Bankrupt or Bust Industry 2

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Bankrupt or BustIndustry 2 Firm 1

• December 5, 2000
• Nathan Head
• Nicole Carlson
• Dan Geurts
• Chris Battles

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Topics

• Industry Analysis
• Company Analysis
• Recommendations for the Future

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Industry Analysis 5 Forces

• New Entrants Product differentiation is low,
  capital requirements are low, and switching costs
  are low.
• Normally a high risk but game limitation makes
  this a zero risk

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Industry Analysis 5 Forces

• Substitution A wide variety of substitutes
  exists including other transportation and other
  entertainment activities.
• Normally a high risk but game limitation makes
  this a zero risk

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Industry Analysis 5 Forces

• Buyers Threat of backwards integration for game
  purposes is low but product differentiation is
  also low.
• The bargaining power of buyers is medium.

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Industry Analysis 5 Forces

• Suppliers The information on suppliers is
  relatively unknown for game purposes. Our group
  assumed low risk.
• The bargaining power of suppliers is low.

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Industry Analysis 5 Forces

• Rivalry Although most of the other forces are
  relatively low for the industry, the threat of
  rivalry among competing firms is high. In fact,
  it is the driving force of the simulation.
  Product differentiation is low, switching costs
  for consumers are low, exit barriers are high,
  and strategic stakes are high.
• The threat of rivalry among competing firms is
  high.

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Industry Strategies

• Each firm in the industry began with equal
  financial resources, equal products, and equal
  information. All of this added to the need for
  each firm to develop a strategy that would help
  their firm to gain a competitive advantage over
  the other firms.
• Strategies
• Differentiation strategies
• Expand into additional product lines (Racer,
  Leisure, etc.).
• Increase awareness and image of current products.
• Increase quality.
• Cost leadership strategy
• Reduce price and reduce internal costs.

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Bankrupt or Bust Strategies

• Employee Level Strategy
• We want our employees to be satisfied with their
  jobs and motivated to increase the companys
  performance through increased quality and
  increased production levels.
•  
• Additional strategies to achieve the above goals
• Increase training levels.
• Continuously increase salaries every year.

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Bankrupt or Bust Strategies

• Manufacturing Level Strategy
• Initiate a total quality management (TQM)
  approach to manufacturing. Our goals are to
  maintain the highest quality level for our
  products, attempt to achieve zero defects, and
  reduce finished goods inventory to a level of
  zero. We also want to maximize productivity.
• Additional strategies to achieve the above goals
• Increase batch size.
• Decrease setup times.
• Increase supplier relations.
• Increase training.
• Cause demand for our products to be higher than
  supply.
• Reduce breakdowns.
• Increase quality control and inspection.

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Bankrupt or Bust Strategies

• Market Penetration Strategies
• We want our product to be the most widely known
  product in the industry. We want our brand name
  to have the best image. Our companys end goal
  is to increase our market share as high as
  possible and squeeze out the competition.
• Additional strategies to achieve the above goals
  
• Increase advertising every year for each product.
  
• Increase PR every year for each product.
• Increase support for distributors every year.
• Increase brand advertising every year.
• Increase plant size and employees every year.

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Bankrupt or Bust Strategies

• Product Development Strategies
• We want our products to conform to the exact
  specifications our customers desire. Using
  market research, our company will continuously
  develop new products and redevelop old products
  to match the markets needs. In addition, we
  will work to decrease the cost of our products
  through product development.
• Additional strategies to achieve the above goals
  
• Develop new products until all 5 product lines
  are complete.
• Once we have a product for all 5 markets, our
  company will begin redeveloping existing products
  in order to match the customer specifications for
  each product line and also decrease the costs to
  manufacture each product line.

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Bankrupt or Bust Strategies

• Financial Strategies
• Our main financial goal is for our share value to
  be higher than any other companys share value in
  the industry. We also want to maximize
  shareholder benefit by increasing sales and net
  profit each year. Finally, our company needs to
  maintain a respectable debt to equity ratio.
• Additional strategies to achieve the above goals
• Continually pay dividends at an increasing rate.
• Issue additional shares of stock each year.
• Eventually pay off all our long-term debt.
• Increase our investor PR every year.

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Manufacturing Capacity Usage
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Manufacturing Capacity
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Industry Sales
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Industry Profit
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Market Share
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Industry Share Value
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Summary of Financial Results 2006

• Total sales were 138 million.
• Total profit was 35 million (Approximately 25
  profit per sales dollar).
• Share price was 105.10 per share.
• Plant production time was 91.3 of total
  operating time.
• Total market share was 71.8.
• The warranty rate for our products was less than
  0.1.
• Our cash on hand was 107 million dollars.
• Our debt to equity ratio was 17.
• Book equity totaled 100 million.

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Bankrupt or Bust Strengths

• Low Cost
• Skilled Employees
• High Quality, Zero Defects, Zero Inventories, and
  High Efficiency (TQM)
• High Awareness/Product Image
• RD
• High Capacity
• Increased Channel Support

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Bankrupt or Bust Weaknesses

• Price Due to the increased quality,
  advertising, and PR, our company was not able to
  achieve the lowest price in the industry.
• Delivery Due to our zero inventory strategy, it
  was not uncommon for distributors to be sold out
  of our products. As a result, if a store sold
  out of our bikes, the customer simply purchased
  our competitors bikes.

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Recommendations for the Future

• Although our company currently has a competitive
  advantage, it is an advantage that could easily
  be imitated within a few years simulation time.
• The firm should continue to expand and grow by
  following the company strategies.
• The firm should attempt to lower costs and also
  lower prices.
• The game does not allow a company to open a
  second plant, therefore if the option were
  enabled, our firm would purchase one of our
  competitors in order to expand into a second
  plant.

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Questions?
?
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• Thank You for your time!