1. World 80 Team 4
2 Year Plan
Luisana Villalba
Isabelle Miranda
Janet Morales
Yodit Gizaw
Lilit Kirakosyan
Mariam Hakobayan
MGMT 497
Table of Contents
Section 1 Introduction……………………………………………………………………….….. 4

2. Section 2 Organization……………………………..………………….……………………….. 6
Section 3 Objectives & Industry Analysis………………………………………………..……… 8
3.1 Industry Analysis ………………………………………………………………..….. 8
3.2 Weighting Factors …..…………………………………………………………….. 13
3.3 Financial Objectives ………………………………………………………………. 14
Section 4 Strategies …….………………………………………………………………….. 16
4.1 Inflation Adjustments …………………………………………………………… 16
4.2 Marketing and Sale Efforts ……………………………………………………….. 17
4.3 Production and Operations Management ………………………………………. 21
4.4 Financial Management …………………………………………………………… 28
Section 5 Sales Forecast ………………………..……………………………………………. 30
5.1 Industry Sales ……………..………………………………………………………. 30
5.2 Company Sales ……………………………………………………………………. 31
5.3 Market Shares …………………………………………………………………….. 32
5.4 Regression Analysis …..………………………………………………………….. 33
Section 6 Production Plan …………….…………………………………………………… 34
6.1 Production Schedule …………………………………………………………… 34
6.2 Production and Inventory Management ………………………………………… 36
6.3 Production Supply Distribution …………………………………………….. 38
6.4 Labor and Material Cost ……………..…………………………………………… 39
6.5 Total Production Cost ……….………………………………………………….. 40
6.6 Cost of Goods Produced ……………………….……………………………… 41
Section 7 Financial Statements ………………….………………………………………….. 42
7.1 Pro Forma Assumptions ……………………………………………………….. 42
7.2 Quarterly Income Statements …………………………………………….. 45
7.3 Quarterly Balance Sheets………………………………………………………… 46
7.4 Quarterly Cash Flow Statements…………………………………………………. 46
7.5 Annual Consolidated Income Statements ………………………………………….64
7.6Annual Consolidated Balance Sheets …………………………………………….. 80
7.7 Annual Consolidated Cash Flow Statements ………………………………….. 96
7.8 Pro Forma Analysis …………………………………………………………. 108
Appendix ……………………………..……………………………………………… 110
Appendix A: Historical Data for Years 1 and 2 ………………………………….. 110
Appendix B: Operating Information Quarterly Report for Years 3 and 4 ………… 111
Appendix C: Completed Sales Forecast ……………………………………………. 119
1.0-Introduction
Eco Industries Inc. started in Los Angeles with six creative, motivated and
entrepreneurial business women ready to enter and tackle the business world by

3. applying all they learned from their college courses: management, accounting, and
finance. This empowered them to run a profitable business that has gained a reputable
brand name.Eco Industries produces and manufactures durable goods from recycled
material while staying on top of competitors in a society that is focused on being
environmentally conscious. Our product designs are based on research and and
customer preferences.
We have established three sales office in America and one international office
on Nystock. Our focus has always been and will continue to be our customer
satisfaction. We have consistently maintained the highest sales in Merica 1 and which
contributes to our high market share. Proving a greater competitive advantage in the
industry. Our growing manufacturing companies are equipped with the latest
technologies along with highly trained skilled professionals that help produce the finest
products in the industry.
Eco Industries goal is to provide a product that is desireable to the customers
while meeting their needs at an affordable price. Despite the intense competition Eco
Industries has maintained a reputable standing in the industry. Our innovative
management team has maintained a rigorous cost which has helped us stay on top of
the market. We are confident that we will maintain the same standing that we have for
the past years, that will yield to strong earnings in the suture.
Vision statement:
Our plan is to provide consumers with desirable and affordable products while being an
eco-friendly company. We strive to inspire suppliers and consumers to do something

