1. Capstone Simulation Ferris (25055)
May 26, 2008
Group 2

2. Ferris Strategy What is our competitive advantage?
All competitors equal at beginning
Must establish core competency and invest to maintain market leadership
Commodity? – Not our focus (not sustainable)
Differentiation? – Focus R&D to generate profit
Capacity? – Need to fill capacity with competitive products while building technology
Strategy – Focus on high value products
Build sustainable advantage through R&D
Support all segments to utilize open capacity
Over time, products will drift to low end

3. Competitor Analysis
Andrews – focus on traditional and low end markets with low price leadership
Digby – focus on high end market
Baldwin – little attention to high end but very successful in performance and size
Erie – focus on promotion of diverse product mix with competitive pricing

4. Round 1 Strategy -- Market share leader of low end to generate profit
-- Increase traditional market share through size/performance
-- Invest R&D to develop new high end, performance, and size markets
Implementations
-- Reduce low end to industry leading price (generate profits)
-- Improve Fist, Foam and Fume, keep the price
-- Invest $1.6M to develop a new industry leading of high end (Fancy)
-- Add employee to meet production capacity
Performance
-- Stock Price $46.94 (1)
-- Profit $12.5M (1)
-- Sales 143M (1)

5. Round 2
Strategy
-- Maintain low end volume while continuing R&D investment
-- DIFFERENTIATE!
Implementations
-- More promotion expense on traditional
-- Add sales and marketing staff
-- Reduce traditional price to market leading.
-- Add employees to meet production forecast
-- Improve automation rate
Performance
-- Stock Price $56.12 (1)
-- Profit $9.8M (2)
-- Sales $ 198M (1)

6. Round 3 Strategy -- DIFFERENTIATE! Implementations
-- Continue R&D investment to improve high end
-- Buy production capacity for high end
-- Continue to improve size and performance to lead market
-- Move Fist (high end) to traditional focus
-- Add employees to meet production capacity
-- Add sales for high end promotion.
Performance
-- Stock Price 58.29$ (1)
-- Profit $ 7.7M (1)
-- Sales $ 223M (1)

7. Round 4 Strategy -- DIFFERENTIATE! Implementations
-- Continue R&D spend of $2M
-- Begin development of new high end product (Future)
-- Increase marketing for high end
-- Reduce inventory on hand
-- Buy production capacity for high end, performance and size products
-- Add employees to reduce OT
Performance
-- Stock Price $77.48 (1)
-- Profit $16M (1)
-- Sales $267M (1)

8. Round 5 Strategy -- DIFFERENTIATE! Implementations
-- Continue development of high end products
-- Pay dividend
-- Improve traditional products to maintain differentiation
-- Continue to increase buying capacity for high end, performance and size products
-- Increase marketing on low end and traditional products to use capacity
-- Extend AP and AR
Performance
-- Stock Price $ (1)
-- Profit $26M (1)
-- Sales $324M (1)

9. Round 6 Strategy -- DIFFERENTIATE! Implementations
-- Continue to pay dividend
-- Improve traditional to competitive level
-- Continue high end, performance and size R&D
-- Longer AP and AR
-- Add high end marketing
-- Add more capacity to capture potential segment share
Performance
-- Stock Price $145 (1)
-- Profit $30M (1)
-- Sales $387M (1)

10. Round 7 Strategy -- DIFFERENTIATE! Implementations
-- Increase dividend to $1
-- Reduce traditional price to consume inventory
-- Maximize performance production to take 80% market share
-- Maximize production capacity of high end
-- Beginning to see market competition between other Ferris high end products
-- Reduce price of “traditional” business to support low end market
Performance
-- Stock Price $142 (1)
-- Profit $ 27M (1)
-- Sales $ 497M (1)

11. Round 8 Strategy -- DIFFERENTIATE! Implementations
-- Pay dividend of $1.5
-- Buy back stock of $1.9M
-- Technology leading and price competitive on high end
-- Adjust price (first time) to capture size market
-- Must reduce inventory holding costs
-- Very difficult to capture more than 60% of market
Performance
-- Stock Price $188 (1)
-- Profit $ 37M (1)
-- Sales $ 549 M (1)

12. Marketplace Map
Performance →
Size→
High→

14. Group 2 Introduction CEO _ Bill Muck Marketing _ Zhang Shuhua, He Yi
Production _ Zhuang Jianbin
R & D _ Tang Nanxun
Finance _ Whole team
GREAT TEAMWORK!

15. Questions?