PDA

View Full Version : Looking for understanding into GW corporate?



Duke
01-07-2011, 02:55 PM
Read it here

Follow the link in my sig.

Duke

DarkLink
01-07-2011, 03:49 PM
Well... that's interesting.

Sounds to me like they're trying to maintain their image as a minis company with the whole manufacturing thing, while quietly expanding their business to where they can take advantage of the money involved in retail as well. That would also be consistent with their IP protection policies. They want any and all 40k/fantasy business to be done through them and them alone, it seems.

Farseer Uthiliesh
01-07-2011, 05:24 PM
I give up trying to understand GW. I love the hobby, but the company leaves me scratching my head.

somerandomdude
01-07-2011, 05:52 PM
"Shareholders who look for a predictable dividend on their shares might want to look elsewhere."

Best line of the wall o' text.

Great post Duke. I'm nowhere near your level of business knowledge (I've just recently begun business education for my international studies degree) but I still had a lot of fun reading this.

However, I don't think his comment about the new hobby centers had anything to do with his previous comment about being unaffected by economic factors. As someone who recently spent a few years in retail management (I know, GW isn't a retailer... ;)) predicting the performance of a new store is not an easy task and certainly not concrete evidence of performance, so any results from a first year store should not be considered when talking about the company as a whole.

I think they're holding onto the fact that the webstore has grown as an indication that they are not being affected. That, and they most likely cut costs considerably elsewhere (you mentioned the frozen salaries), so telling their shareholders that they're fine isn't a bold-faced lie, it's just telling them the truth in a much nicer way. :D

That's most likely the reason they said they were a manufacturer, and not a retailer. No shareholder wants to hear retail. The further along the retail track (manufacturing, retail, end consumer) you get, you become more affected by economic woes.

Of course, when you put everything together (as shareholders should, and CEOs don't) it makes very little sense and you get a good laugh out of it. Unless you are an investor.

eldargal
01-07-2011, 06:31 PM
Bear in mind these financial statemens are intended for stockholders not the hobbyists, apart from the facts and figures its mostly corporate spin so it will always sound rather silly to our ears. Atleast they aren't talking about how to synergise their dynamics.:rolleyes:

Mauglum.
01-07-2011, 06:35 PM
Hi all.
GW corperate are realy easy to understand.
They pick what ever action is easiest to explain to the share holders, (no matter how counterproductive.)

And then blame anything/anyone they can if thier actions result in less than favourable results.

Untill they run out of scape goats then admit they were '...fat and lazy...';)

Then after a bit of good fortune , (licence revenues-currency fluctuations ) give them better results they continue to be lazy...

Duke would you say relying on price increases to compensate for falling sales volumes is a sound long term buisness practice?

I think its run its course at GW , and the NEED to adress the real problems now.

TTFN

MaltonNecromancer
01-07-2011, 06:37 PM
I don't think there's anything in that document to actually be surprised about. GW's strategy is simple - vertically integrate everything so the only place anyone can go to for GW products is GW. That's how it's been for twenty years, and it's just not going to change.

However, it's not going to bring in massive profits. What it'll do is bring in smaller levels of profit more reliably, which isn't going to pay out whopping dividends. The document seems to me to be an attempt to obfuscate this fact from potential investors, hence the incongruities and inconsistencies.

Basically it's business as usual, no boat rocking in sight. They've made losses, but they're a business selling a luxury product, and luxuries are always the first thing to go in a recession; we're in a recession, and their profits have dropped. That doesn't mean they're going to change their business practices though, because the people in charge are fundamentally conservative business people. They don't look at risk and see what they have to gain - they look and see what they stand to lose. So they're going to keep their heads down and not branch out.

Doesn't seem like a bad strategy; doesn't seem like a great one. This document is just fiscal mummery designed to hide the shortcomings of a lack of new business ideas.

As I see it for us, the bottom line is: no fall in product price. Ever. With moaning about it being as effective as trying to paint a ratling sniper with an enraged gibbon's private parts.

eldargal
01-07-2011, 06:42 PM
Well, apart from the fact there is no evidence sales volume is down (GW don't release sales data, and when you take into account increases in commodities prices, inflation and tax rises the price increases don't point to a decreasing sales volume at all*) I agree with you. These statements are for stockholders who see GW purely as a corporate entity, they know little about what GW does and don't care to learn more.


*We have some anecdotal evidence from people claiming their local sales rep have said sales volume is down. Well I've got anecdotal evidence from three store managers which says at the very least UK sales volume has been increasing slowly but steadily. I'm not claiming this is fact, the point is all we have is anecdotal evidence.