4. that matters for our environment. our goal is to maintain a high net income, stock price,
and market share.
Mission statement:
Our company's foundation is built on our values, that are socially and economically
responsible. we are committed to our community, customers, and employees by
manufacturing products from recycled materials.
Broad Statement
2.0 Organization
Commitment was the key to the company's success, where the foundation was
build through its key successors. In order to keep our company profitable we hold
corporate meeting on a regular basis where crucial decisions are made.
Luisana Villalba Chief of Executive Office
As Chief of executive officer Luisana Villalba delegates and communicates with
her peers what actions plans need to be taken into place. With the experience that she
has gained in Sales, Marketing, and Management has placed this company in a
reputable standing. Luisana is the driving force behind the company. Her job is to keep
focus on the company's’ vision and mission statement. While always looking for a
competitive edge to always be one step ahead of the competitor.
Yodit Gizaw Vice President
As Vice President Yodit is the right hand of the CEO (Luisana Villalba). She
oversees financials that to meet budgets and objectives of the company. As well as
optimizing operations performance. Yodits’ priority is to oversee budgets of all

5. financials to ensure that proper procurement. Giving ideas and feedback as to how to
maximize revenue is top priority.
Isabelle Miranda Vice President of Human Resources
As the director of human resources, her responsibilities entail; hiring and training
all personnel to effectively support rapid growth of multiple businesses, developing
progressive and proactive compensation and benefits programs to provide motivation,
incentives and rewards for effective performance, continually assess the
competitiveness of all programs and practices against the relevant comparable
companies, industries and markets, and manage the budget and other financial
measures of the Human Resources Department.
Lilit Kirakosyan Chief Finance Officer
Her role as the CFO includes financial planning, analysis,identifying and
minimizing risk for the longevity of the company. Provide strategic financial input and
leadership on decision making issues affecting the organization
Janet Morales Chief Operating Officer
Janet’s role as Chief Operating officer encompasses managing day to day
operations and overseeing all operational policies such as production schedules making
sure Eco Industries Inc. has enough inventory every quarter to effectively make
decisions for the company.
Mariam Hakobyan Chief Marketing Officer
As a Chief Marketing Officer, Mariam is responsible for advertising products for
the company. In addition, she is always looking for ways to reduce costs for the

6. company by taking into consideration past trends of Eco Industries Inc and that of its
competitors to make informed decisions for the company's growth.
3 .0 Objectives and Industry Analysis
3.1 Industry Analysis
Here we will provide and industry analysis for that past two years that will provide
a better understand as where we stand as a company. We will be focusing on analyzing
the past 8 quarters this will include sales, Net Income, Return on Assets, Return on
Equity, and stock price. Being able to analyze this will help us determine a strategy
against our competitors as to where we will be by the end of year 6.
Sales
*we are company number 4 (C4)

7. Having stable sales is one of the most crucial elements to the company’s
success because the main source of revenue is generated here. Due to the fact that
due our strategy we don’t want any loans or stocks from banks because that entails
paying interest. Analyzing our sales in comparison to the industry we have had the
highest sales for the past eight quarters most consistently. As we prepare to go into
years 5 and 6 we are expecting to to have an increase in sales with new products. We
plan to achieve his by investing in R&D, advertising, and training to maintain our
industry leadership.
Net Income

8. Net income is the deduction of taxes and expenses from our total revenue. This
is the determinate whether we have been profitable or not. As any other company in our
industry we have had our highs and our lows. However, we have always been able to
maintain a more consistent outcome than our competitors. In the past eight quarters we
have not earned a high negative income as our competitors which comes to a
recognition to our management team that has been able to really analyze situation and
come to conscious decisions. Our strongest quarters were between year 3 quarter 4
and year 4 quarter 4. With Eco- industries strong management system we plan to strive
to be number one until the end of year 6.
Return on Assets
Analysing our return on assets gives us a better understand as to how we are
utilizing our assets to generate income. The graph below demonstrates that we have a
high ROA from the beginning. This is because we have invested in our company
expansion with cash. This helps us keep our debt and our equity high. We are

9. converting or investment into net income, this is primarily due to the fact that we have
invested in manufacturing plants that help produce more productivity which turns into
more sales. We plan to continue investing for plant expansion so that our return yields
to a higher income.
Return on Equity

