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Kit Karnes

Dazzle Dogs Ltd. (DDL) manufactures and sells designer seat belts for dogs. The founder and president of DDL, Kit Karnes, saw a need for this product when a law was passed that all dogs must be secured when travelling in a vehicle. Knowing that many dog owners spare no expense for their dogs, she decided to offer a premium product that is both fashionable and functional. Kit loves dogs, having a Shih Tzu named Ballee, who travels with Kit where ever she goes, including to her office at DDL. Ballee is a big part of Kit's family. Kit has always talked about how important it is to provide functional, safe, and fashionable travel accessories for dogs. That's how she got into business. Her mission is to provide safe and comfortable travel products for dog owners. Kit is really happy with how things are going. DDL has been profitable since it started operations four years ago after using $10,000 of her own savings and borrowing $20,000 from her older brother, Robert, to capitalize the business. He is charging her 5% interest/year and has not asked her to repay any of the principle, so far. 

DDL's customers are pet boutiques across Canada. Boutique owners have been very pleased with the quality and design of the seat belts, and the sales price of $225/unit has been well received. In fact, a well-known pet products consumer website recently named DDL's seat belts as "excellent quality at a fair price." Kit has not increased DDL's prices since starting her business. 2020 Forecast Kit recently met with her brother Robert to discuss DDL's plans for the future. Kit indicated that for 2020, she felt DDL could sell 700 seatbelts at her current price, that the ratio of materials and labour costs to revenue would be the same as in 2019, and that Overhead Costs would be the same as in 2019. However, two new strategic options needed to be considered. At the moment, Kit only has the time and resources to pursue one of these options; she can't pursue both. The two options are described below. Strategic Option #1: Reduce material costs One of the reasons for DDL's success is that the specially designed hooks and buckles on the seat belts are made with titanium. Titanium is an extremely strong, lightweight metal, which makes the hooks and buckles virtually impossible to break. This makes DDL's seat belts safer and longer lasting than those of DDL's competitors, who use steel. Kit has learned that DDL is the only company using titanium for their hooks and buckles. Recently, a survey was included as part of the warranty registration process for DDL. In the survey feedback, the use of titanium in seat belts was selected as "a major factor in my buying decision" 10% of the time, "somewhat of a factor in my buying decision" 25% of the time, and "not a factor in my buying decision" 65% of the time. Over 90% of recent customers completed the survey. Titanium is expensive and most competitors use steel. A supplier has recently approached Kim and suggested that she could lower her material costs by 35% if she were to switch her raw material from titanium to steel. He also suggested that switching to steel would reduce her labour costs by another 20% because it is much easier to work with steel and there is a lower wastage factor with steel. However, DDL estimates that they would need to drop their selling price by 10% if they were to switch to steel. Kit Karnes 3 Strategic Option #2: Add a New Product Line Kit has also been approached by an agent representing a supplier of dog crates. He has suggested that she could significantly improve her overall profitability if DDL were to add dog crates to their product line. The crates are manufactured offshore, by a Far East third-party  producer.

Kit has never been a fan of crates because the dogs are isolated in the rear of the vehicle, but she recognizes that there is a demand for the product. She is unsure whether it would be the right move for DDL. The National Pet Passenger Safety Board currently recommends seat belts over crates due to the injuries a dog can sustain within a crate when involved in an accident. Dogs wearing seatbelts are injured 5% of the time in motor vehicle accidents, while those who are unrestrained or in crates sustain injuries 25% of the time. A properly fitted seat belt is the safest choice and can be used with a hook in the cargo area of a vehicle if necessary.  


Assignment Instructions

  1. Summarize your analysis and recommendations in an Analytical Report.
  2. Apply the Strategic Situational Analysis Process  to analyze this case scenario and make appropriate recommendations. 

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