competitive advantage from the bottom uphome.kelley.iupui.edu/kwendeln/j411/competitive...advantage...
TRANSCRIPT
Competitive Advantage from the Bottom Upby Daniel Smith
Most discussions of competitive advantage are presented from a bird's eye perspective . If you are a boardmember, or an industry analyst, or if you are simply looking for a good stock to buy, the big picture approachmakes sense.
Let's look at a typical discussion . Put this white paper aside, and link tohttp://www.quickmba .com/strategy/competitive-advantaqe . The discussion is only a page or so long, yet it isquite good – terse and to the point.
Hopefully you just read it . Over the years I have directed many students to it and to pieces like it. Thestudents have then turned to me and said, "I don't get it . How do I get a competitive advantage inCapstone?" And my response is usually, "Your Capstone company is no different than any other company.You use the same tactics ." I would then show them the tactics and they would say, "Oh . So that's what acompetitive advantage is ."
This white paper attempts to do in print what I usually do in the breakout room . It takes the bottom upapproach to competitive advantage . We will use a Capstone Courier that was taken from a previous classchosen at random. (Reference to the school and students have been removed, but it was at one point a liveclass with six teams in Round 3 .) You will find the Courier at the bottom of this document . I recommend thatyou print it or open up a second window in Word so that you can refer it as we look for competitiveadvantages.
What is a competitive advantage?Simply put, Competitor A offers more of something that the customer wants than Competitor B.
Turn to page 7, the High End segment page . Looking at the Buying Criteria, the customer's top priority isPositioning . On December 31, 2007 the ideal positioning was at Performance 11 .6 and Size 8 .4 . Looking atthe Perceptual Map or at the table at the bottom of page, the best positioning was offered by Adam.
We could say that on the day this report was printed, Adam has a small competitive advantage over Cid inpositioning, and a significant advantage over Dixie, with Echo somewhere in between.
When looked at this way, identifying a competitive advantage is easy . You simply run through everything acustomer could care about and ask, "How does my product compare with its competitors?" Let's prioritizethe list of things a customer cares about in the High End.
1. Delivery. We tend to take this for granted, but it is the most important thing a customer cares about.Without delivery, other considerations are moot . Looking at the table at the bottom of the page,notice that every product stocked out. In the Statistics box at the top of the page, over 400thousand units of demand could not be met . The stock out produced big winners and losers, ashighlighted in the "Market Share Actual vs . Potential" chart . Bid, a terrible High End product(actually repositioned as a Traditional product) was the number 3 seller. Bid deserved 3% shareand captured 19% . Fortunes were left on the table by Adam and Cid.
2. Satisfying the rough cut criteria . "Rough cuts" set an absolute limit on what a customer can buy.They define segments in any industry. In Capstone, the High End segment's rough cuts are:
a. The product must fall within the outer segment circle on the perceptual map.
b. The reliability must be above 15000 hours MTBF (5000 hours below the expected rangeof 20000 to 25000).
c. The price must be within $4 .99 of the expected range, and that applies above or below therange. In Round 3 the High End price rough cuts were at $23.51 and $43 .49.
In this example, the secret of Bid's success is that it passes all of the rough cut criteria, anddesperate customers are willing to buy anything that meets the minimums .
3. The "Product" design . Recall "the 4-P's" – Product, Price, Promo, and Place. In Capstone theproduct design is taken from Positioning, Age, and Reliability . Earlier we looked at Positioning, butsimilar observations apply to Age and Reliability . Looking at the table at the bottom of page 7, Cidhas a slight Age advantage over Adam, and an important one over Echo . However, all arevulnerable to a new product, since the perfect age is 0 .0 . Similarly, Adam has a reliabilityadvantage over Cid and Echo, which in turn have an advantage over Dixie.
4. Price . Be careful here . From a customer's viewpoint, a lower price offers an advantage . However,price slips into something we will consider below, "sustainable competitive advantage" . As pricegoes down, margins go down . Obviously negative margins cannot be sustained, and even smallmargins will be avoided . On the other hand, the customer is oblivious to your margins, seeing onlythe price . In the example on page 7, Echo attempts to overcome a bad design with a $4 price cut . Ifwe compare Echo with Dixie, a similar bad design, we can get some sense of the price cut'simpact. Looking at the Market Share chart, we might conclude that Echo's price cut increased ourshare about 3%. Was it worth it? Probably not, because Echo missed $4 on every unit it wouldhave sold at $38 .49.
5. Promotion. Customers want to know about your product . Looking at the table at the bottom of page6, Adam has 62% awareness versus Echo's 46% . If all other factors were identical, Adam wouldoutsell Echo simply because more customers know about it.
6. Place. Customers want to be able to find your product and work easily with your company.Capstone evaluates this in the Accessibility chart at the top of page 7 . Chester, with accessibility of70%, has a clear advantage over other competitors, including Andrews, its closest competitor at56%.
7. Salesmanship. Customers want human interaction . We observe that given two identical competingproducts, if one has a salesman, and the other does not, chances are the salesman will win thesale. In the reports this will show up in the sales budget at the bottom of page 7 . Capstoneassumes that the bigger your Sales budget, the more sales force time you are allocating to theproduct. Cid, with a budget of $1593 will have a slight advantage over Adam and a largeradvantage over Echo.
8. Credit terms. Customers want credit terms. A company demanding cash payment will see 60% ofthe demand of a company offering 90 day terms . To see if any company is offering better termsthan another, turn to page 3 of the Capstone Courier . Divide Accounts Receivable by Sales at eachcompany, and multiply by 365 . Chester has an advantage, with a 60 day credit policy versusAndrews at 30 days.
How would you get a competitive advantage in any of these 8 categories? Here is a list of tactics:
1. Delivery. An advantage here derives from good forecasting and production scheduling . In this case,Chester and Andrews had the production capacity, but failed to forecast their demand . This costAndrews 8% of the market, and Chester a whopping 12% . Consider, 12% of a 4 million unit marketis 481 thousand units . Chester had already paid for its fixed costs, even its interest costs . It wasmaking Cid for $25.65 and selling it for $38 .49, a margin of $12 .84 . Multiply by 481 thousand unitsand we discover a total missed opportunity of $6 .2 million . After tax profits at Chester should havebeen $4 million higher.
2. Rough cuts. The advantage here comes from recognizing segment boundaries and avoidingmistakes.
a. Consider places where segments overlap . Sometimes a product can pick up sales fromtwo segments. For example, bring up page 11, the Perceptual Map, and consider Bid.Although clearly a Traditional product, Baldwin hedged by offering a product that couldsatisfy a High End customer in a pinch . We could debate whether this was a good idea ornot, (although it did pay off) but the underlying issue addresses whether segmentboundaries are "strong" or "weak" . For example, the price boundary between Traditionaland High is strong, but between Traditional and Low it is much weaker . A team coulddevelop an advantage based upon capturing incremental sales from an overlappingsegment.
b. Recognizing potential mistakes confers two benefits . First, you avoid the mistake . Second,you consider ways to take advantage of a competitor's mistake – for example, bychoosing to carry a little extra inventory just in case your competitors stock out. In the High
End segment Capstone teams often make rough cut mistakes around pricing andpositioning. The price range falls $ .50 each round. If you are priced at the top of range and
forget to reduce your price $ .50 each round, 10% of your demand bleeds away . Similarly,
teams occasionally offer too much positioning, placing their product in the rough cut aheadof the segment . This is especially true during new product introductions.