10. This is where we are able to analyze the how much of the net income is being
returned to the investors. This is where investors can see how effectively the company
is using their money to generate profit. Eco Industries has effectively been able to
achieve this in the past eight quarters. We have been able to have a high rate of return
between year 3 quarter 4 and year 4 quarter 3. This then entails to make our investors
very happy because their investment has a high return rate. According to the data in
comparison to the rest of the industry, we have had the most consistent and high ROE
in the entire industry.
Stock Price

11. Stock price determines how well the company is doing against its competitors.
Stock prices have been a more constant competition than any other section as an
industry. Eco Industries has been number one for the past 8 quarters however the
competitors have been right behind us. This has been one of our fortes since the
beginning, where there has been a steady increase of 2% every quarter. Eco Industries
We have high hopes that for the future we will maintain a high ROE and therefore, our
shareholders and stock prices will keep on increasing.
3.2 Preliminary Weighting Factors

12. Our preliminary weight factors vary little
from those of the final ones. Without a doubt as
company, Eco Industries strong potential was in
its market share. At the end of year 3 we were
ended second place with 20.74%. However, by
the end of year 4 we has the highest market
share of 23.26% where as the industry average
was 19.18%. This demonstrates a 4% above the
industry average.
After two quarters of making decisions
we were able to notate what our strongest
points were. This help us as to where to focus
our goal for year 5 and 6. There were some
weight factors that we changed because we
knew that those were going to be our strongest
points. We wanted to give our attention more to
our shareholders with market share and stock
price. As management of Eco industries believed that if we gained a greater market
share our customer loyalty would be consistent. As well as our stockholders and
investors would be greatly compensated. Which we have not had a problem with for the
past years and we will be able to deliver for the coming years.
3.3 Financial Objectives

13. For the next couple of years ( Year 5 & 6) we plan to meet our weights factor
goals. Our goals and objectives are to are going to take into recent consideration in our
recent performances according to our financials and the ever changing economic
environment.
4.0 Strategies (JANET)
STRATEGIES:
Marketing
Price, on Year 3 Quarter 1 our company decided to increase product to $10.10 on Area
1, 2, and 3 to reduce Cost of Goods Sold. Unfortunately, this increase affect our sales
comparing to last quarter results. On the following quarter, prices were reduced to
$10.05 on the same areas so we can increase our revenues.Our decision was then to
make price changes with caution. Also, we tried to avoid making drastically changes on
the price so our sales won't suffer.

14. Advertising, on Year 3 Quarter 1 we failed to increase on advertisement to promote our
product. Prices were increased that quarter so this error cost our sales. On the following
quarters, we took a different approach by increasing this expense so our product can be
consistently purchased by our customers.
Salary, on the salary section we decided not to make any changes at all because we
believed that commision was more important for our employees. "the higher the salary,
the less the need to earn commission by selling".
Commissions, we started to increase commissions on Year 3 Quarter 2 because this
was our first peek season of the year. We wanted to motivate our employees by giving a
little extra so they can sell more products. We also took in consideration that Area 1 was
making the most of sale across the company so employees for Area 1 received better
commissions.
Dividends I AM NOT SURE HOW TO ANALYZE THIS!!! we have negative numbers
from year 3 quarter 2 to year 3 quarter 4
Hiring. Our strategy was to hire salespeople on low season so these people could be
ready for peak season such as quarter 2 and quarter 4. Also, our hiring process was
based on how many employees would resigned a particular quarter.

