2. 1.1 Generic Business Strategy: Scope
• Claim your strategy: Broad Cost Leader
• Scope
• Andrews offer five products in five different market segments:
• Traditional: Able
• Low End: Acre
• High End: Adam
• Performance: Aft
• Size: Agape
• As a cost leader, Andrews focuses on low price markets, Traditional and
Low End, to satisfy customers with below average prices made possible
by low costs
1-PERFORMANCE & PLANNING MEASUREMENT
3. 1.1 Generic Business Strategy: Competitive
Advantage
• Competitive Advantage
• Andrews maintains low costs in:
• Research & Development
• Production
• Materials
• Automation
• Andrews competes in the market with below
average prices
4. 1.2 Business Model
• To generate revenue
• Andrews operates in all five market segments (later four segments) to
reach the maximum amount of customers to sell to
• Andrews maximizes its promotion and sales budgets to continue to
reach full awareness and accessibility of its products and each segment
by designated customers
• To reduce costs
• each year, Andrews increases automation for each product in their
respective segments
• in Year 3, Andrews exited the High End market, eliminating Adam – its
most costly product
5. 1.3 Financial Objectives
Objectives Round 1 Round 2 Round 3 Round 4 Round 5 Round 6 Round 7 Round 8
Sales $100,000,000 $105,000,000 $120,000,000 $130,000,000 $145,000,000 $160,000,000 $180,000,000 $200,000,000
Profits $6 Million $8 Million $10 Million $10 Million $12 Million $15 Million $20 Million $30 Million
Leverage 2.0 2.3 2.5 2.5 2.5 2.5 2.5 2.5
Stock Price $3.00 $1.00 $1.00 $1.00 $1.25 $1.75 $2.15 $2.50
Contribution
Margin
27.5% 28.5% 30.0% 32% 33.50% 35% 37.50% 40.0%
6. Objectives Round 1 Round 2 Round 3 Round 4 Round 5 Round 6 Round 7 Round 8
Capacity
No
Change
Sell Capacity
for 3
products
No Change No Change Buy Capacity
(if needed)
No Change No Change No Change
Number of
Products
5
Trad, Low,
High, Pfm, Size
5
Trad, Low,
High, Pfm,
Size
4
Trad, Low,
Pfm, Size
4
Trad, Low,
Pfm, Size
4
Trad, Low,
Pfm, Size
4
Trad, Low,
Pfm, Size
4
Trad, Low,
Pfm, Size
4
Trad, Low,
Pfm, Size
Positioning
Ideal Spots for
each except
Low-end
Ideal Spots
for each
except Low-
end
Ideal Spots
for each
except Low-
end
Ideal Spots
for each
Ideal Spots
for each
except Low-
end
Ideal Spots
for each
except Low-
end
Ideal Spots
for each
except Low-
end
Ideal Spots
for each
except Low-
end
Customer
Awareness
(Promo
Budget)
50% 70% 80% 85% 90% 95% 100% 100%
Customer
Accessibility
(Sales Budget)
50% 60% 70% 80% 85% 90% 95% 100%
1.4 Strategic Objectives:
15. 3.3 Resources & Capabilities
Tangible Resources Intangible Resources
Capabilities
Financial:
• We were able to raise money by obtaining
long term debt on every round.
• We had money on hand from round 0 – 2.
• We had an emergency loan on round
three.
• We bought and sold capacity to raise
money.
Physical:
• We have invested a lot of money on
machinery.
Technological:
• We increased our automation level in the
first two rounds.
Organizational:
• We work according to our strategic plan,
which is low cost.
• We have an excellent evaluation for some
of our products.
Human:
• All our employees are capable and well trained
to do their job.
• All our headcount are trustworthy, which
helps the success of the company.
• Every employee in the organization can share
any idea that can benefit our company.
Innovation & Creativity:
• We are looking for ways to create and establish
products that can differentiate us from our
competitors.
Reputation:
• Our brand name is known for the quality of
our products and the low prices that we offer
to our customers.
• We are focused on giving our customers what
they want.
Leadership:
• Our leadership team works hard on motivating
the individuals to achieve the company’s goals.
• We try to keep our employees happy; giving
them great benefits.
• We have outstanding customer service for all our
customers.
• We have great communication within the
company in every area of performance.
• Our human resource team does a great job
hiring, motivating and retaining human capital.
3- INTERNAL ANALYSIS
16. 3.4 Testing for Core Competence
Potential Source
of SCA
Valuable? Rare?
Difficult to
Imitate?
Difficult to
Substitute?
Effect on
Perform.?
Brand Image
Parity, No
Advantage
Innovation
Competitive
Advantage
High Quality
Products Parity, no
advantage
Financial
Temporary
Advantage
Human Skills Parity, no
advantage
Competitive advantage
rendered unsustainable
No advantage. Must be Valuable
AND Rare for advantage