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Final Report Stallion company
Instructor: Christina Day...

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Stallion Computer, Inc. Business Plan - Final Report MGMT 490 April 24, 2018 Lahsene Bouchikhi, Colin Greeley, Jenae Kurtz, Csaba Matko, Hyongyu Park

Executive Summary a.

Mission Statement

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At Stallion Computer, Inc. we intend to deliver an unparalleled customer experience through reliable products, customer-focused technical support, and responsible manufacturing practices. b.

Business Strategy Stallion Computer, Inc. chose a differentiation business strategy. For the first few

quarters, Stallion Computer chose to focus on the Workhorse target market due to its large potential customer base. After Quarter 6, Stallion Computer shifted and mainly focused on smaller but higher margin segments of the Mercedes and Traveler market to harness higher profit margins. Stallion Computer’s primary target market was the Mercedes segment. The secondary target market was the Traveler market, with the Workhorse segment being the third target market. Stallion Computer opened its the first office in Chicago in Quarter 2. Stallion Computer has expanded its sales office to Paris and Shanghai in Quarter 4 and Quarter 6. The purpose of opening new sales offices was to expand the market and gain more revenue. Stallion Computer’s goal was to dominate the niche market, turn the positive profit, and provide great compensation to the shareholders. To achieve this, Stallion Computer differentiated the products by adding more customized and high-end features, set the long-term perspective to defer profits in order to build a strong competitive position, and maintained the good compensation to all employees. By the end of Quarter 6 Stallion Computer, Inc. created three various computers, one each for the respected target markets. For the Mercedes segment, a desktop named the Appaloosa Ultra, which focused on high-end features and capabilities to meet the customer needs and demands.. For the Workhorse segment, a desktop named the Clydesdale W2, the desktop had the power and features for the Workhorse customer to get their work done on a reliable computer system. Then for the Traveler segment, a laptop named the Pegasus

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Ultra, which emphasized the convenience and great reliability on the business trip for Traveler target market. c.

Decision Making The Stallion Computer made all decisions as a team. Each person had a primary and

secondary responsibility (listed below), but all looked at other department’s works and gave some feedback. The Stallion Computer understood how one small change or update in a certain department would affect the other department’s decision making. Every time a team member made a change, an email was sent to every team members for updating an information.

Officer Name

Primary Responsibility

Secondary Responsibility

Bouchikhi, Lahsene

VP - Sales Management

VP - Human Resources

Matko, Csaba

VP - Human Resources

VP - Business Analytics

Greeley, Colin

President - Overall Leadership

VP - Manufacturing

Park, Hyongyu

VP - Accounting and Finance

VP - Sales Management

Kurtz, Jenae

VP - Marketing

VP - Manufacturing

d.

Major Achievements The Stallion Computer, Inc. achieved first place in the Asset Management and had the

second lowest Financial Risks among all other competitors according to the Cumulative Balanced Scorecard Report. In addition, the Stallion Computer, Inc. achieved the second place in performance for the Cumulative Balance Scorecard Report for Human Resources Management. These achievements were possible because of the hard work from all team members and funds allocated to System Improvement actions.

Assessment of Current Situation in the Market

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a)

Company's current strengths and weaknesses The way of addressing Stallion Computer, Inc.’s current strengths and weaknesses is

taking the company's measured performance from the balanced scorecard by category and see how it ranks Stallion Computer, Inc. in the industry (in the most recent quarter). By having six companies in the industry, if the measured performance in certain category ranks third place or higher, it is considered to be a current strength of Stallion Computer, Inc. If the measured performance ranks lower than third place, it is considered to be a current weakness of Stallion Computer, Inc. This method seemed to be more fair comparison than using industry average scores since two companies had outstanding scores making the industry average scores unbalanced. After summarizing the measurable (numerically scorable) strengths and weaknesses, the report will include non-measurable strengths and weaknesses. As an overall evaluation the company's biggest strength and focus was to invest in the future which explains the poor financial performance in the early stages of the game since investing in the future involved large amount of spending but Stallion Computer, Inc. managed its assets the most efficient way in the industry and took the least amount of financial risk to achieve its investment goals. Unfortunately, the company struggled to lower its cost of goods sold which resulted a low contribution margin ratio therefore the company was unable to generate high amount of profit on its sales. In addition, the company experienced stockouts throughout the simulation because it was unable to meet demand for its products. More detailed information provided below in listed format: Measurable Performance: Strengths: 1. Investment in Future, ranked 3rd.

