A Strategic Management Case Study

1. Winnebago Industries A Strategic Management Case Study Matthew O’Malley Spenser Ouellette Kristi Plourde Robert Roy

2. Overview • Company Overview • A Brief history of Winnebago Industries • Existing Mission and Vision • Existing Objectives and Strategies • Current Issues • New Mission and Vision • External Assessment • Industry analysis • Opportunities and threats • EFE Matrix • CPM Matrix • Internal Assessment • Strengths and weaknesses • Financial Condition • IFE Matrix • Strategy Formulation • SWOT Matrix • Space Matrix • IE Matrix • Grand Strategy Matrix • Matrix Analysis • QSPM Matrix • Strategic Plan for the Future • Objectives • Strategies • Implementation Issues • EPS/EBIT • Evaluation • Winnebago: 2008 Update O’Malley, Ouellette, Plourde, Roy 2009

3. Company Overview • Headquartered in Forest City, Iowa. • Incorporated in 1958 and adopted present name in 1961. • Have approximately 310 dealer locations. • Sold through dealers under Winnebago and Itasca brand names. • Leading manufacturer of motor homes. • Build quality motor homes with state of the art computer-aided design and manufacturing systems on automotive styled assembly lines. O’Malley, Ouellette, Plourde, Roy 2009

4. History • 1958- John Hansen and others convinced a California company to open a travel trailer factory in Forest City. • 1960- The name of the company was changed to Winnebago Industries after the operation was purchased by 5 Forest City residents and Hansen became president. • 1966- First motor home came off Winnebago assembly lines, selling for half the price of competitors because of manufacturing innovations and use of assembly lines. • 1970- Listed on NYSE and appreciated 462 percent the next year. • 1975- Itasca line was introduced. • 1977- Sold their 100,000th unit, first RV manufacturer to reach that level. • 1986- First appeared on the Fortune 500 . Ranked 500th in sales and 340th in net income. O’Malley, Ouellette, Plourde, Roy 2009

5. History (Cont.) • 1989-1992- Posts losses each year, partly because of decrease in demand because of the recession, and also the Gulf War and fears of an oil shortage. Total loss is over $50 million for those four years. • 1997- Earnings and revenue fall due to a weakening motor home market. • 1999- $3.6 million expansion plan is announced for their manufacturing facilities in Forest City. • 2000- Sales increase 11% to reach record of $743.3 million. • 2001- Net income decreases 12% on revenues of $675.9 million, 9.5% lower than previous year. • 2004- Profits reach unprecedented high at $70.6 million while sales exceed $1 billion for the first time. • 2006- Because of economic conditions, begin marketing more affordable products such as the Winnebago Access. O’Malley, Ouellette, Plourde, Roy 2009

6. Through the Years… 1960’s 1970’s 1980’s 1990’s 2000’s O’Malley, Ouellette, Plourde, Roy 2009

7. Class A & Class C RVs Class A models are conventional motor homes constructed directly on medium-and heavy-duty truck chassis, which include the engine and drive-train components. Gas or Diesel- 33 to 37 feet in length. Can sell for over a quarter of a million dollars Class C models are mini motor homes built on a van type chassis onto which the home manufacturer constructs a living area with access to the driver’s compartment. Gas or Diesel- 22 to 31 feet in length. O’Malley, Ouellette, Plourde, Roy 2009

8. Mission Statement(Current 2007) Winnebago Industries is a leading United States manufacturer of motor homes and related products and services. Our mission is to continually improve our products and services to meet or exceed the expectations of our customers. We emphasize employee teamwork and involvement in identifying and implementing programs to save time and lower production costs while maintaining the highest quality of products. These strategies have allowed us to prosper as a business with a high degree of integrity and to provide a reasonable return for our shareholders, the owners of our business. O’Malley, Ouellette, Plourde, Roy 2009

9. Motto and New Vision(2007) • “Quality is a journey-Not a Destination.” • What do we want to become? • Our vision is to become the Global leader in manufacturing and sales of Recreational Vehicles. O’Malley, Ouellette, Plourde, Roy 2009

