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Business Plan
Spring, 2009

Tom Junker
Katie O’Connell
Elizabeth Pike
Hajime Sargent
Ami Waldenberger

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MARKETPLACE BUSINESS PLAN
Table of Contents

Executive summary……………………………………………………….........3
Mission Statement and Purpose…………………………………………........ 4
Executive Staff/Biographies………………………………………………….. 5
Year in Review: Performance Summary……………………………………..7
Situation analysis………………………………………………………10
External analysis…………………………………………....…..11
Customer analysis……………………………….…..…..11
Competitor analysis……………………………..…..…..17
Market (Market Share) analysis………………...……..21
Environmental analysis…………………………………31
Internal analysis………………………………………………...33
Sustainable competitive advantage………………………...…………39
How you compete—Basis of Competition……………..……...40
Assets and competencies………………………..………40
Where you compete ……………………………………………43
Market selection (Targeting)…………………….……..43
Competitor selection (Positioning)……………………..48
What you offer
Value Proposition/Strategic intent…………………….50
Marketing strategy……………………………………………...…….51
Product objectives, strategies and tactical decisions ..………52
Promotion objectives, strategies and tactical decisions.…….58
Place objectives, strategies and tactical decisions……..…….64
Price objectives, strategies and tactical decisions…….……..67
People objectives, strategies and tactical decisions….………70
Other strategies………………………………………………….........72
Production objectives, strategies and tactical decisions…….73
Financial objectives, strategies and tactical decisions………76
Appendix A: Supporting analysis and documentation …………………...78
Appendix B: Tactical plan………………………………………….……...100
Appendix C: Pro-forma financials………………………………………...104
Appendix D: Venture Funding Request…………………………………..110
Appendix E: Statement of Targeted Consumer Markets………………..112

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Executive Summary
InnoVision’s comprehensive Business Plan covers numerous domains and strategies that
we have examined in our first year of operation. First, the Business Plan contains our
mission statement and a brief discussion of our purpose for existence, as well as our
company philosophy.

Next, the Business Plan features information about our team, with titles and brief
background biographies to give a little idea about where we come from. Following
information about our team is information about our previous strategy in our first year of
operation. This section features information about what he did in each of the first four
quarters and the justifications for each decision.

Following the summary of our performance is the situational analysis, where we look
both internally and externally at the environment that we are competing in. Numerous
charts and graphs illustrate where we stand relative to the competition and give an
indication as to how InnoVision looks on the inside.

The next major section of the Business Plan contains information about how we have
developed and maintained a Sustainable Competitive Advantage. We outline how we
compete, where we compete, and what we have to offer the customers. This detailed
section features information about our company’s assets, where we feel that we are
positioned relative to the competition, and what value propositions we offer the
customers.

Further discussion of strategy follows, specifically in the areas of marketing, production,


and finance. First, in the marketing section, we discuss product, promotion, place, price
and personnel objectives that we have for the remaining four quarters, and the decisions
that we have already made. We continue to discuss our strategies for production, such as
where and why we will open new sales offices, and how we plan to finance these
purchases.

The Business Plan concludes with an appendix, featuring numerous documents, ranging
from tactical plans to financial statements. The final two pages of the Business Plan
contain a letter from our CEO to our venture capitalist. We ask them to carefully review
the Business Plan and consider our formula for success as one you can and should invest
in.

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Mission Statement and Purpose


“At InnoVision, our mission is to produce high quality products that improve the lives of
our customers. Through innovative research, streamlined distribution, and superior
management, we are committed to excellence and long term success in this continually
evolving industry.”

This is our mission statement. We base all of our decisions on this philosophy. We
operate in a very challenging industry, and we must make tough decisions about where
and with what products to compete, but at the heart of all of our decisions is the
commitment to excellence for all of our stakeholders.

We have chosen to do business in the Work Horse and Traveler segments. We chose
these segments of our industry because we felt that we had an opportunity to be the
market leaders in the United States and China where we chose to compete. We have
designed a laptop that will satisfy the desires of customers in the workhorse segments,
who use their laptops to accomplish tasks at work, and a laptop for those in the traveler
segment who want to have the all the conveniences of a computer “on the go.”

These are obviously two distinctly different segments with different wants and needs
when it comes to what they are looking for in a computer. However, with the guidance of
market research and careful examination of the important variables in each segment, we
have created what we believe to be superior laptops that will compete very well in each
segment.

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Executive Staff Biographies


Tom Junker
CEO

Tom Junker is the CEO of InnoVision. Mr. Junker polished his leadership capabilities at
Notre Dame, serving as the President of Keenan Hall, as well as the Vice President of the
Notre Dame Marketing Club. He has a great deal of management work experience and
specializes in marketing, which is why he decided to assemble a team of the best and
brightest marketing students at Notre Dame to help InnoVision succeed the global laptop
market.

Katie O’Connell
Vice President of Accounting and Finance

Katie O'Connell is the Vice President of Accounting and Finance at InnoVision. Prior to
working at InnoVision, Ms. O'Connell earned her experience in sports entertainment
industry, where she served as a media and communications representative from 2005-
2009. During that time, Katie spent six months in Australia, Singapore and Thailand
studying business practices and culture with a focus on Asian business. While there, she
accumulated a unique skill set which enables her to have a sound understanding of the
Asian Pacific market. Her analytical background, as well as her background in
Psychology, has helped her to be an integral player in the InnoVision executive team.
Ms. O'Connell is a 2009 degree candidate at the University of Notre Dame.

Elizabeth Pike
Vice President of Manufacturing

Elizabeth Pike is the Vice President of Manufacturing at InnoVision. Prior to joining the
InnoVision team, Elizabeth was a research assistant at the University of Notre Dame.
Elizabeth has also worked in the international sponsorship industry where she served as
an analyst for the International Olympic Committee and UEFA out of Relay Worldwide's
London office. Prior to her time in the sponsorship industry, she had a short stint as a
marketing researcher for internationally renowned advertising agency, BBDO. Each of
these experiences has given Elizabeth the opportunity to experience a broad range of
business industries both locally and internationally with an emphasis on quantitative
analysis, allowing her to be versatile in her role here at InnoVision.

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Hajime Sargent
Vice President of Marketing and Sales

Hajime Sargent is Vice President of Marketing and Sales at InnoVision. Sales comes
naturally to Mr. Sargent who worked most recently as an account executive at a
prominent ad agency until finding his role at Innovision. It is said that his first sale was
made at the age of five, when he sold half a sandwich to his kindergarten teacher. Mr.
Sargent's creative skills are only matched by his leadership and held multiple positions in
his college career in both clubs and student government. Mr. Sargent will receive his
Bachelor in Business Administration in May of 2009.

Ami Waldenberger
Vice President of Research and Development

Ami Waldenberger is the Vice President of Research and Development at InnoVision.


Ms. Waldenberger worked in a similar position during her previous job at the Page
Education Foundation where she was instrumental in researching and developing a retail
website for the organization. She has brought her expertise to InnoVision to ensure only
the highest quality products are developed and sold. She was actively involved in the
water safety business as a lifeguard at Notre Dame and has put her life saving skills to
work ensuring no one suffers from cardiac arrest at InnoVision. Her interpersonal skills
and experience in management have proved essential in her role at InnoVision.

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YEAR IN REVIEW: Performance Summary


QUARTER 1:

Strategic goal: to build a solid foundation for the company by choosing responsibilities
and team norms that will best benefit InnoVision.
• The name “InnoVision” was developed from the company’s creative and
innovative nature whose financial, analytical, and organizational skills will lead
the industry into the future of laptop design.
• Our President and CEO, Tom Junker, has recruited a top tier management team
from all over the world whose specialties represent facets of Manufacturing,
Accounting and Finance, Marketing Research, and Sales Management.
• The idea behind this team was to bring in industry leaders to create a synergy
unmatchable by other competitors that will lead InnoVision in the market. In
deciding team norms, significant decisions were made through executive team
meetings, with functional decisions made by the specialist of that area. Another
vital aspect of creating this synergy was that all decisions are to be discussed with
other members before final decisions can be made. Ultimately, the President and
CEO has the final decision.
• Team norms reflect the set of values that InnoVision strives to achieve. We want
each member’s voice to be heard, and to have respect for each other, our vision,
and our products. This means showing up on-time and prepared to meetings,
keeping meetings confidential, giving and receiving feedback from each other,
and allowing each team member the opportunity to speak freely without
interruption.
• Market research is very important here at InnoVision. The team chose to
purchase a 600-participant survey market research plan this quarter in order to
determine customer needs and wants and potential demand. Overall, this plan
best suited the company because it had a low percentage of error relative to the
participants involved. Market research is especially significant in developing our
products and establishing what product attributes best suit the needs of our clients.
This was to be beneficial in deciding where to place our sales offices and
distribution facilities.
• Financial performance is crucial at InnoVision. The team invested $235,000 in a
3- month certificate of deposit to earn an additional $3,525.

QUARTER 2:

Strategic Goal – to attack the Workhorse and Traveler segments of the European and
Asian markets and to determine strategic distribution of plants
• At this time, InnoVision made many important tactical decisions including the
strategic placement of distribution plants, determining target markets and
choosing test markets.

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• Independent and team goals were established. First, InnoVision will focus on the
large, highly competitive segments. This includes targeting geographic markets
that could be more expensive but are not so costly that they will put a major dent
in the company finances.
• The competitive goals of the organization were developed so that the team could
build a market position and defend it, and, given the opportunity, to attack the
competition on their own ground.
• Upon analysis of the market data received at the beginning of the quarter, we felt
that Tianjin, China was the best place to build our distribution facility. After
examining production and per-unit cost in each possible location, China provided
the most cost efficient option for shipping in to all markets. The per-unit cost was
relatively low, as well. By building a plant in China, we can produce products
cheaply and efficiently and minimize our shipping costs.
• At InnoVision, our work ethic and ability to meet consumer needs is what defines
us. This was why we chose the Workhorse and Traveler regions. In doing so, we
have the opportunity to penetrate a large and a small market, with hopes of
earning a large share of the market in the Traveler and be a leader in the
Workhorse.
• Our test market locations were London and Shanghai. The unit demand in
London was the top three in each segment. The London office will serve as the
hub of our European operations. Also, with a plant in China, we wanted to have a
store located in Shanghai as a high percentage of each target segment lives there.
Doing so will keep our production and shipping costs down and have an
opportunity to gain high market share.
• Two other major decisions we made were production capacity and product
capability. Because of the size of the London market, we chose to make our
initial production capacity 50 with plans to expand in the future. We made the
decisions for product capability based upon consumer needs and wants found
when analyzing market research. We also included a few more bonus features
that would give added-value to the product.
• Financially in quarter 2, we added another $200,000 to the certificate of deposit
we opened last quarter.

QUARTER 3:

Strategic Goals – to have a successful test market run that will enable us to be prepared
for the future.
• Upon reviewing customer and market needs, we chose to hire four employees in
the London office and five in Shanghai. In London, half of the employees will be
Workhorse specialists. The focus in China will be on incredible customer service.
We devoted two members to customer service, two as Workhorse consultants and
one as a Traveler consultant.
• In our attempt to own the Chinese market, we have decided to open another sales
office in Guangzhou in Quarter 4. It has the next highest Traveler segment and
also has a big Workhorse demand in China.

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• Analysis of each target market found four major needs that consumers want.
These were the focus of our products and were demonstrated in the
advertisements. Eleven regional ads were placed in London (6) and China (5) and
twelve regional ads were placed in magazines throughout China.
• Prices were set competitively with an average selling price of $2,574 for the
Voyager and $2,599 for HGH. The manufacturing plant was set to produce
twenty-two units daily in order to meet sales goals. Finally, market research was
purchased in order to keep up with customer needs and desires.

QUARTER 4:

Strategic Goals – to maintain cost-cutting practices and come back strong from a
difficult Quarter 3.
• Overproduction in quarter 3 resulted in a loss and emergency loan for InnoVision
in Quarter 4. Our analysts overestimated need this quarter and produced too
many products in both segments. High holding and production costs and
aggressive expansion in production and sales capabilities led to the need for an
emergency loan.
• Although the quarter started out disappointing, InnoVision closed out the year on
a high note, on its way to reaching its goals of becoming a market leader. We
were in the top 2 in many categories, including market share, and had superb
financial performance, regardless of our emergency loan.
• This quarter, significant functional decisions were made in nearly every category.
Finances were closely scrutinized this quarter and the team managed costs well,
only producing what was absolutely necessary.
• Due to overproduction in quarter 3, the brand design of The Voyager and HGH 13
remained the same. Also, production costs were low due to the excess inventory
retained from last quarter.
• After receiving a poor rating in the Workhorse and Traveler ad copy review,
advertising was revamped to create a new look for InnoVision that reorganized
the way that InnoVision creates ads. Also, we reevaluated and decreased the
number of ads placed to more specifically define our market.
• The sales force increased by three to account for the opening of the Guangzhou
office.
• Pricing was adjusted slightly in Quarter 4. We received high ratings for the HGH
and Voyager in China and the Voyager in Europe, but not the European HGH.
Prices were raised and rebates offered in the Chinese market and in the Traveler
in Europe. However, we offered a rebate for the European HGH to help raise
price judgment. Points of purchase displays were also added in China for the
Voyager and in London for the HGH.
• Because projected inventory demands were so low and the remaining inventory
from quarter 3 was so high, the team chose to salvage 200 of each product.
• Overall, InnoVision products sold very well. We were extremely pleased with
our management team’s projections. The forecast for the future is only getting
better. Adjustments were made at the correct times, helping the company benefit
from its superior leadership.

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Situational Analysis
 
 

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External Analysis
In order to understand the environment facing the firm, potential strengths, opportunities,
threats and weaknesses will be identified in this section. It is important to identify these
trends so that future events and investment opportunities can be discovered and
InnoVision can take advantage of these growth directions. While InnoVision’s target
segments are the Work Horse and the Traveler, all five segments will be analyzed in
order to discover any business opportunities and larger strategic uncertainties that should
be addressed. The goal of the external analysis is to use any strengths, opportunities,
threats and weaknesses to decide where and how to compete in the computer market.

CUSTOMER ANALYSIS

Customer Needs

InnoVision strives to understand its customers and be sensitive to their needs. This
customer orientation drives brand design and identifying significant needs is critical to
designing successful products at InnoVision. The following is a list of top 10 most
significant needs for the five market segments (Cost Cutter, Work Horse, Innovator,
Traveler and Mercedes) in descending order of significance:

Cost Cutter

Customer Need CostCutter


Minimum complexity for operators 127
Little training needed before use 125
Easy to use 122
Computers are lowest price 122
Made locally 121
Want more productive operators 121
Savings in operator cost (training) 120
Easy to set up and use new PC 118
Reliability of product (up-time) 115
Competent sales personnel 114

As the name states, this segment is price sensitive and “computers are lowest price” is the
fourth important need for this segment. The segment requires a reliable product and sales
personnel. Ease of use appears to be the most significant need of the segment as four of
the needs (“minimum complexity for operators”, “little training needed before use”,
“easy to use” and “easy to set up and use new PC”) all included in the top 10 needs.
InnoVision’s products are currently generating sales in this segment even though it is not
a target segment. Currently InnoVision market share is second in the segment with 26%
of sales.

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Work Horse

Customer Need Work Horse


Reliability of product (up-time) 127
Business graphics capabilities 123
Easy to use 123
Fast computer to computer links 122
Little training needed before use 121
Fast service response time 121
Savings in operator cost (training) 120
Can tie into other microcomputers 120
Local technical service 119
Made locally 118

Similar to the Cost Cutter segment, ease of use is also important to the Work Horse
segment, (“easy to use” and “little training needed before use”) suggesting some overlap
in needs between the segments. However, functional and productivity needs appear in the
top 10 as well suggesting the segments needs a competent machine that is packed with
software (“business graphics capabilities”, “reliability of product (up-time)”) with a local
support staff is required (“fast service response time” and “local technical service”).
Networking needs are also significant for the segment (“fast computer to computer links”
and “can ties into other microcomputers”)

Innovator

Customer Needs Innovators


Can tie into other microcomputers 134
Vendor is technical leader 131
Security-able to backup files, data 130
Analysis of statistical data 128
Fast, reliable dedicated connection 126
Fast access to graphical images 125
Fast computer to computer links 125
Must be fast, handle large problems 124
Can see, work on multiple programs 122
Quick response to commands 121

The Innovator segment appears to have three main needs: networking, speed/power, and
reliability/security. Three of the top 10 needs relate to networking (“can tie into other
microcomputers”, “fast, reliable dedicated connection” and “fast computer to computer
links”) and five relate to processor speed and power/multitasking (“fast access to
graphical images”, “must be fast, handle large problems”, “can see, work on multiple

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programs” and “quick response to commands”). This segment does not appear to be as
price sensitive or value ease of use compared to the Cost Cutter or Work Horse.

Traveler

Customer Need Traveler


Reliability of product (up-time) 130
Small footprint/size 130
Can connect to office when on road 126
Can use on the road 126
International support organization 123
Portability 122
Easy to set up and use new PC 120
Recommended by others 117
Fast computer to computer links 117
Can tie into other microcomputers 116

The Traveler’s two top needs are “reliability of product (up-time)” and “small
footprint/size” translating to a need for a competent, compact machine. Network
capabilities are important to the segment as the user will need to connect to other
computers and the office from a remote area. Portability features such as a small size,
battery life and network connectivity are also important to the segment. Again, this
segment is arguably less price sensitive than the Cost Cutter or Work Horse.