15. Sales Workforce

16. Eco Industries Inc strategy is to hire personnel in slow quarters being 1 and 3 to
so that we can prepare to for the busy sales seasons of quarters of 2 and 4. In the past
we noticed a constant trend of people were resigning in Merica 2 and 3. Therefore, our
strategy to compensate the loss of employees is to hire 2 employees each in those
areas. Eco Industries Inc believes that with a sales force of fifteen people is sufficient for

17. our production needs, and as a result will increase our return on assets contribute to
our growth in market share.
Advertising By Market Area
With the industry growth there, we plan to maximize profit to increase sales. By
doing so we plan to increase advertising expense during the busy quarters by 10%
percent, while for Nystock there was an increase of 5%.
General and Other Selling Expense
Inflation Adjustments

18. Salaries and Commission for Sales People
The management team at Eco Industries Inc. recognizes that our employees are
a major strength to the company. Without them we would not be the profitable company
that we are. In order to keep our success going, we believe by compensating our
employee’s quarterly salary base by 5% increasing from 3000 to 3150 along with
increasing commission by 5 cents every quarter will contribute to our thriving future.
Product Pricing Plan and Projected Sales

19. OPERATIONS
Research and Development, our strategy was to increase this operation expense every
quarter so a new model can be developed for future production. Increase was done
gradually to avoid adding too many models before the right time.
Training, to assure productivity in our production process we increase training expense
gradually every quarter to prepare our employees for complex assignments and
increase efficiency.
Product Introduction, when we decided to introduce model 2 to the market we analyze
the results from the Consumer Preference Study II to analyze consumer preferences
according to quality and features of our product. We choose quarter 2 of year 4 to
introduce our new model because its a peak season and we designed an specific
quality and features in each area according the study.
Quality Level, company strategy was to follow the study to narrow down which area
would receive our product more favorable.

20. Assumptions behind our plan -to achieve sales and production, we added lines to speed
up production. Overtime was given to employees during peak season.we also our
spreadsheets table to accommodate the right quantity in specifics areas to we won't
encounter short of inventory or overstock.
FINANCE
Dividends ????
CD's, our company made a mistake by purchasing CD on year 3 quarter.
Debt Position ?????
5.0 Sales Forecast

22. Company Sales
Our company uses variable sources to forecast sales on of them being the
regression model. We used historical data to be able to compute future forecast.
Illustrated in the tables shown below are the forecast for years five and six. From this
we can also extract that there are high season which as well as some low season, these
are quarters two and four. This forecast gives us a better understanding as far as where
we will be in the next years.

23. Regression Analysis
The regression model that was used was based on either two variables,
dependable(Y) or Independable variable (X). The dependable variables are based on
time, real GDP, and average price for each region. Where as the (Y) variable we used
adjusted seasonality. There are the four different types of models that we used to run
the regressions to figure out sales forecast. Which were:
Model #1:SA Sales= B0+B1 x Time
Model#2:SA Sales=B0+B1 x Real GDP
Model#3:SA Sales= B0+B1 x Average Price
Model#4:Sa Sales=Time x Real GDP
To be able to forecast for the best sales all regressions had to be ran and
examine the R-Square, which gives is a percentage of sales variation. We then looked
at the examined the coefficients to make sure weather they had the appropriate positive
or negative values. Once all of them were ran we selected the one with the highest
adjusted R-Square. We were then able to figure out which ones worked better in Merica
1,3 and three as well as in Nystock. From running the regression analysis we came to
the conclusion that in Merican 1,2, and 3 the best model to use was model. For
Nystock because of the different economic environment the best model to use is model
2. The regressions are as shown:

24. 6.0 Production Plan

26. For the production plan, the management team we have decided that in order to
meet future production and keep inventory low, we would only open operate with 14
lines total. This would allow us to keep inventory low and meet customer demands. Put
of these 14 lines, 10 will be in Merica and 4 will be in Nystock. The beginning of year 5

27. quarter 3 production to full capacity will be produced giving a total production of 728
uniter per quarter which will be enough to cover sales orders and have a safety stock of
20%.
Production and Inventory Management
For Production and inventory management we need to keep a tight inventory
throughout years five and six due to the fact that we planning to release two new
models. One will be released in year five quarter 2 and the second will be released on
year 6 quarter 1. We need to keep in mind these release because that affects the
inventory that we have left over that will be leftover will be sold as liquidation.

29. Production
Supply Distribution
lON
Labor and Material Cost
Labor cost seems to increase every quarter by 4% which makes sense because
the new models with enhanced features require more maintenance and technological
advances. Whereas in Nystock there has been a steady increase of 1 Deanr every two
quarters.

30. Appendix: