MGT 460 Neil Tocher

Meredith Ellis Lynette Wharton David Westacott Roxanne Christy

Chester Group: Capstone Strategic Plan

I. The Environment The business environ ent in the si ulation is uni!ue because everybody starts at the sa e "lace# Every tea or $co "any% has a "roduct in each o& the &ive ar'et se( ents )ith the sa e ar'et share# *or the "ur"oses o& this si ulation+ Chester has chosen a business,level strate(y as a di&&erentiator )ith a hi(h,tech &ocus# -ur tea has chosen this strate(y to ta'e advanta(e o& the hi(h tech ar'ets and the custo ers )ho desire hi(her "er&or in( "roducts# .n the rehearsal si ulation+ our tea &ocused on "roducts in the traditional+ hi(h,end+ and "er&or ance se( ents# We believe the other co "anies co "etin( in the si ulation are (oin( to choose varyin( strate(ies so it )ould be best to choose one that )e &eel &airly co &ortable )ith# / di&&erentiation strate(y )ith a hi(h,tech &ocus could be a co "etitive advanta(e in a ar'et )here other co "anies are utili0in( a lo),cost or lo),end "roduct &ocus# Li'e)ise+ it could be a liability in a ar'et )here other co "anies are tryin( a si ilar &ocus# *ro )ee' to )ee'+ )e )ill be able to vie) the results o& the other (rou"s# 1y critically exa inin( their results+ )e should be able to relatively deter ine )hat business strate(ies these tea s are tryin( to ca"itali0e on# .& it beco es clear that another co "any is directly co "etin( )ith us on a hi(h,tech di&&erentiation strate(y+ )e can ad2ust the "rices+ si0es+ and ean ti es bet)een &ailures o& our "roducts accordin(ly to (ain ore o& the ar'et share# The strate(y )e have chosen should enable our co "any to (ro) !uic'ly and reali0e ore u", &ront returns on our invest ents# Lo),cost strate(ies ta'e a considerable a ount o& ti e to reali0e real returns on invest ents# /s a hi(h,tech di&&erentiator+ certain custo er se( ents )ill be "ositively in&luenced by a hi(her "rice# 3erceived value certainly has in&luence over buyin( decisions o& custo ers )ho only )ant the latest and (reatest "roducts available# While it is i "ortant to stay co "etitive )ith si ilar co "anies+ it is less i "ortant to ini i0e "ro&it ar(ins on hi(h,end and "er&or ance "roducts# We )ill aintain co "etitive "rice+ si0e+ and reliability easures )ith our co "etitors+ and (ain the ost ar'et share )e can )ithin the hi(h, tech+ si0e+ and "er&or ance se( ents# II. Business-Level Strategy & Pricing Strategy /s "reviously stated+ Chester4s business,level strate(y )ill be a "roduct di&&erentiator )ith hi(h, tech &ocus# There&ore the "ri ary "roducts our co "any )ill be &ocusin( on are Cid+ Coat+ and Cure )hich co "ete in the hi(h,end+ "er&or ance+ and si0e ar'et se( ents res"ectively# -ur di&&erentiation )ill be based on "rovidin( custo ers )ith cuttin( ed(e technolo(y that is "erceived by our custo ers as bein( valuable#

MGT 460 Neil Tocher

Meredith Ellis Lynette Wharton David Westacott Roxanne Christy

5ince our "ri ary &ocus )ill be on the hi(h,end+ "er&or ance+ and si0e se( ents+ ini al &ocus )ill be (iven to the traditional and lo),end ar'et se( ents# Monitorin( the environ ent &or ne) entrants and co "etin( "roducts )ill be essential as )e contend &or ar'et share# 1y o&&erin( hi(h !uality "roducts )ith a broad base o& loyal custo ers+ )e ho"e to create hi(h entry barriers to ne) entrants# Monitorin( and res"ondin( to the "rice o& co "etin( "roducts )ill di inish the threat o& substitute "roducts# We ex"ect our associated costs to be hi(her as )e are sellin( hi(h,end "roducts )hich cost ore to anu&acture# .n res"onse to the hi(h "roduction costs+ our custo ers )ill be ex"ected to "ay "re iu "rices &or our "roducts# .n exchan(e &or the "re iu "rice+ our ain ob2ective )ill be to eet the buyin( criteria o& our custo ers and satis&y their ex"ectations )hich )ill result in custo er loyalty# 1ased on these assu "tions+ )e antici"ate our (ro)th in sales to be hi(h# II. unctional Strategies ar'etin(+

The si ulation consists o& &our &unctional activities6 research and develo" ent+ "roduction+ and &inance#

Research 7 Develo" ent 8R7D96 /s a hi(h,tech di&&erentiator+ Chester ex"ects to incur hi(h R7D costs &or "roducts in the "er&or ance+ hi(h end+ and si0e se( ents# 1y introducin( ne) "roduct lines and re"ositionin( existin( "roducts+ )e ho"e to aintain a co "etitive advanta(e a(ainst other &ir s in the industry and su""ort our overall business,level strate(y# Mar'etin(6 Chester "lans to invest a((ressively in the "ro otion and sales o& our "roducts# This )ill enable us to create axi u a)areness a on( custo ers and hi(h levels o& accessibility to our "roducts# 3roduction6 5ince our "roducts )ill be continually re"ositioned to re ain co "etitive as a hi(h, end di&&erentiator+ our co "any )ill not be investin( heavily in auto ation or "roduction ca"acity# / ini u a ount o& auto ation )ill allo) our &ir to !uic'ly res"ond to custo er ex"ectations enablin( our &ir to re ain co "etitive a(ainst other "roducts# /s ne) "roducts are added+ ca"acity )ill be "urchased in advance to ensure the "roduct )ill be anu&actured in a ti ely anner# .n order to eet de and+ second shi&ts )ill be scheduled as necessary to ensure an ade!uate su""ly o& our "roducts and "revent stoc' outs#