Mercedes

Customer Need Mercedes


Fast computer to computer links 143
Fast access to graphical images 138
Security-able to backup files, data 136
The more storage space the better 133
Can see, work on multiple programs 131
Been around a long time 131
Computer aided design (CAD)graphics 130
Fast, reliable dedicated connection 130
Able to work on graphical details 128
Need to program special functions 128

As the high end segment in the market, Mercedes customers require a machine that is fast
above all else. This speed is necessary for running complex productivity applications
such as CAD graphics and special programmed functions along with a ample storage

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space for saving information. Finally network/internet capabilities must be fast and
reliable, not merely present.

Summary of Needs

The following prominent segment needs have been identified and compile several
individual needs into an overall characteristic. This summary will be the basis of the
submarket analysis in the Market Analysis section.

Segment Needs
CostCutter Low price, ease of use, reliable product and sales
personnel
Work reliable machine and service personnel,
Horse productivity software, networking
Innovator networking, processor speed and power, reliable
and secure machine
Traveler Reliable, compact machine, networking, portability
Mercedes Fast mahcine, CAD graphics application, ample
storage space, fast and reliable networking and
internet

Segment Demand

The total potential market demand for Q1 through Q4 is 610,662 units across all cities
and all regions. InnoVision has chosen to focus on the European cities of London and
Berlin and the Chinese cities of Guangzhou and Shanghai. The combined market demand
of these four cities is 127,418 units or 20.9% of total worldwide demand for all segments.
The following tables highlight the total demand per segment by city and total demand by
segment:

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CostCutter Innovators Mercedes Work Horse Traveler

Total Demand all


20 cities 147,375 90,116 118,131 161,413 93,627

Segment Media Preferences

Understanding customer media preferences will allow InnoVision to target segments


effectively based on publications likely to be read. In addition to this, comparing this
information by cost can determine the cost effectiveness of the media. The following is a
list of cost to advertise by region and the relative cost effectiveness base on media
preferences (with the most cost effective media given a value of 1). Due to limits in
available research, this information is only available for the two target markets: Europe
and China. The two most cost effective media in each segment are highlighted:

These figures were obtained by dividing the media preference by the cost of the
respective media and then standardizing the figures by the most cost effective media
(which has a value of 1)

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Europe

Cost
Media CostCutter Innovators Mercedes Work Horse Traveler (Europe)
'Leisure &
Entertain
Mag 0.17 0.05 0.08 0.17 0.15 $17,000
'Daily
Newspaper 0.36 0.18 0.26 0.38 0.26 $8,000
'Science &
Technology
Mag 0.08 0.27 0.31 0.07 0.02 $14,000
'Executive
Business
Magaz 0.01 0.04 0.12 0.11 0.04 $26,000
'Sports
Magazines 0.22 0.05 0.10 0.19 0.18 $22,000
'New
Venture
Magazines 0.46 0.65 0.12 0.23 0.54 $8,000
'Leading
Trade
Journals 0.67 0.41 0.38 0.61 0.67 $6,500
'General
News
Magazines 0.46 0.23 0.69 0.50 0.52 $7,000
'Computer
Magazines 0.08 1.00 0.88 0.25 0.16 $4,500
'General
Business
Magazine 0.27 0.18 0.24 0.31 0.26 $14,000
'Business
Newspapers 0.13 0.09 0.21 0.20 0.12 $20,000

Media habits that are high for two or more segments are of particular interest and can
dramatically increase reach while being very cost effective. Such media and segments
are: New Venture Magazines for Cost Cutter, Innovators and Traveler; Leading Trade
Journals for Cost Cutter, Work Horse and Traveler; General News Magazines for Cost
Cutter, Mercedes and Work Horse; and Computer Magazines for Innovators and
Mercedes

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China

Cost
Media CostCutter Innovators Mercedes Work Horse Traveler (China)
'Leisure &
Entertain Mag 0.21 0.06 0.10 0.21 0.18 $7,000
'Daily
Newspaper 0.38 0.19 0.27 0.40 0.27 $3,900
'Science &
Technology
Mag 0.10 0.32 0.37 0.08 0.03 $6,000
'Executive
Business
Magaz 0.01 0.04 0.12 0.11 0.04 $13,000
'Sports
Magazines 0.24 0.05 0.10 0.20 0.19 $10,500
'New Venture
Magazines 0.47 0.66 0.12 0.24 0.55 $4,000
'Leading Trade
Journals 0.70 0.42 0.39 0.64 0.69 $3,200
'General News
Magazines 0.44 0.22 0.65 0.47 0.49 $3,800
'Computer
Magazines 0.08 1.00 0.88 0.25 0.16 $2,300
'General
Business
Magazine 0.29 0.19 0.25 0.33 0.27 $6,800
'Business
Newspapers 0.14 0.10 0.24 0.23 0.13 $9,000

Media high in two or more segments in China are: New Venture Magazines for
Innovators and Traveler; Leading Trade Journals for Cost Cutter, Work Horse and
Traveler; General News Magazines for Cost Cutter, Mercedes and Work Horse; and
Computer Magazines for Innovators and Mercedes.

COMPETITOR ANALYSIS

Sales Offices and Plant Locations

InnoVision currently has two sales offices in China: Guangzhou and Shanghai, and one in
Europe: London. InnoVision’s production facility is also located in China, greatly
reducing shipping costs to one of the company’s primary markets. Currently there is only
one competitor in China, MiCOMP in Beijing, one of the benefits of targeting a small
market initially and penetrating the Work Horse and Traveler segment early on.
However, no competitors exist in InnoVision’s target cities of Guangzhou and Shanghai.

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In particular, Shanghai is one of the top 10 Traveler markets in terms of units demanded.
The low level of competition coupled with high levels of regional advertising in previous
quarters, local production and a local sales and support staff gives InnoVision a strong
competitive position in China.

London was also targeted given its highest demand worldwide for Work Horse computers
and 3rd position for Traveler demand worldwide. Despite this high demand, only one
other competitor is present in London: DrevTech. Given the large size of the London
market and the positive customer reviews of InnoVision’s HGH 13 as “acceptable” –
DrevTech did not receive such a review for the Work Horse market – the competitive
position of InnoVision is also strong in London.

Number of Competitors in Plant (Fixed


City Region City Company (sales people) Capacity)
Calgary Canada
Montreal Canada
JovieTech
(75),
DrevTech
Toronto Canada (50)
Vancouver Canada
Beijing China 1 MiCOMP(7)
Guangzhou China InnoVision (3)
Shanghai China InnoVision (5)
miCOMP
(50),
InnoVision
Tianjin China (75)
Berlin Europe 2 InTouch (4), JovieTech (4)
DrevTech (4), InnoVision
London Europe 1 (4)
Paris Europe
Rome Europe
Curitiba Brazil
Belo
Horizonte Brazil
Rio de
Janeiro Brazil
Sao Paulo Brazil
Atlanta USA

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Intellijet
(50),
InTouch
Chicago USA 1 InTouch (?) (100)
Los
Angeles USA
IntelliJet Computers (?),
DrevTech (?), miCOMP (?),
New York USA 4 JovieTech (?)

Production costs by regions are shown in the following graphs. Factories located in China
have a low variable cost per unit while export costs are relatively equal yet higher to all
other regions from China. Facilities located in Canada or the United States are at a
disadvantage exporting to China due to the high cost per unit (the highest of the five
regions). Therefore it is unlikely that JovieTech, DrevTech, IntelliJet or InTouch will
enter the Chinese market from a cost perspective, not to mention the late entrant
disadvantage of InnoVision’s established brand loyalty and awareness. MiCOMP, with
factories located in China persists as a threat in the Chinese market and has a similar cost
structure to InnoVision. However, InnoVision’s advantage lies in its fixed capacity in
China, 75 compared to 50 for MiCOMP.

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InTouch currently has the largest manufacturing facility, located in Chicago, USA. At
100 fixed capacity, InTouch has greater flexibility in manufacturing capabilities
compared to IntelliJet Computers, which only has a fixed capacity of 50 in the same city.
The same applies to InnoVision compared to MiCOMP, the former which has a larger
fixed capacity of 75. In addition to this, both companies have an advantage in segments
that value locally produced products, such as the Work Horse segment, compared to
JovieTech or DrevTech, which have located their manufacturing facilities in Canada.

Target Segments and Prices

The following is a list of products by company and primary target segment. In many
cases, the product is appealing to multiple segments and therefore a second segment may
purchase the product. InnoVision’s HGH 13 is an example of such where the product has
been designed for the Work Horse market but also generates sales in the Cost Cutter
segment. The lowest priced product in the European market, the InnoDrev 6000 sold a
total of 1 unit in the Cost Cutter segment. In fact the InTouch’s InSync was the only
product rating as acceptable by the cost cutter market. This may mean that there is an
opportunity in the cost cutter market in Europe, as well as in China being that there is no
product currently positioned towards the segment, but this will be discussed further in the
Unmet Demand section.

Europe - Price and Priority and Demand


Price Price
Company Brand Q3 Q4 Segments

InnoVision The Voyager $3,049 $3,049 Traveler

InnoVision HGH 13 $2,999 $2,949 Work Horse


InnoDrev
DrevTech 6000 $3,099 $2,400 Traveler
DrevGo
DrevTech 4000 $3,095 $3,095 Traveler
TechnoDrev Work
DrevTech 3000 n/a $3,199 Horse/Innovator
InTouch InMotion $3,000 $3,400 Traveler
InTouch InSync $3,000 $2,700 Cost Cutter
Cost Cutter/work
JovieTech jBook $2,850 $2,900 horse
JovieTech jPro $2,800 $2,700 Cost cutter
JovieTech jPad n/a $3,050 Cost cutter
China - Price and Priority and Demand

20
 
Price Price
Company Brand Q3 Q4 Segment

InnoVision The Voyager $2,099 $2,249 Traveler

InnoVision HGH 13 $2,199 Work Horse


$2,275
Work horse/cost
miCOMP SpeediComp $2,499 $2,349 cutter
miCOMP EliteComp $3,099 $2,499 Work Horse
miCOMP LuxComp n/a $3,099 Innovator/Mercedes

MARKET SHARE ANALYSIS

The current market leader is MiCOMP overall with 26.2% of the market. MiCOMP also
has the highest market share in the Work Horse, Mercedes and Innovator markets with
36.49%, 69.8% and 51.53% of sales respectively. InTouch is the market leader in the
Cost Cutter segment with 44.96% of sales and IntelliJet Computers is the market leader
in Traveler with 32.33%. InnoVision is third overall in market share with 22.27%, second
in the Cost Cutter and Work Horse market with 26.61% and 34.67% market share
respectively and third in the Traveler segment with 21.15%.

Annual
CostCutter CostCutter CostCutter Annual Market
Company Q1 CostCutterQ2 Q3 Q4 Total share
IntelliJet
Computers 0 0 2 8 10 2.58%
InnoVision 0 0 37 66 103 26.61%
DrevTech 0 0 0 1 1 0.26%
InTouch 0 0 66 108 174 44.96%
miCOMP 0 0 12 28 40 10.34%
JovieTech 0 0 21 38 59 15.25%
Total
Worldwide
Actual
Demand 0 0 138 249 387
Total
Worldwide
Potential
Demand 147375
Unmet
Demand 146988 (99.7%)

Annual
Innovator Innovator Innovator Innovator Annual Market
Company Q1 Q2 Q3 Q4 Total share

21
 
IntelliJet
Computers 0 0 31 288 319 32.55%
InnoVision 0 0 21 41 62 6.33%
DrevTech 0 0 4 69 73 7.45%
InTouch 0 0 2 2 4 0.41%
miCOMP 0 0 118 387 505 51.53%
JovieTech 0 0 6 11 17 1.73%
Total Worldwide
Actual Demand 0 0 182 798 980
Total Worldwide
Potential
Demand 90116
Unmet Demand 89136 (98.9%)

Work Work Work Work Annual


Horse Horse Horse Horse Annual Market
Company Q1 Q2 Q3 Q4 Total share
IntelliJet Computers 0 0 13 82 95 5.77%
InnoVision 0 0 216 355 571 34.67%
DrevTech 0 0 0 41 41 2.49%
InTouch 0 0 115 112 227 13.78%
miCOMP 0 0 145 456 601 36.49%
JovieTech 0 0 44 68 112 6.80%
Total Worldwide
Actual Demand 0 0 533 1114 1647 100.00%
Total Worldwide
Potential Demand 161413
Unmet Demand 159766 (98.9%)

Annual
Traveler Traveler Traveler Traveler Annual Market
Company Q1 Q2 Q3 Q4 Total share
IntelliJet Computers 0 0 135 446 581 32.33%
InnoVision 0 0 128 252 380 21.15%
DrevTech 0 0 161 288 449 24.99%
InTouch 0 0 179 188 367 20.42%
miCOMP 0 0 6 10 16 0.89%
JovieTech 0 0 2 2 4 0.22%
Total Worldwide
Actual Demand 0 0 611 1186 1797 100.00%
Total Worldwide
Potential Demand 93627
Unment Demand 91830 (98.0%)

Annual
Mercedes Mercedes Mercedes Mercedes Annual Market
Company Q1 Q2 Q3 Q4 Total share

22
 
IntelliJet
Computers 0 0 2 45 47 20.89%
InnoVision 0 0 2 4 6 2.67%
DrevTech 0 0 0 12 12 5.33%
InTouch 0 0 0 0 0 0.00%
miCOMP 0 0 27 130 157 69.78%
JovieTech 0 0 1 2 3 1.33%
Total
Worldwide
Actual Demand 0 0 32 193 225 100.00%
Total
Worldwide
Potential
Demand 118131
Unmet D 117906 (99.8%)

Revenue by Company

It is difficult to analyze exact sales figures for each firm beyond InnoVision due to the
fact that no research is available for the United States where four competitors are located.
Thus product prices are unavailable preventing the simple revenue calculate of price x
units sold. It is possible to estimate revenue based on InnoVision’s sales and market share
and project revenue for other companies based on this ratio. The following table
highlights these projections:

Overall Q3 Overall Q4
Q3 Sales Market Estimated Q4 Sales Market Estimated
Company (units) Share Sales (units) Share Sales Total Sales
IntelliJet
Computers 183 12.23% $474,100 869 24.55% $2,405,773 $2,879,873
InnoVision 404 27.01% $1,046,646 718 20.28% $1,987,739 $3,034,385
DrevTech 165 11.03% $427,467 411 11.61% $1,137,828 $1,565,295
InTouch 362 24.20% $937,836 410 11.58% $1,135,060 $2,072,896
miCOMP 308 20.59% $797,938 1011 28.56% $2,798,892 $3,596,830
JovieTech 74 4.95% $191,712 121 3.42% $334,981 $526,693
Market Total 1496 100.00% $3,401,600 3540 100.00% $9,800,273 $13,675,972

As shown, the total revenue for all firms worldwide is $13,675,972 and the market leader
in terms of revenue is MiCOMP with $3,596,830 in sales. InnoVision is second with
$3,034,385. These are the only two firms with revenue exceeding $3 million for the year.
It should be noted that a number of assumptions were made with the above model:
• Revenue is solely a reflection of market share
• There is no variation between average price across different regions where market
research was not purchased (i.e. prices in New York are not systematically higher
than they are in Tianjin)

23
 
• There is no variation in demand between product segments across cities (i.e. All
cities have proportionally equal demand for the work horse segment compared to
the cost cutter segment)
• Equal efforts are made in terms of sales priority and advertising in each city

On a related note, the above model used Innovision’s sales figures which incorporate prices from
China which will be systematically lower than those of New York or Chicago (for which no
research is available) There for companies in the U.S. market, there is a risk that revenue will be
underestimated.

A second method was also used to calculate market revenue for each firm. This used the average
price of each segment and multiplied it by units sold in the segment. The average price x quantity
sold in by segment gave an estimated total revenue for all firms at $15,038,452 and is roughly
$1.3 million higher than the revenue obtained by the previous analysis. We can therefore
conclude that combined revenue for all firms is near $14.5 to 15 million.

cost annual sales average market total


cutter (units) price revenue
IntelliJet
Computers 10 $2,857 $28,571
InnoVision 103 $2,857 $294,286
DrevTech 1 $2,857 $2,857
InTouch 174 $2,857 $497,143
miCOMP 40 $2,857 $114,286
JovieTech 59 $2,857 $168,571
Total 387 $1,105,714

annual sales average market total


innovator (units) price revenue
IntelliJet
Computers 319 $3,149 $1,004,531
InnoVision 62 $3,149 $195,238
DrevTech 73 $3,149 $229,877
InTouch 4 $3,149 $12,596
miCOMP 505 $3,149 $1,590,245
JovieTech 17 $3,149 $53,533
Total 980 $3,086,020

annual sales average market total


work horse (units) price revenue
IntelliJet
Computers 95 $3,049 $289,655
InnoVision 571 $3,049 $1,740,979
DrevTech 41 $3,049 $125,009
InTouch 227 $3,049 $692,123

24
 
miCOMP 601 $3,049 $1,832,449
JovieTech 112 $3,049 $341,488
Total 1647 $3,049 $5,021,703

annual sales average market total


traveler (units) price revenue
IntelliJet
Computers 581 $2,854 $1,657,884
InnoVision 380 $2,854 $1,084,330
DrevTech 449 $2,854 $1,281,222
InTouch 367 $2,854 $1,047,235
miCOMP 16 $2,854 $45,656
JovieTech 4 $2,854 $11,414
Total 1797 $5,127,740

annual sales average market total


mercedes (units) price revenue
IntelliJet
Computers 47 $3,099 $145,653
InnoVision 6 $3,099 $18,594
DrevTech 12 $3,099 $37,188
InTouch 0 $3,099 $0
miCOMP 157 $3,099 $486,543
JovieTech 3 $3,099 $9,297
Total 225 $697,275

Summary

ItelliJet
Company Computers InnoVision DrevTech InTouch miCOMP JovieTech Total

Revenue $3,126,294 $3,333,427 $1,676,153 $2,249,096 $4,069,179 $584,303 $15,038,452

Competitive Advantages/Disadvantages

At this stage, it is difficult to establish sustainable competitive advantages but several


companies have distinguished themselves nonetheless. In particular, MiCOMP has
positioned itself as a technological leader, one of the needs of the Mercedes market and
has gained an early market leader position for the segment (69.78%). The LuxComp
features a “very high capacity hard drive” and “high performance power/speed” two
features which are the maximum obtainable in their categories without R&D investment
and a wide variety of software.