Farseer Uthiliesh
01-07-2011, 07:20 PM
Untill they run out of scape goats then admit they were '...fat and lazy...';)


You mean, 'escape goats' ;)

Duke
01-07-2011, 07:22 PM
...However, I don't think his comment about the new hobby centers had anything to do with his previous comment about being unaffected by economic factors. As someone who recently spent a few years in retail management (I know, GW isn't a retailer... ;)) predicting the performance of a new store is not an easy task and certainly not concrete evidence of performance, so any results from a first year store should not be considered when talking about the company as a whole.

I think they're holding onto the fact that the webstore has grown as an indication that they are not being affected. That, and they most likely cut costs considerably elsewhere (you mentioned the frozen salaries), so telling their shareholders that they're fine isn't a bold-faced lie, it's just telling them the truth in a much nicer way. :D

That's most likely the reason they said they were a manufacturer, and not a retailer. No shareholder wants to hear retail. The further along the retail track (manufacturing, retail, end consumer) you get, you become more affected by economic woes.

Of course, when you put everything together (as shareholders should, and CEOs don't) it makes very little sense and you get a good laugh out of it. Unless you are an investor.

Exactly, Why go on about your web store and your brick and mortar locations when you NOT A RETAIL SHOP? Well, because your right... In a recession they magically aren't retail any longer. Truth be told, they are really a hybrid retail/manufacturing shop. I look forward to July when they release this years statement and all the sudden pat themselves on the back for participating in the economic upturn.


Bear in mind these financial statemens are intended for stockholders not the hobbyists, apart from the facts and figures its mostly corporate spin so it will always sound rather silly to our ears. Atleast they aren't talking about how to synergise their dynamics.:rolleyes:

Perfect, QFT! If you really look at the numbers their top line revenue wasn't up much at all (126,511 2010vs 125,706 2009) Also, from what I can tell the are company prepared numbers, which means an accountant hasn't verified any of this information... But I could have missed it (Still looking). Lol "Synergise their dynamics"


...Duke would you say relying on price increases to compensate for falling sales volumes is a sound long term buisness practice?...

I know I don't have to say this, and you surely don't need an MBA to figure this out, but no it is not a viable business practice. The only time this would work is if your product is perfectly ineslastic, meaning as price rises demand remains the same. From our own experiences we know that we will pay through the nose for plastic crack (Blood knights?) but there is a limit.

Anyway...It seems there is more demand for this on my blog, so Ill do a numbers analysis this weekend. Keep your eyes out (Or just simply follow the blog wink wink)

Duke

DarkLink
01-08-2011, 12:33 AM
Atleast they aren't talking about how to synergise their dynamics.:rolleyes:

Yeah, check out this statement from the wikipedia article on 'talking points':

A political think tank will strategize the most effective informational attack on a target topic and launch talking points from media personalities to saturate discourse in order to frame a debate in their favor, standardizing the responses of sympathizers to their unique cause.


It actually does mean something, but I don't know if they could use a more obtuse way of saying it.

dagonis
01-08-2011, 01:01 AM
You mean, 'escape goats' ;)

Unless I am missing something, I think you mean scapegoats.

http://en.wikipedia.org/wiki/Scapegoating

From Urban dictionary

"1. Escape Goat

A slang used by idiots who do not realize the term is scapegoat "

That being said, interesting article.

eldargal
01-08-2011, 01:11 AM
Hehe, yes Dagonis, its actually a callback to an earlier thread where someone did say 'escape goat' instead of scape goat. Farseer Uthiliesh was being amusing.:)

Aldramelech
01-08-2011, 02:40 AM
Is Duke, in fact, Stringer Bell?

fuzzbuket
01-08-2011, 04:12 AM
i used to think i had a vague idea of GWs buisness model?

now.. it seems that because a few buy models mr noob thinks hes makin monies and is a:

"supah-gangsta-leet-newbkillah-sexybeast-manager

-fuzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

Mauglum.
01-08-2011, 05:52 AM
Hi all,
I DID understand GW buisness model before it became a PLC.
Produce a WIDE range of interesting and entertertaning games suitable for a wide demoghraphic.
And if they are good, the people playing the games will buy your products and tell thier friends too.

Inspiring creativity and social intereaction in others often has the pleasant side effect of loyal customers who expand your customer base through word of mouth...:)

(AFAIK every other GOOD games company uses its games quality to promote sales in the open market.Thus rendering the need for owning its own stores unecissary. )

GW HAD to use a chain of B&M stores pre PLC becuase the internet was NOT the prime centre for trading it is now.

When everyone is selling stuff in shops , because there is no alternative , it doesnt make opening shops any thing other than enevitable it you want to expand your buisness.

However, after dismissing the internet as '...a passing fad...' GW plc decided to maximise profits from its B &M stores , by using them as a means to achive insular marketing.

And as GW products were sold in isolation , they wouldnt be compared to similar product in the open market, and so the extra costs involved in runnung the B&M stores could be covered by increased retail prices.
Originaly this can be seen as a good thing...

But unfortunatley for GW the internet was not a ' passing fad'.

