Team E
Performance Assessment
Performance Assessment
Tactical & Policy Considerations
Marketing: by ---The following graphs illustrate our products’ performance as it relates to marketing awareness and
accessibility, attributes, and customer survey ratings.
80
70
60
50
40
30
20
10
0
Awareness %
Accessibility %
Customer Criteria - EAT
Value
Value
Marketing - EAT
Survey pts.
Market Share %
27
24
21
18
15
12
9
6
3
0
Price $
Performance
Size
Reliability
(in thousands)
80
70
60
50
40
30
20
10
0
Awareness %
Accessibility %
Survey pts.
Market Share %
Customer Criteria - EBB
Value
Value
Marketing - EBB
20
18
16
14
12
10
8
6
4
2
0
Price $
Performance
Size
Reliability (in
thousands)
Customer Criteria - ECHO
55
50
45
40
35
30
25
20
15
10
5
0
Awareness %
Accessibility %
Value
Value
Marketing - ECHO
Survey pts.
Market Share %
40
36
32
28
24
20
16
12
8
4
0
Price $
Performance
Size
Reliability (in
thousands)
55
50
45
40
35
30
25
20
15
10
5
0
Awareness %
Accessibility %
Customer Criteria - EDGE
Value
Value
Marketing - EDGE
Survey pts.
Market Share %
33
30
27
24
21
18
15
12
9
6
3
0
55
50
45
40
35
30
25
20
15
10
5
0
Awareness %
Accessibility %
Survey pts.
Market Share %
Performance
Size
Reliability (in
thousands)
Customer Criteria - EGG
Value
Value
Marketing - EGG
Price $
33
30
27
24
21
18
15
12
9
6
3
0
Price $
Performance
Size
Reliability (in
thousands)
Recommendations

As seen in the initial graphs, Product Eat and Ebb fell short of our goals in awareness, survey points, and market
share. Since the traditional and low end segments are the target segments of our low cost niche strategy, each
round we will give priority to marketing products in these segments while managing expenses and our financial
health. But, we will increase both sales and promotion budgets across all segments.

Corrections to increase Awareness: This is affected by the promotion budget and we will increase the reach and
frequency across all segments, employing the most in our target segments. Over the rounds, we will increase
this budget in all segments and extend the accounts receivable lag. We will add print media to our size segment,
direct mail to our performance segment, web media to our high end segment, email to our high end segment,
and trade shows to our traditional, low, and performance segments.

Corrections to increase Accessibility: We will make changes to our allocation of the sales budget. We will
increase inside sales, outside sales, and distributors across all segments. Traditional and low end will reach their
maximum with the first two rounds while all other segments will experience increases with each round.
Corrections to increase Survey Points: At minimum, we will be positioned in the ideal spot within the traditional
and low end segments, price at the bottom of the expected range, have the ideal age, and have an MTBF at the
top of the range. We will lower prices and MTBF across the remaining segments as much as our financials will
allow.


Corrections affecting Market Share: In many segments, we will find the ideal spot as soon as possible and
maintain it the cheapest way possible prioritizing expenditures in the traditional and low end markets. We will
reposition, develop new products, or move a product over time into the spot to increase demand and sale of our
products across all segments.

We will avoid stock outs by running a capacity analysis combined with our demand analysis. Additionally, we will
be proactive by adding capacity for the next rounds within the traditional and low end segments and selling a
little less capacity in the remaining segments. Our time allocations will increase across all segments, but we will
maintain greater allocations in our target markets.
Production/HR: by -----Plant Utilization
From the start, the only product that was utilizing greater than 100% of the plant’s capacity was our Low End product
Ebb. As we were clearly producing in excess of demand, we decided to cut production on Ebb to bring it line more
towards our forecasted sales amount for year 1. In addition, we did have some excess inventory in year 0, which enabled
us to cut production to 99% of the plant’s capacity, which provided us the opportunity to avoid paying overtime and to
boost employee moral. However, once demand in the Low End segment picked-up in year 3, we then continued to
produce over single-shift capacity out to year 4.
