of active lifestyle cameras rather than expand into more general, every-day film cameras. Even though the product is a success in terms of sale but its positioning and unique selling proposition is not clearly defined which can lead to the attacks in this segment from the competitors. Within the digital camera market as a whole, GoPro's competitors include Nikon, Sony, and Canon. As fellow Fool Steve Symington highlighted a few months ago, GoPro's U.S. market share of 21.5% in digital cameras/camcorders was up 80 basis points from a year ago and included three of the five best-selling products in the category. Tampa, FL. Market-leading video-editing software include Adobe (Premiere), Apple (iMovie), Sony Vegas, and awhole lot more. GoPro is known for its high-quality action cameras and accessories, but also for its amazing UGC. You can email us to get an example document of Weighted SWOT analysis. We recently highlighted some of the pricing strategies that GoPro is leveraging to achieve tremendous market capitalization, but recent changes demand a new pricing strategy in order to create a sustainable competitive advantage. The subscription, which costs $49.99/yr, offers unlimited cloud storage, access to their video editing app Quik, livestream capabilities, free "no-questions-asked" camera replacement and discounts on all accessories and products (, GoPro is undeniably the market-leader within the active lifestyle camera industry. [Online], Available at: https://biclabs.com/insights/change-of-competitive-advantages/foreseeing-change-polaroid-gopro/, [Accessed on: 16th January, 2018]. However, in March 2017, the company faced challenges due to product failures and increased competition, and the introduction of new products in the market. Organizations also assess the likelihood of events taking place in the coming future and how strong their impact could be on company's performance. The company's net cash position is of $46M, which is by no means a crazy cash position, but I would consider it to be a solid cash position given the GoPro's recent troubles. What's challenging for GoPro is that its only real competitive advantage is a stronger and more identifiable brand in the action camera market than competitors. Changes in the macro-environment can have an impact on the company's co . Kotler & Armstrong (2017) "Principles of Marketing Management Management", Published by Pearson Publications. However, receivables -- amounts that customers owe to the business -- fell by $93 million during 2020. If its technology doesn't fall behind others entering the market, it could maintain a strong position in action cameras with a good brand alone, but that may not be enough for investors. Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors. On a broader scale imitation of products of Gopro Confidence can happen in two ways Duplication of the products of the company, and competitors coming up with substitute products that disrupt the present industry structure. I like the GoPro brand a lot, but a brand alone doesn't guarantee success, and GoPro has found that out the hard way in the past couple of years. 49-61. GoPro is an American based technological company and indulge in manufacturing of eponymous action cameras, develop mobile apps and also video editing software. Again, the size of the video-editing software market is difficult to estimate, and GoPro is a tiny-player in the market. The company has adopted a combination of cost leadership, differentiation and focus strategies to handle the competitive pressure. There's no question Karma is well behind industry leader DJI's products from a technology standpoint, and the Karma's recall didn't help. Even though GoPro, Inc. is spending above the industry average on Research and Development, it has not been able to compete with the leading players in the industry in terms of innovation. All rights reserved. To date, it has sold over 26 million action cameras. This is one of the. It's not clear that GoPro can leverage its brand to gain a significant share in drones without making a better product than the Karma of today. 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It's not clear that GoPro can leverage its brand to gain a significant share in drones without making a better product than the Karma of today. This site requires JavaScript to run correctly. Beyond hardware, GoPro only offers some software products such as its video-editing software Quik. Targeting the outdoors and the extreme-sports community, GoPro has made a name for itself by offering high-quality yet little, impact-resistant cameras that can be attached on the body, on helmets, or just-about anywhere else. With this in mind, let us turn to valuation & earnings. Strong Brand Portfolio Over the years GoPro, Inc. has invested in building a strong brand portfolio. When you think of action sports, whether on TV or in your own life, brands like GoPro and Red Bull seem to always be around the action. Does its approach to delivering customer value contribute to a sustainable competitive advantage? GoPro, Inc. was an American action camera and software manufacturer founded in 2002 by a young entrepreneur. That's right -- they think these 10 stocks are even better buys. *Average returns of all recommendations since inception. For 2020, overall revenue fell by 25% year over year, to $892 million. The global digital camera market was valued at only $13.1B in 2020, a small fraction of which is the active-lifestyle camera industry (. Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales. SWOT analysis an immensenly interactive process and requires effective coordination among various departments within the company such as marketing, finance, operations, management information systems and strategic planning. While institutional ownership may appear low, I expect institutional ownership to increase if GoPro gives signs of a promising turnaround effort. How could it do this? As fellow Fool Steve Symington highlighted a few months ago, GoPro's U.S. market share of 21.5% in digital cameras/camcorders was up 80 basis points from a year ago and included three of the five best-selling products in the category. Market-leading video-editing software include Adobe (Premiere), Apple (iMovie), Sony Vegas, and a, Nick Woodman founded GoPro and has served as the CEO of GoPro for 16 years. Please, Founded in 2002, GoPro (NASDAQ: GPRO) is the pioneer in active lifestyle cameras, practically inventing the market segment (. GoPro have the capacity to offer a separated item that will spur the buyer from wandering far from a less expensive buy. The Motley Fool has a disclosure policy. Going D2C also enables the company to take control of its margins. Despite the competition, GoPro has maintained strong market share. The Motley Fool owns shares of and recommends AMBA and GoPro. It sounds opaque, but GoPro's biggest asset is really its brand. GoPro is undeniably the market-leader within the active lifestyle camera industry. By leveraging user-generated content (UGC), GoPro has been able to solicit and repurpose content showing real people using its products. Although not perfect competitors, the comparison is still worth noting as GoPro seems to be in-line with its competitors (at least when using GoPro's quarterly P/E ratio). Heres how to play the largest growth opportunity in history, Forget Apple! While I think that creating an editing system is a nice thing-to-have, I do not think that Quik is the solution to GoPro's growth. Still, the fact that it ran an operating loss of $37 million in 2020 means that it must burn cash to survive. The company's digital-camera competitors have trailing P/E ratios of 32.83 forCanon, 38.69 forNikonand 14.02 forSony. While the path to growth may not yet be clear, the potential remains. I like the GoPro brand a lot, but a brand alone doesn't guarantee success, and GoPro has found that out the hard way in the past couple of years. GoPro's bread and butter remains its active lifestyle cameras. The SWOT Analysis framework facilitates an organization to identify the internal strategic factors such as -strengths and weaknesses, & external strategic factors such as - opportunities and threats. Maker of compact cameras for extreme adventurers has rallied from the start //www.fool.com/investing/2017/03/27/what-is-gopro-incs-competitive-advantage.aspx, [ Accessed:... To handle the competitive pressure, GoPro has been able to solicit repurpose! Small action cameras and accessories, but maintains a hold consensus loss of by! 2014 peak of $ 86.97, the stock has dropped by 87.6 to. 2018 ] purchase experience that in the future cameras and the app technology GoPro trails! 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