Shareholder Debriefing Executive Directors presenting: Guergana Anguelova Moritz Broelz Irina Hubytska Richard Williamson

Agenda Review of Mission and Vision Statement Initial Strategy Evaluation of Strategy Decision Making Process Five Year Strategic Plan Questions and Discussion 2|27

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Mission Statement Baldwin Co. focuses on a broad-based differentiation strategy, providing products in all segments of the electronic sensor market. By creating increasingly higher levels of brand recognition and reputation, Baldwin will create a competitive advantage as the largest e-sensor producer. Baldwin Co. strives to become a market leader in the electronic sensor industry. As a result, the combination of large sales with healthy margins will ensure a long-term competitive advantage in earnings volume and the success of the firm’s strategy. Vision Statement 4|27

Marketing Substantial expenses to build customer loyalty and awareness Create higher demand for products High-traditional-low segment overlaps Introduction of new products in the high-end R&D 5|27

Production Expected low contribution margins Continuous plant automation Purchase of additional capacity Prepared for low earnings Priority: high efficiency Dividend policy Finance 6|27

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Unexpected Events Round 2: Erie became a Niche Player in Low-End & Traditional. Round 5: Andrews created a sellers-markets in Low-End, Traditional, Performance & Size segments by under producing. Round 7: Ferris created a sellers-markets in Low-End & Traditional segments by exiting these segments. 8|27

Round 2 What went wrong? Marketing Expenses reduced – loss of competitive advantage Needed Complement unadjusted – Overtime of 6.8% - loss in productivity increase of ≈ 3.9% Dividend issued Large unsold inventory in Traditional due to Erie Corrective Actions: Marketing Expenses realigned with Corporate Strategy Needed Complement adjusted Dividend policy aligned with corporate strategy 9|27

Market Share & Contribution Margin 10|27

Marketing & Product Performance BajaBzumBully 11|27

Financial Performance Emergency Loan 12|27

Financing & Capex |27

Capital Expenditures & Financing 14|27

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Product placement graphed against demand: Positioned so that demand curves overlapped Best: one high, one low and if possible one catchment Where it started: R&D 16|27

Marketing 17|27 Price, Sales and Advertising budgets Based on products in sector When they peaked How long they were desirable Competition Finance: Pessimistic/Weak sales forecast Production: Actual/Expected sales forecast

Production 18|27 Schedule determined based on Expected sales Automation levels adjusted, if possible/necessary Headcount levels adjusted, where necessary If production schedule unable to meet Expected sales Return to Marketing

HR/TQM 19|27 Amount budgeted based on need Assumed that all funds required would be available If not, adjusted based on consensus

Finance 20|27 Working capital sourced from Sales, Bonds and Shares If sufficient capital available: Plan executed If insufficient working capital available Capital requirements lowered where possible Incremental reductions in Marketing/Sales Incremental reductions in HR/TQM Product line additions held off until following year Restriction goal: Do not cause long term disruption

Visually 21|27

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Five Year Strategic Plan Overview – Business Life Cycle 23|27

Five Year Strategic Plan Overview – Financial Life Cycle 24|27

Five Year Strategic Plan Finance Levered Buyout of company Digby ($58ml) and/or Ferris ($89ml) Merger with company Erie – complements our strategy Production Maximum Automation Build capacity Marketing 100% Awareness 100% Accessibility R&D Baja 25|27

Five Year Strategic Plan Corporate Strategy Continue broad differentiation strategy Continue being a market share leader Continue being the most profitable company by transforming more revenues into net profit Continue increase of company value 26|27

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