Since our competitive strategy was as a low cost niche provider of sensors, we ultimately decided that it would be in our
best interest to focus solely on our Traditional and Low End products Eat and Ebb respectively. Therefore, as you can see
from the chart below, our plant utilization for Echo, Edge, and Egg became zero starting year 2 and continued to be so
until the end of year 4.We released all of the workers that were employed in these segments but did keep the lines
open.
Plant Utilization
Year 0
Eat
Ebb
Echo
Edge
Egg
Year 1
66%
129%
45%
73%
63%
Eat
Ebb
Echo
Edge
Egg
Year 2
66%
99%
53%
71%
69%
Eat
Ebb
Echo
Edge
Egg
Year 3
99%
127%
0%
0%
0%
Eat
Ebb
Echo
Edge
Egg
Year 4
198%
121%
0%
0%
0%
Eat
Ebb
Echo
Edge
Egg
Percent of Line Utilization
Plant Utilization Per Product
250%
200%
Year 0
Eat
150%
Ebb
Echo
100%
Edge
50%
0%
Egg
Year 0 to Year 4
124%
101%
0%
0%
0%
Automation
Given our low-cost strategy, it was imperative to increase our automation levels for products Eat (Traditional) and Ebb
(Low End). Throughout the course of four years we did not adjust the automation levels of our other products because
they were not our primary area of focus. In addition, the more advanced the sensor the more imperative it is to have
actual workers constructing them. We have included below a chart and a graph representing the increases in our
automation levels per year.
Automation Levels
Year 0
Eat
Ebb
Echo
Edge
Egg
Year 1
4
5
3
3
3
Eat
Ebb
Echo
Edge
Egg
Year 2
6
6
3
3
3
Eat
Ebb
Echo
Edge
Egg
Year 3
7
7
3
3
3
Eat
Ebb
Echo
Edge
Egg
Year 4
8
10
3
3
3
Eat
Ebb
Echo
Edge
Egg
8
10
3
3
3
Changes in Automation Levels Per Product
12
10
8
6
4
2
0
Automation Levels
Eat
Ebb
Echo
Edge
Egg
As you can see from the information presented above, we were automated to the optimum levels by year 3 for our
Traditional and Low End products. The optimum automation level for Traditional products is 8 and for Low End products
10. We had to steadily increase these levels as we ran into liquidity issues due to investing in other equally important
areas.
Capacity Changes
From the start, we made very little adjustments in our capacity levels due to the uncertainty of what was going to
happen in the sensor industry as we knew very little about our competitors’ overall strategies. We did not want any
issues with stocking-out or being short capacity in subsequent years. However, once a few years had passed and the
market started to take shape, we began selling excess capacity in all our lines except our Low End line where we
increased our capacity. This strategy enabled us to free-up some cash to funnel into other areas within our organization
that were in need.
Capacity Changes
Year 0
Eat
Ebb
Echo
Edge
Egg
Year 1
1800
1400
900
600
600
Eat
Ebb
Echo
Edge
Egg
Year 2
1800
1400
900
600
600
Eat
Ebb
Echo
Edge
Egg
Year 3
760
1800
256
1
1
Eat
Ebb
Echo
Edge
Egg
Year 4
760
1800
256
1
1
Eat
Ebb
Echo
Edge
Egg
760
1800
256
1
1
Production Capacity Changes Per Product
2000
1500
1000
500
0
Capacity Changes
Eat
Ebb
Echo
Edge
Egg
Selling all the capacity we could in Performance, High End, and our Size lines was not a great decision. Even though these
lines were not our ultimate focus, we sacrificed greatly in-terms of sales that we could have generated and market share
we could have taken away from our competitors. We never recovered from this poor decision. In addition, selling excess
capacity for Eat (Traditional) in year 3 was not a wise decision either because as the years progressed we could never
afford to buy the capacity back that we needed in-order for us to gain additional market share. Our competitiveness in
our strategic areas, Traditional and Low-End, was inevitably weak because of this mistake.