25
 

InnoVision aims to develop a competitive advantage in China with two sales offices and
its manufacturing facility in the region. Both the HGH 13 and The Voyager are priced
lower than the products of MiCOMP, the only other competitor in the region,
acknowledging the lower price willing to pay in China. InnoVision also aims to maintain
high awareness and develop customer loyalty with high levels of regional advertising in
China while taking advantage of the low price of media placement. With a possible
introduction of a new Work Horse product in quarter 5, InnoVision has a strong position
in China. InnoVision has also avoided the highly competitive and expensive New York
market, the only firm in such a position.

The iJet by IntelliJet Computers was the only product to achieve the brand judgment
rating of “good” for traveler consumers in quarter 4 and leads the category with 32.33%
of the market. Unfortunately, IntelliJet’s only sales office is located in New York, which
currently has three other competitors and the highest setup/close and annual salary costs.
Opening a sales office in Los Angeles or Atlanta, where there are currently no
competitors, may be advantageous.

The InnoDrev 6000 by DrevTech generated 1 sale in the Cost Cutter market, which it
appears to be targeted at given its low price of $2,400. Meanwhile, DrevTech sold 41
units to the Work Horse segment in quarter 4, which most likely where InnoDrev 6000
units. It appears that the product is either designed poorly and does not appeal to the Cost
Cutter segment or it is price too high for the cost cutter and too low for the Work Horse.
Repositioning the product or introducing a new product to the Cost Cutter or Work Horse
segment is a likely move by the company, a move that will likely affect InnoVision, the
only other competitor in London.

MARKET ANALYSIS

Submarkets

In the Customer Analysis conducted above, low price, easy to use, networking, reliability
and fast were identified as prominent customer needs across multiple product segments.
This can explain the overlap in demand experienced by InnoVision’s HGH 13 which was
targeted at the Work Horse segment but given the design to be easy to use and reliable,
appealed to the Cost Cutter segment as well, giving the company the second highest
market share in both segments.

The following is a table of available product attributes that are likely to appeal to the
identified submarkets:

Low Price price


Easy to Use Standard desktop design, 19’ or 21’ high
resolution monitor for desktop, standard
keyboard
Networking Standard network/internet connection

26
 
Reliability High performance, power/speed, windows
for professionals with high security
protection, antivirus software
Fast High performance, power/speed

Potential Market Size and Fulfillment of Demand

The total market size of the worldwide market is 610,662 units or $1,830,247,563. The largest
segment in terms of potential revenue is the work horse with $492,148,237. The following is a
table of the six cities where competitors are currently located and the demand of only those cities.
Combined, these six cities represent 35.4% of worldwide demand or 210,993 units. The average
price of all products in each five segment was used to calculate total market potential in revenue.

CostCutter Innovators Work Horse


City (units) (units) Mercedes (units) (units) Traveler (units) Total (units)
Berlin 8,193 6,145 7,144 9,226 5,469 36,177
Chicago 10,256 5,038 8,816 10,687 6,478 41,275
Guangzhou 5,863 4,696 3,578 4,469 4,493 23,099
London 8,644 6,256 9,059 12,247 6,887 43,093
New York 10,177 8,455 9,488 11,207 8,009 47,336
Shanghai 5,242 3,827 4,986 5,455 5,539 25,049

Total Units 48,375 34,417 43,071 53,291 36,875 216,029


Total Met Demand 387 980 225 1647 1797 5036
Total Unment D (six
cities) 47,988 33,437 42,846 51,644 35,078 210,993
Total Demand
(world, units) 147,375 90,116 118,131 161,413 93,627 610,662
% met D (six cities) 0.80% 2.85% 0.52% 3.09% 4.87% 2.33%
Average Market
Price $2,857 $3,149 $3,099 $3,049 $2,854
Total Met Demand $1,105,714 $3,086,020 $697,275 $5,021,703 $5,127,740 $15,038,452
Total Unmet D (six
cities) $137,108,571 $105,293,113 $132,779,754 $157,462,556 $100,095,073 $632,739,067
Total Unmet Global
D $421,071,428.57 $283,775,284.00 $366,087,969.00 $492,148,237.00 $267,164,644.50 $1,830,247,563.07
Total met Global
Demand % 0.26% 1.09% 0.19% 1.02% 1.92% 0.82%

Only 2.33% of potential demand has been realized in these six cities and 0.82% globally,
leaving opportunity for increased sales. In particular, demand for the cost cutter, the
markets second largest segment, has only been fulfilled by 0.8% in the cities which is low
compared to the work horse and traveler segments which are 3.09% and 4.87% met
respectively. The traveler segment which is the second smallest segment with only
35,078 units of potential demand had the highest met demand, which is expected given
the number of products in the segment.

27
 

From this analysis it can be concluded that opportunities exist in the Cost Cutter and
Mercedes market. However, both of these segments have drawbacks with low margins in
Cost Cutter and high research and development costs for the Mercedes segment. There
may also be an opportunity in the Innovator market given 2.85% fulfilled market
demand, lower R&D costs than Mercedes and higher product margins than Cost Cutter.

Market Demand Growth by Segment

The largest segment in terms of units sold and revenue was the Work Horse until quarter
4 with $140,693,011. In quarter five however, the Traveler became the largest segment
with 2049 units sold and roughly $220,000,000 in sales. Mercedes and Innovator are the
fastest growing segments. The Cost Cutter segment has the slowest growth rate for both
quarters. It is likely that Mercedes will continue to grow given its large potential market
size, investment in R&D and high profit margins.

Cost Total
Quarter Cutter Innovators Mercedes Work Horse Traveler Demand
Q3 to
Q4
change 280.43% 538.46% 703.13% 309.01% 294.11% 336.63%
Q4 to
Q5
change 180.88% 370.51% 415.11% 223.74% 214.02% 254.09%

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Profitability

Competition from Existing Firms and New Product Entrants

There is no threat of a new competitor entering the market. However, competition from
existing firms is likely. New York is the most competitive market with four different
firms in the city: IntelliJet Computers, DrevTech, miCOMP and JovieTech. All currently
have products that target all four segments but the Mercedes market and it is likely that
one firm will introduce such a product in New York, being that the city is the highest in
Mercedes demand. MiCOMP is the most likely to introduce such a product or improve its
LuxComp which already has generated sales in the segment. This may also affect the
Chinese market, where MiCOMP and InnoVision are located with the introduction of a
Mercedes product in Beijing as well. In addition to this, the cost of entry of China is low
and this may invite competition.

Two firms, InnoVision and DrevTech are in London with competing products in the
Traveler market. Being that London’s work horse market is the world’s largest; it is
possible that DrevTech may introduce a product targeted at the work horse market or
redesigns its cost cutter product. This would be a significant threat to InnoVision.

The Chinese market is dominated by two China based firms: InnoVision and miCOMP.
Both firms have similar cost structures given production facilities in Tianjin, although
InnoVision has a slight advantage with 75 fixed capacity versus miCOMP’s 50.
MiCOMP has the advantage of size compared to InnoVision and is the overall market
leader with 26.19% market share at the end of quarter 4.

Threat of Substitutes

At this stage in the market, the perceived level of product differentiation is low being that
firms have not had an opportunity to invest in advanced product attributes. Once one firm
gains a technological edge it is likely that consumers in the Mercedes and Innovator
segments will witch to such a product. All competitors in China and Europe also offer
local service support with one support person at each office except for InnoVision in
Shanghai with 2 personnel therefore the threat of substitution based on aftermarket
support is low.

InnoVision currently competes with DrevTech in London and miCOMP in China.


MiCOMP however is located in different cities from InnoVision and currently is not a
competitor but may expand. The following is a summary of InnoVision’s products and
any products in the same segments:

Product Market Substitute (city)


Work InnoDrev 6000*
HGH 13 Horse (London)

29
 
The DrevGo 4000
Voyager Traveler (London)
*overlap between cost cutter and work horse

Bargaining Power of Consumers

Both The Voyager and the HGH 13 are rated as “acceptable” by consumers in the
Traveler and Work Horse markets respectively and have brand judgment scores over 70.
The HGH 13 also has a brand judgment score of 66 in the Cost Cutter segment with only
InTouch’s InSync with a higher score at 73. Despite its acceptable score in the Traveler
market, two other firms have brand judgment scores above 70 in the segment and
InnoVision must differentiate its product if it is to become the highest rating brand in the
segment. InnoVision risks losing customers in the Traveler segment to DrevTech’s
DrevGo 4000 in the London market and InTouch’s InMotion if the company chooses to
enter the London or Chinese markets.

Bargaining Power of Suppliers

Being that all firms in the market currently use the same distribution channels and
suppliers of market research, bargaining power of suppliers is high but equal with respect
to all firms.

Cost Structure

Currently, InnoVision’s largest cost is cost of goods sold, which is a variable cost and
will therefore likely increase in future quarters and revenue increases. Other variable
costs include sales force salary, advertising placement (and design/modification) and
inventory holding costs. Fix costs include sales office opening and rent expenses, market
research and manufacturing facility property expenses. In order to control variable costs,
InnoVision aims to use cost effective advertising while still achieving its media and
awareness goals and accurately forecast demand to prevent inventory holding costs and
depreciation of the unsold nits. Lowering shipping and cost per unit sold were the goals
of locating a manufacturing facility in China. Cost per unit for InnoVision’s
manufacturing facility in Tianjin, China, are as follows:

30
 
Key Success Factors

Successfully analyzing customer’s needs is the first key success factor for any firm in the
computer market. Interpreting these factors into product attributes and designing a
successful product while identifying potentially successful cities to sell those products is
also a key to success. Finally investing in the future such as opening new sales offices
where opportunities are present and investing in R&D for improved product capabilities
(keeping in mind customer needs) is critical to sustained success in the computer market.

ENVIRONMENTAL ANALYSIS

Technology

It is likely that many competitors with invest in research & development in quarter five to
improve product attributes in quarter six and seven. While it is difficult to predict which
technologies will be introduced, InnoVision is currently investing in a new office
software release and high speed wireless network/internet connection to appeal to the
Traveler segment. With such investments, InnoVision is committed to remaining a
market leader in technology. It is likely that the current leader in the Mercedes segment,
miCOMP will also invest in advanced technology to further its stake in the Mercedes
market. However, it is likely that such innovation will effect InnoVision as well.

Government

Government regulations regarding advertising claims and the licensing of technology will
have effects on InnoVision and all competitors in the market. Should the government
create restrictions regarding licensing to prevent collusion, for example, this will prevent
InnoVision from licensing any advanced technology developed in quarter 5.

Non-government Organizations

The Customer Union, which is an organization that reviews market products and rates
them as “good”, “acceptable” or “below the minimum standards”, is the only NGO that
would affect sales in the market. Its reviews are critical to those segments that have a
need for the product to be “recommended by others” and therefore efforts should be made
to gain the “acceptable” or good brand ratings. Likewise, the International Advertising
Federation reviews ads made by the firms in the computer industry and rates them as
“very poor”, “acceptable” or “good”.

Economic

The first and second quarter of any year have lower sales due to the seasonality of the
computer market. The third and fourth quarters subsequently have the highest demand

31
 
and purchasing managers are more likely to buy in these quarters pending on how much
is left in the annual budget. These trends are market wide and affect all firms in the
computer market.

Culture

A long standing, successful brand can have an influence on culture much as Apple has
done in the real world. Factors such as brand loyalty and investments in “stylish” desktop
and portable designs should be monitored. If such products are successful, they can
become defining to a certain market segments, creating a competitive advantage for the
firm and a barrier that must be overcome for any competitor to enter the segment
successfully.

Demographics

Factors such as disposable income, age and gender will affect sales in the computer
industry and therefore should be monitored. If the average consumer’s disposable income
shows a significant increase, it may be possible to market the Mercedes or Innovator
product to a submarket of high performance personal users or gamers. Changes in
demographics will also have effects on advertising and adjustments will need to be made
to match the target segment.

32
 

Internal Analysis
SHORT TERM PERFORMANCE INDICATORS

Sales and market share

Innovision currently competes in the Workhorse and Traveler segment (primary), with
some sales spilling over into the Cost Cutter and the Innovator segments (secondary)

Primary segments:

Secondary:

33
 

Segment

Innovision, represented in red, is a close second with 35% of the Work Horse market and
in second place for the cost cutter segment with 27%. In the traveler segment Innovision
has maintained a market share of over 21% in both quarters 3 and 4, going from fourth to
a tie for third. The traveler market currently has 4 products with IntelliJet Computers
holding a slight lead of 32% market share. Innovision is committed to this segment as
with significant investment in R&D in quarter five to better satisfy the segment’s needs,
Innovision hopes to improve its position in the Traveler market.

Profitability

While liquidity ratios are currently unavailable, Innovision is currently above the market
average for every financial ratio. Most notably, the company’s quarter four inventory
turnover ratio was 9.1, the highest in the industry, demonstrating accurate demand
forecasting and a decrease in holding costs, a significant improvement from quarter 3
where the same ratio was 0.4 and below the market average at the time. Below is a
complete list of Innovision’s financial ratios:

InnoVision
Ratio Average Market Average
Activity Ratios
Inventory
Turnover 4.75 2.45
Fixed Assets
Turnover 0.95 0.85
Total Assets
Turnover 0.5 0.4
Leverage Ratios
Debt Ratio 10.9 6.25
Debt to Paid
In Capital 13.95 7.7
Profitability Ratios
Gross Profit
Margin 46 27.05
Net Profit
Margin -11 -78.2
Return on
Assets -3.25 -16.85
Return on
Paid In
Capital -4.65 -18.55

In quarter 4 Innovision also had a positive gross profit margin of $811,315 and a net
income of $122,434, the highest net income in the industry. Innovision’s asset

34
 
management score (0.574) the wealth management score was also a high, second in the
industry to MiCOMP at 0.853. Marketing effectiveness was high at 0.71 indicating the
favorable judgment of Innovision’s ad campaigns.

LONG TERM PERFORMANCE INDICATORS

Customer Satisfaction and Brand Loyalty

In quarter 3 the Customer Union, an NGO that rates brands has rated the HGH 13 as
“acceptable” to the work horse segment and The Voyager as “acceptable” as well for the
traveler market. The brand judgment scores were also above 70 for both segments
allowing Innovision’s products to gain a favorable image early on. In quarter 4
Innovision did not make any significant changes to its two main brands and maintained
its position in the work horse market. However, products such as IntelliJet Computer’s
iJet were improved and as a result it was given a rating of “good” by the Customer’s
Union along with three other products given a rating of “acceptable”, which included The
Voyager. Innovision therefore became complacent in quarter four concern The Voyager.
The company plans to correct this with significant investments in R&D.

Ad Judgment

In quarter 3, all advertisements in the work horse and traveler segments were rated as
very poor by the International Advertising Federation. In quarter four Innovision was
more successful in its advertising and obtained “acceptable” ratings in the work horse
segment for both work horse advertisement “work horse Q4” and “Traveler Q3”. While
having the multiple ads appeal to the same segment was not the intention, it allowed
Innovision to generate high brand awareness in the segment and contributed towards
sales. In quarter five, Innovision plans to continue to improve its work horse ad and
redesign the traveler ad to appeal to the right segment.

Price Judgment

The Voyager received a price rating of 100 in both quarters three and four in Europe,
indicated a “good” price judgment. In is possible for Innovision to consider raising the
price of The Voyager for this reason although this may cause a decrease in demand in
London. The HGH 13 received a price judgment rating of 90 in quarter three and 92 in
quarter four, indicating an improvement toward the suggested value of 95. A further
adjustment may be necessary to achieve the desired rating. No rebates were offered on
either product in London for quarter three but rebates of $50 were offered on each in
quarter four, which may have a positive effect on sales.

All products in all quarters received a score of 100 in the Chinese market. This may call
for the price to be reconsidered and possibly raised. One option may be to eliminate the
rebates offered in quarter four of $150 for The Voyager and $75 for the HGH 13.

35
 
Aftermarket Service

Innovision aims to provide a high level of aftermarket service and has trained support
staff in London, Shanghai and Guangzhou, with the goal of being able to provide quick
local support, one of the company’s ad claims. Fast Service response time and local
technical support are both in the top 10 needs for the work horse segment and
International support organization is the fifth for the Traveler segment. While currently
Innovision cannot satisfy this international need, it is one of the company’s long term
goals to expand the European and Chinese markets and thus by quarter 8, the company
hopes to be able to offer such support.

New Products and R&D

Innovision plans to take release new products in both the traveler and workhorse segment
in order to strengthen its competitive position in its primary markets. The work horse
product will arrive in quarter five and will be sold in all of Innovision’s current cities.
With it, Innovision hopes to gain a portion of the unmet demand especially in London,
the largest work horse market. Innovision will also invest in “high speed wireless
network/internet” for its traveler product and a new release of office software to place in
its work horse and traveler products.