MGT 460 Neil Tocher

Meredith Ellis Lynette Wharton David Westacott Roxanne Christy

*inance6 .n order to eet the &inancial obli(ations o& the other &unctional activities+ Chester )ill issue stoc' and bonds as necessary to aintain the &ir 4s &inancial stability# Durin( the initial years 8rounds9+ Chester4s &inancial &ocus )ill be on re"ositionin( and ar'etin( our "roducts# III. In!ormation System Chester )ill routinely onitor the "er&or ance easures &ro each round+ but s"eci&ically exa ine the endin( results o& Return on /ssets+ /vera(e /sset Turnover+ and /vera(e Return on E!uity# 5ince these "er&or ance easures have been (iven the ost )ei(ht &or our business,level strate(y+ )e )ill &re!uently revie) the to deter ine i& chan(es are needed in our "lannin(# We )ill also be revie)in( the /nalyst Re"ort+ 1alanced 5corecard+ and Round /nalysis re"orts that are available on the Ca"5i )ebsite to "rovide additional insi(ht about our co "any4s "er&or ance and deter ine our industry standin(# .n addition+ our co "any )ill also be onitorin( the /)areness and Custo er 5urvey results at the end o& each year so that )e can deter ine i& ore resources are needed in the advertisin( and "ro otions areas# Chester )ill try to li it lon(,ter and current debt by atte "tin( to o"erate the next year on available cash resources# Chester )ill also be onitorin( the (ro)th rate o& each &ocus "roduct# 1y doin( so+ this )ill hel" us deter ine i& our resources are bein( "laced in the a""ro"riate areas# We )ill also closely onitor ca"acity re!uire ents to ensure )e are "roducin( and aintainin( a""ro"riate levels o& inventory# I". Change Philosophy To aintain our business,level strate(y+ ad2ust ents to the "lan )ill li'ely be in order as ti e "ro(resses# We )ill need to onitor sales on our "roducts+ es"ecially those in the hi(h,end+ si0e+ and "er&or ance ar'ets# .t )ill also be i "ortant to onitor inventory levels to ensure that )e are not stoc'in( out on any "roducts or over"roducin( inventory# Ca"acity is another easure that needs to be closely onitored# Durin( the "ractice si ulation rounds+ )e discontinued t)o o& our "roducts but retained too uch ca"acity &or "roducin( these "roducts# Thus+ )e ust be care&ul not to a'e these 'inds o& errors# Custo er buyin( criteria )ill be continually onitored as )ell to ensure that our &ocus "roducts are eetin( the re!uire ents o& custo ers# This )ill involve ensurin( that the "erceived a(e+ a)areness and accessibility o& our hi(h,end+ si0e+ and "er&or ance "roducts are all )ithin acce"table "ara eters# We )ill "er&or analyses to deter ine i& our "roducts are "ositioned )here )e )ould )ant the to be on the si0e versus "er&or ance atrix#

MGT 460 Neil Tocher

Meredith Ellis Lynette Wharton David Westacott Roxanne Christy

.n addition+ i& any o& our non,&ocus "roducts 8such as those in the lo),end se( ent9 cease to be "ro&itable+ )e ay consider discontinuin( the i& the costs to re"osition the are considerable# .& our "lan to &ocus on the hi(h,end+ si0e+ and "er&or ance ar'ets )hile aintainin( "roduction o& "roducts in the re ainin( ar'et se( ents "roves to not be )or'in( )ith our business strate(y+ )e ay need to re)or' our business a""roach# *or exa "le+ i& several other tea s are e "loyin( a hi(h,end &ocus di&&erentiation strate(y+ it )ill be ore di&&icult &or us to co "ete in this ar'et se( ent# Thus+ it ay be )ise to ado"t a ne) strate(y such as an overall lo) cost &ocus# -& course i& this is the case )e )ill need to chan(e our "ractices )ith re(ard to i "rove ents to the "roduct and be care&ul schedulin( second shi&ts or accruin( additional "roduction costs# / chan(e to a cost leader "osition )ould re!uire that our costs are ana(ed very attentively# We )ould 'no) i& such a chan(e is needed i& co "etitors are earnin( considerably ore ar'et share in the "roduct se( ents than )e initially &ocused on#

MGT 460 Neil Tocher

Meredith Ellis Lynette Wharton David Westacott Roxanne Christy

". Propose# Per!ormance $easures & %eights $inimum &llo'a(le 0; 0; 0; 0; 0; 0; 0; 0; $a)imum &llo'a(le <0; <0; <0; <0; <0; <0; <0; <0;

Per!ormance $easure :# Cu ulative 3ro&it =# /vera(e Mar'et 5hare ># /vera(e R-5 4# /vera(e /sset Turnover <# /vera(e R-/ 6# /vera(e R-E ?# Endin( 5toc' 3rice @# Endin( Mar'et Ca"itali0ation

*ur Choices #:0 #:0 #0< #=0 #:< #=0 #:< #0< +,,-