Strategic Plan

Strategy

We are pursuing the Broad Cost Leader basic strategy in our industry.

Mission Statement

We provide value to our stakeholders by developing, producing and marketing products

that provide quality in both excellence and reliability, at competitive prices. We achieve this

through an organizational culture that values efficiency across all functions.

Vision Statement

Our goal is to be the ideal corporate citizen in our industry, by providing the immense

value that each of our stakeholders deserve. These stakeholders include: our customers,

employees, suppliers, stockholders, creditors, governments and the general public.

Tactics (SMART Goals)

R&D

We will develop products that provide quality in both excellence and reliability. Our

existing product in the Traditional market segment will be continuously upgraded to meet

customer expectations of its age, while our existing product in the Low-end segment will not be

upgraded, to meet customer expectations of its age. Our existing products in the High-end,

Performance and Size segments will be continuously upgraded to meet customer expectations.

Eventually, we will introduce a second product in the Traditional and Low-end segments.

Marketing

We will price our products competitively, but never at the sake of a contribution margins

below 30%. We will continue to spend just over $1,000,000 per round for both the promotion

budget and sales budget for our product in the Traditional segment. We will increase our

spending to this level for our product in the Low-cost segment. Once we introduce a second

product to these segments, we will increase the promotion and sales budget to $1,500,000 each,

per round, to grow and maintain our market share. We do not plan on increasing our spending on

the promotion or sales budgets beyond this level, due to the diminishing returns achieved beyond

this point. We will increase our spending on the High-end, Performance and Size markets

gradually, until maxing our spending out just above $1,000,000 per round.

Production

We will aggressively increase our automation levels for products in our Traditional and

Low-end market segments. This strategy will reduce our labor costs, allowing us to price these

products competitively, while retaining a contribution margin above 30%. We will pursue a more

gradual increase in the automation levels of our products in the High-end, Performance and Size

market segments. This strategy will allow us to continually upgrade these products within a

competitive timeline. We will not buy additional capacity, unless the plant utilization for any of

our products nears 200%. Once plant utilization reaches 150% for any of our products, we will

increase our capacity by 1,000 units for every additional increase of 10%. This strategy will keep

our plant improvement costs low, with investments made only when stock-out concerns arise.

Finance

Our investments in R&D, Marketing and Production will be initially financed through

current debt borrowing. This initial strategy will be used, as opposed to issuing long-term debt,

because it has a comparatively lower interest rate and no brokerage fees. Also, by retiring the

current debt annually, we will keep our leverage ratio on the lower-end of the ideal range for a

broad cost leader: 2.0-3.0. We will also issue long-term debt and/or sale common stock, if it is

necessary to maintain a debt/equity ratio above 2.0. By aggressively investing in automation,

effectively increasing the value of our plant and equipment, we ensure that we have this option at

our disposal. In later rounds, we will issue dividends and/or extend our accounts receivable credit

policy, if necessary to maintain a debt/equity ratio under 3.0.

Human Resources

Starting in round 2, we will begin to invest in recruiting and scheduling training hours.

Since our goal is to reduce the cost of goods sold, we will spend and schedule conservatively.

We will spend $2,000 per employee on recruiting and schedule 25 hours of training for each

employee annually.

Total Quality Management (TQM)

Starting in round 4, we will begin to invest in the Process Management and TQM

initiatives that reduce the cost of goods sold. We will invest $500,000 for each of the following

Process Management initiatives, totaling $2,000,000 annually: Continuous Process Improvement

(CPI), Vendor/Just in Time (JIT), Quality Initiative Training (QIT) and The United Nations

Environment Program (UNEP Green Program). We will invest $750,000 for each of the

following TQM initiatives, totaling $1,500,000 annually: Concurrent Engineering/6 Sigma

Training (CCE) and The Global Environmental Management Initiative, Total Quality

Environmental Management (GEMI TQEM).