Human Resources

Currently, Innovision has four sales people located in its London office, five in the
Shanghai and three in Guangzhou. All companies in London have four sales people.
However, given the large size of the London market, Innovision will be increasing its
sales force in London and training new sales people in work horse sales and support staff
in equal numbers. Currently, Innovision has a total of eight sales people in China, while
miCOMP has seven located in Beijing. Innovision will therefore be increasing its sales
force in Guangzhou and Shanghai and opening a new sales office in Beijing in quarter six
and Tianjin in quarter seven to dominate the Chinese market and provide regional
support.

DETERMINANTS OF STRATEGIC OPTIONS AND CHOICES

Strategy

Innovision’s strategy is to create a high end product that will help us meet and surpass
our customers’ wants and needs and help us achieve our company goals of building
market share and defending it. Our company will also cater to our customers wants and
needs by providing superior customer service. Our two primary target segments are
traveler and work horse and we strive to continually improve products in these segments.
China and Europe are our target markets. We also aim to attack any competitor
attempting to introduce similar products to our markets and stimulate brand loyalty and
awareness with superior advertising.

36
 
Thus far, Innovision is on track with its strategic goals. With initial sales offices in
London and Shanghai followed by Guangzhou in quarter four and Berlin which will be
open in quarter six, Innovision is on track with its regional goals. Both the HGH 13 and
The Voyager have received acceptable product ratings as of quarter four and there we
have made progress in satisfying customer needs. However, Innovision must continually
improve product features to appeal to customer wants and needs and therefore will be
making significant R&D investments in quarter five. With a customer orientation
approach, Innovision plans to achieve market dominance.

Strategic Problems

It is unclear which attributes will satisfy which needs in each market. This is true for
product development and true for Research & Development. In the latter, the capital
investment is much higher and Innovision plans to invest nearly $4 million in new
product features in quarter four. It is not guaranteed that “high speed wireless
network/internet” and a new release of office software will be appealing to the traveler
and work horse markets respectively, but the hypothesis is that such wireless connectivity
will satisfy the segment needs of “Can connect to office when on road”, “Can use on the
road”, “Portability”, “Fast computer to computer links” and “Can tie into other
microcomputers” to some degree. A similar uncertainty exists for advertising, as ad
design may not be appealing to customers in the various segments, but through gradual
improvement, Innovision hopes to achieve a “good” rating from the International
Advertising Federation.

Overall Strengths and Weaknesses

Advanced Balanced Scorecard - Strengths


IntelliJet
InnoVision DrevTech InTouch miCOMP JovieTech
Computers
Total Performance 0.000 0.312 0.000 0.000 1.744 0.000
Financial Performance -11.632 3.397 -7.591 -5.481 7.416 -15.754
Market Performance 0.160 0.264 0.165 0.295 0.438 0.035
Marketing
0.752 0.710 0.653 0.672 0.745 0.510
Effectiveness
Investment in Future 3.269 1.000 1.466 1.000 1.727 4.559
Wealth 0.600 0.853 0.634 0.743 0.857 0.503
Asset Management 0.422 0.574 0.135 0.134 0.486 0.000
Green indicates highest, Light Green indicates second highest
Red indicates lowest, Pink indicates second lowest

Innovision’s largest weakness thus far arose from poor demand forecasting in quarter
three. The company was left with a large ending inventory of unsold units and therefore
received an emergency loan from the loan shark Guido. The company was obligated to
repay this loan and was unable to successfully invest in the future by launching new
products or opening new sales offices. Thus the company received the lowest rating in

37
 
investment in future of 1.000. However, in the following quarter, Innovision was able to
correctly forecast demand and sell out effectively, without losing customers to ill will
(indicated by the highest inventory turnover ratio in quarter four as mentioned
previously).

The company’s asset management and wealth are both the market’s highest and second
highest respectively. This indicates meaning the company successfully used its assets to
generate sales and did not receive a penalty for out of stock products in quarter four. The
wealth score indicates the stockholder’s equity in the company which is not 1.0 due to the
emergency loan received in quarter three.

Innovision is one of only two companies to receive a positive score for financial
performance which indicates the fact that the company was profitable in quarter four with
gross profit of $811,315 and net operating income of $122,434. The difference between
these two numbers is again due to the emergency loan received and indicates the amount
paid to close the loan plus interest. However, despite paying back its emergency loan,
Innovision still recorded net income for the quarter.

Markets

In order to become the market leader in traveler and work horse, Innovision must first
redesign its products with the goal to appeal to the segments and achieve at least a “good”
product rating from the Customer Union. Next, Innovision can consider expanding
further into Europe and China. The Chinese expansion will be based on the advantaged
gained in locating manufacturing in China which greatly decreases the unit cost for
products sold in China. London is currently the largest work horse market but Berlin also
has a sizable segment market and Berlin, Paris and Rome are all within the top ten largest
markets for both the work horse and traveler markets and therefore Innovision plans to
expand into these markets as well.

38
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 

Sustainable Competitive
Advantage (SCA)  
 

39
 

Assets and Competencies

BASIC COMPETITION

A sustainable competitive advantage is composed of the basic assets and competencies of


an organization, what the organization has to offer, where that product is offered, and the
way in which it is offered. The set of skills, assets, and competencies known as the basic
competition is an integral part of this advantage. The Basic competition is made up of
organized with a group of resources, knowledge, and processes that are distinctive,
enduring, and valued by the organization and its consumers.

At InnoVision, we pride ourselves on the following resources and skills:

Assets/Resources Competencies/Skills
Financial resources Good management and staff
Reputation for quality Customer orientation
Market share Strong market knowledge/ research
Early entrance in business Continuing product innovation/development
Effective advertising/image
Strong R&D

Assets/Resources

Financial resources:

At the climax of quarter 4, InnoVision was a leader in nearly all financial ratios,
including Inventory Turnover, Current Liquidity ratio, and Gross Profit Margin. We are
spending wisely, while investing for future opportunities.

Reputation for quality

InnoVision, as an organization, has a reputation for producing quality products. Recent


Brand Judgments give InnoVision the highest the highest rating (70) of any product in the
European Workhorse market and the second highest rating (71) in the Traveler market.
In China, InnoVision is second in Workhorse with a rating of 72 and leads the Traveler
division with 72.

Brand Judgment - Europe


Company Brand

40
 

CostCutter Innovators Mercedes Work Horse Traveler


JovieTech JPad 58 35 15 50 18
JovieTech JPro 64 29 15 51 17
JovieTech JBook 46 34 23 45 27
InTouch InSync 73 26 13 60 32
InTouch InMotion 18 7 1 24 76
DrevTech TechnoDrev 3000 32 52 32 53 13
DrevTech DrevGo 4000 23 1 1 23 75
DrevTech InnoDrev 6000 1 27 9 19 61
InnoVision HGH 13 64 46 25 71 31
InnoVision The Voyager 6 1 1 20 70

Brand Judgment - China

Company Brand
CostCutter Innovators Mercedes Work Horse Traveler
miCOMP LuxComp 36 77 57 59 16
miCOMP EliteComp 50 72 48 77 30
miCOMP SpeediComp 61 35 9 65 39
InnoVision HGH 13 66 48 25 72 32
InnoVision The Voyager 7 1 1 20 72

Market Share
InnoVision remains competitive in both the Traveler and Workhorse segments. A strong
showing in both categories leaves Innovision currently with 31% of the Workhorse
market share and 21% of the Traveler share.

Early entrance in business


InnoVision remains one of the only competitors in China, and the only company in
Shanghai and Guangzhou. By taking advantage of this early share, InnoVision has been
able to successfully penetrate the market and continue to close in on MiComp.

Effective Advertising/Image
InnoVision’s Workhorse advertisements are of the few ads that have received acceptable
ratings. R&D is being done each quarter to determine how we can continue to improve
upon this rating.

41
 

Strong R&D
Over the next year, InnoVision has set aside over $5,000,000 for research and
development. Specifically, we are studying new technologies that will improve wireless
networking capabilities, enhance office suite software, and increase battery life.

Competencies/Skills
Good management and staff
At InnoVision, President and CEO Tom Junker has assembled an elite management staff
that specialize in all areas of business. This team has worked diligently to create the best
products that meet the needs of the consumer while producing a quality brand image for
its consumers. The internal and external goals are the same: to make InnoVision an
industry leader.

Consumer orientation, strong market knowledge/research, and continuing product


innovation/development
Consumer orientation, strong market knowledge/research, and continuing product
innovation/development are interconnected at InnoVision. Based on our heavy
investment in market research, these three competencies are a major part of our daily
lives at InnoVision. Analysts are continuously scrutinizing the current market data, and
exploring ways to improve old attributes and produce new ones through research and
development. All of this is done to meet the changing demands of today’s consumer.

42
 

MARKET SELECTION
SEGMENTATION

In selecting the target markets for InnoVision’s line of laptops, market attractiveness
factors were considered in accordance with two positioning factors. First, we examined
how well the needs and size of each segment fit with the strategic goals and visions of the
organization. Then, the opportunity for growth in the segments was considered. The
price willing to pay was analyzed to determine if it aligned with our strategic goals. The
industry position was looked at to see where the industry would be developing in the
future. Finally, the competitive structure for each segment was analyzed.

Market Attractiveness Factors:


1. Market Size
2. Opportunity for Growth
3. Price willing to pay
4. industry potential
5. Competition

Business Positioning Factors


1. Market Share
2. Advertising and promotion
3. Facilities location and newness
4. Sales distribution effectiveness (and customer service)
5. Relative Product Quality
6. R and D advantages/position
7. General Image

As mentioned earlier, the market is divided into five segments: Cost Cutter, Workhorse,
Innovator, Traveler, and Mercedes.

Cost Cutter:
Market attractiveness factor Criteria Weighted D=B*C
(A) Weight (B) Rating (C) Score
Market size .25 5 1.25
Growth .20 3 .60
Price .15 5 .75
Industry Potential .30 4 1.20
Competition .20 4 .80
Totals 1.0 3.40
Workhorse:
Market attractiveness factor Criteria Weighted D=B*C
(A) Weight (B) Rating (C) Score
Market size .30 5 1.5
Growth .20 5 1.0
Price .15 5 .75
Industry Potential .30 4 1.2
Competition .05 5 .25
Totals 1.0 4.7

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Innovator:
Market attractiveness factor Criteria Weighted D=B*C
(A) Weight (B) Rating (C) Score
Market size .20 3 .60
Growth .20 4 .80
Price .20 3 .60
Industry Potential .15 5 .75
Competition .25 3 .75
Totals 1.0 3.5
Traveler:
Market attractiveness factor Criteria Weighted D=B*C
(A) Weight (B) Rating (C) Score
Market size .10 5 .50
Growth .15 4 .60
Price .25 5 1.25
Industry Potential .15 4 .60
Competition .25 5 1.25
Totals 1.0 4.2
Mercedes:
Market attractiveness factor Criteria Weighted D=B*C
(A) Weight (B) Rating (C) Score
Market size .15 3 .60
Growth .20 3 .60
Price .15 3 .45
Industry Potential .15 4 .60
Competition .20 4 .80
Totals 1.0 3.85

Cost Cutter:

The Cost Cutter market is large but has little opportunity for growth. The prices
consumers are willing to pay are a major concern among consumers. Consumers in this
segment want a low price, an easy to use product and reliable service, products, and
personnel. Because competition is so heavy here, it would be difficult to maintain market
share, as consumers aren’t very loyal.

Workhorse:

Consumers in the Workhorse market consist of the largest segment and desire an
organization that has reliable products and service. These consumers want their products
to have great productivity software and networking capabilities. Research and
development can be key in this market to develop products that will be the best. There is
major opportunity for growth here since the market is so large in many cities and in many
regional markets.

Innovator:

Technology is important to the Innovator. Innovators need quick processing units with
speedy networking. These consumers want a reliable and secure machine. Although this
is one of the smaller markets, consumers are willing to pay for a quality product that will
give them an advantage over other users. R and D can be useful here in developing new
technologies that will increase the speed and performance of their products

Traveler:

44
 

Like the Innovator, the Traveler is a small but specifically targeted segment that knows
exactly what it wants in a computer. The Traveler needs a compact, reliable processing
unit with wireless capabilities. Ability to reach the Travelers is based upon a good
advertising and promotion program that reaches their needs. Although the market is
small, it is a competitive one.

Mercedes:

Mercedes consumers are the cream of the crop when it comes to laptop users. These
consumers want a product that will give them the best machine with little concern about
the price. A fast, reliable unit with ample storage space, CAD graphics and applications,
and a reliable network and internet are the factors that attract Mercedes consumers.
These consumers generally start as Innovators and progress into Mercedes users.

After carefully assessing the market attractiveness and business positioning factors, we at
InnoVision have chosen to target the Workhorse and Traveler Segments. Combined with
a strong Advertising and promotion campaign, good facility location choices in Europe
and China, and a reliable company image, the large size, potential to grow into many
different markets, and the challenge of the competitive structure make the Workhorse a
great fit for our organization. A key focus of attracting this target will be producing
reliable products and have extensive customer service, both of which we developed in our
test market segments.

Although a smaller market, the Traveler segment is very well defined. InnoVision can
help travelers by providing quality products in smaller Asian markets and major
European cities. By attacking the Traveler segment with a strong advertising and
promotion plan, gaining early market share, and creating an image of being a well known
service wherever the traveler goes, we will successfully target this segment.

ASSESSING THE BUSINESS POSITION

Cost Cutter:
Business Position Factors (E) Criteria Weighted H= F*G
Weight (F) Rating (G) Score
Market share .20 3 .60
Advertising and promotion .20 3 .60
Facilities location and .15 3 .45
newness
Sales distribution .15 4 .60
effectiveness
Relative product quality .20 4 .80
R and D adgantages/position .10 3 .30
General image .10 5 .50
Totals 1.0 3.85

Innovator:

45
 
Business Position Factors (E) Criteria Weighted H= F*G
Weight (F) Rating (G) Score
Market share .10 5 .50
Advertising and promotion .10 3 .30
Facilities location and .05 3 .15
newness
Sales distribution .15 5 .75
effectiveness
Relative product quality .20 4 .80
R and D adgantages/position .20 4 .40
General image .20 5 1.0
Totals 1.0 3.90

Workhorse:
Business Position Factors (E) Criteria Weighted H= F*G
Weight (F) Rating (G) Score
Market share .10 5 .50
Advertising and promotion .15 5 .75
Facilities location and .10 5 .50
newness
Sales distribution .20 5 1.0
effectiveness
Relative product quality .25 4 1.0
R and D advantages/position .10 4 .40
General image .10 5 .50
Totals 1.0 4.65

Traveler:
Business Position Factors (E) Criteria Weighted H= F*G
Weight (F) Rating (G) Score
Market share .10 5 .5
Advertising and promotion .20 5 1.0
Facilities location and .15 5 .75
newness
Sales distribution .15 5 .75
effectiveness
Relative product quality .20 4 .80
R and D adgantages/position .10 4 .40
General image .10 5 .50
Totals 1.0 4.70

Mercedes:
Business Position Factors (E) Criteria Weighted H= F*G
Weight (F) Rating (G) Score
Market share .10 4 .4
Advertising and promotion .05 5 .25
Facilities location and .05 5 .25
newness
Sales distribution .15 5 .75
effectiveness
Relative product quality .25 4 1.0
R and D adgantages/position .20 4 .80
General image .20 5 1.0
Totals 1.0 4.45

After choosing the Workhorse and Traveler segments, we will position InnoVision in the
European and Chinese markets. First, we decided to place our main distribution facility
in the Tianjin, China. This location provides us with the low-cost production and
shipping to all regions of the world, thus creating an opportunity for growth without
major cost concerns. When placing our central distribution facility in China, we decided

46
 
to go after the Chinese region for two reasons. First, we felt that the competitive
landscape may not be as high because of the smaller markets. It was our goal to be the
market leader in China by having great customer service and quality, reliable products at
a good price. Secondly, there possibility for gaining market share in both segments is
high. By having solid advertising and promotion programs, a reliable and consumer-
oriented staff and presenting a good corporate image to the Chinese people, we will be
the market leader in China. We will begin by having an office in Shanghai, expand into
Guangzhou, and eventually open a sales office in Tianjin.

Europe was chosen for its high quantities of demand in both the Workhorse and Traveler
segments. Using London as the hub of our European operations is the best choice for
InnoVision as it provides us with a unique opportunity to face intense competition.
Quality, reliable products and great customer service will again be key advantages that
InnoVision has. A majority of our sales people in each office that we maintain will be
specialized in customer service, with at least one-third of the staff also specializing in
Workhorse or Traveler products. After success in London, we will continue onto Berlin,
where we will attack competitors on their home ground.

MARKET ATTRACTIVENESS

47
 

COMPETITOR SELECTION/POSITIONING
Goal: to determine who and where our competitors are

When selecting competitors, we can assume that the organization that provides
significant product attributes in the most attractive combinations to consumers will be the
product that is chosen over all others. We began this process by identifying each of our
competing organizations and their market offerings.

Our immediate industry competition is MiComp and Drev Tech. Similar to InnoVision,
MiComp chose to take advantage of the small but profitable market in China, attacking
the Workhorse segment. Their products, the SpeediComp, EliteComp, and LuxComp,
serve the basic needs of the Workhorse market by employing high capacity hard drives
and easy to use systems. Their prices are suitable for nearly all segments, and have
similar regional and local ad placements. Currently, they have a grasp on the Workhorse
market share, with InnoVision not far behind. MiComp’s sales offices are located in
Beijing, leaving Shanghai and Guangzhou open for InnoVision to penetrate. The
European market is more saturated with DrevTech, competing with InnoVision in
London. DrevTech directly affects our sales in the London, especially in the Traveler
segment. They currently have a slightly higher market share yet have a similar product
with less antivirus protection. However, with similar sales distributions, we plan on
increasing our sales force to focus more on customer service in London. Consequently,
JovieTech is focused in Berlin, rather than London. At the end of year 1, JovieTech
occupied 6% of the Workhorse market and was obsolete in the Traveler segment.

