Team AndrewsBusiness 499

Jacob BabcockJustin BrunsBrian Fielder

Jared Kohn

Mission Statement We will strive to be the leader in the High End,

Traditional, & Low End segments of the market

Overall Strategy Focusing on our segments & implementing

a cost leadership, product lifecycle focus

Success Measures Return on Assets (ROA) – 40% Return on Equity (ROE) – 40% Return on Sales (ROS) – 20%

Andrews

R&D◦ Reduced MTBF to minimum standards in all segments

Reduces material costs Marketing

◦ Increased Sales & Promotion budget in Traditional, High End, & Low End

◦ Decreased Sales & Promotion budget in Size & Performance Production

◦ 18.8% left in inventory◦ Stocked out in Low End segment

Finance◦ Issued $18,994,000 bond◦ Had an $8,769,036 emergency loan

Year 1

R&D◦ Introduced new product – Awsum

Marketing◦ Set Promotion & Sales budget for Size & Performance to $0 to

prepare to phase out◦ Decreased Promotion & Sales budget for Traditional, High End, &

Low End Production

◦ 9.0% left over in inventory Stocked out in Traditional segment

◦ Maintained production levels in all segments except Size◦ Did not produce any products in the Size segment

Finance◦ Retired $6,950,00 in long-term debt◦ Paid back emergency loan from Year 1

Year 2

R&D◦ Reduced Adam’s MTBF to 14,000◦ Introduced Ace on April 23, 2014

Marketing◦ Began to phase out the size & performance segments (Aft &

Agape)

Production◦ Sold 200 units of capacity for Acre and Awsum◦ Sold all but one unit of capacity for Aft and Agape◦ Bought 200 units of capacity for Ace◦ 5.4% of production remained in inventory at end of year

Sold out of Able, Acre, Adam Aft, and Ace

Finance◦ Retired $40,000,000 in long term debt

Year 3

R&D◦ Acre’s performance changed from 3.0 to 3.5 and

size from 17.0 to 16.6◦ Adam’s performance changed from 7.6 to 7.5 and

size from 12.4 to 12.5 Marketing

◦ Increased promotion & sales budget for Adam, Acre, & Ace

Production◦ 12.4% of production remained in inventory at end

of year (down from year 3) Sold out of Able, Adam

Finance◦ Issued $10,000,000 loan

Year 4

R&D Introduced new High End product called Apple

◦ Costs totaled $1,673,000

Marketing Increased promotional budget & decreased sales budget in Low End Increased promo budget for Ace (High End)

Production Purchased 200 units of capacity for Awsum (Traditional) Sold 400 units of capacity for Acre (Low End)

Finance Sales increased to 118,948,000 Net profit increased to $10,786

Year 5

R&D Traditional product, Aooook introduced (1/16/2017) Costs of Adam (Low End) totaled $56,000 High End costs of $673,000

Marketing Acre’s (Low End) sales budget decreased while promo budget increased Adam’s (Low End) sales budget decreased Awsum & Ace priced at $27.50

Production Purchased 400 units of capacity for Able (Low End) Sold 400 units of capacity for Adam for $9,880,000 (Low End) Purchased 200 units of capacity for Apple (High End)

Finance Retired 2,500 worth of stock Net Profit increased to $11,970

Year 6

R&D◦ 3 products in the traditional segment this round

Introduced Aooook to our customers Goal: Take market share away – only sold 325,000

Marketing◦ Maintained Marketing Investments

Production◦ 15.8% left over in inventory

3 products stocked out Finance

◦ Issued $30 Million Bond◦ Retired 6,555,000 Shares of stock

Year 7

R&D◦ Made High end product slightly better◦ Traditional Segment did well

Sold over 4 Million between 3 products Marketing

◦ Maintained Marketing Investments Production

◦ 10.9% left over in inventory◦ 1 product stocked out

Finance◦ Retired $87 Million in bonds◦ Retired 10,427,000 Shares of stock

Year 8

Strengths Weaknesses

• High contribution margin - 54.4%

• Stock price - $209.59/share

• Returns – ROS, ROA, ROE

• Bond Rating – AAA

• Under-leveraged – 1.1

• Capacity issues

• Inconsistent sales forecasting

• Poor product positioning in Low End

SWOT Analysis

Opportunities Threats

• Focus on customer buying criteria

• Increase leverage

• Improve product positioning

• Companies with products in Traditional, Low End, & High End

• Our own decisions!

Product strategy◦ 3 Products in Traditional◦ 3 Products in Low End◦ 1 or 2 in High End

Positioning◦ “No one has a STAGGER like us”

Focus more on customer buying criteria

R&D

http://www.youtube.com/watch?v=TiS9-yPvBnY

Maintain sales and promotion budgets at necessary levels◦ Awareness goal: 90%

Allocate more time and money to the products that perform better

Improve sales forecasting Price products at competitive levels

Marketing >

Increase capacity to adequate levels to enable us to produce forecasted amounts

Maintain automation at required levels to minimize costs

Maintain investment in Human Resources to increase productivity

Keep overtime levels to a consistent minimum

Production

Increase leverage to satisfactory amounts◦ Take out necessary bond amounts

Continue to maximize ROS, ROA, ROE◦ Retire stock◦ Retire bonds early when able

Make sure we have adequate cash levels to avoid emergency loans

Finance

Questions