Inventory Management
Our excess inventory levels were somewhat of a problem until year 4. However, the only reason that is was not a
problem in year 4 was because many of our competitors stocked-out of their inventory and we captured additional
sales. In fact, this was the only year that we had more than one segment stock-out. Presented below is our inventory
management chart, graph and dollar impact chart due to stock-out.
Excess Inventory Levels
Year 0
Eat
Ebb
Echo
Edge
Egg
Year 1
189
39
40
78
62
Year 2
Eat
Ebb
Echo
Edge
Egg
491
0
255
367
266
Year 3
Eat
Ebb
Echo
Edge
Egg
0
147
183
311
207
Eat
Ebb
Echo
Edge
Egg
Year 4
310
393
163
277
68
Eat
Ebb
Echo
Edge
Egg
0
152
0
40
0
Excess Inventory Levels Per Year
600
500
400
300
200
100
0
Excess Inventory Levels
Eat
Ebb
Echo
Edge
Egg
Dollar Impact of Stockouts
Year 0
Eat
Ebb
Echo
Edge
Egg
Total
Year 1
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
Eat
Ebb
Echo
Edge
Egg
Total
Year 2
$0.00
$798.00
$0.00
$0.00
$0.00
$798.00
Eat
Ebb
Echo
Edge
Egg
Total
Year 3
$27.50
$0.00
$0.00
$0.00
$0.00
$27.50
Eat
Ebb
Echo
Edge
Egg
Total
Year 4
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
Eat
Ebb
Echo
Edge
Egg
Total
$0.00
$0.00
$874.50
$0.00
$320.00
$1,194.50
Even though only a small amount of money was lost due to stocking-out over the course of four years, it is important for
us to really look at the reasoning behind this. We made no product enhancements for our High-End, Performance, and
Size products and, therefore, moved slowly out of favor with customers, which subsequently led to decreased market
share. We stopped producing these products in-order to eliminate additional excess inventory build-up. We knew that
the higher-end markets were growing in size and the chances of us selling the excess that had been created were
greater each year.
Recommendations
One recommendation to improve production efficiency will be to increase automation levels in High-End, Performance,
and our Size segments to their optimum levels in-order to reduce labor costs associated with production. Another
recommendation will be to keep these lines running by not selling too much capacity so we can capture additional
market share. We will produce enough inventory in-order to satisfy our worst-case sales scenario per each higher-end
segment to continue to stay somewhat competitive. We say somewhat competitive as these segments are not our
primary area of focus given that we are a low-cost niche provider. In addition, in-order for us to capture this additional
market share, we will need to spend money enhancing the performance and the size of these products so they remain of
interest among customers.
Since we eliminated a great deal of our capacity in the High-End, Performance, and Size segments, we really did not
need to spend a great deal on recruitment incentives as we displaced many employees. However, we did provide
training of forty hours each year starting year 2. I do believe it would be in our organizations best interest to provide
eighty hours of training per year, especially given that we will be increase our automation levels in all of the segments
and not just Traditional and Low-End as it takes a more knowledgeable worker to work with automated lines. Obviously,
we will be spending money on recruitment incentives in the future as we will be keeping all lines running and will need
an additional complement of workers.
Finance: by ------The table included below represents the actual financial figures that were achieved over the four year period. Next to
the forth year’s actual figure in each category, you will find our forecasted amount. In two areas, Net Margin and Asset
Acquisition, we found it extremely difficult to provide a forecasted amount given the uncertainty of our product pricing
decisions with respect to our competitors and the speed with which our competitors and their products would be
moving in and out of market segments. In addition, as far as plant improvements/automation levels are concerned, our
main objective was to be automated to the ideal level in both our Traditional and Low End lines before the end of Year
3. However, due to monetary constraints, we were not able to reach our optimum automation levels until the beginning
of year 4.
