1. Simplicity Direct
Business Plan

2. Agenda 1. Executive Summary 2. Business Description 3. Strengths
This business plan will be reviewing our executive summary, our business description, analyzing our strengths, and weaknesses, and revealing plans for our future.
4. Weaknesses
5. Future Plans

3. Executive Summary
Simplicity Direct is a microcomputer business that was formed to produce innovative and high-performance technology that meets the needs of today’s forward moving society by developing affordable hardware that caters to engineering and manufacturing applications while keeping the business intellect in mind. It is our goal to deliver fast, powerful, intelligent, top-of-the-line microcomputers; thereby, consistently exceeding customer expectations.
Slide to be read aloud.

4. Business Description Business Summary
Produces and markets microcomputers in Tokyo, New York, and Paris
Focuses on direct sales to business customers
Owners
Ashley Donorovich (President and VP of Market Research)
Andrea Hart (VP of Human Resources and Manufacturing)
Courtney Peterson (VP of Marketing and Market Research)
Tywon Thompson (VP of Accounting and Finance)
(This slide represents the business description, and much of what is on the slide can be read)
Spoken: Because this is a new company, there is not a lot of history with the company. However, it can be noted that the company was created, because four outstanding individuals saw an opportunity to enter the microcomputer business, which was new to the PC world.

5. Strengths
Market Effectiveness

6. Highest total market share
At Simplicity Direct we were able to gain the highest total market share. In the marketing plan portion of our business plan we set our sights on smaller, high margin segments as well as large, high margin segments. We started the second quarter with two products: one marketed to the Workhorses segment and the other to the Mercedes segments. By quarter three we saw the opportunity we had with the Traveler segment, a smaller, high margin segment. None of our competitors were targeting this segment of consumers and we choose to take advantage of it. A brand was created and became very successful creating the highest revenue of the brands by the fifth quarter.

7. Highest market share: Traveler segment
Our brand marketed to the Traveler segment became incredibly profitable with little to no competitors. We were able to gain 97% of the market share for this segment.
Highest market share: Traveler segment

8. Second highest market share: Workhorse
There is more competition when marketing products to the Workhorse segment. This brand was initially marketed with first priority. In the third quarter we made some changes to our marketing mix and made this our brand with least priority. With this change we were still able to control 30% of the market share.
Second highest market share: Workhorse

9. Second highest market share: Mercedes
Gaining market share for the Mercedes segment has proven to be a difficult task. Currently controlling 26% of the market share, we are able to incorporate more features that are important to the consumer as the Mercedes segment is willing to pay the most of the three targets.
Second highest market share: Mercedes

10. Future Market Share Plans
Maintain market share in 5th quarter
Increase market share in 6th quarter
Simplicity Direct plans to maintain its market share in the 5th quarter. However, we expect to see an increase in market share beginning in the 6th quarter as we are expecting fewer stockouts since production will be increased. This will result in a decrease of ill will and an increase in demand and market share.

11. Highest total market demand
Along with leading in market share, Simplicity Direct leads the industry in market demand.
Highest total market demand

12. Highest market demand: Traveler segment
With no direct competitors for the Traveler segment, Simplicity Direct is able to dominate the market demand.
Highest market demand: Traveler segment

13. Second highest market demand: Workhorse
In a more competitive market, Simplicity Direct is able to maintain the second highest market demand in the workhorse segment.
Second highest market demand: Workhorse

14. Second highest market demand: Mercedes
Similar to the Workhorse segment, Simply Direct was able to secure the second highest market demand for the Mercedes segment.
Second highest market demand: Mercedes

15. Product Development Ratings
Simplicity Direct markets one brand to each segment. BusinessTech3 to Workhorse, Scientech2.0 to Mercedes, and Traveltech2.0 to Traveler. Each product ranks number one in the industry for each segment.
Best product developed for each segment.

16. Future Product Development Plans
Expand brands with new features
Change Traveler segment to first priority
Simplicity Direct plans to keep our products consistent with our target markets’ needs. This has continued to stay constant since our first quarter. As new features became available the needs of each target segment was accessed. New brands were created based on these features. We will continue to improve our brands whenever possible.

17. Advertising Highest rated ad copy
Simplicity Direct’s ad copy rated highest among each target market. As outlined in the promotion portion of our marketing mix we have relied on word of mouth advertising, sales promotion through rebates, direct sales through our sales team, and advertising in publications read most by our target markets.
Highest rated ad copy

18. Advertising
Highest rated ad copy

19. Advertising
Highest rated ad copy

20. Future Advertising Plans
Monitor market research
Make changes to advertising as necessary
Simplicity Direct plans to monitor market research for changes in the preferences of target markets. From this information we will make any necessary changes to our advertising while evaluating our advertising campaign each year for effectiveness.