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2. Asset Management, ranked 1st. 3. Financial Risk, ranked 3rd. Weaknesses: 1. Financial Performance, ranked 5th 2. Market Performance, ranked 4th 3. Marketing Effectiveness, ranked 6th 4. Wealth, ranked 5th 5. Human Resource Management, ranked 5th 6. Manufacturing Productivity, ranked 6th 7. Reputation, ranked 6th Non-Measurable Performance: Strengths: 1. Quality Inspections ran on: Case, Hard drive, Monitor, Computing power and keyboard & mouse. 2. Separated employees from chemicals with protective clothing and gloves. 3. Controlled the temperature, humidity, and cleanliness of the work area. 4. Cross-trained employees to work on multiple tasks within their department. 5. Trained employees to help with departmental planning, including issues related to workflow, equipment, materials, job assignments, vacation scheduling, etc. 6. Scheduled time for department planning with coworkers and supervisors. 7. Trained the employees to develop teamwork skills, including interpersonal, communication, and negotiation skills. 8. Sat up a statistical process control program to monitor all materials, parts and

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manufactured components. 9. Trained operators to detect errors and adjust machines so they produce within tolerance. 10. Close relation with suppliers 11. Provided fitness center and daycare services for employees 12. Sat up and run a health clinic that includes general practitioners plus a few specialists for employees and the immediate families of employees. 13. Sat up a grant program to supplement the learning experiences at local schools. 14. Helped to create bike trails that connect the residential areas, community center and the industrial section where the production facility is located. 15. Helped to create a series of parks throughout the community, but first near the production facility. Weaknesses: 1. Allowed toxic chemicals to enter the water supply 2. Sold laptop computers with batteries that can potentially burn a user 3. Exposed workers to lead poisoning by making computers with lead paint on the casings 4. Sold products with packaging that is wasteful 5. Sold products that unnecessarily drain the power system b)

Current and Potential Customers Currently Stallion Computer, Inc. has 8.51 percent of the total market share, which is less

than what 4 other firms has. More detailed Stallion Computer, Inc. had 11.02 percent of Workhorse, 9.51 percent of Mercedes and 4.18 percent of Traveler segment of market share. The

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Appaloosa Ultra was designed for the Mercedes segment with the gross margin profit of $3,736,201 and 40% of Stallion Computer, Inc.’s brand revenues. The Clydesdale W2 was designed for the Workhorse segment with the gross profit margin of $1,659,206 and 31% of brand revenues. The Pegasus Ultra was designed for the Traveler segment with the gross profit margin of $759,898 and 29% of brand revenues. Safe to say that the most profitable market segment was the Mercedes, therefore it would be reasonable to keep pushing the already existing product and features and invest in the product with further improvements. The small percentage of buyers from the Traveler segment indicates that the company has to make effort to break into that market - to set themselves apart from the competition. Introducing more of a variety of products in each market segment would be reasonable since it gives the buyers the option to choose whichever product fits them the most. c)

Current and Potential Competition Companies that are currently competition to Stallion Computer, Inc. are LifeStyle and

Eastern Technology, as they own 7 percent and 11 percent of the total market share respectively where Stallion Computer, Inc. has 9 percent. In the area of reputation LifeStyle has a score of 70, Eastern Technology has a score of 71 and Stallion Computer, Inc. has a score of 69. In the areas of financial performance, marketing effectiveness, wealth and human resource management Eastern Technology outperforms both Stallion Computer, Inc. and LifeStyle. In the areas of manufacturing productivity and investment in future LifeStyle outperforms both Stallion Computer, Inc. and Eastern Technology. In the areas of market performance, financial risk and asset management Stallion Computer, Inc. outperforms LifeStyle and Eastern Technology. Regarding to product variety, LifeStyle has 3 different products and is present in 2 major cities while Stallion Computer, Inc. offers 4 and Eastern Technology offers 6 different products for its

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customer and both companies are present in 3 major cities. About the potential competition, Stallion Computers, Inc. should be part of the Top 3 leading firms in the industry. This is highly unpreventable since the industry is changing repeatedly, some quarter and decision are very well executed by certain companies but mistakes can be made even in the best companies. d)

Opportunities and Threats The industry is influenced by many factors and very sensitive for changes, meaning even

the smallest decision that certain company makes can have huge influence on its operation and success. The company is facing many challenges which most significant is to meet customer expectations and demand. The challenge not only to figure out what product will sell well, but also produce enough quantity so each potential customer can buy Stallion Computer, Inc. products. Problem could arise if Stallion Computer, Inc. will not be able to keep up with the competition`s growth, which would result in loss of sales as customers seeking to buy the newest technology for the cheapest price. Other threat could be if Stallion Computer, Inc. fails to create safe working environment, as it would result in low employee morale therefore the best employees could lose motivation and be less productive or may quit their jobs. These factors could potentially drive Stallion Computer, Inc. bankrupt. Opportunities and key success factors are firstly to prevent the threats mentioned above. Secondly, the company could open a new sales office and introduce new products to its customers. It would be considerable to invest more in research and development and build up the new products with the newest technology. Stallion Computer, Inc. should look into cooperating with other companies as it could possibly give a new perspective to the management for both companies. To increase the profit margin, Stallion Computers, Inc. should find the way the reduce the price of cost of goods sold. Stallion Computers, Inc. believes that the future is looking bright for the company.

