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Capstone Presentation

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Nguyen Nguyen

on 26 April 2011

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Transcript of Capstone Presentation

Team Baldwin Performance
Review Strategy Industry Driving Forces Rivalry of Competitors Next Time Lessons Learned Value Created For ...

Ending Stock Price: $69.96
AA Rating in 8th Round

Market Share
Product Placement
Employee Retention 8 Financial Success Measures:

Overall, Baldwin came in 3rd based on chosen weighted criteria.

Cumulative Profit
Market Share
Stock Price
Market Cap
ROE, ROS, and ROA The Balanced Scorecard

Final Score: 762 out of 1000

Internal Business Process- weakest
Financial- strongest
Overall, this left us in the 82nd percentile Us Against Them

How well did we do compared to other teams?

Consistently highest market share
Came out strong, tried to stay on top
Cumulative profit was strong, but not the best
Automation rate scared us off and raised product costs
Ending stock price where we wanted Initial Strategy

Niche Cost Leader strategy in the Low Technology segments with an extended focus on the SIZE segment

Gain a competitive advantage by distinguishing our products with advanced design, 100 percent awareness, easy accessbiility and new and improved product offerings

Position some products to reflect the price conscious customer's needs by cutting costs in some areas while other products offered will keep pace with the market and offer improved size and performance

Expand capacity as we generate higher deman and increase automation on a regular basis Key
Tactics Tactical Changes

Niche Cost Leader in the Low Technology segments with an extended focus in the Size segment.

Chose to introduce a High End product, Biff, rather than a Size product

Amount of capacity purchased by competitors during Round 2 led us to believe that new products would be introduced into the Performance and/or Size segments
-Angus: 500 units
-Deer: 400 units
-Fine: 500 units

In order to capture a larger market share, introducing a product into a segment that appeared to have fewer competing products was ideal

R&D positioning for High End products take time, and having 2 products within this segment would increase our chances of always having at least one ideal product

This would allow us to have 2 nearly identical products in a segment where price was virtually not a factor
-Bid was to be ideally positioned in Round 4 along with Biff
-Allowed our products to command the segment Tactical Changes

We offer customers 30 day credit terms

In order to increase demand and remain competitive, we realized that we must offer our customers longers credit terms
-It was highly unlikely that the competition would be offering anything less than 30 days

In the beginning, we were hoping to have less cash tied up in Accounts Receivable

We believed that 90 days was too long a period, but 30 days was not long enough, therefore a compromise was set at 60 days A/R lag

60 day credit terms would only decreae the Customer Survey base score by 0.7%, or reduce the maximum to only 99.3%
-At 30 days, the highest achievable Customer Survey score is 99.3%
-We did not agree that this was worth the extra cash that it would provide the company Tactical Changes

Automation levels for High End products will be no more than 5.5 and Performance and Size segment levels will not surpass 6.5

Ending automation levels totaled:
-High End 8.0
-Performance 9.0
-Size 9.0

Gradually increased in order to cut production costs

Chester's high automation levels forced Baldwin to keep increasing these levels in order to remain competitive
-With labor costs increasing after each negotiation, high automation levels seemed inevitable
-Chester set themselves up competitively to tackle wage increases Tactical Changes

Automation levels for Traditional and Low End segments are at 10, having increased these levels during Round 1 & 2

Ending automation levels
-Traditional 9.0
-Low End 10.0

Rather than increasing these levels right away, the strategy changed to a gradual increase each round

Allowed us to more quickly reposition products

New Traditional products introduced by Andrews and Erie required lower automation levels by Baldwin to keep Baker competitively positioned Tactical Changes

Investments are funded with 60% LT Debt and 40% stock or retained earnings

This amount fluctuated round-to-round based on funding needs

As more programs became available (HR, TQM, etc.) , more funding was needed

Nearly every round, investments were funded with 50%+ equity

Short term debt was issued in rounds 3 & 5, totaling $6.6M
-Round 3 as a result of increase in SG&A for Biff
-Round 5 as a result of potential wage increase due to labor negotiations

