Trends in Annual Total Revenues
Trends in Annual Earnings Per Share (EPS)
Trends in Annual Return on Equity Investment (ROE)
Trends in Credit Rating
Trends in Image Rating
Trends in Year-End Stock Price
Trends in Year-End Global Unit Sales
Trends in Year-End Market Share
Company B’s Strategic Vision
• Our strategic vision involved differentiating ourselves from our competitors on quality, image, and socially conscious practices. It is our belief that our strength in these areas represented a significant competitive advantage as compared to other industry players.
EPS, ROE, Credit Rating, Image Rating, and Stock Price Performance Targets for next two years
Performance Targets
Year 17 Year18 Year 19 Year 20
EPS 5.30 9.47 $5.45 $5.70
ROE 23.1% 37.6% 20% 20%
Credit Rating
B+ A B- B
Image Rating
76 73 75 79
Stock Price $77.00 $194.00 $105.00 $115.00
Internet Competitive Strategy
• Maintain internet market share at 15% or higher
• Stay price competitive relative to industry benchmarks
• Maintain at least a 15% profit margin/shoe in every region
• Pass certain costs to our consumers whenever possible (free shipping)
Year 11
Year 12
Year 13
Year 14
Year 15
Year 16
Year 17
Year 18
0
5
10
15
20
25Internet Market Share
Market Share
Avg. 15.8%
Year 11
Year 12
Year 13
Year 14
Year 15
Year 16
Year 17
Year 18
0
5
10
15
20
25
30Internet Profit Margin Per Shoe
Overall Profit Mar...
Avg. 21.3
Internet Market Competitors
• Company E in all markets
• Companies C,F and D based on market share.
Competitive Strategy for Wholesale Market and How It has Evolved
• Stay price competitive overall in early years to retain market share.
• Maintain 15% or more market share in North America, Asia/Pacific, and Latin America each year
• Maintain 10% or more market share in Europe/Africa
• Have highest celebrity appeal in all regions• Always be one of top three advertisers• Raise prices in latter years
Wholesale Market Competition
• Our strongest and most direct competitor in all regions is Company E
• We view both Company D and Company F as competitors more for the market share and profit that they earn each year than anything else.
Private Label Market StrategyN.A.
OfferedN.A.Sold
E/AOffered
E/ASold
APOffered
APSold
LAOffered
LASold
Yr 11 - - - - - - - -
Yr 12 280@ $28.75
280w/ 18%MS
280@ $31.75
280w/ 24.8%MS
200@ $26.00
200w/ 15.5%MS
289@ $30.99
289w/ 37.1%MS
Yr 13 570@ $31.75
0 470@ $33.00
0 507@ $31.75
0 186@ $33.50
0
Yr 14 - - - - - - - -
Yr 15 - - - - - - - -
Yr 16 - - - - 146@ $36.00
146w/ 9.6%MS
147@ $36.00
147w/ 13.4%MS
Yr 17 - - 432@ $45.00
432w/ 24.1%MS
- - 233@ $38.90
233w/ 12.1%MS
Yr 18 - - - - 161@ $36.00
161w/ 8.5%MS
230@ $40.00
230w/ 19.7%MS
Private Label Competitors
• Our competitor changes from year to year, depending on how we decide to play the market.
• We are not trying to compete with any one company on prices, we just hope to pick up the extra demand for a favorable profitability margin.
Production Strategy
Plant Capacity• Concentrate most of our production in the most cost
effective regions• Focus all capacity in the appropriate regions to meet
expected demand excess overtime capacity used in Private Label
• Upgrade facilities and resources as often as finances allow
• Construction of new plants take place only when absolutely necessary
Production Strategy
Asia Branded Production• Use lowest amount of superior materials possible
w/o sacrificing our 7 SQ rating• Maintain at least 90% production of all expected
demand with our Asian plants• Balance our workers’ incentive pay and base wage
changes with that of the industry average• Pursue Six Sigma and Best Practices only to increase
productivity; never sacrifice Profit Margin
Production Strategy
Latin American Branded Production• Use lowest amount of superior materials and style
w/o sacrificing our 5 SQ Rating• Maintain enough capacity to only fulfill the major
demand needs of our Latin American customers• Keep all other costs as low as possible due to LA’s
high setup costs • Use plant upgrades to bring setup costs down; slowly
begin to offer more models
Company B’s Finance Strategy
Loans:
• Maintain D/A ratio of .5• $200 million 10 yr. loan in
year 11• Year 15 $15 million 5 yr.
loan• Year 16 $150 million 10 yr.
loan• Year 17 $42 million 5 yr.
loan
Dividends:
• $1.00 dividends paid in years 12-14, 16 and 17
• $2.00 in year 18
Future Actions
• Continue to further upgrade plants • Build more capacity in Asia plants based on
forecasts in global demand• Return to our dominance in regard to being
socially responsible (Gold Star Awards)• Continue to aggressively pursue possible
celebrity endorsements (Have at least 3 signed each year)
Strategies/Actions for Out-Competing Rivals
Lessons Learned
• Competing year-to-year required constant adjustment to plan
• Biggest challenge was how to keep production costs low enough to off-set socially conscious activities/celebrity endorsements.
•