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Presented by: Nazanin Karimi, Minoo Mirhoseini, Mohammad Nikseresht.

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Presentation on theme: "Presented by: Nazanin Karimi, Minoo Mirhoseini, Mohammad Nikseresht."— Presentation transcript:

1 Presented by: Nazanin Karimi, Minoo Mirhoseini, Mohammad Nikseresht

2  Founded in 1978 in Dedham, Massachusetts  Product: Stolen Vehicle Recovery System

3 A unique patented system designed to assist law enforcement personnel in locating, tracking, and recovering stolen vehicles

4  Sales in 1998: $ 74,502,000  U.S.: a distribution network consisting primarily of new automobile dealers (81%)  International: primarily derived from product sales  Licensing: from unaffiliated distributors

5 Joe Abely (President and chief operating officer) & Mike Daley (CEO) Strategy: expansion into more metropolitan areas, states, and countries where the combination of population density, new car sales, and vehicle theft was highest

6  Strong consumer confidence in the LoJack brand  The extensive network of distributors  Sales and marketing expertise  Experience in the technology of tracking and position location  Excellent financial position

7  LoJack’s long standing strategic partner in the development and manufacture of the Stolen Vehicle Recovery System

8 Abely had recently met with senior managers from MicroLogic to discuss joining with them in introducing a new monitoring and maintenance system for construction equipment

9 Bill Reagan (1977):  Owner of a mergers and acquisitions company  Selectman and police commissioner in Medfield, Massachusetts

10  Frank Massa: president of a small electronic firm  Help to complete the patent application  Lack of the appropriate technical resources and time

11  Potential investors: $250,000 in exchange of 40% of the company’s equity  MicroLogic: a ten-person product development firm

12 MicroLogic’s contribution:  Refine the product specifications  Design the entire system  Work with various government agencies to obtain the appropriate approvals  Convincing the FCC (Federal Communications Commission) MicroLogic received a total of $350,000 and 90,000 shares of LoJack stock

13  In 1986, the system became available in Massachusetts as a market experiment  In 1989, the FCC allocated a police radio band for operation of a nationwide Stolen Vehicle Recovery Network

14  MicroLogic: a contract for manufacturing the police tracking computers  Motorola: manufacturing the transponders that were installed in each automobile

15  Financing:  $875,000 in 1983  $4.5 million in 1985

16 Some problems (1986):  Most of the money had been spent  Product development was not quite complete  Distribution system consisted mostly of two converted garages that served as retail outlets and handful of new-car dealerships  Sales were about 100 units per month  Payroll had grown to almost $1 million per year

17 Temporary CEO, Mike Daley  Reduce staff by 40%  Seek additional capital infusions  A new franchising model Florida  Ordering 34,000 units from Motorola at $120 per unit  Growth: 450 unit per month, 1987

18  The concept behind it: quite straightforward while the technology underlying it, fairly complex.  The components of the system includes:  LoJack Unit: installed in the car  Registration Database: correlates unique unit codes with each vehicle  Sector Activation System: in the state computer that could activate a LoJack Unit  Police Tracking Computers: allowed police to locate the stolen car

19 The LoJack system was available in areas where state and local police departments had agreed to support the system. LoJack has to:  Maintain the registration database  Tie in the sector activation system with the state-wide stolen vehicle reporting system  Install tracking computers in police cars and at strategic locations

20  When buying new vehicles, customers usually purchased LoJack Units as a $595 option  Like other options, could usually be financed conveniently as a part of the purchase price of vehicle  No recurring fee  The cost was often mitigated by an annual reduction of insurance rates of up to 35%  LoJack warranted that if a LoJack equipped vehicle were stolen within two years of installation and not recovered within 24 hours from the time that the theft was reported to the police, it would refund the full purchase price.

21  The majority of purchasers were buying mid- priced cars rather than expensive cars such as Mercedes or Jaguars  The greatest sector was related to: Honda Accord

22  The units were “hidden” somewhere in the vehicle so that they could not be removed by prospective thieves.  Thus LoJack maintained full responsibility for installation and warranty service of LoJack units both for the convenience of dealers and to maintain a high degree of quality control and security over its technology

23  When a LoJack owner reported to the police that a vehicle was stolen:  The routine processing of a stolen vehicle automatically forwarded a message to the sector activation system.  This in turn sent a unique radio signal to activate the LoJack Unit in the stolen vehicle to begin broadcasting a signal

24  Police officers who detected the transmissions of an activated LoJack Unit called into the dispatcher for a description of the transmitting vehicle  Police tracking computers, sophisticated radio direction finders each consisting of a radio receiver with a directional antenna array, Doppler signal processor, computer, and a controllable display, then guided the police to the exact location of the stolen vehicle.