3. Product design . Simply put, make every effort to give the customer what they want . If their top
priority is positioning, give it to them . Of course, there is always a downside . It costs money, eitherdirectly in the R&D budget or indirectly in material and labor costs to give the customer a perfect
design.
4 . Price . First cut your material and labor costs . After the savings have materialized, then cut your
price .
a. To cut your material costs, place the product in the trailing part of the segment or reduce
the MTBF specification . Notice that this is in direct conflict with what the customer wants(except in the Low End), but if the customer prefers price to the design, you could arguethe customer is willing to sacrifice design.
b. To cut your labor costs, automate the production line . As always there is a trade-off . Whenyou automate, it becomes increasingly difficult to reposition products, an important liability
in the high technology segments.
c. You may also have opportunities to reduce the cost of goods via HR and TOM initiatives.
5. Promotion . Spend money on Promotion beyond what is necessary to replace lost awareness . It is
possible to reach 100% awareness by spending heavily for several years.
6. Place . Spend money on the Sales budget to drive up accessibility, and place a second product in
the segment. To reach 100% accessibility you will need two products in the segment.
7. Salesmanship . Spend more money on the Sales budget . This can be useful to move excess
inventory.
8. Credit terms . Offer better terms . The downside is that it is expensive to give customers a loan . You
must either borrow money to extend the loan, or tie up working capital that could be put to use in anincome producing asset.
What is a sustainable competitive advantage?Next we should consider the terms "sustained" and "sustainable" competitive advantage . They ask thequestion, "If we do this tactic to gain a competitive advantage, how long can we keep the advantage?"
As a child, chances are you experienced an Easter egg hunt . Let's use the hunt to make the distinctions
about competitive advantage clear.
A group of children are lined up at the starting line of the Easter Egg hunt . In front of them is a playing field
scattered with eggs. There are three groups of children – small (ages 2 to 4), young (5 to 7), and older (8+).The goal is to grab the most eggs and put them into a basket.
An excited two year old boy jumps the gun and toddles onto the field . The child's parents snatch the boy
back to the starting line . During the time the child was on the field, he had a competitive advantage, but theadvantage could not be sustained . He might even have secretly snatched an egg, but so far as the future isconcerned, he no longer has any advantage over other children . His advantage was temporary, albeit real
while it lasted.
Business examples of this sort of temporary competitive advantage include a price cut, a promotional eventlike a sale, or simply telling the sales force to push a particular product this month . The key characteristic is
that the effect is temporary but real while it lasts .
The officials signal that all the small children ages 2 to 4 can begin the hunt . They rush out onto the field andbegin picking up eggs . They have a sustained advantage over older children . They are further onto the field,and they have a collection of eggs . A sustained advantage does have a memory . It confers some of itsbenefits into the future . Think of it as a head start . At a minimum, the small children enjoy an advantagewhile their competitors are off the field, plus the time it will take for competitors to catch up.
Business examples of this sort of "sustained" competitive advantage include an advertising campaign, a newdistribution center, a product update, or even a patent . The key characteristics are that the effect has bothshort term and long term components . The short term component is the temporary advantage describedabove. The long term component recognizes that it will take time for competitors to recognize and matchyour advantage . During the temporary period and the catch-up period you have sustained advantage.
The officials signal that the 5 to 7 year old children can begin the hunt. They quickly overtake the smallchildren and move further out onto the field . The small children's sustained advantage remains relative tothe 8+ year olds, but it has evaporated relative to the 5 to 7 year olds . Further, the 5 to 7 year olds have asustainable competitive advantage relative to the small children . Once ahead of the little ones, the little onescan never catch up. The gap keeps widening.
Business examples are more difficult to find, which is why they are so prized . In general tactics fall into twocamps – erect barriers to entry, or find something that is a perpetual marathon where competitors cannotever catch up . For example, a patent would erect a barrier to entry, making the "temporary" advantage quitelong. 100% customer awareness or accessibility make it expensive for new competitors to enter the market.Riding a wave change in technology (electronics, software, nanotechnology) would offer a marathon.
Finally the officials release the 8+ year olds. They quickly overtake the little ones, then the 5 to 7 year olds.The situation is now as follows . The little ones have no advantage in the future, and their parents collectthem . The 5 to 7 year olds have a sustainable competitive advantage over the little ones . They are loath togive up, but they get few of the remaining eggs . The older children have a sustainable competitiveadvantage over both groups . At the end of the egg hunt, only the older children remain on the field.
Business examples are easy to find in the historical record . Any company that finds a sustainablecompetitive advantage survives and prospers . Those that do not fail and exit the stage . It follows that allcompanies keep a sharp eye out for sustainable competitive advantages
Competitive advantage in CapstoneNow let's look at a list of tactics in Capstone and ask the question, "Does this tactic offer a temporary,sustained, or sustainable competitive advantage?"
1. We increase our promotion budget . This buys us increased awareness in the future . It presents asustained competitive advantage . However, our competitors could catch up, so it is not asustainable competitive advantage . The best we can hope for is that we reach 100% awareness.This might present a weak barrier to entry to new potential competitors, who would think, "It willtake several years to catch them in awareness ."
2. We increase our sales budget . This buys us increased accessibility . The arguments are much thesame as with promotion . We have a sustained advantage, but at best we can achieve a weakbarrier to entry.
3. We improve our product designs . Similar reasoning, similar result.4. We do numbers 1, 2, and 3 all at once . Or put another way, we differentiate our product . This
approaches a sustainable competitive advantage, in that it will dissuade all but the mostdetermined competitors . Also notice that all of the elements of branding are in place – except one,a barrier to exit . In branding we hope that customers will also experience some exit cost, even if itis only that they are comfortable and familiar with our product.
5. We cut the price without addressing our costs . This offers a temporary advantage, which mightmake sense if we have excess inventory, but is not sustainable over the long haul.
6. We increase automation . This confers a sustained advantage, and works much the same as points#1, #2, or #3 . The barrier to entry is financial instead of time, so with deep pockets a competitor canovercome the barrier quickly . On the other hand, only serious competitors will take the step.
7. We add a new product in the segment, either by invention or repositioning . This confers asustained advantage in the segment, although our two products cannibalize each other somewhat.However, the potential for sustainable advantage is also here . Try this thought experiment . Starting
with four competitors, consider what happens when one adds a second product . Then when asecond competitor adds a product . As each product is added, the remaining competitors are lessand less motivated to add another product. To gain a sustainable advantage, we endeavor to haveone more product than our nearest competitor . The cost is that with every product, we furtherincrease our SG&A expenditures within the segment.
8. We offer better credit terms . At best this is a sustained advantage, because it is easily matched bycompetitors.
Competitive advantage and other stakeholdersCompetitive advantage applies to different types of stakeholder as well . Normally the term applies tocustomer relationships, but it is easy to see that bankers, stockholders, bondholders, and vendors have theirown list of desirable features in a company.