Actual Figures
Return on Sales (ROS)
Year 0
Year 1
Year 2
Year 3
Year 4
Anticipated Objectives
4.10%
-10.20%
-1.00%
-1.60%
7.40%
Forecast 12.50%
8.70%
-14.10%
-1.40%
-2.20%
10.40%
Forecast 40.00%
4.40%
-6.10%
-0.70%
-1.10%
5.80%
Forecast 20.00%
Return on Equity (ROE)
Year 0
Year 1
Year 2
Year 3
Year 4
Return on Assets (ROA)
Year 0
Year 1
Year 2
Year 3
Year 4
Asset Turnover
Year 0
Year 1
Year 2
1.05
0.6
0.67
Year 3
Year 4
0.69
0.79
Forecast 1.8
$34.25
$14.22
$14.90
$17.51
$30.49
Forecast $61
28.30%
27.40%
33.80%
37.00%
48.80%
Forecast 32.22%
Stock Price
Year 0
Year 1
Year 2
Year 3
Year 4
Contribution Margin
Year 0
Year 1
Year 2
Year 3
Year 4
Net Margin
Year 0
Year 1
Year 2
Year 3
Year 4
4.14%
-10.24%
-1.00%
-1.60%
7.38%
uncertain
Leverage
(Assets/Equity)
Year 0
Year 1
Year 2
Year 3
Year 4
2.0
2.3
2.0
2.0
1.8
Plant Improvements
('000)
Year 0
Year 1
Year 2
$0
($20,000)
$19,591
Forecast Approx 2.0
Year 3
Year 4
($24,640)
$0
fully automated
Asset Acquisition ($)
Year 0
Year 1
Year 2
Year 3
Year 4
0
0
0
0
0
uncertain
We exceeded the forecast on our contribution margin, which indicates that we are utilizing our plants efficiently in
terms of producing sensors, and that we are pricing our sensors appropriately.
With regards to our net margin, our goal here was to try and get this figure as high as possible or at least higher than our
initial net margin in year 0. We did run into several financial issues during years 2 and 3, but we did manage to end year
4 with a net margin of 7.38%; therefore, we are generating $7.38 for every $1 spent. This figure is quite a bit larger than
our beginning net margin of 4.14%. So, we are looking at this figure positively in that we exceeded our expectations
because we are adding more dollars to our bottom line.
Our goal for leverage (Assets/Equity) was to be around 2.0 as we did not want to take on any more debt than we
absolutely needed. The success of this goal came from us selling excess capacity when allowable and increasing our
automation levels.
Recommendations
Our actual Return on Equity was substantially less than our forecast. One corrective measures that we will take in-order
to raise this figure an attract more investors will be to actually increase our leverage. By increasing our leverage we will
be able to grow significantly faster and larger than by just trying to operate within the confines of our net income. In
addition, this will enable us to reach optimum automation levels faster, which will lower our labor costs and increase the
spread between our cost of production and our costs in which we sell our sensors to our customers. The inevitable
affect will be an increase on our Return on Equity.
We also fell short on our Return on Assets. We did have a 30-day accounts receivable policy throughout the four years,
which no doubt had a negative affect on our ROA ratio. We will decrease our accounts receivable policy in-order to feeup more cash. This excess cash will be used to increase the attractiveness on our higher-end products hopefully leading
to greater sales as we got stuck holding a significant amount of inventory on these items. We were not running our
operations efficiently because we had excess inventory on our shelves and as a direct result, our ROA suffered.
By incorporating the above corrections, we will achieve a higher stock price as this was the other area that we fell
substantially short from our forecast.
While it is important for us to focus on our strategy as a Niche Cost Leader, we cannot fall victim to focusing only on our
Traditional and Low-End sensors because the inevitable result will be exactly what happened in the previous four years:
a low ROE, low ROA, and a low stock price.
Competitive Strategy Evaluation
Core Competencies & Competitive Strategy Assessment: by ------Low-cost Position
Our strategy and vision was to become the leading low cost provider of sensors to the traditional and low end segments.
We built better facilities and automation levels in these particular segments but did not in the high end, performance,
and size segments to our company’s detriment. With minimal sales coming in from the non-targeted segments we
subjected ourselves to monetary constraints and were not able to reach our optimum automation levels, thus not
allowing for us to reach our optimum low prices. In our strategy we overlooked the need for healthy sales in our nontargeted segments. We gave up all market share in the high end, performance, and size segments and were not able to
develop our core low cost competency.
