Andrews

Round 1:
The first week was introduction of the company's product to the market. The company
produced a low-tech product in a limited amount of 1,300. Low tech statistically make up 70% of
the industry and therefore the company would have increased chances of successfully selling the
product. The MTBF forecasted was 21,000 hours. Price expectations of consumers in the low
tech industry was between $15-$35. The initial price offering was $35. Introducing a new
product into the market which was unfamiliar with the company, while selling at the highest
possible price for the industry products, required a great deal of investment in marketing. The
initial amount invested was $800,000. The material and labor cost combined made up 80%
leaving the product with a contribution margin of 20%. In the first week the product sales
consumed 50% of the market alongside Baldwin. The net profit earned was $2494 which
represented 6.1% of sales.

Round 2:

During the second round, the company decided to launch a new product in the high-tech
industry. Since deciding to introduce Able 2 to the market the company needed to purchase
automation and capacity for it. High tech products only make up 30% of the industry however
the profit margin is higher. In taking this decision, the company also increased the marketing

budget to $900,000. Contribution margin increased from 20% to 26%. The company occupied
51% of the market share for each product. The addition of an entirely new product into the
company was anticipated to be quite successful. The company would be able to expand the
market base and increase profits. The lower sales revenue for a high-tech product was
compensated through higher profit margin.
Round 3:

In this round, the goal was to decrease costs in effort to increase profits. Material costs
were lowered by 9% while profits from the previous round increased by 24%. Able commanded
a staggering 67% of the high tech market and 55% of the low-tech market share. This decision
created an ideal financial position for the company to increase shareholder value and become
more attractive to potential investors. In this round, the company was in a position to target new
customers and solidify a base for demand. Cost control is a successful strategy to boost revenue
in order to develop the company and allow for growth. The stock price increased to $23.81
which was an all-time high for the company.

Round 4:

Able 2 was not generating sufficient profits for the company to continue distributing it to
the market. Able maintained steady sales and total profits from the company were mainly from
the revenue of Able. In this round, the company attempted to reduce cost again in an effort to
increase the overall contribution margin. Material cost decreased by 11% and contribution

margin increased by 3%. The total liabilities decreased by 32% while retained earnings
increased by 11%. The increase in retained earnings allowed the company to continue operations
without incurring a significant amount of loss. This decision temporarily acquired time for the
company to stabilize the financial position as well as re-strategize the output of products in their
respective target markets.

Round 5:

After taking into consideration the constituents of Able and Able 2, it was determined
both products were similar. Though the return on equity increased from the previous round from
13.1% to 15.6%, the products only occupied 29% of the market share. Able 2 which was
intended for the high-tech segment was being consumed by individuals in the low-tech segment
therefore cannibalizing the sales of Able. Essentially, both products were competing against each
other. This heavily impacted the companys sales and performance. Therefore, the company
invested in research and development to improve overall quality output of Able 2 and capture
consumers in the high-tech market. Approximately $250,000 was invested in TQM. The intent of
this plan was to better cater to the needs of the market.

Round 6:
After having invested further in R&D, Able and Able 2 were firmly distinguished and
separated in the market. The goal of the company was to avoid prematurely ending the product
life of Able 2. The firm strived to meet the needs of the high-tech market through price, quality

and overall value. The interest and sales for Able 2 were being predominantly being obtained
from the low-tech market. Through repositioning the product, the company hoped to appeal
solely to the high-tech market and distance Able 2 as much as possible from the low-tech market.
The first three rounds, the company was able to forecast and sell the Able in a profitable manner.
Able 2 began to cause sales of Able to decline slowly thus making it difficult to recover.

Round 7:

At this point, all work put towards improving Able 2 was futile as the market damage had
already been permanent. There was a significant decrease in stock price from $23.51 to $1. The
products continued to compete in same market and Able 2 was a sunken cost and a loss for the
company. For the first time, the company experienced a net loss of $6,166. Drastic measures had
to be implemented to recuperate the situation. The products consumed only 20% of the market.
This dramatic change caused the company to lose a great deal of investors and thus reduced cash
flow. There was minimal financing available to be utilized among many expenses. The most
efficient way to distribute the the companys cash flow was to remove Able 2 which was
damaging the companys chances of recovering. In this condition, the company was forced to sell
products at a loss.

Round 8:
After the extreme drop in the stock price, the company decided to only keep Able and
eliminate all other products. The other two products required significant time and investment.

The return on investment would have been in approximately nine years. Total liabilities tripled
from the last round due to the fact that the company had no revenue. The market share further
reduced to 13.1% while return on equity dropped to -129%. There was no return on assets. The
only strategy for the company was to minimize losses through liquidation. Selling assets and
reducing expenses was the companys approach to recover some of the loss incurred.

Round 9:

Due to the continual losses, the company lost 100% of the market share. In these
unforeseen circumstances, the company is operating at a loss and hence has elected to shut down
all operations. The decision to add Able 2 with lack of proper distinction in the market was a
great oversight. The only option left was to sell the remaining assets and operations for the best
price possible.