DAS presentation.

1. 2010
Industry C38446-
Baldwin
Group 20
[MANAGERIAL ANALYSIS
REPORT]

2. We are team Baldwin of Industry C38446. We finished on top of our industry with a stock price of
$163.60, an ending market share of 29.3% and cumulative profits of over $157 million. With the
highest market share, highest stock price and maximum ROE amongst all industries of the division,
we have performed extremely well and above expectations.
Our initial goals were as follows:
 To reduce inventory carrying costs by improving turnover and having better forecasts
 To increase our sales
 To increase our contribution margins
As the simulation went on, we had to change our strategies and game plan accordingly. Our goals
were now more specific and more measurable. These were:
 Increase profits by maximising contribution margins.
 Focus on segments with two products and consolidate on the achieved market share and
increase it further, get an overall market share close to 30%.
 Improve ROE consistently.
Initial Game Plan
Our initial game plan was as follows:
 To have two products in the low and traditional segment and achieve high market share in
these segments (close to 50% in each).
 Launch two products in the high end segment and use the drift of segments to move one of
them from high end to traditional.
 Capture 20-25% of the market in each segment and thus have and approximate overall
market share close to 30%.
 Financially we were looking to use long term loans to invest in capacity and short term loans
to maintain liquidity and avoid emergency loans. Payment of dividends was dependent on
the cash position every year.
So what changed?
 We had only 1 product in the low end segment and 2 in the traditional segment.
 Launched 1 new product in high, performance and size segment each.
 Increased automation to increase contribution margins in low end and traditional segments.
The reasons for our good performance were as follows:
 Good strategies adopted such as focussing on segments in the arc (size, traditional and
performance), Increasing labour productivity.

3.  Ability to make decisions which produced returns in the future (foresight), for example,
occupation of traditional segment very early, increasing automation of low end segment to
9.
 Focus on improvement in performance of labour by increasing recruitment cost and
increase in training hours.
 Good utilisation of long term loans to maintain leverage and improve on plant and capacity
as and when needed.
 Good financial management to maintain buffer such that we do not get an emergency loan
(we managed our finances such that at the end of our round, closing balance in the worst
case scenario would be atleast $10 million). Thus our forecasts in general were conservative
where as our production was on the higher side.
Capacity Considerations
Low and Traditional Segment- Initially as the market was small and there were many players in
the market, we had thought of utilizing the existing capacity till round 3. In round 3 we decided to
increase capacity of our low end segment and one traditional segment product as we expected the
demand to rise which is exactly what happened. Due to this we bought more capacity for the same
traditional segment product in round 4 and 5 as well. This year wise increment helped us maintain
our costs and increase production as well. We finally increased the capacity of both the low end
segment and traditional segment products in round 8 for increasing production in the future. The
final capacities of the traditional segment products were 2,000,000 units and 1,800,000 units. The
final capacity of the low end segment product was 2,000,000 units at the end of Round 8.
High End Segment- As and when we added new products, we bought capacity and automation for
them as well. Since we had only one product in the high end segment and could not compete with
Andrews in terms of volumes, we bought capacity of 700,000 only and this was done incrementally
over two years.
Performance Segment- We launched one new product in the performance segment. We bought
capacity of 650,000 units for this product in round 4 and the product was launched in round 5. We
also increased the capacity of the other product in this segment to 650,000 units expecting an
increase in market share and thus larger production requirement. The demand did increase and we
bought more capacity in round 7 to combine the total capacity to 1,750,000 units for this segment.
Size Segment- We launched a new product in round 6 with a capacity of 500,000 units for the size
segment. We bought lesser capacity in the size segment as we were not able to gain a market share
in this market all through the prior rounds. There was no increase in capacity in this segment and the
total capacity of both the products was 1,100,000 units.
For all the segments, on an average we had a plant utilization ranging from 100% in round 1 to 171%
in round 8. This was healthy utilisation at the end of 8 rounds.

4. Analysis
The parameters on which we have done an analysis are:
 Market Share
 Cumulative Profits
 Stock Price
 ROE
 Contribution Margin
Our main competition in the industry was Andrews over the 8 years.
Let’s take a look at these parameters in comparison to our main competitor.
Market share
35.00%
30.00%
Percentage Market share
25.00%
20.00%
Andrews
15.00%
Baldwin
10.00%
5.00%
0.00%
R1 R2 R3 R4 R5 R6 R7 R8

5. Cumulative Profits Millions
Profits
180
160
140
120
100
Andrews
80
60 Baldwin
40
20
0
R1 R2 R3 R4 R5 R6 R7 R8
Contribution Margins
40.00%
35.00%
30.00%
25.00%
Percentage
Andrews
20.00%
Baldwin
15.00%
Average
10.00%
5.00%
0.00%
R1 R2 R3 R4 R5 R6 R7 R8

