Capstone Simulation Ferris (25055)

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Capstone Simulation Ferris (25055)

• May 26, 2008
• Group 2

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Ferris Strategy

• What is our competitive advantage?
• All competitors equal at beginning
• Must establish core competency and invest to
  maintain market leadership
• Commodity? Not our focus (not sustainable)
• Differentiation? Focus RD to generate profit
• Capacity? Need to fill capacity with
  competitive products while building technology
• Strategy Focus on high value products
• Build sustainable advantage through RD
• Support all segments to utilize open capacity
• Over time, products will drift to low end

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Competitor Analysis

• Andrews focus on traditional and low end
  markets with low price leadership
• Digby focus on high end market
• Baldwin little attention to high end but very
  successful in performance and size
• Erie focus on promotion of diverse product mix
  with competitive pricing

4
Round 1

• Strategy
• -- Market share leader of low end to
  generate profit
• -- Increase traditional market share through
  size/performance
• -- Invest RD to develop new high end,
  performance, and size markets
• Implementations
• -- Reduce low end to industry leading price
  (generate profits)
• -- Improve Fist, Foam and Fume, keep the
  price
• -- Invest 1.6M to develop a new industry
  leading of high end (Fancy)
• -- Add employee to meet production capacity
• Performance
• -- Stock Price 46.94 (1)
• -- Profit 12.5M (1)
• -- Sales 143M (1)

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Round 2

• Strategy
• -- Maintain low end volume while continuing
  RD investment
• -- DIFFERENTIATE!
• Implementations
• -- More promotion expense on traditional
• -- Add sales and marketing staff
• -- Reduce traditional price to market
  leading.
• -- Add employees to meet production
  forecast
• -- Improve automation rate
• Performance
• -- Stock Price 56.12 (1)
• -- Profit 9.8M (2)
• -- Sales 198M (1)

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Round 3

• Strategy
• -- DIFFERENTIATE!
• Implementations
• -- Continue RD investment to improve high
  end
• -- Buy production capacity for high end
• -- Continue to improve size and performance
  to lead market
• -- Move Fist (high end) to traditional
  focus
• -- Add employees to meet production
  capacity
• -- Add sales for high end promotion.
• Performance
• -- Stock Price 58.29 (1)
• -- Profit 7.7M (1)
• -- Sales 223M (1)

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Round 4

• Strategy
• -- DIFFERENTIATE!
• Implementations
• -- Continue RD spend of 2M
• -- Begin development of new high end product
  (Future)
• -- Increase marketing for high end
• -- Reduce inventory on hand
• -- Buy production capacity for high end,
  performance and size products
• -- Add employees to reduce OT
• Performance
• -- Stock Price 77.48 (1)
• -- Profit 16M (1)
• -- Sales 267M (1)

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Round 5

• Strategy
• -- DIFFERENTIATE!
• Implementations
• -- Continue development of high end products
• -- Pay dividend
• -- Improve traditional products to maintain
  differentiation
• -- Continue to increase buying capacity for
  high end, performance and size products
• -- Increase marketing on low end and
  traditional products to use capacity
• -- Extend AP and AR
• Performance
• -- Stock Price 115.36 (1)
• -- Profit 26M (1)
• -- Sales 324M (1)

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Round 6

• Strategy
• -- DIFFERENTIATE!
• Implementations
• -- Continue to pay dividend
• -- Improve traditional to competitive level
• -- Continue high end, performance and size
  RD
• -- Longer AP and AR
• -- Add high end marketing
• -- Add more capacity to capture potential
  segment share
• Performance
• -- Stock Price 145 (1)
• -- Profit 30M (1)
• -- Sales 387M (1)

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Round 7

• Strategy
• -- DIFFERENTIATE!
• Implementations
• -- Increase dividend to 1
• -- Reduce traditional price to consume
  inventory
• -- Maximize performance production to take
  80 market share
• -- Maximize production capacity of high end
• -- Beginning to see market competition
  between other Ferris high end products
• -- Reduce price of traditional business to
  support low end market
• Performance
• -- Stock Price 142 (1)
• -- Profit 27M (1)
• -- Sales 497M (1)

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Round 8

• Strategy
• -- DIFFERENTIATE!
• Implementations
• -- Pay dividend of 1.5
• -- Buy back stock of 1.9M
• -- Technology leading and price competitive
  on high end
• -- Adjust price (first time) to capture size
  market
• -- Must reduce inventory holding costs
• -- Very difficult to capture more than 60
  of market
• Performance
• -- Stock Price 188 (1)
• -- Profit 37M (1)
• -- Sales 549 M (1)

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Marketplace Map
Performance ?
Size?
High?
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(No Transcript)
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Group 2 Introduction

• CEO _ Bill Muck
• Marketing _ Zhang Shuhua, He Yi
• Production _ Zhuang Jianbin
• R D _ Tang Nanxun
• Finance _ Whole team
• GREAT TEAMWORK!

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Questions?