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Business Strategy Going forth in the next year, Stallion Computers Inc. has plans of investing in various Research and Development projects, expanding their product line, as well as opening an additional sales office in Sao Paulo. The company believes that expanding into new markets with new and innovative products will enable us to harness more market share in the industry and increase overall profits. Within Quarter 7, Stallion Computer, Inc. will be investing $2,131,927 into two major R&D projects - a long-life lithium battery for the laptops and sustainable packaging. These R&D projects will help the company create a new laptop, Appaloosa Ultra Compact, targeted at our most profitable market segment, Mercedes. This new technology will also allow the company to update the current products on the market - giving customers innovative and the newest technology on the market. Stallion Computer, Inc is aware of the heavy financial strain of the R&D projects but believes that with the new technology and products they will be able to generate more revenue and increase profits, making the investment worth it. With new, innovative products, Stallion Computer, Inc. aims to capture more market share in every segment overall, but also to focus on the Mercedes segment within each of our sales offices. Stallion Computer, Inc. on top of redesigning existing products and designing new products, plans on adjusting and redesigning their advertising efforts. The company’s cumulative marketing effectiveness came out on the bottom of the industry by the end of Quarter 6 and plans to turn that around completely by redesigning their Traveler segment ads, as well as their Mercedes segment ads to better suit the respected target markets. Allocating more money for the Mercedes segment ads to media placements, the company hopes to gain brand and product

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awareness - gaining more customers, creating more demand, while simultaneously generating greater profits. Stallion Computer, Inc. plans to expand further globally by opening a new sales office in Sao Paulo, Brazil with an investment in Quarter 7 and forecasted to start functioning by Quarter 8. This move to expand their global footprint should put the company in a more competitive position when it comes to gaining market share. Aside from facilitating the transition into a new market, it is imperative the company also makes adjustments to growing demand in existing markets as well. The demand for the company’s products is forecasted to increase significantly from Quarter 7 to Quarter 8 because of the new sales office in Sao Paulo. Unit demand is expected to jump from 6,720 units to 10,384. Because of this, Stallion Computer, Inc. will increase its salesforce by 20 to compensate and keep the volume of units each salesperson is responsible for constant. The unit-per-salesperson will also remain consistent even as demand returns to a gradual increase after full operation in Sao Paulo. Stallion Computer, Inc. plans to correct its manufacturing woes by investing in fixed capacity to meet demand projections. The company plans to invest 75 units per day in total from Quarter 7 to Quarter 10. The company plans to stagger increase in capacity to eliminate the chances of underutilizing its current fixed capacity and to spread out the financial strain across multiple quarters. Stallion Computer, Inc. believes this renewed focus in its capacities can reduce stock outs and help retain their asset management score. Another way Stallion Computer, Inc. plans to improve its footing is by halting the overall compensation increases of its production worker, salesperson, and production supervisor positions. Taking another look at compensation throughout the industry at this time, Stallion

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Computer, Inc. tends to offer superior packages when compared to competitors. The company does plan to improve packages over the next year, but will not make any changes through Quarter 10. The focus for Stallion Computer, Inc. in the next year is to create superior quality computers within the industry - expanding into new markets in order to gain more market share and increase profits. Designing a new laptop, the Appaloosa Ultra Compact, with the most powerful hard drive, with the fastest computer power on the market, a long-lasting battery, loaded with software, and sustainable packaging will attract the higher-end consumers in the Mercedes segment and give them the option of a laptop versus a desktop from Stallion Computers, Inc. Updating components in the Pegasus Ultra and the Clydesdale W2 will also give Stallion Computer, Inc.’s products more of a competitive edge and in return result in higher sales. To offset some of the investments in R&D, product design and development, the spending on marketing, and the additional costs associated with opening another sales office in Sao Paulo, Stallion Computer, Inc. plans on scaling back on some of the ‘System Improvement Actions’, which had been previously invested in. Taking away extras such as the family clinic, and helping the community build and maintain bike trails and parks, will help the company allocate much needed resources to other departments within the company. Investing the money directly into the company will help build up the brand up positively and enable Stallion Computer, Inc. to create exceptional and sustainable products for their customers.

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Appendix A Income Statement for Stallion Computer, Inc. Includes Q1-6 and the next year’s projected quarters 7-10. See Excel file attached (Appendix A - Income Statement, Stallion Computer, Inc.)

Appendix B Stallion Computer, Inc.’s Tactical Plan. Includes Q1-6 and the next year’s projected quarters 7-

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10. See Excel file attached (Appendix B - Tactical Plan, Stallion Computer, Inc.)...