This is especially relevant in raising capital . More capital means more assets, and as a generalization, alarge asset base confers an advantage over a small asset base.
In the Courier, turn to Page 3 . In the Balance Sheet Survey, scan across the balance sheets looking at twonumbers — Plant and Equipment, and Total Assets . Knowing nothing else about the companies, who wouldyou predict would have the strongest competitive advantages going into the future? I would be interested inFerris.
More simply, suppose you saw that Andrews had twice the assets of Baldwin . Assuming equal managementskill, Andrews has a clear advantage. Their assets would translate to more products, higher automation,better credit terms, etc.
When considering competitive advantage, put customers first, but close on their heels put the capitalmarkets. If you can get more highly productive assets on the playing field than your competitors, chancesare you will overwhelm the competition.
The big picture on competitive advantage.There is a relationship between your success with customers and your access to capital, and it cuts in bothdirections.
• Succeed with customers, and your profits will be good,• Success with customers will make it easier to attract capital• More capital leads to more assets• More assets means you can serve customers even better.
A virtuous circle, which in the end is the competitive advantage that observers want to see in action.
ASSIGNMENT
Using the Capstone Courier attached to this document, answer the following questions:
1. Looking at page 4, does any company have a competitive advantage in the Low End segment nextround? If so, why? What could they do? (Tip . What do Low End customers want? Who is in aposition to give that to them?)
2. Looking at page 4, Andrew's Able product is clearly better than Baldwin's Baker product, but in theMarket Share Actual vs. Potential chart, Baldwin had potential demand of 38% while Andrews hasonly 16%. What is the secret of Baldwin's competitive advantage? What should Baldwin do next?What should Andrews do?
3. In an unusual lawn ceremony involving hari kari knives, the Andrews team's Acre product managerhas atoned for his mistakes. (See page 6 .) What did the Acre product manager do right to create acompetitive advantage? What did he do wrong that resulted in his demise?
4. Pull out your crystal ball and turn to page 8 . How many competitors will there be in the segment inthree or four years? What can Ferris do to encourage this outcome?
5. Turn to page 3 . Looking at the SGA line in the income statement, which competitor is most likelypursuing competitive advantage through differentiation?
6. Turn to page 4 . Which competitor should worry Baldwin in the Traditional segment? Why?
Round 3, 12/31/2007
For Industry : C9411
Cheap at any price
Andrews Bonus Baldwin Bonus Chester Bonus
Digby Bonus Erie Bonus Ferris Bonus
Andrews Baldwin Chester Digby Erie Ferris
ROS 4.8% 3.4% 7 .1% 7.7% 3.7% 12.0%
Turnover 1 .33 1 .37 1 .11 1 .14 1 .10 1 .02
ROA 6.4% 4 .7% 7.9% 8.8% 4.1% 12.2%
Leverage 1 .7 1 .8 1 .7 1 .6 1 .6 1 .9
ROE 11 .0% 8.5% 13.8% 14 .1% 6 .7% 23.4%
Emergency Loan $0 $0 $0 $0 $0 $0
Sales $149,810,766 $157,498,347 $139,664,298 $138,036,281 $120,683,129 $134,132,686
EBIT $16,374,419 $13,883,245 $20,588,244 $21,630,333 $11,742,507 $32,463,326
Profits $7,210,223 $5,355,952 $9,962,354 $10,638,386 $4,518,772 $16,124,338
Cumulative Profit $21,962,351 $19,814,622 $28,954,549 $32,893,153 $17,609,434 $23,824,174
SG&A % Sales 9.7% 8.3% 10.3% 10.6% 8.8% 12.4%
Contrib. Margin % 30.3% 23.0% 30.9% 33.8% 27 .0% 44.4%
D VarCosts D Depr D SGA D Other ® ProfitPercent of Sales
Erie
FerrisDigbyAndrews Baldwin
Chester
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Page 1
CAPSTONE COURIER
C9411
Round 3, 12/31/2007
STOCK MARKET SUMMARYCompany Close Change Shares Market
Cap ($M)BookValue
EPS Dividend Yield PIE
Andrews $39 .98 $2.86 2,000,000 $80 $32.77 $3 .61 $0.00 0 .0% 11 .1
Baldwin $39 .04 $4.56 2,055,962 $80 $30 .83 $2 .61 $0 .00 0 .0% 15 .0
Chester $46 .46 $3.66 2,006,236 $93 $36 .08 $4 .97 $0 .15 0 .3% 9.4Digby $49 .43 $3.11 2,006,272 $99 $37 .71 $5 .30 $0 .19 0 .4% 9.3
Erie $37 .68 $5.74 2,313,069 $87 $29 .27 $1 .95 $1 .50 4 .0% 19.3
Ferris $49.89 $18 .96 2,049,890 $102 $33 .55 $7 87 $0 .10 0 .2% 6.3
Closing Stock price
$60
I$50 __ . .. .
,: -•-Andrews$40 _
Tr'-i-Baldwin
Chester
-NE-Erie$20
1-•--Ferris$10
2004
2005
2006
2007
2008
2009
2010
2011
2012
BOND MARKET SUMMARYCompany Series# Face Yield Close
S&PAndrews 12 .552008 $10,883,516 12 .4% $100.99
BB14 .052010 $20,750,000 13 .2% $106.31
BB110.852015 $7,100,000 11 .1% $96 .96
BB
Baldwin 12 .552008 $13,833,333 12 .4% $100 .72
BB14 .052010 $20,750,000 13 .3% $105 .55
BB`10 .852015 $12,000 11 .3% $95 .48
BB,10 .952016 $2,500,000 11 .4% $95 .69
BB.11 .052017 $5,000,000 11 .5% $96 .00
BB'
Chester 12 .552008 $11,370,984 12 .4% $100 .99
BB14 .052010 $20,750,000 13 .2% $106 .31
BB .10 .852015 $50,000 11 .1% $96 .96
BB,11 .752016 $5,000,000 11 .5% $101 .64
BB
Digby 12 .552008 $13,833,333 12 .3% $101 .4414 .062010 $20,750,000 13 .0% $107 .59
Erie 12 .552008 $13,833,333 12 .3% $101 .35
BBB-.
