Industry C60304: Digby

1. Industry C60304: Digby Katie Guiheen, James Bello, Viola Hang, Gracious Adai

2. The Strategy

3. Research and Development • Cutting High End and Performance products • Focusing R&D investment in three segments • Following industry standard in general • Staying in perceptual circle • Adjust according to age and other criteria • Age consideration • High priority for Low End • R&D cycle time • Low End last revise longer than expected -2years • Discontinued current Low End product

4. Traditional Marketing = Market Leader = Sold Out

5. Low End Marketing = Sold Out

6. Size Marketing = Market Leader = Sold Out

7. Production Decisions Units Produced vs. Units Sold • Units produced was based off a calculation of our current market share increased by 2-3% with the new market forecast • Invested in automation early • Exceeded competitors by 0.5 • Mitigated labor problems • Invested in benchmarking

8. The Margin Problem Traditional Low End Size • Capacity didn’t follow industry demand or production • Low end was a constant guessing game • Focused on high ROA in traditional and size • Looking forward: • Traditional largest success • Increase investment in size and high end

9. Capital Structure • Issuance of more Debt than Equity resulted in high interest costs • Stock price hurt badly in early rounds, factor for issuing debt instead of equity • Retired old debt with new debt, never tried to pay debt off early • Repurchased 3.6M shares in round 8

10. EBIT, Profit, Interest Expense • High Int costs in the later rounds hampered profits in combination with low contribution margins and less sales • Round 7: 9.5M IntExp • Decision in round 5 to raise 40M in debt drastically increased interest expenses

11. Thank you for your time.

12. Appendix A

13. Appendix B