Capstone - Chester

Chester Company

Our Mission

To serve all stakeholders, customers, and employees while becoming a global leader in the digital market.

Vision

At Chester Company, we are striving to become a broad cost leader in the electronic sensor industry. We are dedicated to offering a diversified product line at affordable prices to create the best value in the industry.

Strategic Objectives

In order to gain strategic advantage through cost leadership we will be focusing on multiple core competencies. These competencies include:

• Human Resources

• Plant Utilization

• Automation

• Financing

We will be focusing on cumulative profits, ending market share, ending stock price and market capitalization in order to appeal to investors and for our company’s growth and benefit.

In the first year our main focus will be to raise capital through issuing stocks and long term bonds. Our goal is to issue $10 million in stock and $20 million in long term bonds. This capital will go directly to plant improvements in automation. We will increase the automation on Able to 6, Acre to 7, and the other products one full point. We will also increase capacity of Acre and Able 100,000 units each. This will significantly lower the production costs for future years. Profits will be very minimal in the first year due to these large increases in automation and capacity.

The second year we will continue to increase capacity and automation. We will also begin to make investments in TQM. This will continue to make our company more efficient and lower costs. These cost saving will begin to show as we will be able to produce at a lower cost than our competitors and therefore sell at lower prices than our competitors. We will begin to gain market share as the low cost leader. The goal in this round will be $5 million in profits. If this goal is met, we will offer a dividend to our investors between $0.25 and $0.50 per share. Market share should be increased in the second year to 20% in all markets.

In the third year we will continue to increase automation and capacity, though at a slower rate. We will increase our investments in TQM to help lower costs and produce more efficiently. These cost saving will be transferred to the consumer through lower prices. This will increase demand and market share will increase.

Research and Development

Description of Products:

• Cake-Traditional product that will drift slowly toward middle of the perceptual map

• Cedar- Low End Product that will not be repositioned until round 4.

• Cid- High End product that will be moved to the high end area of the perceptual map. Product will perform better and get smaller over time.

• Coast- Performance Product that will drift to the performance area of the perceptual map

• Cure- Size Product that will consistently become smaller over time with slight gains in performance.

The product positioning is shown in the following chart along with ideal ages and MTBF.

Product Segment Ideal Age MTBF

Cake Traditional 1.5-2.5 (Best at 2) 14000-19000

Cedar Low End 4-7 (Best at 7) 12000-17000

Cid High End 0-1 (Best at 0) 20000-25000

Coast Performance .5-2.0 (Best at 1) 22000-27000

Cure Size 1-2 (Best at 1.5) 16000-21000

In order to keep the high end, performance, and size ages down we will be using the research and development to update the products. This way we can keep the products positioned and at the same time monitor the age of the products.

We will also be keeping the MTBF numbers low. We will remain in the acceptable range while at the same time lowering material costs. This will provide direct cost savings to customers while maintaining acceptable levels of reliability.

Marketing

We will be setting prices very aggressively compared to our competitors and the market standard. We will use these lower prices to increase demand and increase market share. This will keep sales revenues and overall profits higher.

We also want to maximize the awareness of our products. In order to do this we will be using various different promotion methods for our different products. We will use print media, direct mail, web media, email, and trade shows to help increase awareness. Different products will use a different mix of each of these promotion media.

We will be using our research and design department to control the design of our products. We will have products that fit different customer needs and requirements.

Production

In order to run at maximum efficiency we will require the production department to have very accurate measures of capacity and inventory. Some areas that we will focus on to make the production department more efficient are:

• Constantly making adjustments to sales forecasts using actual production data, taking into account inventory on hand and the plant ability.

• Coordinating capacity restrictions with production to produce optimal levels of inventory without stocking out or creating a large excess of inventory.

• Using Automation and human resources to provide optimal efficiency while still allowing for products to be repositioned.

• Employing the optimal number of employees to minimize overtime costs.

• Effective plant utilization, use automation to decrease overtime.

• Effectively enter and exit product markets.

• Using the highest level of production

Human Resources (HR)

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