And relying on THE MOST EXPENCIVE way to increase market presence,(B&M stores) has just driven the overhead costs so high that the retial prices of the GW products in the shops have become increasingly restrictive.

And at the moment GW NEED to use B&M stores to sell thier products in isolation , becase they are SO much higher than the open market.
And shutting the B&M stores would cut the ONLY reliable recruitment optionGW have left after activley distancing themselves from the vets and fan support...

(This is NOT retail staff but corperate interferance in game development and heavy handed IP enforcment.)

IMO moving the focus from '...inspiring game play, with clarity brevity and wit...' to '...selling toy soldiers to kiddies...'

Has reduced GWs target demoghraphic from ALL gamers 8 and over , to 10 to 16 yo boys who pass a B&M store...

I know many outside the 10 to 16 yo boy demographic enjoy playing WHFB and 40k.
But GW is not targeting them directly.GW is relying on its size to maintain its popularity...rather than activley trying to grow its customer base.

TTFN

scadugenga
01-08-2011, 09:42 AM
Duke--really liked the synopsis and evaluation of the statement.

It only serves to make me wonder how these people would survive in a truly competitive environment where they were not the established "top dogs" for a couple decades...

dagonis
01-08-2011, 11:05 AM
Hehe, yes Dagonis, its actually a callback to an earlier thread where someone did say 'escape goat' instead of scape goat. Farseer Uthiliesh was being amusing.:)

Fair enough, no snark intended :)

Duke
01-08-2011, 01:26 PM
Is Duke, in fact, Stringer Bell?

Why you lookin for an apartrment downtown? I got somethin real nice or ya.

Duke

Aldramelech
01-08-2011, 01:51 PM
I'll stick to the 800 block :)

isotope99
01-08-2011, 02:05 PM
Whilst I agree with the general view that the statements are not the greatest, and are sometimes contradictory, it is my new year's resolution to be less cynical so here are a couple of counterpoints:

1) GW is genuinely a hybrid manufacturing/retail operation in that they produce their own product and then sell it. Imagine which is more credible:
i) a GW that sells its models wholesale with no dedicated stores of its own
ii) a GW that doesn't make any Warhammer/40K models of its own, but sells other people's stuff.

The manufacturing process doesn't really change year to year so naturally there is more news on the retail front.

2) Concentrating on your core competencies (i.e. the warhammer universe) is solid tactics in a recession, they were already spreading themselves a bit thin with LotR releases so there is no incentive to make any historical figures, where they have no expertise and there is already a separate market.

And a couple of points where I definitely agree:

1) To claim that they are insulated from the recession affecting most customer retail operations is either naive or disingenuous, all non-essential discretionary spending (and let's face it, its hard to imagine much that's less essential) is under pressure right now, so of course they are having trouble keeping sales up.

2) Their dividend comments are all over the place and whilst I think I know what they are trying to say, that they're happy that they're able to pay a dividend but investors shouldn't expect it to be stable or recurring, it's not really a model of clear and concise communication.

On price rises:

Has anyone done any long term analysis of where prices were 5 or 10 years ago? Even with straight inflation of 2-5% a year, prices are going to go up. For example, assume a really simple scenario where inflation is 3% for 10 years on a £20 product, that would lead to a current price of about £27.

Obviously there are some big variations, particularly the metal models, but the core plastic kits don't seem to be running way ahead of this in general.

Duke
01-08-2011, 08:44 PM
beause this thread has actually become popular Im moving it to where it should have been in the first place... The Corporate Wargames discussion thread. I will be doing part two of this post (on the financials themselves) on my blog in a couple days so keep an eye out

Duke

Mauglum.
01-10-2011, 07:37 AM
Hi all.
Here are the figures from 2000-2001 for comparison to 2010-2011.

2000................2001
Revenue
£78 million.........£92.6 million.

Operating profit
£10 million.........£11.2 million.

2010................2011
Revenue
£125.7 million.....£126.5 million.(Less after currency flutuiations taken out.)

Operating profit
£8,93 million........£16.04 million

It appears that the increse in revenue 2001 to 2010 is about inline with inflation , about 35% ish.
However the increase over the same period,in GWs retail price, is about 130%.

Now this signals a loss in sales volume or increse in inefficiency to me...

Could you investigate Duke?

TTFN

TheCreator
02-11-2011, 07:16 PM
You've got great stuff on your blog Duke, but have you thought about looking at the finances for Privateer Press or others for comparison?

wittdooley
02-11-2011, 07:46 PM
Shoot, I think PP needs to get their production up to keep with demand first.

Duke-- Are your custodes the Scibor models? If yes, how do you like them?

MarneusCalgar
02-15-2011, 09:25 AM
I loved the post, Duke!!

weeble1000
02-15-2011, 12:44 PM
Yes, very interesting stuff Duke. I'd like to see more.