21. Competitive Analysis Primary Competitors Creative Computers, Inc.
Powerhouse Technologies
Olympus Computers
Simplicity Direct has three primary competitors: Creative Computers, Inc., Powerhouse Technologies, and Olympus Computers. To help distinguish ourselves from our competitors we have focused on emphasizing our product features and post-purchase service and support.

22. Competitive Analysis Number of brands Average Pricing Regional Inserts
Fixed Capacity
Operating Capacity
-Compared to our competitors Simplicity Direct has only three brands while our competitors all market four.
-Simplicity Direct has the highest average price among our competitors
-The number of regional inserts is somewhat similar across the board. Simplicity Direct places 25 inserts into publications while Powerhouse Technologies places 24 inserts and Creative Computers, Inc. and Olympus Computers each place 28 inserts.
-The fixed capacity among our competitors varies: Simplicity Direct 75; Creative Computers, Inc. 100; Powerhouse Technologies 25; and Olympus Computers 150.
-Simplicity Direct along with Creative Computers, Inc. and Powerhouse Technologies operated at the same capacity as the fixed capacity. Olympus Computers only operated at 100.

23. Weaknesses
Pricing

24. Pricing COMPETITOR PRICING Company Brand Price Rebate Priority
Simplicity Direct
Scientech 2.0
4,600 1
BusinessTech3
2,700
100 3
Traveltech 2.0
4,100 2
Creative Computers, Inc.
Creative Power
4,000
300
Creative Worker
2,500 4
Creative Work2
2,600
Creative Power2
Powerhouse Technologies
Excite V2
3,000
200
Trooper VX
3,850
Stealth
3,300
Commander T1
Olympus Computers
Zeus 200
Apollo 400
2,800 50
Zeus 400
4,500
Apollo 50
Simplicity Direct has the highest average price of any of its competitors. Simplicity Direct has the highest price ($4,600) for the brand targeted at the Mercedes segment. Although the price for the brand targeted at the Workhorse segment ($2,700) was not the highest among competitors it was slightly higher than the price that the Workhorse segment was wanting to pay. Simplicity Direct was the only company to create a product targeted to the Traveler segment however the price for this product was slightly higher than the price that the Traveler segment was wanting to pay.

25. Pricing PRICE JUDGEMENT Company Brand Workhorse Mercedes Traveler
Olympus Computers
Apollo 50
100
Zeus 400 56 89 71
Apollo 400 92
Zeus 200 62 80
Powerhouse Technologies
Commander T1
Stealth 76 97
Trooper VX 65 83
Excite V2 93
Creative Computers, Inc.
Creative Power2 66
Creative Work2
Creative Worker
Creative Power 68 82
Simplicity Direct
Traveltech 2.0 61 98 78
BusinessTech3
Scientech 2.0 54 87 70
Based on the price of the products and what the customers were willing to pay, price judgments were made. Traveltech 2.0 marketed at the Traveler segment only scored a 78 for price judgment. BusinessTech3, marketed at the Workhorse segment, was the best price judgment of the three products at 98. The price judgment of Scientech 2.0, the brand marketed at the Mercedes target shows some dissatisfaction among the segment with 87.

26. Future Pricing Plans Decrease prices
Compete for increased market share with pricing
Simplicity Direct plans to lower the prices of Scientech 2.0 and Traveltech 2.0 for the next quarter. This price decrease is expected to increase demand to make up for the demand that will be lost due to ill will caused by stockouts until production can be increased. By the 6th quarter Simplicity Direct expects these changes in pricing to greatly increase demand. By decreasing the price of two of its products Simplicity Direct expects to be able to increase market share by being able to compete better with its competitors in the price arena.

27. Operating Capacity
Operating Capacity of the Facilities each Quarter was – 100%
Market Analysis
Product demand was larger than expected
Operating Capacity not increased.
In order for Simplicity Direct to maximize resources and control costs, our facilities needed to be at 100% of operating capacity. Demand was under estimated and therefore the operating capacity was not increased. New facilities were opened to assist in product demand in other markets

28. Operating Capacity Inventory Position - Number of Units
Brand
Inventory Available at Start of Quarter
Number of Units Produced
Net Demand
Number of Units Sold
Lost Sales Due to Stock Outs
Ending Inventory
Scientech 2.0
1,136
1,862
726
BusinessTech3
2,216
3,632
1,416
Traveltech 2.0
1,523
2,495
972
Total
4,875
7,989
3,114
Each brand sold out every quarter. Each quarter started with no leftover inventory. Demand was underestimated for all brands and thus resulted in
726 lost sales for Scientech 2.0, 1,416 for BusinessTech3, 972 for Traveltech2.0 for a total lost sales of 3,114 units.
Operating capacity should have increased.
Dominating market share required more capacity.