Round 8 debt/equity ratio was 30/70 Current Debt Long Term Debt Common Stock Retained Earnings The Five Forces Model Buyers

Buyer bargaining power
Prevalent in all segments depending on customer buying criteria
When the products tightened and customers had several choices of equivalent products, Awareness and Accessbility proved to have the most impact

Baldwin's Tactic
Kept our products ideally placed throughout the competition
Spend significant dollars on Accessibility and Awareness to reach 100% (or close) quickly Potential Entrants

Significant market share in a segment was obtained when 2 or more products were placed in any one market, regardless of the quality of products

Baldwin's Tactics:
Placed new product, Biff, into High End segment
Maintained very high quality products in each segment so that significant market share was still present Suppliers or Other Inputs

Reducing costs had the greatest effect on profit
Automation: the more highly automated the company, the more significant their profits were
TQM: not only assisted with cost reduction, but also had a positive impact on repositioning time

Baldwin's Tactics:
Increased automation at a mediocre pace so that repositioning was not effected
Invest in TQM, but only as much as necessary Rivalry Among Competitors

All previous forces lead to significant competition among products and companies

Baldwin's Tactics:
Studied and researched possible moves from competition in each segment
Stayed relatively true to original plan and strategy Baldwin's Driving Forces Keys to Success:

Investing in Awareness and Accessibility
Ideally placing products
Introducing a new product
Staying price competitive
Investing enough, but not too much
Anticipating strategic moves from our competitors and adjusting to minimize damage Regrets:

Automating too slowly
Failing to introduce a second new product Competitor: Erie How did their strategy affect us?

Grabbed large market share of 2nd largest segment
Threatened our plan to have largest market share How did we respond?

We didn't
No plan to take over Traditional
Continued to offer best products possible Competitor: Ferris How did their strategy affect us?

Planned on entering the same segment we did
Took away some of our market share by crowding High End segment How did we respond?

We supported Biff with strong sales and promo budgets
Tried to give Biff the biggest edge to gain control of High End Competitor: Andrews How did their strategy affect us?

Forced us to thoroughly analyze

Focused on larger segments, threatening our market share How did we respond?

Repositioned our Low End product, Bead, later to reduce ideal age competition

In Round 8, when market was largest, we had ideal age, positioning Competitor: Chester, Digby Did not focus on them because their strategies did not seem to conflict with ours

Moves seemed to be made on a round-by-round basis
-Therefore, we could react appropriately during next round Which competitors caused greatest problems?

Well developed strategy had us constantly thinking

Moves were made so far in advance that we could not react to them in a timely manner

Produced products that sold more than ours on a few occasions

Strategy directly conflicted with ours (market share) Responding Quickly and Effectively

Yes- We were able to continue with our original strategy
-Our products always catered to buyer preferences
-We had a top product in every segment
-Obtained highest total market share by almost 3%

Most of the time
-To help profits, should have automated more
-Feared inability to reposition products "Roads? Where we're going, we don't need roads." Positioning for Strengths

Ideal Positioning
Ideal Automation
Great Financial Position
Large Market Share
Credit Rating
Stability Weaknesses

Lack of Products Firm Value

Baldwin's value is measured by the Future Potential Success

Stable company

Extremely consistent

Potential profit of over $30M a year

Great Stock Price

Great Credit

Porven Success To Sell Or Not That is the question.... Make decisions at least 24hrs. before deadline Allow input from all members for every decision Assign specific parts to each team member Team Decision Making Course Learning Goals

Role of the General Manager (GM)

The GM has to wear several different hats in an organization similar to the capsim program

The GM has the responsibility to make decisions based on teh good of the entire company and not just one or two aspects Course Learning Goals

Coordinating Functional Decisions

First looked at R&D and positioning, followed by marketing, production, human resources, and finance

After positioning the products we wanted to coordinate our marketing and production to match our goals and ended looking at finance

All decisions were coordinated with each other at end to match our objectives and goals

Course Learning Goals

Strategic Management Concepts and Experience

Looking at the big picture

Coordinate all decisions

Have clear goals and objectives Questions?
Full transcript