6. ROE
35.00%
30.00%
25.00%
Percentage
20.00%
Andrews
15.00%
Baldwin
10.00%
5.00%
0.00%
R1 R2 R3 R4 R5 R6 R7 R8

7. Financial Analysis
NET INCOME
50,000
40,000
30,000
20,000
10,000
0
RD. 1RD. 2RD. 3RD. 4RD. 5RD. 6RD. 7RD. 8
SALES
5,00,000
4,00,000
3,00,000
2,00,000
1,00,000
0
RD. 1 RD. 2 RD. 3 RD. 4 RD. 5 RD. 6 RD. 7 RD. 8
Round 1- We were conservative in our forecasts and hence were stocked out in some segments
whereas had a high inventory left in others. Because of this we had high inventory carrying costs and
could not utilize our sales capability to the maximum. We had paid out a dividend of $0.5. We did
not issue any equity as we wanted to gain good profits so that we could raise more money by issuing
lesser number of equity, thereby getting good leverage, ROE, EPS and reduce dividend costs. We

8. issued $14 million bond to finance our long term expenses like capacity purchase. Our stock price
increased by very little because we did not have much profit.
Round 2- We improved our forecasting and hence were stocked out in all but one segment (Size).
With an increase in sales, we were able to increase our profits. Our contribution margin also
increased above 30.2%, thereby reducing our variable costs. Our costs had also increased with an
employment of 122 resources for whose recruiting and training, we spent $384000. Our sales came
very close to that of Andrews, but our profits were still not very strong. We issued stock as well as
borrowed long term debt, as we had to buy capacity for Bounce. ROE increased to 11.3 because of
stronger profits. We again gave a dividend of $0.5.
Round 3- We increased our sales drastically. Profits also increased. Therefore our stock prices went
up and ROE also increased. Our contribution margins dipped because of increased labour costs due
to 2nd shift on existing and new products. Plant improvements were a major drain on our cash. We
also bought capacity for 3 of our products. We thereby took long term debt as well as issued equity.
We took 482 new employees. We also put 50 hours of training to get more labour productivity. We
paid $0.75 dividend.
Round 4- Our sales could not increase much because our competitors dropped prices drastically.
Therefore, we also had a huge inventory carrying cost. Our contributions were very close to 30. We
took another 331 employees. We took a debt for buying capacity for 2 products including a new
product. We also increased automation for Baker, Bold and bought for Blaze. We gave $0.5 dividend
Round 5- We increased our sales again. We started retiring stock as the financial position of the
company looked strong. We had a very good contribution margin of 35.5% and good predictions
leading to stock outs in all products except Blaze. We increased capacity for BID and employed
another 102 employees. WE also invested 17 million dollars in TQMAs the company’s financial
position looked good, we retired equity as well as debt. We gave $0.5 dividend.
Round 6 – Sales increased again. Our demand increased and labour costs and admin costs
decreased because of investment in TQM in the previous round. This led to substantial increase in
profits. We invested huge amounts in TQM again ($ 11 million). We bought capacity and automation
for our new product Berry. We increased automation for the low end segment to 9. We also
increased employees by 270 and increased training hours to 80. As this round we had a consolidated
cash position, we gave a dividend of $7, close to our P/E. As our leverage was decreasing, we retired
equity, but took debt for our long term investments.
Round 7- We increased sales but profits went down as we lost market share to Andrews in low-end
as well as high-end. We were left with a lot of inventory. We bought capacity for 4 of our products.
We continued to give $7 as dividend. ROE went down as profits reduced. Share prices increased not
much. WE invested 8 million in TQM which decreased our admin cost by more than 40%
Round 8- We decided to decrease our prices drastically in the low end segment as now the strategy
of high pricing in this segment was hurting us. We thus gained market share and improved on sales
as well and our profits increased. Our share prices shot up again. We were stocked out in all
products except one. We also bought capacity for taking into account the going concern.

9. Traditional Segment
MARKET SHARE
50
45
40
35
30
25 BALDWIN
20 ANDREWS
15
10
5
0
R1 R2 R3 R4 R5 R6 R7 R8
From the above graph it’s evident that except for an initial hiccup, we have done consistently better
than Andrews in the traditional segment. Able started with a good market share of 21% but that
continued to fall till round 4 primarily because the R&D undertaken did not conform to industry
expectations. They tried selling products with poor specifications at low price, but their strategy
failed. They improved their market share in round 5 but still were very poorly placed among other
products. They made a quantum leap in round 6 which was due to the failure of Eat and Dixie in the
segment and also the stocking out of Bid. The market share again fell in the next rounds because of
age factor which is the major concern in traditional segment.