14 .052010 $20,750,000 13 .0% $107.33
BBB
Ferris 12 .552008 $11,333,333 12 .4% $100 .4514 .052010 $20,750,000 13 .4% $104 .80
B10.852015 $22,000,000 11 .5% $94 .04
B12.552016 $3,000,000 12 .2% $102 .66
B
Page 2
CAPSTONE COURIER
C9411
Round 3, 12/31/2007
Cash Flow Statement Survey Andrews Baldwin Chester Digby Erie Ferris
Cash flows from operating activitiesNet Income (Loss) $7,210 $5,356 $9,962 $10,638 $4,519 $16,124
Adjustment for non-cash items
Depreciation $9,455 $8,293 $8,137 $9,199 $8,440 $10,427
Extraordinary gains/losses/writeoffs $50 $0 $38 $0 $0 ($2)
Changes in current assets and liabilitiesAccounts payable $2,306 $5,052 $4,481 $1,729 $1,387 $2,465
Inventory $0 $8,187 ($5,026) ($9,535) ($6,237) ($2,091)
Accounts receivable ($97) ($4,718) $506 ($244) ($488) ($2,503)
Net cash from operations $18,924 $22,170 $18,098 $11,788 $7,621 $24,421
Cash flows from investing activities
Plant improvements (net) ($15,000) ($10,600) ($6,500) ($8,520) ($12,800) ($5,188)
Cash flows from financing activitiesDividends paid $0 $0 ($301) ($381) ($3,470) ($205)
Sales of common stock $0 $1,500 $0 $40 $10,000 $0
Purchase of common stock $0 $0 $0 $0 $0 $0
Cash from long term debt issued $0 $5,000 $0 $0 $0 $0
Retirment of long term debt ($3,000) $0 ($2,500) $0 $0 ($2,500)
Change in current debt ($5,407) ($2,006) ($6,917) ($4,167) ($6,917) ($6,917)
Net cash from financing activities ($8,407) $4,494 ($9,718) ($4,508) ($386) ($9,622)
Net change in cash position ($4,483) $16,064 $1,880 ($1,240) ($5,566) $9,611
Closing cash position $21,192 $38,982 $36,123 $22,383 $20,698 $19,388
Balance Sheet Survey Andrews Baldwin Chester Digby Erie Ferris
Cash $21,192 $38,982 $36,123 $22,383 $20,698 $19,388
Accounts Receivable $12,313 $12,945 $22,959 $13,993 $9,919 $16,537
Inventory $215 $6,749 $9,535 $14,619 $2,091
Total Current Assets $33,505 $52,142 $65,831 $45,910 $45,236 $38,015
Plant and equipment $143,330 $124,400 $122,050 $137,980 $126,600 $156,400
Accumulated Depreciation ($63 .983) ($61,779) ($61,769) ($62,695) ($61,926) ($62,272)
Total Fixed Assets $79,347 $62,621 $60,281 $75,285 $64,674 $94,128
Total Assets $112,852 $114,763 $126,111 $121,196 $109,910 $132,143
Accounts Payable $8,582 $9,291 $16,563 $8,198 $7,613 $6,277
Current Debt $0 $0 $0 $2,750 $0 $0
Long Term Debt $38,734 $42,095 $37,171 $34,583 $34,583 $57,083
Total Liabilities $47,316 $51,386 $53,734 $45,531 $42,196 $63,360
Common Stock $18,276 $20,276 $18,526 $18,516 $28,276 $20,276
Retained Earnings $47,260 $43,100 $53,851 $57,148 $39,438 $48,507
Total Equity $65,536 $63,376 $72,377 $75,665 $67,714 $68,783
Total Liabilities & Owner's Equity $112,852 $114,763 $126,111 $121,196 $109,910 $132,143
Income Statement Survey Andrews Baldwin Chester Digby Erie Ferris
Sales $149,811 $157,498 $139,664 $138,036 $120,683 $134,133
Variable Costs (Labor, Material, Carry) $104,415 $121,254 $96,543 $91,350 $88,142 $74,525
Depreciation $9,455 $8,293 $8,137 $9,199 $8,440 $10,427
SG&A (R&D, Promo, Sales, Admin) $14,471 $13,143 $14,321 $14,573 $10,659 $16,683
Other (Fees, Write Offs, TOM, Bonus) $5,095 $925 $75 $1,285 $1,700 $35
EBIT $16,374 $13,883 $20,588 $21,630 $11,743 $32,463
Interest (Short term, Long term) $5,032 $5,458 $4,917 $4,895 $4,634 $7,073
Taxes $3,970 $2,949 $5,485 $5,857 $2,488 $8,887
Profit Sharing $162 $120 $224 $239 $102 $380
Net Profit $7,210 $5,356 $9,962 $10,638 $4,519 $16,124
Page 3
CAPSTONE COURIER
C9411
Round 3, 12/31/2007
Capacity vs . Production
3,000
4,000 5,000
6,0001 .000 2,000
El Capac Prod
7,000
Erie
Ferris
Production Information
Andrews
Baldwin
Chester
Digby
Name PricePrimary Units Units in Revision
Age
MTBFPfmn Size
Segment Sold Inventory
Date
Dec .31
Coord Coord
2nd Shift
AutoCapac-
Material
Labor Contr
mation
Plant
Cost
Cost Marg. & Over-
Nextity Next
Utiliz.
time
RoundRound
Able
Acre
Adam
Aft
Agape
Na
Baker
Bead
Bid
Bold
Buddy
Cake
Cedar
Cid
Coat
Cure
Daze
Dell
Dixie
Dot
Dune
Eat
Ebb
Echo
Edge
Egg
Fast
Feat
Foam
Fume
Trad 1,782 0 6-May-07 1 .8 18000 7 .4 12 .7 $25.99 $10.68 $7 .19 31% 0% 5 .0 2,000 99%
Low 1,584 0 24-May-00 7 .6 14000 3 .0 17 .0 $18.00 $5 .71 $7 .19 27% 0% 5.0 1,700 99%
High 891 0 1-Aug-07 1 .4 25000 11 .3 8 .7 $38 .50 $16 .20 $9.58 34% 0% 3.0 1,100 99%
Pfmn 663 0 2-Jul-07 1 .7 27000 11 .8 13 .7 $34 .00 $15 .23 $9.82 27% 6% 3 .0 835 104%
Size 545 0 6-Jun-07 1 .7 19500 5.7 7.8 $33 .25 $13 .09 $9.58 32% 0% 3.0 600 91%
0 0 0 .0 0 0.0 0.0 $0 .00 $0 .00 $0 .00 0% 0% 1 .0 150 0%
Trad 1,386 0 16-Aug-07 1 .7 17000 7 .3 12 .7 $27 .00 $10.50 $8 .41 30% 0% 4 .0 1,800 77%