With no current secondary competition in China, our European segment is affected by


JovieTech and InTouch. Both companies target the Berlin market with JovieTech
infiltrating both the Workhorse and Traveler segments. JovieTech creates similar
products with less computer security. Neither organization values advertising like at
InnoVision and have unacceptable pricing given their products.

There are a number of key attributes that define InnoVision’s offerings:

Core Values Tangibles Intangibles


Customer Service Speed Reputation
Consumer Needs Price Image
Superior management Upgradeability Service
Innovation Features Quality

We have chosen to enter one of the most competitive segments, the Workhorse. Due to
large potential demand, the Workhorse is a segment where many companies will have
similar product attributes. In order to succeed, we must position ourselves as a leader
among all attributes and have a differentiating factor. At InnoVision, we pride ourselves
on four things: enhanced customer service, greater ability to meet consumer needs,
superior management, and innovation.

48
 
Enhanced customer service is something we have worked on since day one and will
continue to do so. In each sales location, our sales staff has at least half of the staff
focused solely on serving the needs of the consumer. We will continue to uphold this and
continue to train our staff in the upcoming quarters. Meeting the consumer needs has
also been a major point of difference at InnoVision. By purchasing market research each
quarter, our analysts are able to spot trends before they occur, giving us the advantage of
implementing those trends into our attributes. InnoVision has superior management that
is committed to the success of the organization and the consumer. Finally, innovation is
achieved through a creative staff and heavy investment in Research and Development. In
the next year, we plan to invest over $5,000,000 in improving our wireless capabilities,
office suite settings, and longer battery life. The goal of this research is to make the life
of the consumer easier.

Overall, InnoVision has a competitive advantage because its core values are reflected in
the reputation it upholds and the high-quality products it produces.

*See Appendix A for SCA attribution graphs

49
 

Value Propositions/Strategic Intents


InnoVision strives for four main value propositions: developing a superior product,
creating value for customers, competing globally, and balancing return to shareholders
and stakeholders.

1. Developing a superior product

InnoVision believes that the key to achieving success in the face of competition is the
development of a superior product. We use the knowledge we gain from reviewing
market research and consumer data to tailor our products to best fit the needs and wants
of our consumers. InnoVision knows that if we have the superior product, they will be the
market leaders, so they constantly strive to have as high quality of product given the
constraints at the time.

2. Creating Value for Customers

Caring for customers is central to InnoVision’s mission and purpose. They recognize that
if the customers are not satisfied with the products, their computers will not sell. It is
important to stay informed of what customers are demanding so that they can accurately
develop their products.

3. Competing Globally

InnoVision is dedicated to selling its computers globally. They have already gained a
large share of the market in China, but in the later quarters, InnoVision plans to expand
into several European markets to attract new customers and to attack the competition.

4. Balancing returns to shareholders and stakeholders

One common challenge for any business is to balance the concern for stakeholders, such
as employees and customers, with the concerns of the shareholders, who want the
company to perform well in respect to their finances. InnoVision firmly believes that if
we look out for our stakeholders and create products that our customers will value, the
finances will take care of themselves.

50
 

 
 
 
 
 
 
 

Marketing Strategy
 

51
 

Product
At InnoVision, we are committed to producing high quality products that improve
the lives of our customers. Our product strategy to create a high end product will help us
meet and surpass our customers’ wants and needs which will help us achieve our
company goals of building a market share and defending it. Our company will also cater
to our customers wants and needs by providing superior customer service. These
strategies will allow InnoVision to create profitable brands that are a step above our
competitors.

Goals and Objectives

• Be the market leader in our target segments (Traveler and Work Horse)
• Be the highest service provider in the market
• Obtain highest brand judgments and ad designs
• Achieve and maintain low distribution costs
• Improve the HGH 13 and the Voyager
• Introduce new brands, Voyager Quest and HGH eXtreme
• Invest in research and development and marketing research

Strategy

Innovative research, streamlined distribution, and superior management will allow


us to create a high quality product that matches and exceeds our customers’ wants and
needs. Our innovative products will allow us to provide a superior product to our
customers that will guarantee InnoVision long term success. We will build a market
share in the target segments of Traveler, and Work Horse. Initially, Traveler was our first
priority, but due to the higher demand for our work horse product we have changed our
strategy to make the work horse our first priority. Our standards for excellence and
quality for our customers will allow us to continue to lead market share and brand
judgments among our competitors.

Tactical Decisions

Quarter 1:
• Established team norms, decision making process, and responsibilities

Quarter 2:
• Decided initial business strategy
• Started building a factory
• Used marketing research to create new brands, HGH 13 and Voyager
Cost to design new brands = $120,000

52
 

The Voyager HGH 13


Base components X X
Standard desktop design X
Rugged portable design X
Compact disk (CD) read/write drive X
Digital video disk (DVD) read/write drive X
Standard hard drive X
High capacity hard driv X
Office software-word, spreadsheets X X
Business graphics software X X
Presentation software X X
Database software X
Bookkeeping, budgeting software X
19" high resolution monitor for desktop X
13" monitor for portable X
Mid-range computing power/speed X X
Expanded keyboard with hot keys X X
Expansion slots for adding new devices X
Antivirus software X X
Standard network/Internet connection X X
Standard battery for portable X
Windows for professionals X
Windows for professionals with high security
X
protection

As a part of our strategy we decided that our target segments will be the traveler,
and the work horse. We created two new brands, The Voyager for the traveler, and HGH
13 for the work horse with the components listed above. Based on the marketing
research and customers’ wants and needs we feel these two products will meet and
exceed customer expectations.

Quarter 3:
• Initiated test marketing
• Started advertising for HGH 13 and the Voyager in Europe and China to prepare
for the sale of our new products
• Started production of two new brands, the HGH 13 and the Voyager

Quarter 4:
• Results from quarter 3 showed InnoVision had the highest market share for the
work horse segment (40%) and had the lowest market share for the traveler
segment (21%). However, we had the highest overall market share (27%) among

53
 
our competitors. Besides our results in the traveler segment, the rest was
consistent with our intentions to be the leader in our target segment and take over
the market share.

54
 
• Purchased marketing research to help us stay competitive
Marketing research costs = $40,000
• We had to take out an emergency loan in quarter three due to over production so
we did not have sufficient funds to modify any of our brands this quarter

Quarter 5:
• At the end of quarter 4, we had the second highest market share for the work
horse (31%) and the third highest market share for the traveler (21%). Our total
market share fell to 21% making us the third highest market share. We continued
to be successful in the work horse market share which followed our strategy to
dominate our target segments. We saw improvement in the traveler market share
which brings us closer to our goal of leading the traveler market share. We did
stray from our goal to be the lead market share holder but since our finances have
improved this quarter we will be able modify our brands and reclaim our
competitive edge.
• Created a new product, the HGH eXtreme to be more competitive in the work
horse segment (See chart below). We decided The voyager and HGH 13
continued to be acceptable for their target segments so we decided not to make
any modifications to them

HGH eXtreme
Base components X
Standard desktop design X
Digital video disk (DVD) read/write drive X
Very high capacity hard drive X
Office software-word, spreadsheets X
Business graphics software X
Presentation software X
Database software X
Bookkeeping, budgeting software X
Web design software X
Statistical analysis software X
Engineering design software X
Manufacturing control software X
21" high resolution monitor for desktop X
High performance power/speed X
Standard keyboard X
Antivirus software X
Standard network/Internet connection X
Windows for professionals with high security
X
protection

55
 
• Invested in research and development to stay competitive and prepare for
modifications to our products next quarter
Total R&D Expenses = $3,979,597
• Opened a new sales office in Berlin to capitalize on the high demand in Europe
and attack our competitors
• Modified ads and created a new ad for the HGH eXtreme
Cost to design new brand = $60,000
• Marketing Research costs = $40,000

R&D Projections for Quarter 5- Quarter 8

Quarter 5 Quarter 6 Quarter 7 Quarter 8

Office software-word,
spreadsheets - new
Brand Feature No
release; High speed long life battery No investments
R&D Projects investments
wireless network/Internet
connection;

Brand Feature
3,919,597 1,279,156 0 0
R&D Expense

In quarter 5, we invested in the office software upgrade and high speed wireless
connection. We will re-design and upgrade the HGH 13 by adding the office upgrade
while still continuing to sell the HGH eXtreme at the same time in quarter 6. We will
also discontinue the Voyager and introduce a new product brand named, the Voyager
Quest. This product will be an up-dated version of the Voyager with the office upgrade.
We added this feature to both our brands because both the traveler and the work horse use
their computer for many business functions. The high speed wireless connection will
also be added to both products and will help increase customer satisfaction. It will be
especially helpful in the traveler segment because of the need to connect out of the office.
These modifications fit our strategy to provide high quality products at InnoVision.

Quarter 6:
Innovision will implement a long life battery in all three of our computers: the
Voyager Quest, HGH 13, and HGH eXtreme, to help increase reliability which is a top
customer need in both our target segments. All three brands will be sold with this new
feature in quarter 7. Adding this component will help us achieve our company goal of
taking and leading market share. We feel this upgrade will help make our product
superior and differentiate us from our competitors. Our projected costs for quarter 6 will
be $60,000 for the creation of a new brand, and $1,279,156 for research and
development.

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Quarter 7 & 8:
At this point in time, we will not be investing in any research and development in
quarters 7 and 8 because we feel we will have created strong enough products to be
successful against our competitors. However, we will be introducing two new products
in quarter 8, The Navigator and the HGH Olympian, to sell along with our other existing
brands. Our projected costs for quarter 8 will be $120,000 for the creation of two new
brands.

Although research and development costs are expensive we, at InnoVision, realize
innovation and research are an important part of creating a product that customers want
and need. The money spent on research and development is an investment for a better
product in the future. Improving our products will generate more demand in our target
segments and help us attain more market shares. This means more revenue and return for
our company, its shareholders, and investors.

57
 

Promotion
The promotion strategy at InnoVision has been to aggressively attack our target
segments through local and regional media. InnoVision is a company that understanding
who our target customers are – in terms of media preference and buying style – which
allows us to create effective ads that generate brand recognition and promote the high
quality and service of our product. Advertising is a way of investing in our product
because it will help generate future demand and brand loyalty. Our promotion strategy
will help promote the reliability of our company and create a positive image among our
customers.
 
Goals and Objectives

• Design effective ads that communicate the reliability, quality, and excellent
customer support of our products
• Increase brand awareness through our promotion strategy
• Achieve top ratings and brand judgments in our target segments (Work Horse and
Traveler) each quarter
• Create ads that address the specific wants and needs of our target segments
• Increase ad placement as we open more sales offices in each country
• Receive top brand judgments to differentiate us from our competitors

Strategy

Our initial advertising strategy in quarter 2 at InnoVision was to focus on local


advertising in Europe and implement both local and regional advertising in China. We
decided to promote regional ad placements in China because of the larger population and
also because we initially decided to place our focus on China and become a market leader
there. At first, we decided not to use regional advertising in Europe because we were
only attacking London, and it is also more costly to advertise in Europe than China. We
felt it would have been difficult to achieve our goals without investing a lot of money into
Europe which was not our focus. However, as we saw demand for our product in Europe
increase each quarter, we decided to switch our focus and implemented regional
advertising in Europe to stay competitive.

Tactical Decisions

Overall Media Plan and Budget:


Quarter 3 Quarter 4 Quarter 5 Quarter 6 Quarter 7 Quarter 8

Media Plan (%
local/% 45% / 55% 39% / 61% 74% / 26% 60%/40% 50%/50% 30%/70%
regional)

Advertising
202,856 172,536 213,078 266,350 270,000 300,000
Budget

58
 

Quarter 3:
• Created new advertisements for our products, HGH 13 and the Voyager

Workhorse Q3 Traveller Q3
[HGH 13] [The Voyager]
Mention brand name 3 3
Do a wide variety of tasks 2
Local sales/service 4 4
Word processing
2
applications
Easy to use, simple design 1
Small footprint/size 1

• Implemented local ad placements

Europe
Number of times ad should run in market
City Cost Workhorse Q3 Traveller Q3
London 7,000 4 2

China
Number of times ad should run in market
City Cost Workhorse Q3 Traveller Q3
Shanghai 6,000 2 3

Total Expenses = $64,760

• Implemented regional ad placements in China only

China
Number of times ad should run in market
Media Cost Workhorse Q3 Traveller Q3
Business Newspapers 9,000 0 0
General Business Magazine 6,800 3 0
Computer Magazines 2,300 0 0
General News Magazines 3,800 0 0
Leading Trade Journals 3,200 1 3

59
 

New Venture Magazines 4,000 0 0


Sports Magazines 10,500 3 2
Executive Business Magaz 13,000 0 0
Science & Technology Mag 6,000 0 0
Daily Newspaper 3,900 0 0
Leisure & Entertain Mag 7,000 0 0

Total Expenses = $77,896

Quarter 4:
• Ad judgments from quarter 3 showed both our ads were below the satisfaction
rating of 70 for consumers so we re-designed both our ads to be more appealing to
our customers.

Workhorse Q4 [modified] Traveller Q3 [modified]


[HGH 13] [The Voyager]
Mention brand name 1 1
Manufacturer`s rebate 2 2
Do a wide variety of tasks 7
Local sales/service 6 6
Bookkeeping/budgeting applications 4
Presentation applications 5
Easy to use, simple design 5
Small footprint/size 4
Link PC to local network/internet 3 3
Picture business professionals 7

• Local ad placements in Europe only

Europe
Number of times ad should run in market
City Cost Workhorse Q4 Traveller Q3
London 7,000 4 3

Total Expenses = $43,190

60
 
• Regional ad placement in China only

China
Number of times ad should run in market
Media Cost Workhorse Q4 Traveller Q3
Business Newspapers 9,000 2 0
General Business Magazine 6,800 3 0
Computer Magazines 2,300 0 0
General News Magazines 3,800 0 0
Leading Trade Journals 3,200 3 4
New Venture Magazines 4,000 0 4
Sports Magazines 10,500 0 0
Executive Business Magaz 13,000 0 0
Science & Technology Mag 6,000 0 0
Daily Newspaper 3,900 0 0
Leisure & Entertain Mag 7,000 0 0

Total Expenses = $68,746

Quarter 5:

• The ad judgment results from quarter 4 showed that we were the top ad judgments
for our target segments which follows our goal to have high brand judgments and
awareness
• We modified our ad for the Voyager and created a new ad for our new product,
HGH eXtreme

Traveller Q3 [modified] ROIDS Q5 [new]


[The Voyager] [HGH eXtreme]
Mention brand name 1 1
High speed/execution time 5
Do a wide variety of tasks 7
Most powerful processor on market 3
Local sales/service 2 6
Presentation applications 6
Small footprint/size 5
Link PC to local network/internet 4 2
Picture business professionals 4
Picture people in travel setting 3

61
 
• Local ad placement

Europe
Number of times ad should run in market
City Cost Workhorse Q4 Traveller Q3 ROIDS Q5
London 7,000 2 3 4

China
Number of times ad should run in market
City Cost Workhorse Q4 Traveller Q3 ROIDS Q5
Shanghai 6,000 2 3 3
Guangzhou 3,000 2 3 3

Total Expenses = $ 121,428

• Regional ad placement in China only

China
Number of times ad should run in market
Media Cost Workhorse Q4 Traveller Q3 ROIDS Q5
Business Newspapers 9,000 0 0 1
General Business Magazine 6,800 1 0 2
Computer Magazines 2,300 0 0 0
General News Magazines 3,800 0 0 0
Leading Trade Journals 3,200 0 2 1
New Venture Magazines 4,000 0 1 0
Sports Magazines 10,500 0 0 0
Executive Business Magaz 13,000 0 0 0
Science & Technology Mag 6,000 0 0 0
Daily Newspaper 3,900 0 0 0
Leisure & Entertain Mag 7,000 0 0 0

Total Expenses = $ 41,660

Quarter 6:
• Local ad placement 60%
• Regional ad placement 40%

62
 
• We will increase local ad placement quarter 6 because we will be opening two
new sales offices. We want our new customers to become familiar with our brand
name and product. It is also more cost effective for us to focus on local ad
placement this quarter. However, we want to maintain regional advertising
because we plan on expanding in the future.

Quarter 7:
• Local ad placement 50%
• Regional ad placement 50%
• We will have three established sales offices in both Europe and China so half of
our promotion will be regional placement. The other half will be local placement
because we are opening a new sales office in China and we want to continue to
build brand awareness in our newer sales offices.

Quarter 8:
• Local ad placement 30%
• Regional ad placement 70%
• We will focus mostly on regional ad placement during our last quarter because we
will have four established sales offices in both countries. Our customers will
know and trust our brands.

63
 

Place
At InnoVision our mission is to saturate our target countries with sales offices in order to
optimize our sales opportunities within each country. Our strategy will be consistent with
our overall company goals to be the market share leader, have superior management, and
low distribution costs. We will be aggressive in markets with low competition and also
attack our competitors in their homes. We will also be focusing on areas with high
demand for our target segments. We will target China and Europe and we plan to
dominate both countries with our high quality and reliable products.

