For Kim Woods management 600 business planning seminar
Team Baldwin
1
Company Organization
Our company has experienced some re-organization from the end of year two into years three and four. Matthew our team leader is still focusing on Marketing, Brou is still focusing on R&D, I am still focusing on Finance, HR, and TQM and all three of us have split the Production and plant improvements responsibilities.
2
Strategy Moving Forward
Markets We Prioritized
High End
Traditional
Low End
Effectiveness of Strategy
Team Rating: 9/10
Advanced R&D
Excellent Design
Above average pricing
Just-in-time production
Collaboration between Marketing, R&D and Production departments
Use of Finance as a check and balance
Our team gave our strategy a 9/10 for the second two rounds. We continue to attribute the effectiveness of our strategy, which we have kept the same into the second week of rounds, to our advanced research and development, the excellent design of our products, our above average pricing and our just in time production. We also feel that the strong collaboration between the marketing, R&D, and production departments as well as the use of the Finance department as a check and balance to all of our decision making continued to contribute to the success of our company and the effectiveness of our strategy for the next two years of our business.
3
Strategy Evolution Impact of Competition R&D
2022
2023
Baldwin continues to meet Customer’s buying criteria and decided to shift all current products for placement within fine cut circle. Following our previous plan from 2020 and 2021 we were able to come up on round 3 and 4 with a premium design compared to our 2 closest competitors Andrews and Chester.
4
Results R&D
Baldwin continue to reduce the size and improve the performance where we outperformed our competition on round 3 and 4. As a result, our products are placed on a strategic spot on the perceptual map for the most. Based on true collaboration between teams, R&D also launched a strategy that was able to help the Production team to cut down the material cost.
5
Results Marketing Pricing and Forecast
| Baker | Bead | Bid | Bold | Buddy | |
| YEAR 2- 2021 | 27.99 | 20.99 | 39.49 | 33.99 | 33.99 |
| YEAR 3-2022 | 27.99 | 21.99 | 38.49 | 33.49 | 33.49 |
| YEAR 4-2023 | 27.99 | 21.99 | 37.99 | 32.99 | 32.99 |
| YEAR 5-2024 | ? | ? | ? | ? | ? |
| 2022 PROMO Budget | 2023 PROMO Budget | Delta | |
| Baker | $2M | $2M | - |
| Bead | $2M | $2M | - |
| Bid | $2M | $2M | - |
| Bold | $1.125M | $2M | + $750k |
| Buddy | $1.125M | $2M | + $750k |
3.4%
Team Baldwin continues to deliver great results for our shareholders and customers. There is always room for improvement. Today I will be giving you an update on our marketing results and some insight into our strategy to grow market share. Year end 2023 we are 2nd in Market share across all 5 product lines at 25.95%. This we believe is a shortcoming in delivering our technically superior products. Over the past 2 our profits have significantly grown, and our Margins a good, however our market share overall is only up 3.4%.
You can observe here that we have not had pricing pressures but we do anticipate them going forward as our competitors begin to mature and our B2B clients expect to pay less year over year for the same product. I firmly believe the problem is not with our aggressive product pricing but with stagnating Customer awareness and lack of investment in accessibility. Additionally, we face some challenges in production capacity which we look to address in the next 2 years.
You can se above that Our Promotion budget over the last 3 years had only changed a mere $1.5M. With a depreciation of almost 33% annually in awareness. We cannot improve accessibility without increasing our budget going forward, into the next 2 years.
6
Strategy Evolution Impact of Competition Marketing Promotion and Sales
2023 Sales Forecast
Baker 4,727 -28%
Bead 2,965 -26%
Bid 1,571 90%
Bold 937 78%
Buddy 1,263 94%
Markets Sales Budgets: 2022 2023
Outside Sales 11 20
Inside Sales 29 37
Distributors 14 17
As I Mentioned on the previous slide an increase in plant production capacity is needed. All 5 product lines are experiencing over 120% plant utilization with two of them at 198% capacity. This will have a negative impact on Gross Revenue Sales next year if we don’t make capacity changes to meet demand. Else we will have to scale back forecasts.
The forecasting over the past 2 years has improved with only one product having a stock out in year 4. Our traditional product line, Baker experienced an almost 28% miss on forecasted expectations as well our low end product Bead with a 26% miss on the year. Meanwhile, Our High End, Performance and Size market segments were at 90%, 78% and 94% to forecast targets. That is great news!
You can see that we invested in new sales resources in years 3& 4, with the addition of 9 outside salesperson, 8 inside salespersons and the addition of 3 distributers by year end 2024.
Potential market segment signals indicates growth opportunities with investment in our sales markets segments combined with plant improvements.
7
Results: Market Share
1st
3rd
2nd
As I close out this Marketing presentation, we at Baldwin have slid into the #3 position in market share: Just 2 years ago we were 4 % points behind Chester. We have slipped falling over 7% behind them in total sensor market share. The Andrews Team has stepped up taking the number 2. position.
Staying focused within Baldwin and delivering on expected sales targets continues. A 5.7% growth potential in the Traditional product Baker along with a 10.4% growth opportunity in the Size segment offer prospects to grow sizably.
Next we will be taking a look at Baldwin's Marketing and Sales strategy and their impact on Production.
8
Strategy Evolution Impact of Competition Production
| Automation | End 2021 | End 2022 | End 2023 |
| Baker | 8 | 8 | 8 |
| Bead | 8 | 8 | 8 |
| Bid | 4 | 8 | 8 |
| Bold | 3 | 5 | 7 |
| Buddy | 3 | 5 | 7 |
2021
2023
Decreased Labor Cost
Increased Capacity costs(Each new unit of capacity costs $6.00 for the floor space plus $4.00 multiplied by the automation rating
Automation above 8.0 rating increased R&D improvement > 1 year.