Low 2,371 15 6-Aug-07 2 .5 13725 4 .0 15 .8 $19.00 $6 .68 $7 .97 24% 29% 5 .2 1,400 127%
High 1,188 0 10-Feb-07 3 .3 20000 8 .0 11 .7 $29.99 $12 .15 $10 .75 22% 33% 3.0 1,400 132%
Trad 792 0 23-Jul-07 1 .7 25000 7 .5 14 .2 $26.99 $12 .38 $10 .75 13% 33% 3.1 600 132%
Trad 693 0 11-Sep-07 1 .6 18500 6 .5 11 .9 $25.99 $10 .99 $10.26 18% 17% 3 .1 600 116%
Trad 870 373 6-Aug-07 1 .8 15000 6.4 13.4 $27 .99 $9 .19 $8.94 32% 0% 4.5 1,800 64%
Low 1,889 0 15-Jan-05 7 .6 13000 3.0 17.0 $22 .00 $5.49 $8 .65 35% 41% 5 .5 1,450 130%
High 714 0 18-Sep-07 1 .3 23000 10.6 8 .9 $38 .49 $15.44 $10 .21 34% 0% 3 .0 900 79%
Pfmn 691 0 26-Aug-07 1 .5 26000 12 .0 14 .5 $33 .49 $15.07 $10 .97 23% 20% 3 .0 625 111%
Size 691 0 28-Jul-07 1 .5 19000 5 .6 7 .7 $33.49 $13 .17 $11 .12 28% 25% 3.0 600 115%
Trad 1,541 539 4-Sep-07 1 .7 17300 6 .8 13 .2 $27.99 $10 .14 $7 .71 34% 15% 5.3 2,000 111%
Low 1,698 0 4-Aug-07 1 .9 14000 3 .8 16 .0 $19 .75 $6 .59 $6 .33 35% 11% 6 .0 1,700 106%
High 495 0 28-May-07 1 .6 22000 9 .8 10.3 $38 .99 $14 .16 $9.87 38% 3% 3.0 600 83%
Pfmn 644 0 28-Apr-07 1 .8 27000 10.8 14.6 $34 .00 $14 .66 $10 .17 26% 12% 3 .0 600 107%
Size 594 0 13-Jun-07 1 .8 19000 4.7 9.5 $33 .99 $11 .92 $9 .87 36% 3% 3 .0 610 97%
Trad 1,232 431 24-Mar-07 2.6 17500 6 .4 13 .6 $26 .00 $9.85 $8 .45 27% 0% 5 .0 1,800 66%
Low 2,008 467 26-Oct-07 2.4 14000 3 .5 16 .3 $19 .99 $6 .33 $8 .58 25% 79% 6 .0 1,400 177%
High 594 0 9-Jul-07 2.0 23000 10 .7 9 .3 $34 .49 $15 .30 $9 .66 29% 0% 3 .0 900 66%
Pfmn 396 0 20-Feb-07 1 .8 25000 10 .5 15 .2 $32.00 $13 .74 $9 .66 26% 0% 3 .0 600 66%
Size 495 0 18-Jun-07 2 .4 19000 5 .4 8 .6 $31 .00 $12 .60 $9 .66 29% 0% 3.0 600 83%
Trad 1,480 155 10-Jul-07 1 .7 14000 5 .8 13.5 $24 .70 $8 .57 $4.94 45% 0% 7 .0 1,800 91%
Low 2,747 0 30-Aug-07 1 .8 12000 2.5 16.8 $18 .30 $5.08 $3.05 56% 98% 9 .0 1,400 196%
Pfmn 756 0 22-Jun-07 1 .5 27000 13.2 13.4 $33 .49 $16 .30 $8 .16 27% 27% 5 .0 700 126%
Size 656 0 4-Oct-07 1 .5 20000 6.1 7.3 $33 .49 $13.79 $7 .74 38% 11% 5 .0 700 109%
Page 4
CAPSTONE COURIER
C9411
Round 3, 12/31/2007
Total Industry Unit DemandActual Industry Unit SalesSegment % of Total IndustryGrowth Rate
AccessibilityTraditional Statistics
Customer Buying Criteria
1 . AgeExpectationsIdeal Age = 2 .0
Importance47%
2 . Price $18 .50 - 28.50 23%3. Positioning Pfmn 7 .1 Size12.9 21%4. Reliability MTBF 14000-19000 9%
Perceptual Map
9,619 t
9,61929 .4%92%
2019 - -18 nnHn n nnHnnnnnnn1716 n~nnnnnnnnn
nnnnn ~~-~~ nnnnnnnn15
14 Mrl9}!fO nnnnnnnn13
nnn~111firMIE111112 nnn ~V~~~.nnnnnnnnn10 nnn `iInnnnnnnnnn9
nnHnnnnnnnnnnnnnnn654
32
o
nnn=HnnHnnnnnnnn~Hn HnnnnnnHn
nnnn_nnnnnnnnnnnnnnn
n~~nnnn~~ nnnnnnnnnnnnnnHHn~nnnnnn
0 1 2 3 4 5 6 7 8 9
10 11 12 13 14 15 16 17 18 19 20
Performance
Market Share Actual vs. Potential
q Actual II Potential
-40% -
35%
30% -
25%
20%
15%
to%- --
5%- Ii0 % _Ferris
i
-
-T-
. ..
Andrews
Baldwin
Chester
Digby
Erie
aN
Cl,
Top Products In Segment
NameMarket Units Sold Revision Stock Pfmn Size
List Price MTBFAge Promo Sales Customer
DecemberCustomer
Share
17%
to Seg
1,638Able
Date
6-May-07
Out
YES
Coord
7 .4
Coord
12.7 $25.99 18000
Dec.31
1 .8
Budget
$1,150
Budget
$1,594
Awareness
65%Survey
45Daze 16% 1,530 4-Sep-07 6 .8 13.2 $27 .99 17300 1 .7 $1,100 $1,520 63% 39Baker 14% 1,382 16-Aug-07 YES 7 .3 12.7 $27 .00 17000 1 .7 $1,200 $1,191 64% 41Fast 14% 1,363 10-Jul-07 5.8 13.5 $24 .70 14000 1 .7 $1,200 $2,200 66% 33Eat 12% 1,173 24-Mar-07 6 .4 13.6 $26.00 17500 2.6 $1,075 $953 45% 24Cake 9% 860 6-Aug-07 6.4 13 .4 $27.99 15000 1 .8 $550 $1,019 31% 23Bold 7% 657 23-Jul-07 YES 7 .5 14.2 $26.99 25000 1 .7 $250 $596 17% 23Buddy 6% 562 11-Sep-07 YES 6.5 11 .9 $25.99 18500 1 .6 $500 $596 17% 25Bid 5% 445 10-Feb-07 YES 8.0 11 .7 $29.99 20000 3 .3 $1,350 $794 42% 7Bead 0% 6 6-Aug-07 4 .0 15 .8 $19.00 13725 2 .5 $1,250 $794 29% 0Egg 0% 4 18-Jun-07 YES 5.4 8.6 $31 .00 19000 2 .4 $660 $675 14% 0
Page 5
CAPSTONE COURIER
C9411
Round 3, 12/31/2007
Low End
Statistics
Total Industry Unit Demand
12,488
Actual Industry Unit Sales
12,488Segment % of Total Industry
38 .2%Growth Rate
11.7%
Customer Buying Criteria
Perceptual Map
20 --1918 ,V~,~17
ii `~T1 I1 N16 _ mil:, ~l~ n15
~ • .
5 .- 113
n12 •aaa11199 ..~ ••
8 Unnn..n7-
5 r4 a.. .. .- ;.2
_
2
a00
1
2
3
4
5
6
7
8
9
1011121314151617181920
Performance
Market Share Actual vs . Potential
IoActual tiPaential
35%
30%
1
25%
20% Jr
--
_
- -
--
-
---
-- ---
-
1'15%
10%
5%
I
-
1Ii
Andrews Baldwin
Chester Digby
Erie Ferris
~
Accessibility
Andrews
i - .-°-.. 3Baldwin I
Chester f )
Digby I1 i
Erie!