Goals and Objectives

• Expand into cities with high demand in our target segments


• Have largest market share in cities with less competition
• Focus on large geographic markets
• Focus on geographic markets that minimize distribution costs
• Attack competition on their home ground
• Have sales offices in every city in Europe and China by quarter 8
• Be able to claim “international sales support” in quarter 8

Strategy

Intially, our strategy was to attack one competitive market and attack one uncompetitive
market. We decided to make China our focus because it has a fairly high demand but is a
smaller market. This means, compared to other cities, it was the lowest in cost per unit.
The traveler is the target segment we decided to focus on in China, starting in Shanghi
and then adding other cities. We also assumed not as many people would attack China,
which turned out to be correct. In Europe we chose to target London due to the high
demand for work horse, our other target segment. We thought London would be very
competitive, but there was only one other company competing with us in quarter 5. We
avoided the United States because we assumed it would be a popular choice to attack
among our competitors. Our theory proved to be true with four companies competing in
New York in quarter 5. We changed our strategy for the future to focus more on Europe.
Initially we were going to try to expand in China first, then Europe. However, the lower
demand in China proved to be less profitable than the European market.

64
 

Tactical Decisions

Overall Sales Offices for China and Europe:

China
City Setup/Close Cost Quarterly Lease Cost
Quarter 2 Shanghai 110,000 40,000
Quarter 3 Guangzhou 80,000 31,000
Quarter 6 Beijing 90,000 40,000
Quarter 7 Tianjin 70,000 30,000

Europe
City Setup/Close Cost Quarterly Lease Cost
Quarter 2 London 140,000 75,000
Quarter 5 Berlin 120,000 58,000
Quarter 6 Paris 110,000 70,000
Quarter 8 Rome 110,000 65,000

Quarter 2:
• Opened sales offices in London and Shanghi. We chose London due to the high
demand for our target segment, the work horse. We chose Shanghi because our
company goal was to focus on China and it had the highest demand for the
traveler.
• Our initial strategy was to dominate the market share in China and another part of
our strategy was to have low distribution costs. We built a factory in Tainjin to
help achieve both of these goals.

Quarter 3:
• Opened sales office in Guangzhou to continue our company goal of being the
market leader in China. It also had lower setup costs than Beijing and had the
highest demand in China for the traveler besides Shanghi. This means we
continued to achieve our goals of taking market share and having low distribution
costs.

65
 
Quarter 4:
• We were not financially able to open any new sales offices this quarter due to the
emergency loan we had to take out in quarter 3. However, we thought this would
be an opportunity to strengthen our brand positions and prepare for expansion in
quarter 5.

Quarter 5:
• Opened sales office in Berlin because as a part of our strategy we want to attack
our competitors on their home ground. We changed our strategy this quarter to
focus more on the work horse segment in Europe because there is higher demand
for our product than in China. Berlin has the second highest demand for the work
horse segment in Europe. It also had the lowest quarterly lease cost.

Quarter 6:
• We plan to open another sales office in Paris to continue InnoVision’s expansion
into Europe. Paris is also one of the top ten cities for demand in the work horse
and traveler segment, both of which we produce.
• To increase our market share in China we will be opening a sales office in
Beijing. It also keeps our costs lower to set up offices in China since our factory
is located there.

Quarter 7:
• We will open a sales office in Tianjin. This will mean we have completed our
goal to have a sales office in every city in China and maximized our opportunity
there. It also continues to be the most cost effective to open sales offices in China
because of the low distribution costs.

Quarter 8:
• A sales office in Rome will be opened thus achieving our company goal of having
a sales office in every city in both China and Europe. This will allow us to claim
“international sales support” which is valued among our customers and will
separate us from our competitors. This claim also helps support our company
goal to have superior customer service for our products. Rome also has a high
demand for both the work horse and traveler segments which we will be able to
capitalize on.

66
 

Price
InnoVision strives to continually offer products that are perceived valuable to the
customers in our target market. As such, our product prices have historically reflected the
perceived relative value of our products from our customers, and we will continue to
maintain this strategy. However, within each segment and geographic location, price
preferences are continuously changing and therefore our pricing strategies and tactics
must remain dynamic from quarter to quarter. Price sensitivity must be continuously
monitored

Goals and Objectives

• Have acceptable pricing allowing sales people to do their jobs to the best of their
ability.
• Build market share with competitive pricing.
• Maintain product margins through effective pricing strategies.
• Improve pricing to achieve and maintain ratings in the 90s for targeted segments
(Traveler, Work Horse).

Strategy

• Take into account the “price willing to pay” as well as similar competitor product
pricing in order to set prices competitively.
• Continue factoring Cost of Production into pricing decisions.
• Gain higher margins in each subsequent quarter through higher production rates.
• Keep price changes smooth to ensure customers are not surprised. Customers
expect consistency and do not like drastic changes.

Tactical Decisions

Quarter 3:

The Voyager: $2574


HGH 13: $2599

Quarter 4:

The Voyager: $2749


HGH 13: $2650

Quarter 5:

The Voyager: $2749


HGH 13: $2650

67
 

Quarter 6:

The Voyager Quest: $2900


HGH 13: $2499
HGH Extreme: $2850

Quarter 7:

The Voyager Quest $2900


HGH 13: $2499
HGH Extreme: $2850

Quarter 8:

The Navigator: $3000


HGH Olympian $2829
The Voyager Quest $2900
HGH 13: $2499
HGH Extreme: $2850

Average Prices and Judgments At A Glance:

BRAND Q3 Q4 Q5 Q6 Q7 Q8

The Voyager $3,049 $3,049 $3,049 X X X


(Traveler)

100/100 100/100 TBA X X X

HGH 13 $2,999 $2,949 $2,949 $2499 $2499 $2499


(Work
Horse)
90/100 92/100 TBA TBA TBA TBA

HGH X X X $2850 $2850 $2850


Extreme
(Work
Horse) X X X TBA TBA TBA

The Voyager X X X $2900 $2900 $2900


Quest
(Traveler)
X X X TBA TBA TBA

68
 
The X X X X X $3000
Navigator
(Traveler)
X X X X X TBA

HGH X X X X X $2829
Olympian
(Work
Horse) X X X X X TBA

HGH X X X $2850 $2850 $2850


Extreme
(Work
Horse) X X X TBA TBA TBA

• Prices reflect price after rebate.

As you can see from the above table, so far the ratings for our products in the Work
Horse and Traveler segments have been extremely high, showing that our pricing has
been well liked by our customers. However, in many segments, the ratings have been
100, indicating that our product might be priced too low. As such, the new products that
we will be launching in subsequent quarters will have higher pricing levels.

69
 

People
At InnoVision, it is our mission to improve the lives of our customers through our
products. We are committed to being a high service provider in the market and building a
positive and strong relationship with our consumer. Market Research has shown the
importance of customer service to each of our target markets. Our sales and service force
are the face of InnoVision to our customers, and are thus one of the leading assets of the
company. Thus, our people strategy will focus on hiring and retaining the best employees
and training them so they can provide the best possible service to our customers.

Goals and Objectives

• Satisfy the needs of those externally linked with InnoVision (customers) and
those internally linked with InnoVision (employees).
• Provide top quality customer service, that improves the experience of the
customer and provides them with a level that they desire.
• Maintain a strong, affirmative relationship with all of the company’s stakeholders.
• Hire and maintain enough sales people to remain competitive without over
saturating any of the sales offices.
• Increase the level of demand expected of the sales people over time. This I critical
to maintaining efficient sales numbers.
• Appropriately train sales force in the correct target market specialties.

Strategy

• Open sales offices in Europe and China in order to meet the customer needs and
wants in our target locations.
• Increase customer service and sales force when logically possible in order to
maintain a top quality experience for the customer.
• Allocate sales force to targeted segments (workhorse and traveler) with primary
goal being workhorse. Also allocate to customer service to provide consumer with
pleasant experience when having problems with brand.
• Examine and respond to customer satisfaction and loyalty.
• Examine and respond to regional sales per salesperson; as the market matures
expect an increase in sales demand and challenge the salespeople with these
increased goals.

Tactical decisions

Quarter 3
• London- 4 Sales People
• Shanghai- 5 Sales People

70
 
Quarter 4
• London- 4 Sales People
• Shanghai- 5 Sales People
• Guangzhou- 3 Sales People

Quarter 5
• London- 5 Sales People
• Shanghai- 6 Sales People
• Guangzhou- 3 Sales People

Future Plans

Quarter 6
• London-5 sales people
• Shanghai- 6 sales people
• Guangzhou- 3 sales people
• Berlin- 3 sales people

Quarter 7
• London-5 sales people
• Shanghai- 6 sales people
• Guangzhou- 3 sales people
• Berlin- 3 sales people
• Beijing- 2 sales people
• Paris- 5 sales people

Quarter 8
• London-6 sales people
• Shanghai- 6 sales people
• Guangzhou- 3 sales people
• Berlin- 3 sales people
• Beijing- 3 sales people
• Paris- 5 sales people
• Tianjin- 2 sales people

71
 

 
 
 
 
 
 
 

Other Strategies
 

72
 

Production
Production is an essential segment of the business because it determines the timing and
size of production investments. Production is important because an efficient strategy that
utilizes capacity investments and continuous improvements lowers costs, thus creating a
larger margin of profit for the company.

Goals and Objectives

• Avoid stock outs and ill-will.


• Avoid excessive ending inventory (Don’t have more than 100 in ending inventory
per quarter).
• Produce to at least 90% of specified capacity by quarter 8.
• Keep production costs as low as possible.

Strategy

• Locate factory in China to achieve lowest production costs.


• Increase capacity.
• look at previous demand, projected demand of new areas to make best estimate of
how much to produce
• decrease production costs each quarter (by selling larger volumes!)

Tactical Decisions

Quarter 2:

• Opened plant in China.


o After examining production and per-unit cost, China provides the most
cost efficient option for shipping in the United States, Europe, Canada and
China itself. By building a plant in China, we can produce products
cheaply and minimize our shipping costs.
• Invested in a capacity of 50 units per day
o We chose this capacity level because of the large potential demand we
have due to the large target market. However, we did not invest in more
because we needed to stay within budget.

Quarter 3:

• Increased capacity by 25 units per day


o Slowly want to gain more capacity so we don’t get stuck with a capacity
level below demand in later quarters.

73
 

Production Schedule
Starting # of Units to be # of Units to be Produced # of Units Available for
Brand
Inventory Produced Each Day this Quarter (65 Days) Sale in this Quarter
The Voyager 0 9 585 585
HGH 13 0 13 845 845
Total 0 22 1,430 1,430

Quarter 4:

• We ended up over-producing in quarter 3, so we decided that it would be best to


sell of the old inventory instead of producing more in order to lower the high
inventory costs that we were accruing. Also, we want to sell as much of this old
inventory as possible in order to avoid salvaging remaining inventory at a later
date.
• Due to major budget constraints and greatly unused current capacity, we did not
increase capacity in this quarter.

Production Schedule
Number of Units to Number of Units to be Number of Units
Starting
Brand be Produced Each Produced this Quarter Available for Sale in
Inventory
Day (65 Days) this Quarter
The
359 0 0 359
Voyager
HGH 13 467 0 0 467
Total 826 0 0 826

Quarter 5:

• No increase to capacity.
• Sold off/salvaged old inventory, so our production cycle was re-introduced.

Production Schedule
Starting # of Units to be # of Units to be Produced this # of Units Available for
Brand
Inventory Produced Each Day Quarter (65 Days) Sale in this Quarter
The Voyager 110 3 195 305
HGH 13 0 3 195 195
HGH eXtreme 0 7 455 455
Total 110 13 845 955

74
 

Quarter 6:

• Increase to capacity of 25 units per day


• Planned production of 1,000 units

Quarter 7:

• Increase to capacity of 50 units per day


• Planned production of 1,500 units

Quarter 8:
• Planned production of 2,000 units

75
 

Finance
Overall financial results for Quarter 1 – Quarter 4
Cumulative industry results for last four quarters ending in quarter: 4
Minimum Maximum Average InnoVision
Total Overall 0.00 0.00 0.00 0.00
Financial Performance -17.55 -0.10 -9.32 -1.25
Market Performance 0.04 0.45 0.22 0.29
Marketing Effectiveness 0.48 0.72 0.63 0.67
Investment in Future 1.00 2.78 1.65 1.38
Wealth 0.50 0.86 0.70 0.85
Asset Management 0.01 0.34 0.21 0.34

The cumulative industry results illustrate that InnoVision has built a solid foundation in
its first year. Competitive in each area of performance, InnoVision is the leader in Asset
Management and a close second in Wealth and Financial performance. Although we had
a successful first year, we have a set of strategic and tactical goals and objectives that we
are striving to achieve to maintain and build upon our success. Included in the appendix
is a table that includes the financial formulas used to determine the ratios we hope to
achieve.

Goals and Objectives

• Be a market leader in investment opportunities


• Create a strong return on investment for stockholders
• Always retain a positive cash balance to avoid the need for emergency loans
• Invest for the future

Strategy

• To be a market leader in each of the financial ratios we must:


o Increase financial performance to 3.0 or higher
o Add wealth through channels such as R& D
o Continue investing for the future
o Manage inventory well
• Price competitively in order to maintain good or excellent consumer price
judgments.
• Spend wisely but aggressively with Research and Development and market
research
• Invest funds into certificate of deposit in early quarters
• Analyze and improve upon weaknesses from previous quarters

76
 

Tactical Decisions

Quarter 5:

• Invest up to $4,000,000 in Research and Development. Continue investing at


least $40,000 in market research.
• Increase financial performance ratio to 1.5 by retaining a cash balance over
$300,000 and taking out bank loan.
• Increase asset ratio to at least 0.5 by analyzing the demand of the previous
quarter and assessing production needs.

Quarter 6:

• Invest up to $2,000,000 in Research and Development. Continue investing at


least $40,000 in market research.
• Increase financial performance ratio to 1.5 by retaining a cash balance over
$300,000.
• Increase asset ratio by at least 0.5 analyzing the demand of the previous
quarter and assessing production needs. Avoid overproduction.
• Decrease percentage of spending on local advertisement and increase
percentage of regional advertisements (60%/40%)

Quarter 7:

• Continue investing at least $40,000 in market research.


• Increase financial performance ratio to 2.5 by spending only where necessary
and taking out bank loan.
• Increase asset ratio by at least 0.5
• Increase asset ratio by at least 0.75 analyzing the demand of the previous
quarter and assessing production needs. Avoid overproduction.
• Decrease percentage of spending on local advertisement and increase
percentage of regional advertisements (50%/50%)

Quarter 8:

• Continue investing at least $40,000 in market research.


• Increase financial performance ratio to 3.0 by repaying conventional bank
loans and retaining positive cash balance.
• Increase asset ratio by at least 0.75 analyzing the demand of the previous
quarter and assessing production needs. Avoid overproduction.
• Increase percentage of spending on local advertisement and decrease
percentage of regional advertisements (30%/70%)
• Look to repay conventional bank loan in Quarter 9.

77
 

 
 
 
 
 
 
 

Appendix A
 

78
 

APPENDIX A
SUPPORTING ANALYSIS AND DOCUMENTATION

Over all Customer Needs and Wants (for all quarters)


Customer Needs And Wants

.
CostCutter Innovators Mercedes Work Horse Traveler
Recommended by others 112 117 118 104 117
Available in all local markets 102 91 108 112 104
Computer aided design (CAD)graphics 41 105 130 91 61
Business graphics capabilities 79 104 92 123 113
Analysis of statistical data 86 128 112 82 73
Able to work on graphical details 84 104 128 92 80
Must be fast, handle large problems 76 124 126 96 86
Multi-purpose work station 98 78 95 111 88
Can handle large scale tech. prob. 58 108 123 102 99
Fast, reliable dedicated connection 101 126 130 105 96
Need to program special functions 96 114 128 111 101
Fast processing and output 78 118 122 108 98
Competent sales personnel 114 76 105 113 104
Imported 99 117 104 99 114
Made locally 121 93 95 118 105
Offers a broad line of hardware 97 84 117 110 103
Fast access to graphical images 74 125 138 108 98
Can see, work on multiple programs 89 122 131 99 100
Security-able to backup files, data 74 130 136 111 105
Vendor is technical leader 69 131 108 97 110
Savings in operator cost (training) 120 70 89 120 102
Competent service personnel 112 101 117 106 99
Need to store letters, reports 111 85 62 118 103
Little training needed before use 125 83 71 121 105
Quick response to commands 85 121 125 102 108
Want more productive operators 121 107 108 106 104
Easy to tie into local area network 88 109 118 111 111
Financial stability of manufacturer 102 103 115 115 111
Established brand name 77 99 109 112 102
The more storage space the better 94 120 133 115 101

79
 
Fast service response time 105 107 117 121 111
Minimum complexity for operators 127 98 94 116 103
Easy to use 122 103 108 123 112
Been around a long time 101 95 131 110 115
Want high performance over price 94 111 123 113 108
Easy on eyes 95 111 111 114 106
Fast computer to computer links 88 125 143 122 117
Computers are lowest price 122 94 95 105 115
Easy to set up and use new PC 118 95 103 116 120
Local technical service 107 100 121 119 115
Service available everywhere 106 106 123 110 114
Can be tailored to special apps. 89 116 119 80 105
Can tie into other microcomputers 75 134 115 120 116
International support organization 59 75 128 115 123
Able to send and receive email 93 120 104 115 115
Can connect to office when on road 59 106 90 84 126
Reliability of product (up-time) 115 115 124 127 130
Can use on the road 49 105 95 86 126
Small footprint/size 70 121 117 100 130
Portability 54 83 100 84 122