Relative to Automation, Baldwin developed an early high automation production plant in our primary product lines Traditional, Baker, Low end-Bead, and High-Bid. This had a large impact I reducing our Labor costs This significantly increased contribution margins. There are some drawback however to increased automation. Increased capacity costs a lot more when increasing plant capacity “Each new unit of capacity cost $6.00 for the floor space. Plus ther there $4 multiplied by the automation rating. This can create excessive cost to increase plant production when trying to lower the employee overtime/2nd shift reliance. For instance increasing production of 1 million units at an automation rating of 8 can cost upwards of $38M
I woul like to take the time to thank you for focusing on the presentation. At this time I would like to turn it over to Brough who will continue with Production results.
9
Results Production
As mentioned earlier, Baldwin developed an early high automation production plant in our primary product lines Traditional, Baker, Low end-Bead, and High-Bid. This resulted on a lower labor cost , compared to our competitors as well, as shown on the table obtained from the Production Analysis from years 2022 and 2023. As automation levels increase(1.0 the lowest possible and 10.0 the highest), the number of labor hours required to create each unit decreases considerably. In fact our labor cost went down from $4.28 to $3.89 for Baker; $4.28 to $3.71 for Bead and from $8.78 to $3.86 for Bid. Baldwin was also able to cut down the Material cost between 2022 and 2023 as you can witness on the tables above. Automation is very attractive as you can confirm.
However there are factors to be considered while raising the automation level. As Capstone stated, “as you raise automation, it becomes increasingly difficult for R&D to reposition products short distances on the Perceptual Map. For example, a project that moves a product 1.0 on the map takes significantly longer at an automation level of 8.0 than at 5.0.”
10
Results HR
December 2023
December 2024
During the third and fourth years of operation our company invested in HR. We put money into recruiting and training hours. This resulted in a decrease in turnover from year three to year four. It also increased productivity. As you can see in both year three and year four the turnover rate continued to decrease from 7.3% to 6.5% while the percentage of productivity was over 100%. In year three at 106.6% and at the end of year four our productivity jumped to 112.4%
11
Strategy Evolution Impact of Competition Finance
2022
2023
2024
Financially Baldwin is doing very well compared to our competitors Andrews and Chester. As you can see in the presentation our financial statistics from the end of year two 2022 to the end of our fourth year 2024 our ROS, Sales, and Profits have continued to increase competitively in the marketplace, leaving us with the highest amount of profits at round 44 million and in second place behind Chester for sales at around 261 million. For ROS we started at 11.3% and ended year four at 16.9%.
We also had at least close to a 1.8 ratio for leverage, and 35 or more days of working capital for both years. We managed to keep our A/R and A/P at 30 and no more than 40% in long term debt. We also did not incur any issues which required us to need an emergency loan and our cash position at the end of both years was positive.
12
Results Finance
2024
2023
As you can see in the presentation we saw a consistent increase in our stock price from year three to year four. Our price was consistently higher than our competitors in the marketplace. At the closing of year three we had at stock price of $114.99 and a positive change of $40.29. At the close of year four we had a stock price of $162.20 and we saw a positive change of $47.21.
Our balanced scorecard percentiles were also competitive. In the first round we at 86% which was only 1% away from Chester who had the highest percentage. At the end of our fourth round we were at 78% which was 10% lower than our strongest competitor Chester. At the end of year four Baldwin has started to feel our competitors closing in on us and as Matthew mentioned before we will have to begin restrategizing moving forward so that we can regain the top percentge.
13
Results TQM
We invested in TQM in the third and fourth round and in doing so we received a large advantage because by investing in TQM we received benefits such as lower cost of materials and labor, higher contribution margins, increase in profit gains , faster R&D upgrades with respect to R&D revision dates and increased demand for products.
As you can see in our TQM Summary report from round two and round three the benefits from TQM show a reduction in labor and material costs, as well as a reduction in R&D cycle times, admin costs, and we also had a demand increase.
14
Segment Results At the End of Round 4
Top Product
Baker – Traditional
At the end of of our fourth year of business our product that was at the top of its segment was Baker – Traditional which tied with Able at 33% market share. For our other segments we were in second or third place with Bead – Low End at 16%, Bid - high end at 31%, Bold our Performance at 18% and Buddy – Size at 31%.
Baldwin is starting to feel the pressure from both Andrews and Chester and moving forward as mentioned before we need to work hard to increase our contribution margins in all of the product segments above by tweaking our marketing and production strategies so that we can regain the top of product segments in the marketplace.
15
Baker
33%
Bead
16%
Bid
31%
Bold
18%
Buddy
31%
Baker Bead Bid Bold Buddy 33 16 31 18 31
Team Effectiveness
How Our Team Worked Together
How Our Team Will Improve Performance
Hello, Our team continues to be successful in the in years 3& 4 for Baldwin, by meeting regularly, and cross pollinating primary responsibilities. This allows coverage and informed decision making when a member is not able to be in attendance. I Matthew have taken primary marketing responsibilities, Brou is responsible for R&D, ensuring that the products support the marketing strategy. The entire team shares responsibilities for Production and Plant Improvements. Amelia is a key member of the team balancing the Finance department, scorecard metrics and HR responsibilities.
For the first time Team Baldwin was able to issue $2.2M in dividends for that we are thankful and look forward to next year.
The Baldwin team must deliver on production plant capabilities so that we can continue to reach market potential.
16
Communication
Attendance
Being Prepared