Strategic Plan

Strategic Plan Mission Statement:

Our mission as a broad cost leader is to produce low cost products in every segment of the market. We will maintain good profit margins and low prices to create maximum customer market share. Our Research and development will introduce new items while maintaining our existing products with current trends and obtaining new knowledge relevant to product needs. Marketing will build brand awareness while maintaining low price to increase sales and promoting our new products. Production will increase automation based on forecast and sales of each product to ensure no product stock out. Our Human Resource will compliment sufficient number of workers needed with minimal overtime hours and training to maintain products at a low cost. Our finance will be from long-term bonds and will retire bonds as soon as we meet a certain cash point.

R&D

Our research and development strategy will revolve primarily around making improvements to our current product line. We feel that focusing on our existing products will allow our company to obtain desirable profit margins whilst maintaining low costs. In order to do so, we will reduce the size and increase the performance as needed to match the ideal spots for each segment - you can reference the exact numbers we have decided on in the excel sheet attached.

We have also decided to introduce two new products to our line: a low end (Acre 2) and a traditional (Able 2). Acre 2 will be created in the first round, and Able 2 will be created shortly after in the second round.

We will ensure that all of our projects are completed before the years end in order to maximize our sales - with the exception of Able 2 and Acre 2. We expect those projects to take longer than a year due to the fact that we are creating those new products from scratch.

Able: Traditional

Round Pfmn Size MTBF

0 5.5 14.5 17500 1 5.7 14.3 17500 2 6.4 13.6 17500 3 7.1 12.9 17500 4 7.8 12.2 17500 5 8.5 11.5 17500

Able2: Traditional

Round Pfmn Size MTBF

0 - - - 1 5.7 14.3 16500 2 6.4 13.6 16500 3 7.1 12.9 16500 4 7.8 12.2 16500 5 8.5 11.5 16500

Acre: Low End

Round Pfmn Size MTBF

0 3.0 17.0 14000 1 3.0 17.0 14000 2 3.0 17.0 14000 3 3.2 16.8 14000 4 3.7 16.3 14000 5 4.2 15.8 14000

Acre2: Low End

Round Pfmn Size MTBF

0 - - - 1 2.2 17.8 13000 2 2.7 17.3 13000 3 3.2 16.8 13000 4 3.7 16.3 13000 5 4.2 15.8 13000

Adam: High End

Round Pfmn Size MTBF

0 8.0 12.0 23000 1 9.8 10.2 23000 2 10.7 9.3 23000 3 11.6 8.4 23000 4 12.5 7.5 23000 5 13.4 6.6 23000

Aft: Performance

Round Pfmn Size MTBF

0 9.4 15.5 25000 1 10.4 15.3 25000 2 11.4 14.6 25000 3 12.4 13.9 25000 4 13.4 13.2 25000 5 14.4 12.5 25000

Agape: Size

Round Pfmn Size MTBF

0 4.0 11.0 19000 1 4.7 9.6 19000 2 5.4 8.6 19000 3 6.1 7.6 19000 4 6.8 6.6 19000 5 7.5 5.6 19000

Marketing

As outlined in our attached spreadsheet, our promotion budget for each round and for each category is based on building up to 100% awareness. Once we have reached 100% awareness we will only spend enough on promotions in order to maintain 100%. We will also not invest more than $2250 for each product in each round, because beyond that point we receive diminishing returns.

We will utilize the same procedure with our sales budget in promoting accessibility. Diminishing returns; however, are met at $3000 dolors for sales. For this reason we will never exceed this amount for any given product in any given round. Accessibility will be much more difficult to achieve 100% status.

Our strategy for price will be to lower the price of each product by $0.50 during each round. This will allow us to meet the customers expectation without reducing our profits too greatly.

Our sales forecast is based completely on our current market share, and what percentage that the Capstone Courier predicts each category will grow.

Able: Traditional

Round Promotion Budget Awareness Sales Budget Accessibility My Price Sales

Forecast 0 $1,000 55% $1,000 54% $28.00 - 1 $2,250 82% $3,000 67% $27.50 1092 2 $2,250 100% $3,000 76% $27.00 1192 3 $1,400 100% $3,000 82% $26.50 1302 4 $1,400 100% $3,000 86% $26.00 1422 5 $1,400 100% $3,000 89% $25.50 1553

Able2: Traditional

Round Promotion Budget Awareness Sales Budget Accessibility My Price Sales

Forecast 0 - 0% - - - - 1 $0 0% $0 0% - - 2 $2,250 45% $3,000 31% $27.00 1192 3 $2,250 75% $3,000 52% $26.50 1302 4 $2,250 95% $3,000 66% $26.00 1421 5 $1,500 100% $3,000 75% $25.50 1552

Acre: Low End

Round Promotion Budget Awareness Sales Budget Accessibility My Price Sales

Forecast 0 $900 52% $900 54% $21.00 - 1 $2,250 80% $3,000 67% $20.50 1970 2 $2,250 98% $3,000 76% $20.00 2200 3 $1,500 100% $3,000 82% $19.50 2458 4 $1,400 100% $3,000 86% $19.00 2746 5 $1,400 100% $3,000 89% $18.50 3067

Acre2: Low End

Round Promotion Budget Awareness Sales Budget Accessibility My Price Sales

Forecast 0 - 0% - - - - 1 $0 0% $0 0% - - 2 $2,250 45% $3,000 31% $20.00 2200 3 $2,250 75% $3,000 52% $19.50 2457 4 $2,250 95% $3,000 66% $19.00 2745 5 $1,500 100% $3,000 75% $18.50 3066