10. Major highlights –
1. Traditional segment was our stronghold and we performed better than the competition in
most of the rounds.
2. Our high end product BID was deliberately moved to the traditional segment, to increase our
market presence in that segment. That helped us increase our customer awareness and
accessibility.
3. Our strategy in this segment was that alternately we kept one product constant and moved
the other one for the next year. This way we captured the maximum market.
4. Baker was consistently the most selling product post round 3.
5. We increased automation for both Bid and Baker from 4 to 5.5 to decrease labour costs.
6. Bid showed outstanding performance and faced tough competition from Eat in round 4 & 7,
Dixie in round 5 and Able in round 6.
7. Both our products combined captured a total market share of 46% by the end of round 8.
8. By end of year 8, we were also operating at plant utilization of 198% and 182% for Baker and
Bid respectively.

11. HIGH END SEGMENT
Market Share
60
50
40
Percentage
30 BALDWIN
20 ANDREWS
10
0
R1 R2 R3 R4 R5 R6 R7 R8
As can be seen from the above graph, there were initial ups and downs for both teams till round 3
started. Just as we took over the traditional segment in round 3, Andrews gained market share in
this segment due to launch of a new product here. They went on to launch a third product in this
segment as well in round 6 and their market share reached close to 50 percent.
Major highlights-
1. Our strategy focused on producing a new product exclusively for the high end segment
called Bounce. The R&D began in round 1 itself, purchased capacity in round 2 and began
production in round 3.
2. The product Bid entered rough cut of traditional segment was deliberately moved to that
segment.
3. Bounce was consistently among the top 3 products in this segment.
4. In round 3, capacity was increased from 500 to 700.
5. Though Bounce was ideally positioned but fierce competition in this segment ate into each
other’s market share.
6. We never tried to be leaders in this segment due to feared over competition – 2 new
products by the end of 3rd round, and another 2 by end of 7th round.
7. We ended at position 3 with a market share of 13%.

12. LOW END SEGMENT
Market Share
30
25
20
15 BALDWIN
10 ANDREWS
5
0
R1 R2 R3 R4 R5 R6 R7 R8
Andrews played a price game in this segment slashing prices in round 4 to gain market share. We
continued to price high and make comparable profits till round 6. We lost a lot in round 7 and this
hurt us. We dropped our prices in round 8 to match industry norms and gain market share again.
Major highlights –
1. Our product Bead performed as per the expectations.
2. Our strategy was keeping the utilization of plant and automation levels high, producing
moderately and selling at a premium.
3. By the fourth round the strategy for the companies was very clear; Acre and Ebb were
concentrating on high sales with low prices.
4. The capacity was kept fixed at 1400 till round 4 when a marginal addition of 100 was done.
In round 7 the capacity was stepped up to 1800.
5. The automation was increased to 7 in round three, 7.5 in round five, 9 in round 6. Thus, as
the automation went up, labour costs were lower and the contribution margin went up to
the levels of 50%.
6. The consumer score in this segment is price driven. This segment is very sensitive to price.
This segment is big and there is space for everyone. Thus, the production was kept at
moderate levels and priced at a premium. Thus, this segment was a profit earner for
Baldwin.
7. The plant utilization has been at 129%, 141%, 170%, 185%, 145%, 198%, 198% and 198%.
Thus, this kind of plant utilization is in line with the overall strategy for this segment.

13. 8. The company is a going concern. Thus, in round 8 the strategy was changed for this product
and now since the contribution margin crossed 55%, the prices were dropped to make the
product competitive. Also the production was stepped to 3600, the maximum plant
utilization. The contribution margin was still at 43% and the production level high. This
product thus still continues to be Baldwin’s strength.

14. SIZE SEGMENT
Market Share
45
40
35
30
25
BALDWIN
20
15 ANDREWS
10
5
0
R1 R2 R3 R4 R5 R6 R7 R8
Andrews got hold of the market early in the game and in round 3 had a new product launched in this
segment. Things never really looked up for us until round 7 where our product was launched in this
segment.
Major Highlights-
1. Our performance in this segment was dismal initially.
2. Buddy did better in round 2 because the revised product came into the ideal spot.
3. We lost on the major market share for this product because of foresight- we were always
concentrating on the next round.
4. Our toughest competition in the initial rounds was Dune because it was always ideally
placed.
5. We came up with a new product Berry in round 7, which increased our accessibility in the
segment, and thus our market share.
6. By the end of round 8, Buddy and Berry together gained 27% of the market, with buddy
stocking out. Though we still could not defeat Andrews in this segment because it had two
very good products, but still gained a comfortable market share with respect to others.