Ferris ,~ ~.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
1.Price2.Age3.Positioning4.Reliability
Expectations$13.50 - 23 .50Ideal Age = 7.0Pfmn 3.2 Size16 .8MTBF 12000-17000
importance53%24%16%7%
Name
Feat
Market Units SoldShare
22%
to Seg
2,747Bead 19% 2,365Ebb 16% 2,008Cedar 15% 1,889Dell 14% 1,698Acre 13% 1,584Fast 1% 117Eat 0% 59Daze 0% 10Cake 0% 10Baker 0% 1
Top Products In SegmentRevisionDate
30-Aug-07
StockOut
YES
PfmnCoord
2 .5
SizeCoord
16.8
List Price
$18.30
MTBF
12000
AgeDec.31
1 .8
PromoBudget
$1,200
SalesBudget
$2,200
CustomerAwareness
65%
DecemberCustomerSurvey
18
6-Aug-07 4 .0 15.8 $19.00 13725 2.5 $1,250 $794 58% 13
26-Oct-07 3 .5 16.3 $19.99 14000 2.4 $755 $873 39% 10
15-Jan-05 YES 3.0 17.0 $22.00 13000 7 .6 $550 $637 30% 14
4-Aug-07 YES 3.8 16 .0 $19.75 14000 1 .9 $1,150 $1,520 62% 14
24-May-00 YES 3.0 17 .0 $18.00 14000 7 .6 $1,270 $1,328 62% 35
10-Jul-07 5 .8 13 .5 $24.70 14000 1 .7 $1,200 $2,200 33% 1
24-Mar-07 6 .4 13 .6 $26.00 17500 2.6 $1,075 $953 22% 0
4-Sep-07 6 .8 13 .2 $27.99 17 300 1 .7 $1,100 $1,520 31% 0
6-Aug-07 6 .4 13 .4 $27.99 15000 1 .8 $550 $1,019 17% 0
16-Aug-07 YES 7.3 12 .7 $27.00 17000 1 .7 $1,200 $1,191 32% 0
Page 6
CAPSTONE COURIER
C9411
Round 3, 12/31/2007
High End
Statistics
Total Industry Unit Demand
4,007Actual Industry Unit Sales
3,566Segment % of Total Industry
12 .3%
Growth Rate
16 .2%
Customer Buying Criteria
1 . PositioningExpectationsPfmn11 .6 Size 8 .4
2 . Age Ideal Age = 0 .03 . Reliability MTBF 20000-250004 . Price $28.50 - 38 .50
Perceptual Map
20
1918
17
1615
14
13
12
0
11
10
98765432
00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Performance
Name
Adam
Market Units SoldShare
to Seg
25% 891Cid 20% 714Bid 20% 699Echo 17% 594Dixie 14% 495Able 4% 145Aft 1% 25Baker 0% 3
Market Share Actual vs . Potential ID Actual n Potential
40%
35%
30%
z5% -
20% —
15% —
Io%
5% —
Andrews
Baldwin
Chester
Digby
Erie
Ferris
List Price MTBFAge
Dec.31PromoBudget
SalesBudget
CustomerAwareness
DecemberCustomerSurvey
$38.50 25000 1 .4 $1,100 $1,461 62% 42
$38.49 23000 1 .3 $1,075 $1,593 62% 36
$29.99 20000 3 .3 $1,350 $794 39% 1
$34 .49 23000 2.0 $740 $794 46% 21
$38.99 22000 1 .6 $700 $912 56% 11
$25.99 18000 1 .8 $1,150 $1,594 32% 0
$34.00 27000 1 .7 $780 $1,129 29% 0
$27.00 17000 1 .7 $1,200 $1,191 32% 0
Accessibilityj ~T~ I I I
Andrews
Baldwin
Digby
Erie
Ferris
,10% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Importance43%29%19%9%
H --
Revision
Stock Pfmn
Size
Date
Out Coord Coord
1-Aug-07 YES
11 .3
18-Sep-07 YES
10 .6
10-Feb-07 YES
8 .0
9-Jul-07 YES
10 .7
28-May-07 YES
9 .8
6-May-07 YES
7 .4
2-Jul-07 YES
11 .8
16-Aug-07 YES
7 .3
8 .78 .911 .79 .310 .312 .713 .712 .7
Top Products In Segment
Page 7
CAPSTONE COURIER
C9411
Round 3, 12/31/2007
Performance
Statistics
Total Industry Unit Demand
3,293Actual Industry Unit Sales
3,261Segment % of Total Industry
10.1%Growth Rate
19.8%
Customer Buying CriteriaExpectations
ImportanceMTBF 22000-27000
43%Pfmn12.4 Size13 .9
29%$23.50 - 33.50
19%Ideal Age = 1 .0
9%
1.Reliability2.Positioning3.Price4.Age
Accessibility _--J T___._—T_-_~T--T_.~___.
Andrews r iBaldwin
Chester
Digby
EriekiJ
Ferrisit0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Perceptual Map
20
-—19
I18 N R17 ~i~~
161414 • • !LI t ei a
at~t ~l
~rrrr13 mtsmna r~c121110987
I
6 -5
4
I
3
2
10
0
1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19 20
Performance
Market Share Actual vs . Potential
OActual n Pden6al ~l
25%
20%
15%
10%
5%
-
-
Andrews
Baldwin
Chester
Digby
Erie
Ferris
Top Products In Segment
NameMarket Units Sold
Revision
Stock
Pfmn
Size List Price
MTBF Age
Promo Sales
CustomerDecemberCustomer
Share
to Seg
Date
Out
Coord
Coord Dec.31
Budget Budget
Awareness
Foam 23%
756
22-Jun-07
YES
13 .2
13.4 $33.49
27000
1 .5
$1,175 $2,200
66%
41Survey
Coat 21%
691
26-Aug-07
YES
12 .0
14 .5 $33.49
26000
1 .5
$1,025 $1,529
64%
38Dot 20%
644
28-Apr-07
YES
10 .8
14 .6 $34 .00
27000
1 .8
$950 $912
65%
28Aft 20%
638
2-Jul-07
YES
11 .8
13 .7 $34 .00
27000
1 .7
$780 $1,129
57%
36Edge 12%
396
20-Feb-07
YES
10 .5
15 .2 $32 .00
25000
1 .8
$250 $675
23%
134%
135
23-Jul-07
YES
7 .5
14 .2 $26.99
25000
