The August 2018 Management Case Study deals with a company called Montel, a manufacturer of high-end digital cameras in the fictional country of Farland. As with any CIMA case study, it’s always a good idea to familiarise yourself with some of the key trends and facts pertaining to the industry within which the pre-seen company operates. However, navigating an entire industry on your own from scratch can be disorientating and intimidating! That’s why VIVA has prepared a full real-world Industry Analysis for the August 2018 Management Case Study, to save you the trouble of compiling all the key facts and figures by yourself. You can access the Full Industry Analysis either on its own or as part of one of our Case Study Packs here. The full industry analysis includes both a HD video lesson of approximately 1 hour, and the accompanying powerpoint presentation. Below, we offer you just a few key highlights from the Full Industry Analysis.
Rapid decline, bottomed out?
When we look at the numbers, one thing is obvious: the digital camera industry has been in rapid decline for the last 10 years or so. The major cause of this has undoubtedly been the simultaneous rise of the smartphone, and particularly, the rapid improvements that have occurred with respect to smartphone’s in-built digital cameras. Most modern smartphones have digital cameras that most laypeople deem to be of high quality, and more than sufficient for their daily needs. This has caused the compact digital camera segment to plummet in terms of yearly sales. As you can see in the chart below, since around 2010 shipments of digital cameras as a whole have plunged. If you look at the breakdown however, you can see that it is cameras with in-built lenses that have suffered the most. This is precisely the segment that one would expect to suffer due to the rise of smartphone cameras. The smaller compact digital cameras are “in-built lense” models, and were the most popular models amongst mass consumers up until the end of the last decade. One interesting thing to note is that 2017 saw a slight uptick in the number of digital cameras shipped. Some analysts are wondering if this indicates that the market has finally bottomed out, and that we might see a return to at least modest growth in the coming years. Others are more skeptical and believe it may just be an anomaly and is not necessarily indicative of a long-term recovery. One thing is clear: the compact digital camera is fast becoming obsolete thanks to smartphones.
The Mirrorless Revolution has arrived?
There seems to be a strong case to be made that mirrorless (or Compact System Cameras) are going to overtake DSLRs, both for consumer/demand reasons and for manufacturing reasons.
In terms of consumer considerations, many camera experts and enthusiasts seem to agree that the most recent mirrorless cameras are very close, if not equal to, DSLRs in terms of their capacity to take high-quality, professional photos and video. Moreover, mirrorless cameras boast several advantages over DSLRs – amongst them the ability for the electronic viewfinder on mirrorless cameras to display what the actual photo will look like after taking the picture, to perform better in low-light conditions, and the ability to take completely silent photos due to the absence of a shutter. Mirrorless cameras are also substantially lighter and more compact as they don’t have to house the reflex-mirror mechanism. Some also argue that the autofocus capacity of mirrorless cameras is superior. The two notable downsides of mirrorless cameras from the consumer point of view are (i) that the more compact body of a mirrorless camera generally means a smaller battery, and so reduced battery life and (ii) given their relatively recent emergence on the market, there is a more limited range of hardware available for mirrorless cameras, particularly in terms of lens ranges – though this is quickly changing.
From a manufacturing point of view, mirrorless cameras also seem more attractive. Producing a DSLR with a fast, seamless and reliable mirror-shutter mechanism is a significant manufacturing cost and bottleneck involving many moving parts and potential complications. Mirrorless cameras have no need for such a shutter mechanism, and so a whole manufacturing step is eliminated. Although an electronic viewfinder often replaces the optical viewfinder of DSLRs on mirrorless models, the hardware involved and assembly is generally less complex and less costly.
The impression that the net benefits of mirrorless cameras are greater than those of DSLRs seems to already be manifesting in the numbers. In 2017 there was a 32% increase in mirrorless cameras produced and a 9% drop in DSLRs produced.
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