Segmentation

Segments By Application

.
CostCutter Innovators Mercedes Work Horse Traveler
Statistical analysis 59 121 111 91 68
Business graphics 94 109 102 108 114
Computer aided design/manufacturing 38 108 120 83 32
Technical Graphics 71 117 120 73 63
Manufacturing process control 70 103 133 105 73
Bookkeeping, budgeting 118 118 83 125 80
Engineering/design 72 115 110 74 90
Data management-accounts, inventory 109 112 113 116 111
Word Processing 112 95 103 117 110
Presentations 103 110 90 101 127
Communications with other computers 77 116 121 119 123

80
 

Segments By Business Function

.
CostCutter Innovators Mercedes Work Horse Traveler
Office & administrative services 126 70 74 123 59
Plant management 82 115 124 105 66
Financial management 104 109 91 124 84
Production process control 75 96 125 73 94
Data processing 110 112 117 115 96
Engineering 68 122 124 68 109
General & corporate management 113 82 104 118 119
Marketing/sales 96 109 77 99 135

Pricing

Price Willing To Pay

.
CostCutter Innovators Mercedes Work Horse Traveler
Beijing 1,790 3,136 3,504 2,574 2,889
Guangzhou 1,659 2,706 3,228 2,396 2,432
Tianjin 1,642 2,750 3,670 2,422 2,699
Shanghai 1,694 2,769 3,772 2,273 2,843
London 1,864 3,093 3,977 3,025 3,193
Berlin 1,681 3,075 3,751 2,845 2,908
Rome 1,770 3,457 4,151 2,836 3,106
Paris 1,793 3,145 4,203 2,652 3,232
Belo Horizonte 1,712 2,948 3,789 2,381 2,841
Sao Paulo 1,634 2,808 3,702 2,692 2,933
Rio de Janeiro 1,870 2,910 3,646 2,514 2,816
Curitiba 1,681 2,866 3,776 2,367 2,746
Vancouver 1,878 3,133 3,989 2,760 2,840
Calgary 1,779 3,162 4,088 2,610 3,014
Toronto 1,679 3,148 3,705 2,948 3,031
Montreal 1,734 2,909 3,935 2,575 3,208
Los Angeles 2,165 3,172 4,054 2,734 3,422
Chicago 2,072 3,173 4,343 2,948 3,292
Atlanta 2,081 3,528 4,370 2,661 3,466
New York 2,295 3,437 4,365 3,146 3,256

81
 

Demand

12 month potential demand

.
CostCutter Innovators Mercedes Work Horse Traveler

Beijing 5,458 4,679 4,685 6,306 2,917

Guangzhou 5,863 4,696 3,578 4,469 4,493

Tianjin 5,736 3,483 4,183 5,939 3,220

Shanghai 5,242 3,827 4,986 5,455 5,539

London 8,644 6,256 9,059 12,247 6,887

Berlin 8,193 6,145 7,144 9,226 5,469

Rome 7,988 5,105 6,744 8,532 4,996

Paris 8,167 4,728 7,102 8,528 5,778

Belo Horizonte 6,938 2,567 3,875 6,376 2,332

Sao Paulo 7,185 3,254 5,222 7,908 3,863

Rio de Janeiro 7,046 2,603 3,702 8,720 2,970

Curitiba 6,426 2,328 3,928 7,584 2,541

Vancouver 6,634 2,977 4,255 6,623 3,628

Calgary 6,495 3,216 4,076 5,785 3,170

Toronto 7,795 3,993 6,174 9,582 4,617

Montreal 6,929 3,299 5,732 7,683 4,467

Los Angeles 8,965 7,824 9,029 10,568 7,326

Chicago 10,256 5,038 8,816 10,687 6,478

Atlanta 7,238 5,643 6,353 7,988 4,927

New York 10,177 8,455 9,488 11,207 8,009

82
 
Market Share (As of quarter 4 end)
Market Share

83
 

84
 

Total Market Share (As of quarter 4 end)

85
 
Market Share (As of quarter 4 end)

Market Share

Company Total Market Share


CostCutter Innovators Mercedes Work Horse Traveler
IntelliJet Computers 3.2% 36% 23.3% 7.3% 37.6% 24.5%
InnoVision 26.5% 5.1% 2% 31.8% 21.2% 20.2%
DrevTech 0.4% 8.6% 6.2% 3.6% 24.2% 11.6%
InTouch 43.3% 0.2% 0% 10% 15.8% 11.5%
miCOMP 11.2% 48.4% 67.3% 40.9% 0.8% 28.5%
JovieTech 15.2% 1.3% 1% 6.1% 0.1% 3.4%

Brand Judgments

Brand Judgment (as of Quarter 4 end)- Europe

Company Brand
CostCutter Innovators Mercedes Work Horse Traveler
JovieTech jPad 58 35 15 50 18
JovieTech jPro 64 29 15 51 17
JovieTech jBook 46 34 23 45 27
InTouch InSync 73 26 13 60 32
InTouch InMotion 18 7 1 24 76
DrevTech TechnoDrev 3000 32 52 32 53 13
DrevTech DrevGo 4000 23 1 1 23 75
DrevTech InnoDrev 6000 1 27 9 19 61
InnoVision HGH 13 64 46 25 71 31
InnoVision The Voyager 6 1 1 20 70

Brand Judgment (as of Quarter 4 end) - China

Company Brand
CostCutter Innovators Mercedes Work Horse Traveler
miCOMP LuxComp 36 77 57 59 16
miCOMP EliteComp 50 72 48 77 30
miCOMP SpeediComp 61 35 9 65 39
InnoVision HGH 13 66 48 25 72 32
InnoVision The Voyager 7 1 1 20 72

86
 

Location of Competition (As of quarter 4 end)


*No competition in Canada or Brazil.

Competitors in City - United States


City IntelliJet Computers InnoVision DrevTech InTouch miCOMP JovieTech
New York X X X X
Atlanta
Chicago X
Los Angeles

Competitors in City - Europe


City IntelliJet Computers InnoVision DrevTech InTouch miCOMP JovieTech
Paris
Rome
Berlin X X
London X X

Competitors in City - China


City IntelliJet Computers InnoVision DrevTech InTouch miCOMP JovieTech
Shanghai X
Tianjin
Guangzhou X
Beijing X

Sales Force

Sales Force (As of Quarter 4 ended) – Europe


Total
City Sales
People Support CostCutter Innovators Mercedes Work Horse Traveler
InnoVision London 4 1 0 0 0 2 1
DrevTech London 4 1 0 2 0 0 1
InTouch Berlin 4 1 1 0 0 0 2
JovieTech Berlin 4 1 0 1 0 1 1

87
 

Sales Force (as of Quarter 4 ended) - China


Total
Company City Sales
People Support CostCutter Innovators Mercedes Work Horse Traveler
InnoVision Shanghai 5 2 0 0 0 2 1
InnoVision Guangzhou 3 1 0 0 0 1 1
miCOMP Beijing 7 1 0 2 1 3 0

Price Judgment (By region as of quarter 4 end)

Price Judgment - Europe

Company Brand
CostCutter Innovators Mercedes Work Horse Traveler
JovieTech jPad 66 100 100 89 100
JovieTech jPro 75 100 100 100 100
JovieTech jBook 69 100 100 93 100
InTouch InSync 76 100 100 100 100
InTouch InMotion 59 94 100 79 91
DrevTech TechnoDrev 3000 63 100 100 84 97
DrevTech DrevGo 4000 65 100 100 87 100
DrevTech InnoDrev 6000 83 100 100 100 100
InnoVision HGH 13 68 100 100 92 100
InnoVision The Voyager 66 100 100 89 100

Price Judgment - China

Company Brand
CostCutter Innovators Mercedes Work Horse Traveler
miCOMP LuxComp 51 97 100 81 93
miCOMP EliteComp 64 100 100 100 100
miCOMP SpeediComp 69 100 100 100 100
InnoVision HGH 13 73 100 100 100 100
InnoVision The Voyager 72 100 100 100 100

88
 
Competitors Price and Priority (As of quarter 4 end)

Competitors` Price and Priority - Europe


Company Brand Price Rebate Priority Point of Purchase Display Bonus Gift
InnoVision The Voyager 3,099 50 2 No 0 0
InnoVision HGH 13 2,999 50 1 Yes 0 0
DrevTech InnoDrev 6000 2,400 0 3 No 0 0
DrevTech DrevGo 4000 3,095 0 2 Yes 0 0
DrevTech TechnoDrev 3000 3,199 0 1 Yes 0 0
InTouch InMotion 3,400 0 1 Yes 0 0
InTouch InSync 2,900 200 2 No 0 0
JovieTech jBook 2,900 0 3 Yes 0 0
JovieTech jPro 2,800 100 1 No 0 0
JovieTech jPad 3,050 0 2 Yes 0 0

Competitors` Price and Priority - China


Company Brand Price Rebate Priority Point of Purchase Display Bonus Gift
InnoVision The Voyager 2,399 150 1 Yes 0 0
InnoVision HGH 13 2,300 75 2 No 0 0
miCOMP SpeediComp 2,549 200 3 No 0 0
miCOMP EliteComp 2,699 200 2 Yes 0 0
miCOMP LuxComp 3,299 200 1 Yes 0 0

Ad Judgment (By region as of quarter 4 end)

Ad Judgment - Europe

Company Ad
CostCutter Innovators Mercedes Work Horse Traveler
JovieTech jPad 27 60 45 41 30
JovieTech jPro 38 39 43 58 39
InTouch inMotion 23 25 31 43 62
InTouch inSync 58 29 35 54 37
DrevTech TechnoDrev 1 9 71 64 45 29
DrevTech DrevGo 1 24 43 48 57 63
InnoVision Traveller Q3 38 52 54 71 66
InnoVision Workhorse Q4 46 51 47 74 53

89
 

Ad Judgment - China

Company Ad
CostCutter Innovators Mercedes Work Horse Traveler
miCOMP LuxComp 20 71 68 44 35
miCOMP EliteComp2 33 39 37 73 48
InnoVision Traveller Q3 38 52 54 71 66
InnoVision Workhorse Q4 46 51 47 74 53

Local Media Inserts

Total Local Inserts


Company Number of Inserts
IntelliJet Computers 0
InnoVision 7
DrevTech 2
InTouch 3
miCOMP 16
JovieTech 3

Regional Media Inserts

Total Major Media Inserts


Company Number of Inserts
InnoVision 16
DrevTech 3
InTouch 4
miCOMP 6

90
 

Market Attractiveness Calculations

Cost Cutter:
Market attractiveness Criteria Weighted D=B*C
factor (A) Weight (B) Rating (C) Score
Market size .25 5 1.25
Growth .20 3 .60
Price .15 5 .75
Industry Potential .30 4 1.20
Competition .20 4 .80
Totals 1.0 3.40
Workhorse:
Market attractiveness Criteria Weighted D=B*C
factor (A) Weight (B) Rating (C) Score
Market size .30 5 1.5
Growth .20 5 1.0
Price .15 5 .75
Industry Potential .30 4 1.2
Competition .05 5 .25
Totals 1.0 4.7
Innovator:
Market attractiveness Criteria Weighted D=B*C
factor (A) Weight (B) Rating (C) Score
Market size .20 3 .60
Growth .20 4 .80
Price .20 3 .60
Industry Potential .15 5 .75
Competition .25 3 .75
Totals 1.0 3.5
Traveler:
Market attractiveness Criteria Weighted D=B*C
factor (A) Weight (B) Rating (C) Score
Market size .10 5 .50
Growth .15 4 .60
Price .25 5 1.25
Industry Potential .15 4 .60
Competition .25 5 1.25
Totals 1.0 4.2
Mercedes:
Market attractiveness Criteria Weighted D=B*C
factor (A) Weight (B) Rating (C) Score
Market size .15 3 .60
Growth .20 3 .60
Price .15 3 .45
Industry Potential .15 4 .60
Competition .20 4 .80
Totals 1.0 3.85

91
 
Business Position (By segment)

Cost Cutter:
Business Position Factors Criteria Weighted H= F*G
(E) Weight (F) Rating (G) Score
Market share .20 3 .60
Advertising and .20 3 .60
promotion
Facilities location and .15 3 .45
newness
Sales distribution .15 4 .60
effectiveness
Relative product quality .20 4 .80
R and D .10 3 .30
adgantages/position
General image .10 5 .50
Totals 1.0 3.85
Innovator:
Business Position Factors Criteria Weighted H= F*G
(E) Weight (F) Rating (G) Score
Market share .10 5 .50
Advertising and .10 3 .30
promotion
Facilities location and .05 3 .15
newness
Sales distribution .15 5 .75
effectiveness
Relative product quality .20 4 .80
R and D .20 4 .40
adgantages/position
General image .20 5 1.0
Totals 1.0 3.90
Workhorse:
Business Position Factors Criteria Weighted H= F*G
(E) Weight (F) Rating (G) Score
Market share .10 5 .50
Advertising and .15 5 .75
promotion
Facilities location and .10 5 .50
newness
Sales distribution .20 5 1.0
effectiveness
Relative product quality .25 4 1.0
R and D .10 4 .40
advantages/position
General image .10 5 .50
Totals 1.0 4.65

92
 

Traveler:
Business Position Factors Criteria Weighted H= F*G
(E) Weight (F) Rating (G) Score
Market share .10 5 .5
Advertising and .20 5 1.0
promotion
Facilities location and .15 5 .75
newness
Sales distribution .15 5 .75
effectiveness
Relative product quality .20 4 .80
R and D .10 4 .40
adgantages/position
General image .10 5 .50
Totals 1.0 4.70
Mercedes:
Business Position Factors Criteria Weighted H= F*G
(E) Weight (F) Rating (G) Score
Market share .10 4 .4
Advertising and .05 5 .25
promotion
Facilities location and .05 5 .25
newness
Sales distribution .15 5 .75
effectiveness
Relative product quality .25 4 1.0
R and D .20 4 .80
adgantages/position
General image .20 5 1.0
Totals 1.0 4.45

93
 
SCA Attribute Graphs

Work Horse

TechnoDrev
Product HGH 13 3000 speedicomp jBook elitecomp Market
Reputation 2 1.25 1.75 1 2 1.6

Price 1.75 1.5 2 1.75 2 1.8

Product Speed Price


HGH 13 0 -1
TechnoDrev
3000 2 2
speedicomp 0 0
jBook 2 -2
elitecomp 2 1
Market 1.2 0

Traveler

Brand Rating
Innovision- The Voyager 76
InTouch- InMotion 75
DrevTech- DrevGo 70

The Voyager InMotion DrevGo 4000


Speed 0 2 2
Portability 2 2 2
Price 1.6 1.25 1.5
Upgradability 1 1.75 1.75

94
 
Reputation 1 1.25 1.25
Features 1.5 1.5 1.75

Brand Features Price


The Voyager 1.5 1.6
InMotion 1.5 1.25
DrevGo4000 1.75 1.5

Features v. Price

2
The
1 Voyager
Attribute 2

InMotion
0
-2 -1 0 1 2
-1
DrevGo
4000
-2

Attribute 1

Brand Portability Price


The Voyager 2 1.6
InMotion 2 1.25
DrevGo4000 2 1.5

95
 

Historical Financial Statements

Cash Flow
Quarter 1 Quarter 2 Quarter 3 Quarter 4
Beginning Cash Balance 0 711,525 48,050 1
Receipts and Disbursements from Operating Activities
Revenues 0 0 1,046,646 1,987,739
- Rebates 0 0 0 29,988
- Production 0 0 1,782,990 0
- Research and Development 0 120,000 0 0
- Advertising 0 0 202,856 172,536
- Sales Force Expense 0 0 195,808 177,590
- Sales Office Expense 0 250,000 195,000 146,000
- Marketing Research 57,000 0 40,000 40,000
- Shipping 0 0 24,526 36,105
- Inventory Holding Costs 0 0 127,272 12,632
- Income Taxes 0 0 0 0
+ Interest Income 3,525 6,525 0 0
- Interest Charges 0 0 0 35,132
+ Licensing Income 0 0 0 0
- Licensing Fees 0 0 0 0
+ Other Income 0 0 0 0
- Other Expenses 0 0 0 0
= Net Operating Cash Flow -53,475 -363,475 -1,521,806 1,337,756

Investing Activities
Fixed Plant Capacity 0 1,100,000 600,000 0
= Total Investing Activities 0 1,100,000 600,000 0

Financing Activities
Increase in Common Stock 1,000,000 1,000,000 1,000,000 1,000,000
+ Borrow Conventional Loan 0 0 0 0
- Repay Conventional Loan 0 0 0 0
+ Borrow Emergency Loan 0 0 638,757 0
- Repay Emergency Loan 0 0 0 638,757
- Deposit 3 Month Certificate 235,000 200,000 0 0
+ Withdraw 3 Month Certificate 0 0 435,000 0
= Total Financing Activities 765,000 800,000 2,073,757 361,243

96
 

Cash Balance, End of Period 711,525 48,050 1 1,699,002


Historical Income Statement
Income Statement
Quarter 1 Quarter 2 Quarter 3 Quarter 4
Gross Profit
Revenues 0 0 1,046,646 1,987,739
- Rebates 0 0 0 29,988
- Cost of Goods Sold 0 0 510,273 1,146,400
= Gross Profit 0 0 536,373 811,351

Expenses
Research and Development 0 120,000 0 0
+ Advertising 0 0 202,856 172,536
+ Sales Force Expense 0 0 195,808 177,590
+ Sales Office Expense 0 250,000 195,000 146,000
+ Marketing Research 57,000 0 40,000 40,000
+ Shipping 0 0 24,526 36,105
+ Inventory Holding Costs 0 0 127,272 12,632
+ Depreciation 0 0 45,833 68,924
= Total Expenses 57,000 370,000 831,295 653,787