1 .7
$250 $596
30%
3
Page 8
CAPSTONE COURIER
C9411
Round 3, 12/31/2007
Market Share Actual vs. Potential
0 Actual II Potential
30%
25%
20%
15%
10%
5%-
-
-
—
Andrews
Baldwin
Chester
Digby
Erie
Ferris
Top Products In Segment
NameMarket Units Sold Revision Stock Pfmn Size
List Price MTBFAge Promo Sales Customer
DecemberCustomer
Cure
Share
to Seg Date
28-Jul-07
Out
YES
Coord
5 .6
Coord
7 .7 $33.49 19000
Dec.31
1 .5
Budget
$975
Budget
$1,593
Awareness
58%Survey4922% 691
Fume 21% 656 5-Oct-07 YES 6.1 7 .3 $33.49 20000 1 .5 $1,175 $2,200 61% 56
Dune 19% 594 13-Jun-07 YES 4.7 9 .5 $33.99 19000 1 .8 $900 $1,216 59% 23
Agape 17% 545 6-Jun-07 YES 5.7 7 .8 $33.25 19500 1 .7 $685 $1,129 46% 43
Egg 16% 491 18-Jun-07 YES 5.4 8 .6 $31 .00 19000 2.4 $660 $675 28% 24
Buddy 4% 131 11-Sep-07 YES 6.5 11 .9 $25.99 18500 1 .6 $500 $596 34% 6
Bid 1% 44 10-Feb-07 YES 8.0 11 .7 $29.99 20000 3.3 $1,350 $794 21% 0
Accessibility
Andrews
Baldwin
Chester
Digby
Erie I
Ferris
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Size
Statistics
Total Industry Unit DemandActual Industry Unit Sales
Segment % of Total Industry
Growth Rate
Customer Buying Criteria
Expectations
Importance1.Positioning
Pfmn 6.1 Size 7 .6
2.Age
Ideal Age = 1 .5
3. Reliability
MTBF 16000-210004.Price
$23 .50 - 33 .50
43%
29%
19%9%
Perceptual Map
20 -- -I_
__T _ r ~—T _
19
18
;I
16
1
15
14
13
_
—
11
10
8--r7
6
5
4 I I
2
0
r 1 ~{
0
1
2
3
4
5
6
7
8
9 10 11 12 13 14 15 16 17 18 19 20
Performance
3,2843,153
10.1%
18.3%
Page 9
CAPSTONE COURIER
C9411
Round 3, 12/31/2007
Industry Unit Sales Vs. Demand
U Unit Sales MUM Demand
14,000
12,000
10,000
8,000
6,000
41x10•
2 .000
•
Trad
Low
H igh
Ptnn
Size
Market Segment Shares
I®Trod n Lew qHigh OPtmn Maize
35% -
30%
25%
20%
15%
Baldwin
-N
Digby Erie
-
EertisEl`
Andrews
-
Chaster
Segment Market Share in Units Segment Market Share in DollarsTrad Low High Pfmn Size Total Trad Low High Pfmn Size Total
Total Units Demanded 9,619 12,488 4,007 3,293 3,284 32,691 Industry Sales $256,852 $243,960 $127,233 $108,384 $103,397 $839,826Industry Unit Sales 9,619 12,488 3,566 3,261 3,153 32,087 % of market 30.6% 29 .1% 15 .2% 12 .9% 12 .3% 100.0%
of Market 29.4% 38.2% 12 .3% 10 .1% 10.1% 100 .0%
Able 17 .0% 0 .0% 4 .1% 0 .0% 0 .0% 5 .6% Able 16.6% 0 .0% 3 .0% 0 .0% 0 .0% 5.5%Acre 0.0% 12 .7% 0 .0% 0 .0% 0 .0% 4 .9% Acre 0.0% 11 .7% 0 .0% 0.0% 0 .0% 3.4%Adam 0.0% 0 .0% 25 .0% 0 .0% 0 .0% 2 .8% Adam 0.0% 0 .0% 27 .0% 0.0% 0.0% 4.1%Aft 0.0% 0 .0% 0 .7% 19 .6% 0 .0% 2 .1% Aft 0.0% 0 .0% 0 .7% 20.0% 0 .0% 2.7%Agape 0.0% 0 .0% 0 .0% 0 .0% 17 .3% 1 .7% Agape 0.0% 0 .0% 0 .0% 0.0% 17 .5% 2.2%Total 17.0% 12 .7% 29 .8% 19 .6% 17 .3% 17 .0% Total 16.6% 11 .7% 30 .6% 20.0% 17 .5% 17.8%
Baker 14 .4% 0 .0% 0.1% 0 .0% 0 .0% 4 .3% Baker 14.5% 0 .0% 0 .1% 0.0% 0.0% 4.5%Bead 0 .1% 18 .9% 0 .0% 0 .0% 0 .0% 7 .4% Bead 0.0% 18 .4% 0 .0% 0.0% 0.0% 5 .4%Bid 4 .6% 0 .0% 19 .6% 0 .0% 1 .4% 3 .7% Bid 5.2% 0 .0% 16 .5% 0 .0% 1 .3% 4 .2%Bold 6 .8% 0 .0% 0 .0% 4 .1% 0 .0% 2 .5% Bold 6.9% 0 .0% 0 .0% 3.4% 0.0% 2.5%Buddy 5.8% 0 .0% 0 .0% 0 .0% 4 .2% 2 .2% Buddy 5.7% 0.0% 0 .0% 0 .0% 3.3% 2 .1%Total 31 .7% 18 .9% 19 .7% 4 .1% 5 .6% 20 .0% Total 32.4% 18.4% 16 .5% 3 .4% 4 .6% 18 .8%
Cake 8 .9% 0 .1% 0 .0% 0 .0% 0 .0% 2 .7% Cake 9 .4% 0 .1% 0 .0% 0 .0% 0.0% 2 .9%Cedar 0 .0% 15 .1% 0 .0% 0.0% 0 .0% 5.9% Cedar 0 .0% 17.0% 0.0% 0 .0% 0.0% 4 .9%Cid 0 .0% 0 .0% 20.0% 0.0% 0 .0% 2.2% Cid 0 .0% 0.0% 21 .6% 0 .0% 0 .0% 3 .3%Coat 0 .0% 0 .0% 0.0% 21 .2% 0 .0% 2.2% Coat 0 .0% 0.0% 0.0% 21 .4% 0.0% 2 .8%Cure 0 .0% 0 .0% 0 .0% 0.0% 21 .9% 2.2% Cure 0 .0% 0.0% 0 .0% 0 .0% 22 .4% 2 .8%Total 8 .9% 15 .2% 20.0% 21 .2% 21 .9% 15.1% Total 9 .4% 17.2% 21 .6% 21 .4% 22 .4% 16 .6%
Daze 15 .9% 0 .1% 0 .0% 0.0% 0.0% 4 .8% Daze 16 .7% 0.1% 0.0% 0 .0% 0 .0% 5 .1%Dell 0 .0% 13 .6% 0.0% 0.0% 0 .0% 5.3% Dell 0 .0% 13.7% 0.0% 0 .0% 0 .0% 4 .0%Dixie 0 .0% 0 .0% 13.9% 0.0% 0 .0% 1 .5% Dixie 0 .0% 0.0% 15.2% 0 .0% 0 .0% 2 .3%Dot 0 .0% 0 .0% 0.0% 19.7% 0 .0% 2.0% Dot 0 .0 % 0.0% 0.0% 20 .2% 0 .0% 2 .6%Dune 0 .0% 0 .0% 0 .0% 0.0% 18 .8% 1 .9% Dune 0 .0% 0.0% 0.0% 0 .0% 19 .5% 2 .4 %Total 15 .9% 13 .7% 13 .9% 19.7% 18.8% 15.5% Total 16 .7% 13.9% 15.2% 20 .2% 19 .5% 16 .4%
