Capstone Strategy Overview

STRATEGY OVERVIEW

The initial plan we created was a two part business strategy for our market segments. The traditional and low-end segments were treated equally with an emphasis on a broad cost leader strategy. Pricing was on the low end and investing in automation and TQM initially would help us control our contribution and profit margins. We would spend less on promotion and sales and instead we would focus on market share and profits. The latter three segments, (high-end, performance, and size) would be treated equally as well and would employ a broad differentiation strategy. Initially we would invest a lot of our resources in R&D to keep our products fresh. Advertising and sales would be spent on heavily in order to maximize awareness and accessibility and we would buy capacity on an as needed basis. Our prices in these segments would be higher but that would be due to the lower margins these segments tend to have.

All of our plant investments would be financed with the issuance of bonds not stocks. Our thinking here was that our EPS ratio would decrease due to its denominator increasing with the issuance of outstanding stocks so we would avoid employing that. Each market segment would have a strong representation from us but we decided as a team to only develop one product per segment and focus all of our resources on strengthening each particular product. The factors with the highest level of importance in the Customer Buying Criteria table would be our main focus. Each segment has the four factors ranked differently and the top two in each individual segment will have our highest priority.