Operating Profit -57,000 -370,000 -294,922 157,564

Miscellaneous Income and Expenses


+ Licensing Income 0 0 0 0
- Licensing Fees 0 0 0 0
+ Other Income 0 0 0 0
- Other Expenses 0 0 0 0
= Earnings Before Interest and Taxes -57,000 -370,000 -294,922 157,564

+ Interest Income 3,525 6,525 0 0


- Interest Charges 0 0 0 35,132
= Income Before Taxes -53,475 -363,475 -294,922 122,432

- Loss Carry Forward 0 0 0 122,434


= Taxable Income 0 0 0 0

- Income Taxes 0 0 0 0
= Net Income -53,475 -363,475 -294,922 122,434

97
 

Earnings per Share -5 -18 -8 3

98
 
Historical Balance Sheet

Balance Sheet
Quarter 1 Quarter 2 Quarter 3 Quarter 4
Current Assets
Cash 711,525 48,050 1 1,699,002
+ 3 Month Certificate of Deposit 235,000 435,000 0 0
+ Finished Goods Inventory 0 0 1,272,717 126,317
Long Term Assets
+ Net Fixed Assets 0 1,100,000 1,654,167 1,585,243

= Total 946,525 1,583,050 2,926,885 3,410,562

Debt
Conventional Bank Loan 0 0 0 0
+ Emergency Loan 0 0 638,757 0
Equity
+ Common Stock 1,000,000 2,000,000 3,000,000 4,000,000
+ Retained Earnings -53,475 -416,950 -711,872 -589,438

= Total 946,525 1,583,050 2,926,885 3,410,562

Financial Formulas for determining the Balance Scorecard

Total Overall Performance financial performance * market performance * marketing effectiveness *


investment in future * wealth * asset management

Financial Performance net profit from current operations / total shares issued
Market Performance average market share in targeted segments/100 * percent of demand actually
served/100
Marketing Effectiveness (average brand judgment/100 + average ad judgment/100)/2
Creation of Wealth net equity / total stockholders equity
Investment in Future current expenses that benefit firm’s future / net revenues * 10 + 1
Asset Management Asset turnover * Penalty for excess inventory

99
 

 
 
 
 
 
 
 

Appendix B
 

100
 

APPENDIX B
TACTICAL PLAN

Tactical Plan
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 5 Quarter 6 Quarter 7 Quarter 8
Work Work
Segments Work Horse; Work Horse; work Horse,
Horse; Horse; same same
Targeted Traveler; Traveler; Traveler
Traveler; Traveler;
Sales Offices London; Beijing;
Guangzhou; Berlin; Tianjin Rome
Opened Shanghai; Paris
Sales Office
0 250,000 195,000 146,000 32,400 462,000 442,000 512,000
Expense
Number of New
0 2 0 0 1 1 0 2
Brands
The The
Names of New The Navigator;
Voyager; HGH eXtreme; Voyager
Brands HGH Olympian
HGH 13; Quest
The The Navigator
The Voyager
Voyager 3000; HGH
The Quest
The Voyager 2749; Quest Olympian
The Voyager Voyager 2900;HGH
Brands for Sale HGH 13 2650; 2900;HGH 2829, The
2574; HGH 2749; 13 2499;
& Price HGH eXtreme 13 2499; Voyager Quest
13 2599; HGH 13 HGH
2850; HGH 2900;HGH 13
2650; eXtreme
eXtreme 2499; HGH
2850
2850 eXtreme 2850
Average Selling
0 0 2,587 2,700 2,750 2,750 2,750 2,816
Price
Office software-
word, spreadsheets
Brand Feature - new release; High long life
R&D Projects speed wireless battery
network/Internet
connection;
Brand Feature
0 0 0 0 3,919,597 1,279,156 0 0
R&D Expense
Media Plan (%
local/% 0% / 0% 0% / 0% 45% / 55% 39% / 61% 74% / 26% 60%/40% 50%/50% 30%/70%
regional)
Advertising
0 0 202,856 172,536 213,078 266,350 270,000 300,000
Budget
Average Sales
Person 0 0 48,888 42,166 43,642 50,000 50,000 50,000
Compensation
Number of
Office Sales 0 0 9 12 14 17 22 26
People
Unit Demand
per Office Sales 0 0 45 60 60 60 60 60
Person

101
 
Projected
0 0 405 720 840 1,020 1,320 1,560
Demand
Sales Force
0 0 110,000 126,500 152,747 212,500 275,000 325,000
Salaries
Cost to Hire
New Sales 0 0 62,808 20,090 12,000 18,000 30,000 24,000
People
Total Sales
0 0 172,808 146,590 164,747 230,500 305,000 349,000
Force Expense

Projected
0 0 1,047,735 1,944,000 2,310,000 2,805,000 3,630,000 4,392,960
Revenue

Addition to
0 3,250 1,625 0 0 1,625 3,250 0
Fixed Capacity

New Investment
in Fixed 0 1,100,000 600,000 0 0 600,000 1,100,000 0
Capacity

Available Fixed
0 0 3,250 4,875 4,875 4,875 6,500 9,750
Capacity

Starting
0 0 0 826 110 115 95 275
Inventory

Planned
Production 0 0 1,430 0 845 1,000 1,500 2,000
Volume

Available
0 0 1,430 826 955 1,115 1,595 2,275
Inventory

Average Unit
Production 0 0 1,247 0 1,769 1,769 1,600 1,800
Cost

Total
Production 0 0 1,782,988 0 1,494,805 1,769,000 2,400,000 3,600,000
Cost

Total R&D
0 120,000 0 0 3,979,597 1,339,156 0 120,000
Cost

Conventional
0 0 0 0 1,000,000 0 1,000,000 500,000
Bank Loans

Total Debt
0 0 638,757 0 1,000,000 0 1,000,000 500,000
Level

Equity
1,000,000 2,000,000 3,000,000 4,000,000 9,000,000 9,000,000 9,000,000 9,000,000
Investment

Total Assets 946,525 1,583,050 2,926,885 3,410,562 5,941,764 6,941,305 10,824,520 23,330,944

102
 

Actual Unit
Sales for 0 0 404 716 770 0 0 0
Quarter

Projected
0 0 405 720 840 1,020 1,320 1,560
Demand

Actual Unit
Demand for 0 0 404 718 0 0 0 0
Quarter

Projected
0 0 1,047,735 1,944,000 2,310,000 2,805,000 3,630,000 4,392,960
Revenue

Actual
0 0 1,046,646 1,869,339 0 0 0 0
Revenue

103
 

 
 
 
 
 
 
 

Appendix C
 

104
 

Appendix C
PRO FORMA FINANCIALS
Projecting Cash Flow

Pro-Forma Cash Flow


Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 5 Quarter 6 Quarter 7 Quarter 8
Beginning
Cash 0 711,525 48,050 1 1,699,002 3,781,187 2,095,292 3,639,169
Balance
Receipts and Disbursements from Operating Activities
Revenues 0 0 1,046,646 1,987,739 2,452,136 2,805,000 3,630,000 4,392,960
- Rebates 0 0 0 29,988 19,100 0 0 0
- Production 0 0 1,782,990 0 1,505,705 1,769,000 2,400,000 3,600,000
- Research
and 0 120,000 0 0 4,039,597 1,339,156 0 120,000
Development
- Advertising 0 0 202,856 172,536 224,088 266,350 270,000 300,000
- Sales
Force 0 0 195,808 177,590 199,750 212,500 275,000 325,000
Expense
- Sales
Office 0 250,000 195,000 146,000 266,000 462,000 442,000 512,000
Expense
- Marketing
57,000 0 40,000 40,000 40,000 40,000 40,000 40,000
Research
- Shipping 0 0 24,526 36,105 44,301 32,500 35,000 37,500
- Inventory
Holding 0 0 127,272 12,632 10,000 339,012 579,012 939,012
Costs
- Income
0 0 0 0 0 0 0 0
Taxes
+ Interest
3,525 6,525 0 0 0 0 0 0
Income
- Interest
0 0 0 35,132 21,409 20,641 45,111 54,889
Charges
+ Licensing
0 0 0 0 0 0 0 0
Income
- Licensing
0 0 0 0 0 0 0 0
Fees
+ Other
0 0 0 0 0 0 0 0
Income
- Other
0 0 0 0 0 0 0 0
Expenses
= Net - - -
-53,475 -363,475 1,337,756 -456,123 -1,535,441
Operating 1,521,806 3,917,814 1,676,159

105
 
Cash Flow

Investing Activities
Fixed Plant
0 1,100,000 600,000 0 0 0 0 0
Capacity
= Total
Investing 0 1,100,000 600,000 0 0 0 0 0
Activities

Financing Activities
Increase in
Common 1,000,000 1,000,000 1,000,000 1,000,000 5,000,000 1,000,000 1,000,000 10,000,000
Stock
+ Borrow
Conventional 0 0 0 0 1,000,000 0 1,000,000 500,000
Loan
- Repay
Conventional 0 0 0 0 0 0 0 0
Loan
+ Borrow
Emergency 0 0 638,757 0 0 0 0 0
Loan
- Repay
Emergency 0 0 0 638,757 0 0 0 0
Loan
- Deposit 3
Month 235,000 200,000 0 0 0 0 0 0
Certificate
+ Withdraw 3
Month 0 0 435,000 0 0 0 0 0
Certificate
= Total
Financing 765,000 800,000 2,073,757 361,243 6,000,000 1,000,000 2,000,000 10,500,000
Activities

Cash
Balance,
711,525 48,050 1 1,699,002 3,781,187 2,095,292 3,639,169 12,603,728
End of
Period

Cost of Goods Sold


Starting
0 0 0 1,272,717 126,317 100,001 1,869,001 4,269,001
Inventory
- Production 0 0 1,782,990 0 1,505,705 1,769,000 2,400,000 3,600,000
= Available
0 0 1,782,990 1,272,717 1,632,022 1,869,001 4,269,001 7,869,001
Inventory

106
 
- Cost of
0 0 510,273 1,146,400 1,532,021 0 0 0
Goods Sold
= Ending
0 0 1,272,717 126,317 100,001 1,869,001 4,269,001 7,869,001
Inventory

Pro Forma Income Statement

Pro-Forma Income Statement


Quarter Quarter
Quarter 3 Quarter 4 Quarter 5 Quarter 6 Quarter 7 Quarter 8
1 2
Gross Profit
Revenues 0 0 1,046,646 1,987,739 2,452,136 2,805,000 3,630,000 4,392,960
- Rebates 0 0 0 29,988 19,100 0 0 0
- Cost of
0 0 510,273 1,146,400 1,532,021 0 0 0
Goods Sold
= Gross
0 0 536,373 811,351 901,015 2,805,000 3,630,000 4,392,960
Profit

Expenses
Research
and 0 120,000 0 0 4,039,597 1,339,156 0 120,000
Development
+ Advertising 0 0 202,856 172,536 224,088 266,350 270,000 300,000
+ Sales
Force 0 0 195,808 177,590 199,750 212,500 275,000 325,000
Expense
+ Sales
Office 0 250,000 195,000 146,000 266,000 462,000 442,000 512,000
Expense
+ Marketing
57,000 0 40,000 40,000 40,000 40,000 40,000 40,000
Research
+ Shipping 0 0 24,526 36,105 44,301 32,500 35,000 37,500
+ Inventory
Holding 0 0 127,272 12,632 10,000 339,012 579,012 939,012
Costs
+
0 0 45,833 68,924 66,052 63,300 60,662 58,135
Depreciation
= Total
57,000 370,000 831,295 653,787 4,889,788 2,754,818 1,701,674 2,331,647
Expenses

Operating - -
-57,000 -294,922 157,564 50,182 1,928,326 2,061,313
Profit 370,000 3,988,773

107
 
Miscellaneous Income and Expenses
+ Licensing
0 0 0 0 0 0 0 0
Income
- Licensing
0 0 0 0 0 0 0 0
Fees
+ Other
0 0 0 0 0 0 0 0
Income
- Other
0 0 0 0 0 0 0 0
Expenses
= Earnings
Before - -
-57,000 -294,922 157,564 50,182 1,928,326 2,061,313
Interest and 370,000 3,988,773
Taxes

+ Interest
3,525 6,525 0 0 0 0 0 0
Income
- Interest
0 0 0 35,132 21,409 20,641 45,111 54,889
Charges
= Income
- -
Before -53,475 -294,922 122,432 29,541 1,883,215 2,006,424
363,475 4,010,182
Taxes

- Loss Carry
0 0 0 122,434 0 29,541 1,883,215 2,006,424
Forward
= Taxable
0 0 0 0 0 0 0 0
Income

- Income
0 0 0 0 0 0 0 0
Taxes
= Net - -
-53,475 -294,922 122,434 29,541 1,883,215 2,006,424
Income 363,475 4,010,182

Earnings per
-5 -18 -8 3 -42 0 20 21
Share

108
 

Pro Forma Balance Sheet

Pro-Forma Balance Sheet


Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 5 Quarter 6 Quarter 7 Quarter 8
Current Assets
Cash 711,525 48,050 1 1,699,002 3,781,187 2,095,292 3,639,169 12,603,728
+ 3 Month
Certificate of 235,000 435,000 0 0 0 0 0 0
Deposit
+ Finished
Goods 0 0 1,272,717 126,317 100,001 3,390,122 5,790,122 9,390,122
Inventory
Long Term Assets
+ Net Fixed
0 1,100,000 1,654,167 1,585,243 1,519,191 1,455,891 1,395,229 1,337,094
Assets

= Total 946,525 1,583,050 2,926,885 3,410,562 5,400,379 6,941,305 10,824,520 23,330,944

Debt
Conventional
0 0 0 0 1,000,000 1,000,000 2,000,000 2,500,000
Bank Loan
+ Emergency
0 0 638,757 0 0 0 0 0
Loan
Equity
+ Common
1,000,000 2,000,000 3,000,000 4,000,000 9,000,000 10,000,000 11,000,000 21,000,000
Stock
+ Retained -
-53,475 -416,950 -711,872 -589,438 -4,058,695 -2,175,480 -169,056
Earnings 4,599,620

= Total 946,525 1,583,050 2,926,885 3,410,562 5,400,379 6,941,305 10,824,520 23,330,944

109
 

 
 
 
 
 
 
 

Appendix D
 

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Appendix D

MEMO
To: Robert Drevs
From: InnoVision
Date: March 25, 2009
Re: Targeted Consumer Markets

At Innovision, our mission statement clearly defines what we do: Produce high quality
products that improve the lives of our customers. Through innovative research,
streamlined distribution, and superior management, we are committed to excellence and
long term success. We have undergone careful review of our market strengths and
competencies, as well as external factors and the market size in order to determine the
most effective segments to target in the forthcoming year. Keeping this in mind, we have
decided to focus on the Work Horse segment as our primary market with the Traveler
segment as our secondary market. We believe that these two markets offer tremendous
revenue potential due to the large demand size of these segments.

After four quarters, InnoVision has a stronghold in the Work Horse segment with 31%
market share, and remains competitive in the traveler segment with 21% market share.
Although many competitors have chosen these two segments, we aim to differentiate
ourselves with the quality of our products and superior customer service. In addition,
according to market research that we have obtained, InnoVision had the highest brand
ratings of 71 in the Work Horse and was third in the traveler segment with a brand rating
of 70. With our continued success in these segments through constant innovation and
evaluation, we believe that we can continue to remain profitable and be valuable to our
stakeholders.

In the future, InnoVision foresees continued expansion in terms of its sales offices while
keeping its focus on the Work Horse and Traveler segments. InnoVision strives to expand
into all the major cities in Europe and China while continuing to strive to provide the
highest quality on the market in order to satisfy our customers to the best of our ability.
We believe that by targeting these specific markets and paying close attention to our
customers’ wants and needs, InnoVision can begin to dominate there markets in the
coming quarters.

Sincerely,

Tom Junker, President


InnoVision

111
 

 
 
 
 
 
 
 

Appendix E  

112
 

Appendix E

MEMO
To: Professor Robert Drevs
From: InnoVision
Date: March 25, 2009
Re: Funding Request

Innovision has demonstrated our commitment to overall success in the computer industry
through our decision making process that has been backed by the hard work of our
employees. Thus far, we have provided our customers with high quality and reliable
products that we are proud to claim as our own innovation. We are dedicated to
continuously improving our products in order to better fulfill the needs of our consumers.

In our first year, we started building some of the most successful brands in the industry.
We are continuously committed to our customers, and are currently targeting the
workhorse and traveler segments in Europe and China and have had tremendous success
with our brands. One of our strategic focuses is our expansion program within these two
regions as we aim to have an active presence in all of the major cities in Europe and
China by the end of InnoVision’s second year. In order to pursue such an aggressive
expansion program, we will be investing in Research and Development initiatives to
continue or innovation strategies and satisfy our customers’ dynamic needs. This can
only be achieved through the help of a long-term investment in our business.

R&D is a critical investment for our company, as we want to continue bringing


innovation to our products and give our customers satisfaction in our brand. With this R&
D we will be able to maintain a competitive advantage over our competitors and make
sure that we bring the best quality to our products. For this pursuit, we are requesting a $5
million dollar investment in Innovision. While we realize this is a significant sum of
money, it will not only facilitate the success and growth of InnoVision, but the return on
investment for you would also prove to be beneficial.

Innovision has demonstrated a propensity to building winning brands, doing something


else, and gaining market share. We are confident that with your investment, we can
continue our success and provide you with a valuable return on your investment.

We truly believe that your investment will be valuable, and we look forward to working
with you in the future

Sincerely,

Thomas Junker, President


InnoVision

113