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Chester team awesome

by

Miranda Reeves

on 19 November 2014

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Transcript of Chester team awesome

Cost leader w/ lifecycle focus

Targeted Markets
Traditional
Low End
High End

Arenas, Vehicles, Differentiation, Staging , Economic Logic

Tactics

High automation & trained employees (year 2)
Minimal R&D investment to stay just behind target preferences
New product in high end market (year 4)

Goals & Results


.
.
.
SYSTEM BOOT
MEMORY CHECK...
More changes...
Chester C65925
Kelsey Flores
Michael Minor
Miranda Reeves
Robert Stegmueller
Chance Witt

Original Strategy
Adapted Strategy
Cost leader w/ lifecycle focus

Targeted Markets
Traditional
Low End

Abandoned the High End Market
Year 3 - 4 new products from 4 firms
Only worth 12% of total Market

New product, Crap, in traditional market (yr 5)
Stronger market vs High End
30% value overall
Cake best product to follow

Leapfrogging R&D vs staying behind ideal spots
Why shift away from High End?
Required expensive R&D to keep product relevant

Harder to transition into Traditional the longer we wait

Low margins

Heavy competition for small piece of the pie
(Year 4- 9 products competing for 12% market in High End vs 8 products competing for 30% market in Traditional)

Segmentation
Management
R&D
Marketing
Forecasting
Sales forecast = Segment Demand*(1+growth rate)*(Market Share from previous round + projected Market Share increase)

Pricing

Aimed for optimal sales

Promo & Sales Budget
2M Promo 1.4-2M Sales

Production
Automation
Maxed out automation to 10

Contribution margin
Competition
Market Evolution
Strategic Capabilities & Core Resources
Changes over the next 3 years...
Marketing & HR
Finance
Critical Incidences & Decisions
Our experience
Low End

Baldwin
Two Low End products capturing about 27% market share

Erie
Two Low End products capturing about 27% market share

Traditional

Baldwin
Two Traditional products capturing about 25% market share

Erie
Two Traditional products capturing about 31% market share



With lower rates of growth, Low End & Traditional will lose share of the overall market

High End, Performance & Size segments will become more important in years to come

Long term market share concerns


High customer awareness/accessibility
High margins
Low material & labor costs
High automation and high plant utilization
Leadership Team

Low End & Traditional

Increase capacity for products each year to keep up with market segment demands
Spend minimally in R&D and use leapfrogging techniques to keep both products relevant

Performance

Started R&D process for new product in Year 8
New product (Chewy) slated for release in late December of Year 9
Buy 200 units of capacity in Year 9 and set automation to 10

Continued promotional spending of about $2M per product
Minimal sales spending for Low End and Traditional market segments to main accessibility of 100%
Begin marketing Chewy in Year 10 and optimize sales spending for segment
Continued recruiting spend of $5,000/employee as well as 80 hours of training annually

Decision Making
Decisions were made collectively (team members had niche areas of expertise)
Critical Decisions
Exited Performance and Size markets earlier than expected
Creating a new product
Sales forecast
= Segment Demand*(1+growth rate)*(Market Share from previous round + projected Market Share increase)


Invest in new Performance product with cash instead of financing
Paid off long-term debt to avoid high interest rates
Buy back maximum stock allowed
Eventually privatize the company and increase employee profit sharing

Spending
Minimal spending to keep desired spot

MTBF
Lower MTBF to reduce material cost


What we learned!

What worked well

What we would do differently
Top labor force
$5,000 & 80hrs in HR
Productivity index up 124.7%

TQM used to reduce:
Reduce material costs (11.37%)
Labor costs (13.75%)
Reduce R&D cycle time (40.01%)
Reduce admin (19.07%)
Demand increase (13.98%)
HR & TQM
Sales Margin as a % of Sales
Contribution Margin as a % of Sales
Labor Expenses by Company
$221M
25.6%
28.5%
25.6%
.90
45% GM
20% MKT
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