We attempted to reach good levels in our contribution margins and net margins, utilizing our plants and adding more
dollars to our bottom line. We were not able to develop a good return on equity level so we will work to increase our
leverage and in turn reach our automation levels faster and lower our labor cost. We had excess inventory over each
round and were not able to develop our return on assets. We will make greater investments in our marketing to
increase our reach and sales to lower our inventory hold each round.
Industry wide Multi-segment
We reached good levels of awareness and accessibility in our target segments but not in the remaining segments. We
need to improve our marketing reach and frequency in the remaining areas to increase our sales and revenues to
provide for greater automation and human resource competencies. This will allow for greater market share in all
segments and in turn we can take greater cost leadership in our targeted markets. In the future, we will invest in
greater levels of awareness and accessibility in our target markets and fair levels in our non-targeted segments.
We did not develop the requisite competencies in product redesign and invention. We did not keep to our plan of
repositioning the products in our non-targeted segments to hit the ideal spot in our traditional and low segments. We
repositioned our low end too early and never repositioned our non-targeted segments products. Greater plant
utilization was achieved in our low end product but not in the traditional product or any of our other products. We did
not develop a new product in the later rounds as suggested in our business plan.
Competitive Position Assessment: by -----
1.) Our competitive strategy was low cost niche leader. Our unique and valuable position will ultimately be a product
that meets the customer’s needs at a lower price within both the traditional and low end segments. We wanted to offer
products in these segments with the best product meeting the customer criteria. We worked to increase demand of our
product by lowering prices. In order to execute this strategy Team E needed to continuously monitor and assess its
position to reach a competitive advantage. We monitored design, production, and marketing so that we are more
efficient than competitors to be able to compete on cost.
We worked to keep R&D, production, and materials costs to a minimum. Our products in the traditional and low end
segments were keeping pace with the market and we increased automation levels.
We needed to develop high levels of automation and plant utilization to lower costs sand in turn offer the customer the
lowest price. At the same time we needed to gain great market share through significant investments in marketing. We
needed to balance costs with investments in employees and product redesign. Our growth strategy included market
penetration and market development. Rather than develop new products we wanted to attract new customers to
existing products and increase our share among existing customers.
2.) We made the decision to not sell capacity in round 1 because we were trying to avoid buying capacity back at a
higher rate. Unfortunately this led to underutilizing the plant and strained finances. We should have sold at least
$300,000 of capacity in the high end, performance, and size products. We should have increased our sales and promo
budgets to around $2 million in the traditional and low end segments. In the future we will increase the promotion
budget and increase our reach and frequency across all segments.
We made an error in re-positioning our low end product in round 1. Our sales forecasting was too high in round one, so
we will be using the customer survey scores to forecast demand better in the future.
We increased automation aggressively each round and will continue on the traditional and low end product lines and
add automation to the remaining product lines. In the future, we will keep pace with the performance and size of all
products to at least keep market share in the higher end segments. We maintained eighty hours of training per year to
employees as we increase automation. We will spend more on recruitment as we will be utilizing more lines and need
more employees in the future.
3.) We achieved competitive advantage by reaching consistently higher contribution margins over competitors and our
bond ratings were consistently better than competitors. Our margins never fell below the initial 28.3% and our ratings
were at least a BB.
We managed the customer criteria importance within the traditional and low end segments, pricing and MTBF at the
bottom of the range. We reached our optimum levels of automation in the traditional and low segments at levels 8 and
10 respectively. We eventually sold some capacity in round 2 which freed up cash and allowed for increased
investments in marketing. We then increased our sales and promotion budget to $2.3 million and $1.8 million
respectively across our target segments. This in turn produced greater sales and increased market share into rounds 3
and 4.
Balanced Scorecard
Assessment: by --------The following graphs illustrate the trends from round 1 to round 4 across the dimensions of the balanced
scorecard; financial, internal business process, customer, and learning & growth.