Adam: High End

Round Promotion Budget Awareness Sales Budget Accessibility My Price Sales

Forecast 0 $800 49% $800 48% $38.00 - 1 $2,250 78% $3,000 63% $37.50 424 2 $2,250 97% $3,000 73% $37.00 493 3 $1,500 100% $3,000 80% $36.50 573 4 $1,400 100% $3,000 85% $36.00 665 5 $1,400 100% $3,000 88% $35.50 773

Aft: Performance

Round Promotion Budget Awareness Sales Budget Accessibility My Price Sales

Forecast 0 $700 46% $700 48% $33.00 - 1 $2,250 76% $3,000 63% $32.50 426 2 $2,250 96% $3,000 73% $32.00 510 3 $1,500 100% $3,000 80% $31.50 611 4 $1,400 100% $3,000 85% $31.00 732 5 $1,400 100% $3,000 88% $30.50 877

Agape: Size

Round Promotion Budget Awareness Sales Budget Accessibility My Price Sales

Forecast 0 $700 46% $700 42% $33.00 - 1 $2,250 76% $3,000 59% $32.50 373 2 $2,250 96% $3,000 71% $32.00 441 3 $1,500 100% $3,000 78% $31.50 522 4 $1,400 100% $3,000 83% $31.00 618 5 $1,400 100% $3,000 87% $30.50 731

Production

As outlined in our attached spreadsheet, our production schedule is based on 110% of our predicted sales. We are taking an optimistic outlook in production based on our sales forecast.

We will attempt to increase automation more rapidly in each round for categories that are more inclined toward automation. We predict that the “sweet spot” for automation in each category will match the below guidelines. Once we have reached this “sweet spot” will add no further automation:

Traditional: 8 (increasing by 1 per round up to 8)

Low End: 10 (increasing by 1.5 per round up to 10)

High End: 5 (increasing by 0.5 per round up to 5)

Performance: 6 (increasing by 0.75 per round up to 6)

Size: 6 (increasing by 0.75 per round up to 6)

We will add enough capacity each round in order to match 50% in Overtime for each category. Some items are not at 50% currently, so we will not add capacity. Other items are currently over 50% so we will need to work our way to this benchmark over a couple of rounds. The prediction for the amount of capacity needed is based on our intended production, which is, in turn, based on our sales forecast.

Able: Traditional

Round Production Schedule Automation Capacity Needed

0 - 4.0 - 1 1201 5.0 - 2 1312 6.0 - 3 1432 7.0 - 4 1564 8.0 - 5 1708 8.0 -

Able2: Traditional

Round Production Schedule Automation Capacity Needed

0 - - - 1 - - 900 2 1311 4.0 100 3 1432 5.0 100 4 1564 6.0 100 5 1707 7.0 150

Acre: Low End

Round Production Schedule Automation Capacity Needed

0 - 5.0 - 1 2167 6.5 300 2 2421 8.0 150 3 2704 9.5 200 4 3020 10.0 200 5 3373 10.0 200

Acre2: Low End

Round Production Schedule Automation Capacity Needed

0 - - - 1 - - 1650 2 2420 5.0 200 3 2703 6.5 200 4 3019 8.0 200 5 3373 9.5 200

Adam: High End

Round Production Schedule Automation Capacity Needed

0 - 3.0 - 1 466 3.5 - 2 542 4.0 - 3 630 4.5 - 4 732 5.0 - 5 850 5.0 -

Aft: Performance

Round Production Schedule Automation Capacity Needed

0 - 3.0 - 1 469 3.8 - 2 561 4.5 - 3 673 5.3 - 4 806 6.0 100 5 965 6.0 100

Agape: Size

Round Production Schedule Automation Capacity Needed

0 - 3.0 - 1 410 3.8 - 2 485 4.5 - 3 574 5.3 - 4 679 6.0 - 5 804 6.0 100

Human Resources

We will maintain 1st shift production line until 2nd shift or overtime is necessary. Recruitment of a maximum of $5000 per worker to acquire a higher caliber worker. Higher productivity will come from training hours at a cost of $20.00 per worker. This will ensure that all workers are highly trained and productivity is at its maximum.

Finance

Our financial strategy consists primarily of financing company activities through long term debt. The majority of our investments are financed through long-term bond issues, however when financing through long-term debt is not sufficient enough to cover our capital needs, we will acquire funds through stock offerings. As our company becomes profitable, and our net income increases, we will establish a dividend policy as well begin to retire stock that was issued. The remainder of our net income will be reinvested into the firm. Our company plans to to keep leverage between 2.0 and 2.8.

TQM

TQM (Total Quality Management)/Sustainability initiatives can reduce material, labor and administrative costs, shorten the length of time required for R&D projects to complete and increase demand for the product line. The impacts of the investments produce returns in the year they are made and in each of the following years.

Assuming positive revenue, we will be using our budget on a few TQM initiatives. In our strategy, we will maximize overall profits by reducing total SG&A cost primarily in materials, labor, and administrative cost. In order to achieve those goals, we will invest in cce/6 sigma training to reduce labor cost, CPI systems to reduce material cost, benchmarking to reduce administrative cost. For our strategy we will use a conservative budget between $1500-$2000 which may increase depending on our sales.