25  Simultaneously, modified designs had been developed for use in helicopters and fixed locations such as toll booths, radio towers, or police communication centers.  Effective tracking: from 1 to 5 miles.

26  The activated LoJack Unit continued to broadcast until the police sent a properly coded report to the National Crime Information Center (NCIC) that the vehicle had been recovered. At that point, the NCIC computer automatically generated a signal to shut off the LoJack Unit.

27  Several stages in establishing distribution of the LoJack system in a new region in the United States:  The law enforcement agency had to be persuaded to support the system  Franchised new car dealers should offer the LoJack Unit as an option on both new and used car sales ▪ LoJack’s pricing structure encouraged dealers to require that heir salespeople try to sell LoJack, because a dealer could make several hundred dollars on each installation: Ex. Offer extra commissions to direct the customer to see the finance director in each dealership. Then this person convinced the customer to …

28  LoJack also marketed vehicle alarms and devices to prevent vehicles from starting under the names “LoJack Prevent” and “LoJack Alert”. The market for these products was decreasing, however since many automobile manufactures were including these features as standard equipment  LoJack’s direct marketing efforts to dealers emphasized the benefits to the dealers and their customers of the LoJack Unit as a purchase option for new and used car buyers  LoJack used radio advertising targeting consumers to generate brand and product awareness and demand.

29 LoJack developed the CarSearch Stolen Vehicle Recovery System  Unlike the LoJack System used in the United States, CarSearch was not tied in with police computers or national crime prevention data banks.  Till 1998, LoJack had licensees in the countries such as: Argentina, Colombia, Czech Republic, Ecuador, Germany, Greece, Hong Kong, Kenya, Korea, Mexico, Nigeria, Panama, Russia, Slovak Republic, …

30  Competitors: several, such as Teletrac.  Potential Competitors:  using GPS (Global Positioning System)  None were compatible with the LoJack System  None were operated or actively monitored by law enforcement agencies, as was the LoJack System  Required consumers to pay recurring monthly fees  By 1999, several on-board navigation systems such as “on star” ▪ In higher priced vehicles ▪ Required separate cellular phone ▪ Required ongoing monthly fees ▪ Suffers from the same limitations as other GPS based systems such as loss of signal when inside a building or on a street with many tall buildings  consumer perception, however, were often shaped by automobile salespeople so that facts were clouded by false perceptions.

31  Growth opportunities in leveraging its connections  need cash to expansion  The roll of Micrologic in success of LoJack  Connections between these 2 companies such as hiring forces

32  Key items in alliance in Aspell’s view Trust Flexibility  Limitation in developing Political oppositions such as state and federal agencies Government bureaucracies

33  Concentration focus: LoJack: Marketing and sale MicroLogic: Technology  More growth  independency People growth To unwritten document

34  Founders with work and study experiments  Clients in startup mood with insufficient engineering and manufacturing capabilities  Work conditions inside: A “lifestyle company” Relaxed atmosphere  Decision to cahnge its strateic dimensions to add marketing and sale A product in an information system business

35  8% to 10% growth in US  Players Equipment owners: ▪ Top 5 US companies owned 180000 pieces of equipment over $10000 Equipment dealers ▪ Work between generators and rental companies Large constuction companies Large manufacturing companies

36  Initial revenues gained because of the need of customers to efficiency and better use of their assets  Long term revenue from Monthly fee for the package Individual charges for special inquiries  Customers: A Large construction company A rental construction company Submit proposals to companies

37  More companies  Main competitors and products such as offering a cellular based system  Effects: Educated potential customers Narrowing window of opportunity

38  No accelerated growth is demanded because the possibility of eroding LoJack’s key strengths  Aspell’s view on Dalley (CEO of LoJack) Right personal characteristics and technical skills Experiment of working as trusting and cooperative partners Strong relationship on the top decreasing the effect of conflicting in lower levels Flexible view of them to alliance

39  Opening and entirely new market to LoJack  It might continue to success  It might be the time to find a new partner  How to structure a relationship

40 1. Which are the relational actors relevant to the technical and commercial success of the stolen Vehicle Recovery system? Which relational objectives, power positions and arrangements exist between LoJack Corporation and the actors? 2. How would you evaluate the first LoJack-MicroLogic alliance from a discrete organization perspective? And how would you evaluate the alliance from an embedded organization perspective? On balance, would you describe it as primarily embedded? 3. Do you think the arrangements between LoJack and MicroLogic changed their competitive advantage over time? 4. What advice would you give the LoJack management team on the joint venture proposal by MicroLogic to join them in introducing a new monitoring and maintenance system for construction equipment?


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