10. New Mission Statement Winnebago Industries, Inc. is the leading United States manufacturer of motor homes and related products and services. Our mission is to become the global leader in manufacturing and sales of motor homes and related services. We believe that quality is a journey-not a destination. By utilizing our employee teamwork and implementing the latest and greatest use of technology we have acquired the safest, largest and most technologically advanced motor home manufacturing facility in the world! With this facility we provide top notch quality and customer satisfaction and service which is essential to the long term growth and profitability of our company. We are an environmentally concerned company and we continue to look for new and innovative ways to fuel our line of recreational vehicles. O’Malley, Ouellette, Plourde, Roy 2009

11. Current Strategies and Objectives • R & D : Develop new products for the motor home consumer with emphasis on quality, safety and function. • Keeping growing market of baby boomers in mind. • Target Market of people 50 and older. O’Malley, Ouellette, Plourde, Roy 2009

12. Core Values • People: Our employees are the source of our strength. • Products: Our products are the end result of our teamwork and they should be the best in meeting or exceeding our customers’ expectations. • Plant: We believe our facilities to be the most technologically advanced in the RV industry. • Profitability: Profitability is the ultimate measure of how efficiently we provide our customers with the best products for their needs. O’Malley, Ouellette, Plourde, Roy 2009

13. Guiding Principles • Quality comes first. • Customers are central to our existence. • Continuous improvement is essential to our success. • Employee involvement is our way of life. • Dealers and suppliers are our partners. • Integrity is never compromised. O’Malley, Ouellette, Plourde, Roy 2009

14. External Assessment O’Malley, Ouellette, Plourde, Roy 2009

15. RV vs. Vacation Travel Cost O’Malley, Ouellette, Plourde, Roy 2009

16. RV vs. Vacation Travel Cost O’Malley, Ouellette, Plourde, Roy 2009

17. RV vs. Vacation Travel Cost O’Malley, Ouellette, Plourde, Roy 2009

18. 2008 Forecast O’Malley, Ouellette, Plourde, Roy 2009

19. 2008 Forecast (Cont.) O’Malley, Ouellette, Plourde, Roy 2009

20. Competitors O’Malley, Ouellette, Plourde, Roy 2009

21. Opportunities • Growing demand for recreational vehicles (U.S Sales of RVs annual growth rate 4%) • Demand for modular homes (15-20% reduction in costs compared to on site-built homes) • Eco-Friendly RVs (Hybrids) • International Markets • Recreational Vehicles Industry Target Market- Baby Boomers (50-65) is expected to grow almost 4% annually until 2010. (US Census Bureau) • Increased demand for high priced amenities and facilities. (fireplaces, refrigerators, gourmet kitchens, wine cellars, home theaters) • Fastest Growing RV owner demographic is 18-34 year olds. O’Malley, Ouellette, Plourde, Roy 2009

22. Threats • High Fuel Prices • Intense Competition (Coachmen Industries, Fleetwood Enterprises Inc.) • Seasonality Business (Weather Conditions, Seasons) • Strict Regulations both State and Federal (NHTSA, TREAD) • Economic Slowdown (GDP Growth of US Economy expected to be 2.8% in 2008 a .05% decrease since 2006) • Potential Liabilities (comprehensive service program, warranties) • Interest Rates O’Malley, Ouellette, Plourde, Roy 2009

23. EFE Matrix O’Malley, Ouellette, Plourde, Roy 2009

24. Competitive Profile Matrix O’Malley, Ouellette, Plourde, Roy 2009

25. Internal Assessment O’Malley, Ouellette, Plourde, Roy 2009

26. Strengths • Strong Brand (Winnebago, Itasca) • Leading Market Position (RV Industry) • Research and Development Facility (start of the art systems) • Product Innovation (25 model lines with 93 floor plans, 49% were new or redesigned for 2008) • Strong Financials (no long-term debt, own building, land, equipment) • Good Cash Reserve ($6,889,000) • 13-Point Code of Ethics O’Malley, Ouellette, Plourde, Roy 2009