Eat 12 .2% 0 .5% 0.0% 0.0% 0.0% 3.8% Eat 11 .9% 0.6% 0.0% 0 .0% 0 .0% 3 .8%Ebb 0.0% 16 .1% 0 .0% 0.0% 0.0% 6.3% Ebb 0 .0% 16.5% 0.0% 0 .0% 0 .0% 4 .8%Echo 0.0% 0 .0% 16.7% 0.0% 0 .0% 1 .9% Echo 0 .0% 0.0% 16.1% 0 .0% 0 .0% 24%Edge 0.0% 0 .0% 0 .0% 12.2% 0 .0% 1 .2% Edge 0 .0% 0.0% 0 .0% 11 .7% 0 .0% 1 .5%Egg 0.0% 0 .0% 0 .0% 0.0% 15.6% 1 .5% Egg 0 .0% 0.0% 0 .0% 0 .0% 14 .7% 1 .8%Total 12.2% 16 .6% 16 .7% 12.2% 15.6% 14 .7% Total 11 .9% 17.1% 16.1% 11 .7% 14 .7% 14 .4%
Fast 14.2% 0 .9% 0 .0% 0.0% 0.0% 4 .6% Fast 13 .1% 1 .2% 0.0% 0 .0% 0 .0% 4 .4%Feat 0.0% 22 .0% 0 .0% 0.0% 0 .0% 8 .6% Feat 0 .0% 20.6% 0.0% 0 .0% 0 .0% 6 .0%Foam 0.0% 0 .0% 0 .0% 23.2% 0 .0% 2.4% Foam 0.0% 0.0% 0.0% 23 .4% 0 .0% 3 .0%Fume 0.0% 0 .0% 0 .0% 0 .0% 20.8% 2.1% Fume 0.0% 0.0% 0.0% 0 .0% 21 .3% 2 .6%Total 14 .2% 22 .9% 0 .0% 23.2% 20.8% 17 .6% Total 13 .1% 21 .8% 0 .0% 23 .4% 21 .3% 16 .0%
Page 10
Perceptual Map
CAPSTONE COURIER
C9411
Round 3, 12/31/2007
19
OP18
17
16Ebb
15 Er OIMIM Edge
14 BoldE Cat
1
~__
3 -~- -
Fa aaze MIAMI
I
II
Ab6s~---~- I
ill
-.km1M12 ---
11
~
IOW\u
-4
10Dixi
Dun Ech
8
Egg dam
e~F mePW
- -
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Performance
Andrews Baldwin ChesterName Pfmn Size Revised Name Pfmn Size Revised Name Pfmn Size RevisedAble 7 .4 12 .7 6-May-07 Baker 7 .3 12 .7 16-Aug-07 Cake 6 .4 13 .4 6-Aug-07Acre 3 .0 17 .0 24-May-00 Bead 4 .0 15.8 6-Aug-07 Cedar 3.0 17 .0 15-Jan-05Adam 11 .3 8 .7 1-Aug-07 Bid 8 .0 11 .7 10-Feb-07 Cid 10 .6 8 .9 18-Sep-07Aft 11 .8 13 .7 2-Jul-07 Bold 7 .5 14 .2 23-Jul-07 Coat 12 .0 14 .5 26-Aug-07Agape 5 .7 7 .8 6-Jun-07 Buddy 6 .5 11 .9 11-Sep-07 Cure 5 .6 7 .7 28-Jul-07
Dig by Erie FerrisName Pfmn Size Revised Name Pfmn Size Revised Name Pfmn Size RevisedDaze 6.8 13.2 4-Sep-07 Eat 6 .4 13 .6 24-Mar-07 Fast 5 .8 13.5 10-Jul-07Dell 3.8 16 .0 4-Aug-07 Ebb 3 .5 16 .3 26-Oct-07 Feat 2 .5 16 .8 30-Aug-07Dixie 9.8 10 .3 28-May-07 Echo 10 .7 9 .3 9-Jul-07Dot 10 .8 14 .6 28-Apr-07 Edge 10.5 15 .2 20-Feb-07 Foam 13 .2 13.4 22-Jun-07Dune 4 .7 9.5 13-Jun-07 Egg 5.4 8 .6 18-Jun-07 Fume 6 .1 7.3 5-Oct-07
Page 11
CAPSTONE COURIER
C9411
Round 3, 12/31/2007
TQM SUMMARYProcess Management Budgets Last Year ($M)
CPI SystemsAndrews
$oBaldwin
$oChester
soDigby
$10
Erie
$150
Ferris
$0
Vendor/MT $o $0 $0 $30 $150 $0Quality Initiative Training $o $o $o $20 $150 $0
Channel Support Systems $o ssoo $0 $500 $150 $0
Concurrent Engineering $2,000 $too $0 $150 $150 $0
TQM Budgets Last Year ($M)Benchmarking $2,000 $o $0 $40 $150 $0
Quality Function Deployment Effort $o $o $o $500 $150 $0CCE/6 Sigma Training st,000 $o $o $33 $150 $0
Total Expenditures ($000) $5,000 $600 $o $1,283 $1,200 $0
Cumulative ImpactsMaterial Cost Reduction 1 .46% 0 .00% 0 .00% 0 .00% 0 .00% 0.19%
Labor Cost Reduction 0 .61% 0 .42% 0 .00% 0 .00% 0 .00% 0.00%
Reduction R&D Cycle Time 39 .57% 5.17% 0 .00% 0 .04% 0 .00% 36 .75%
Reduction in Admin Costs 39 .72% 0 .00% 0 .00% 0 .00% 0 .00% 56.35%Demand increase 1 .92% 0 .02% 0 .00% 0 .19% 0 .00% 0.33%
HUMAN RESOURCES SUMMARYBaldwin Chester Digby Erie FerrisAndrews
Needed Complement 893 1016 944 848 853 499
Complement 893 1016 875 768 700 498
1st Shift Complement 886 843 804 768 694 400
2nd Shift Complement 7 173 71 0 6 98
Overtime% o.o% 0 .0% 8 .5% 10.4% 22.0% 0 .3%Turnover Rate 11 .1% 10 .4% 12 .0% 11 .7% 13.1% 9.8%
New Employees 300 625 230 178 92 180
Separated Employees o 0 0 0 0 0
Recruiting Spend $loo $50 $0 $15 $loo $250Training Hours o 12 0 5 5 5Productivity Index 1 .00 too too too 1 .00 too
Recruiting Cost $331 $656 $230 $181 $101 $225Separation Cost $o $o $o $o $o $oTraining Cost $o $244 $0 $77 $70 $50Total HR Admin Costs $331 $900 $230 $257 $171 $275
Labor Contract Next YearWages $23 .78 $23 .80 $23 .41 $24 .04 $23.83 $24.41
Benefits $2,688 $2,762 $2,765 $2,700 $2,688 $2,775
Profit Sharing 2 .2% 2.2% 2 .2% 2.2% 2 .2% 2.3%Annual Raise 5 .4% 5.5% 5 .5% 5.4% 5.4% 5.6%
Starting Negotiation PositionWagesBenefits
Profit SharingAnnual Raise
Ceiling Negotiation PositionWagesBenefitsProfit SharingAnnual Raise
Adjusted Labor DemandsWages
BenefitsProfit SharingAnnual Raise
Strike Days
Page 12