15. Performance Segment
Market share
40
35
30
25
20 BALDWIN
15 ANDREWS
10
5
0
R1 R2 R3 R4 R5 R6 R7 R8
In the initial years, Andrew’s positioning was either marginally better than Baldwin or were selling at
a marginally lower price and during this time Erie and Digby were doing well. By round 4 their
accessibility and promo reduced and so were their sales even for comparable products. They were
planning to increase their capacity by investing in round 4, 5 and 6 by increasing each year by 100
and worked on double shift in the latter rounds. But from round 5 by the introduction of Blaze, they
could benefit only from our stock outs even at good positioning. In the last rounds we were pricing it
lower them and gained more market share for each product.

16. Major highlights-
1. The performance segment had low contribution margin at an average of 22% and did not
meet our expectations. Hence we did not increase production to meet market demand.
2. We maintained high pricing strategy throughout.
3. Round 1 saw a high inventory of 30% as sales went down due to pricing but soon we were
stocked out in most of the other rounds.
4. Competitors were able to maintain their market share by maintaining good positioning with
lower price. In the seventh round another product was launched by Digby but this did not
affect our product as our positioning was very good.
5. But our forecast was conservative and so lost out on potential market of around 5-10%
6. Capacity increase in Round 5 further increased our market share
7. Baldwin’s market share steadily increased through the rounds and saw a jump in it in round
5 after the launch of new product Blaze. The market accessibility almost doubled from 35%
in Round 4 to 80% in round 6.
8. By 7th round we were using 173% plant utilisation.
9. In the latter rounds competitors benefitted from our stock outs.
10. We ended round 8 with a market share of 36% way ahead of our nearest competitor.

17. TQM
TQM Benefits
70.00%
60.00%
50.00%
40.00%
R5
30.00% R6
20.00% R7
10.00% R8
0.00%
Material Labor Cost Reduction Reduction Demand
Cost Reduction R&D Cycle Admin Costs Increase
Reduction Time
Investments
18
Million
16
14
12
Axis Title
10
Andrews
8
6 Baldwin
4
2
0
R5 R6 R7 R8

18. Comparative TQM Benefits
70.00%
60.00%
50.00%
40.00%
30.00%
Andrews
20.00%
Baldwin
10.00%
0.00%
Material Labor Cost Reduction Reduction Demand
Cost Reduction R&D Cycle Admin Increase
Reduction Time Costs
Round 5: Invested 1700 in all the rounds to get maximum cost savings and R&D cycle time and
increase demand. The benefits are: 5.56% in material cost, 6.86% in labour cost, 29.95% in cycle
time, 46.03% in administrative costs, 7.31% demand increase.
Round 6: Selective investment in CPI, QIP, CCT, UNEP, CCE, GEMI led to further benefits of 5.64 in
material cost, 6.96 % in labour, 10.54% in cycle time and demand increase of 3.75%.
Round 7: Further investment in UNEP, benchmarking, quality function deployment and GEMI
leading to further benefits in material cost (0.56%), 0.14% in labour cost, 0.22% in cycle time, 13.99%
in administrative costs and 2.93% in demand increase. The launch of new product berry was greatly
benefitted with a net cycle reduction of 40%.
Round 8: Investment was done only on channel support systems and increased the demand by
0.41%.
In hindsight, we believe that we could have invested lesser in TQM due to diminishing returns.
There was also a small error made while making the final submission in R8. We had a $10 million
present in 3 of the 8 investing areas. This was an overlook due to lack of time.

19. HR
1. The employee turnover rate has been decreasing over the years from 10% to 6.9%. And this
has been the best in the industry.
2. The number of training hours has been the highest in the industry and most consistent over
the years. The hours were 50 and then increased to 80.
3. The productivity index has been the best in the industry. The productivity after round 8
stood at 115.3%.
4. The benefits offered to the employees were a maximum at 2918. The cost of separation and
recruitment of new employees comes at the cost of loss of productivity and high training
cost. So it is advisable to offer a better package.
5. The training cost at the end of round at stood at 2690 and recruiting cost at 1009 while the
corresponding costs for company second to us were 608 and 207 respectively.
6. Recruiting costs have been very competitive with values up to 2000.
7. Over time of employees has been very low. Thus, the satisfaction levels have been very high
and thus the separation costs have fallen.

20. What could we have done better?
1. We should have looked at pushing one product down the low end segment and introducing
a new product in the traditional segment instead of the size segment as we were neither
able to grab the market here nor get good contribution margins here.
2. Better planned TQM utilisation. We spent more money than necessary.
3. Played a price war in the high end segment as the competition was pricing their products
high and had almost the same values in all the other parameters.
4. Been a little more liberal in our forecasts. This would have enabled us to see a better picture
on the financial front on the proforma statements as well as prevent stock outs in our
dominant segments.