ERIE_B9

Industry C72515

Round 1

Initial focus on Performance (Edge); Low (Ebb) and Traditional (Eat)

segments to increase market share

Automation levels increased for these sectors

Issued Equity for $2.5 billion and Bonds issued worth $7billion

Expected:

Increase in market share ~1%

Ebb performed well, was liked by customers

Echo performed well and expected demand was equal to the predicted demand

Not Expected:

Decrease in stock price, end closing stock price down by $2.42

Eat and Egg ended up in the outer circle in the perceptual map, not keeping up with
the industry changes due to lack in R&D

Stock out of Ebb, Eat, Edge and Egg as actual demand beat our forecast

High employee turnover

Round 2

Aimed to better understand the market demand for each product,

Increase production and increase automation levels for low end and
traditional segment products (Ebb, Eat)

Focus on HR initiatives to decrease employee turnover and increase

employee productivity

Initiated R&D for new product in the performance segment to

continue dominating market share in the performance segment

Expected:

Issue of equity to improve Debt/Equity ratio leading to improvement in credit rating

Not Expected:

Net loss leading to sharp decline in ending stock price by $17.48

Stock out of Edge despite taking an optimistic case of demand growth

Shortfall in cash and kick in of emergency loan

Slight decrease in market share by ~1.8%

Round 3

Invested a total of $750,000 to bring about cost reduction synergies

Partial sell off of production capacity to meet immediate cash needs to repay the
emergency loan

Improvement in R&D of all other product

Expected:

Partial increase in market share

Significant improvement in the stock price

Repayment of loan

All products brought inside the inner circle of the perception map

0 employee turnover

Improvement in credit rating (C to B)

Not expected:

The magnitude of increase in the stock price (more than 120% increase)

Stock out of 4/6 products including the new product

Round 4

Launch of new product, Emb, in the performance segment

Initiated R&D for new product in the High Segment (Err), to increase our
Market share in the segment

We shifted err to high end market segment with the help of research and
development.

Expected:

Net profits have improved from the products we have in the market.

Our cash position, when compared with the previous rounds, has improved. This
gave optimism to focus on the sales and marketing.

Unexpected:

Emb sales was much lower than expected. This lead to negative profit margin.

This removed the levee we had previously.

Round 5

Since we saw a negative growth rate, we planned to produce as per market

expectations. We improved cost of research and development on emb and
err to boost sales of these two products so that market share gets improved
for better results.

Expected:

Increase in market share

Unexpected:

Emergency loan kicked in.

High level of inventory left with us. This lead to plummeting of stock prices.

Round 6

The high Emergency Loan forced us to focus on cost reduction initiatives,

including lower Marketing expenditure for old High segment product, Echo

Significant sales and promotional budget allocated to the new High segment
product, Err

Phase out of capacity for the old Performance segment product, Edge was
initiated with a near ~50% reduction in capacity

Sales and advertising expenditure on the low end product Ebb decreased to
compensate for the R&D expenditure made on it

Expected:

Stock out of the new Performance segment product, Emb

Unexpected:

Below forecast total sales and the consequent kick in of emergency loan

Stock out of Edge despite the bare minimum sales and promotion budget allocated to it.

Round 7

Focused on increasing Marketing expenditure, as decreasing marketing

resulted in very less sales

Phased out product Echo

Expected:

Increase in Market share and profits

Increase in Stock Price

Not Expected:

Credit rating improvement to BB

Round 8

Sell off of capacity across 4 product segments for utilization of 2nd shift
following wage hikes, trainings and other HR & TQM initiatives to ensure that
we dont incur a loss

Owing to the exceptional performance of the performance segment product,

Edge, we dropped the idea for its phase out and continued to produce with
existing capacity but with a greater sales and promotional budget to increase
customer awareness and accessibility

Expected:

Stock out of Err

Net profit ($5.7mm)

Stock price increase (almost doubles from $18.8 to $36.33 per share)

Improvement in credit rating (BB to BBB)

Unexpected:

Cannibalisation of sales of Edge by Emb

Sales of only 1/3 of the inventory for traditional product Eat