Total Points
Overall Performance
240
220
200
180
160
140
120
100
80
60
40
20
0
Team E’s overall scorecard performance
was minimal over the four rounds.
Overall
Performance
Round 1 was successful in improving the
balanced scorecard, but when
emergency loans were needed in round 2
all gains were depleted and it was too
hard to recover.
Round Round Round Round Round
0
1
2
3
4
Overall scorecard performance was minimal over the four practice rounds. We will need to make significant
improvements in all four dimensions to become competitive.
Performance by Dimension
60
50
Financial
Points
40
30
Internal Business
Process
20
Customer
10
Learning & Growth
0
Round Round Round Round Round
0
1
2
3
4
Team E made wrong decisions over
rounds 1 and 2 and the Financial
dimension experienced significant loss.
Learning & Growth experienced
significant improvement and held strong
through round 4.
Internal Business Processes were not
utilized and Team saw 0 growth in this
dimension.
The Customer dimension shows a slight
decline.
Significant improvements must be made in the financial, customer, and internal business process dimensions
to become and stay competitive.
Financial
Market Cap grew from
round 2 to 3 and saw a
slight decline in round 4.
60
50
Points
40
Market Cap
30
Emergency loans took a
dive in round 1 and were
unable to recover.
Sales
20
Emergency Loan
10
0
Round 0
Round 1
Round 2
Round 3
Sales experienced 0
growth and even shows a
slight decline between
rounds 1 and 2.
Round 4
Team E does not have an option to take out emergency loans. We must cover annual expenses by increasing
sales, issuing more stock, and long term debt. Additionally, we must significantly increase sales across all
segments and capture a majority of the market share in our target segments. We will need to invest in
marketing in our non-targeted segments and redesign to stay in the fine and rough cut areas.
Our increased stock value over the rounds improved our market cap. We expect to give a little on our market
cap as we increase our debt and plant/product investments.
Operating Profit
Team E was unsuccessful
in growing operating
profit over the four
rounds.
60
Points
50
40
30
Operating Profit
20
10
0
Round 0
Round 1
Round 2
Round 3
Round 4
We need to significantly increase our net profit. We can do this through increasing our sales and possibly our
prices in the non-targeted segments and lowering our costs. We will have to capture a significant amount of
sales in our non-targeted segments, because we do not see a way to significantly decrease expenses besides
our plans to increase automation. We will continue with aggressive automation. We will spend as little as
possible in repositioning and meet the minimum criteria on product specifications when it is not a customer
priority in our non-targeted segments. We will also spend very little in product invention, instead position our
current products to hit the ideal spots across the segments as drift happens.
Customer
Team E saw small but
steady growth in the
customer survey score.
60
50
Market share declined over
time after round 1.
Points
40
30
Wtg Ave. Survey Score
20
Market Share
10
0
Round 0 Round 1 Round 2 Round 3 Round 4
We must increase the customer’s demand and for our products and their sale across all segments. By
investing in a fair amount of marketing in the non-targeted segments and some repositioning, we will increase
our annual sales compared to the industry sales. We were not able to capture as much market share in our
targeted segments as we were expecting. We plan to improve the overall customer survey score by
prioritizing repositioning: high end and size products first then performance and finally traditional and low end
products. We will be lowering our prices more aggressively to reach the bottom of the expected range and
moving our MTBF to the top of the range when it is of higher importance to the customer. We are planning
the repositioning to hit the ideal age as well.
Learning & Growth
Team E did not improve its
profits/employee
significantly in the practice
rounds.
60
50
Points
40
Sales/Employee
30
Assets/Employee
20
Profits/Employee
10
0
Round 0
Round 1
Round 2
Round 3
Growth in sales/employee
and assets/employee
occurred between rounds 1
and 2 but remained
unchanged through the
end of round 4.
Round 4
We managed labor negotiations to both meet employee needs but also manage expenses. We increased our
assets and decreased the number of employees over the practice rounds. We plan to focus on increasing
profits/employee where we are not able to in the practice rounds. We will work to balance our workforce
compliment to total profits by increasing automation aggressively as well as sales.