29. Operating Capacity Market Performance: Stock outs caused ill will
Decreased market performance
Unable to fulfill 23% of demand
3rd quarter decisions
Because we had more demand than we did product ill will increased. The higher the ill will increased the lower our market performance did. We were unable to fulfill 23% of demand in the fourth quarter due to the 3rd quarter not to increase capacity.

30. Future Operating Capacity Plans
Increase production
Maintain expenses
For the 6th quarter we plan to double our operating capacity and inventory limit to ensure that we have enough products on demand. While increasing our operating capacity we hope to be able to operate more efficiently and keep our expenses at the same level each quarter rather than steadily increasing.

31. Income Statement
This is the income statement showing the performance of Simplicity Direct. It gives an idea of the decisions that were made by departments, and the costs for them all. It also breaks down the Profit, Expenses, and Misc. income and expenses.

32. Portioned Income Statement
This slides highlights the main area of focus, showing the overall profit of Simplicity Direct. As shown here, the company has seen substantial increases in profit over the next slide will show the progression as a positive correlation.

33. Profit Graph
A profit graph benchmarking the company’s highlighted areas of focus.

34. Income Statement
Also on the income statement is the Earnings per Share of stock. Simplicity Direct projects that over the next quarter (Q5), the EPS will more than double that of last quarter (Q4).

35. Earnings per Share Graph
This graph gives an idea of the forward direction the company is moving in shares of stock.

36. Cash Flow Statement
This slide represents the pro forma cash flow statement displaying the projected cash flows over the past four quarters. Low production in Q2 is what weakened a much higher profit, and set the company back. However, the company didn’t spend much in R&D during Q2, but has put greater value in R&D and advertising during the last two quarters of the year. This helped to improve sales and increase profit.

37. Cash on Hand
Simplicity Direct wanted to keep at least $300K in the checking account, but as it can be seen the company made a continued effort to keep more than that amount in checking. It can also be seen that there was only a little over a $1 million increase in the checking in Q4. This is due to the much needed focus of R&D expense to produce a new brand and the opening of a new sales office.

38. Cash Balance
This graph shows the positive correlation in Cash Balances at the end of the periods.

39. Balance Sheet
This balance sheet shows that debt is not an issue at the company.

40. Future Financial Plans
At least $500,000 in checking account
Continued growth
Simplicity direct will work to continue to increase the cash on hand at the end of each quarter. This will be possible through the continued growth of the company that will lead to the continued growth of the finances.

41. Human Resource Management
Strengths
High sales productivity
High satisfaction with compensation.
Simplicity Direct was the market leader in compensation. We started our strong by offering compensation in the high $50,000s. Then increasing approximately $10,000 per quarter. The goal was to recruit the best sales people and ensure they meet the expected sales goals. Each quarter the expected number of sales per salesperson was increased with their salary. By the fourth quarter pension was increased to 20% of salary
Weaknesses
Smallest workforce for market size
Under the 85% productivity potential

42. Human Resource Management
Sales Force
Nineteen sales people in final quarter
Seven each in North America and Europe
Five in Asia
Expected increase of sales
per quarter for employees
Three sales offices
While we had the lowest number of sales people in each office we had the highest number of sales for each person. Because our North America and Europe office had the largest expected sales we staffed those offices with 7 each. We opened our Asia office with 5. Once operating capacity is increased expected number of sales per person and more people will be brought into the offices. Our expected number of sales people will increase in our next quarter to 10 in our North America offices and 8 in Asia.

43. Summary of Future Plans
Phase 1
Phase 2
Phase 3
Maintain market share
Change Traveler Segment to first priority
Lower prices to remain competitive
Increase operating capacity
Increase market share
Expand brands with new features
Analyze price adjustment and change as necessary
Re-evaluate operating capacity and expand as needed
Continue to increase market share
Further define newly created brands
Hire more sales people
Simplicity Direct is planning to continue expansion over a three phase approach.
Phase 1 : Maintain market share, change Traveler Segment to first priority, lower prices to remain competitive, and increase operating capacity.
Phase 2 : Increase market share, expand brands with new features, analyze price adjustment and change as necessary, and re-evaluate operating capacity and expand as needed.
Phase 3 : Continue to increase our market share, further define newly created brands, and hire more sales people.