27. Weaknesses • Overdependence on the US Market • Industry is affected by economic conditions and Per Capita disposable income • Net Income decreased 7.1 percent in fiscal 2007 • Only has 4 facilities located all in Iowa (incurs significant distribution expenses) • Functional Organizational Structure • Company Growth (not taking advantage of low interest rates and there financial strength) • Dealership Networks (only have 290 dealers in the U.S and a limited amount in Canada) O’Malley, Ouellette, Plourde, Roy 2009

28. IFE Matrix O’Malley, Ouellette, Plourde, Roy 2009

29. Income Statement O’Malley, Ouellette, Plourde, Roy 2009

30. Balance Sheet O’Malley, Ouellette, Plourde, Roy 2009

31. Selected Financial Data O’Malley, Ouellette, Plourde, Roy 2009

32. Selected Financial Ratios O’Malley, Ouellette, Plourde, Roy 2009

33. Strategy Formulation O’Malley, Ouellette, Plourde, Roy 2009

34. SWOT Matrix O’Malley, Ouellette, Plourde, Roy 2009

35. SWOT Matrix (Cont.) O’Malley, Ouellette, Plourde, Roy 2009

36. Space Matrix Data O’Malley, Ouellette, Plourde, Roy 2009

37. Space Matrix Conservative Aggressive FS +6 +5 +4 +3 +2 +1 CA IS -6 -5 -4 -3 -2 -1 +1 +2 +3 +4 +5 +6 -1 -2 -3 -4 Defensive -5 Competitive -6 ES O’Malley, Ouellette, Plourde, Roy 2009

38. IE Matrix O’Malley, Ouellette, Plourde, Roy 2009

39. Grand Strategy Matrix O’Malley, Ouellette, Plourde, Roy 2009

40. Matrix Analysis O’Malley, Ouellette, Plourde, Roy 2009

41. QSPM O’Malley, Ouellette, Plourde, Roy 2009

42. Future Strategic Plans O’Malley, Ouellette, Plourde, Roy 2009

43. Recommendations Retained Earnings 2007: $509,056,000 O’Malley, Ouellette, Plourde, Roy 2009

44. Towable Division O’Malley, Ouellette, Plourde, Roy 2009

45. Adventure in the Land Down Under Vacationing in "caravans," as recreational vehicles are generally called abroad, is popular in Australia, New Zealand, and Europe, notably, in Germany, Switzerland, Austria, Scandinavia, and the United Kingdom. O’Malley, Ouellette, Plourde, Roy 2009

46. Caravan and Recreational Vehicles Licensed in Western Australia at June 30, 2007 O’Malley, Ouellette, Plourde, Roy 2009

47. Suggested Itineraries in Europe Scandinavia - Round TripDenmark - Round TripNorth Spain and The PyreneesSouth Spain - Madrid to AndaluciaBelgium & The NetherlandsWest France - Britany , Normandy & French PyreneesAustria, Slovenia & North ItalyLakes & Alps - Switzerland & North Italy Gas prices and narrow roads are the main issues in Europe. O’Malley, Ouellette, Plourde, Roy 2009

48. 2008 Objectives • Maintain Market Share • Decrease Production • Focus on Inventory Reduction • New Product Developments (Fuel Efficient Products) • Focus on the target market (Baby Boomers) • Wait out the recession! O’Malley, Ouellette, Plourde, Roy 2009

49. 2008-2009 Update • 2008 Celebrated 50th year Anniversary • Produced Class B ERA- 3rd Best Selling Manufacturer in Class B • Revenue for 2008 Decreased 30.5% • Net Income for 2008 Decrease 93% • 2009- Fleetwood & Monaco filed for Ch.11 Protection in March due to the housing market meltdown O’Malley, Ouellette, Plourde, Roy 2009

50. Evaluation O’Malley, Ouellette, Plourde, Roy 2009