Business planRYMAX

Arévalo Jose, Barragán Gabriel, Herrera Ariana, Lascano Steven, Lopez Dara07/12/2015

International MarketingEc. Heydi Pazmiño

B. Review of financial and market performance during the past year

Financial Performance: during the last trimesters, our company has the next performance in their income statement that we show in the chart 1. :

Chart 1. Income Statement

Source: Marketplace game

Figure 1.

Source: Marketplace game

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As we can see, in the last quarter, the company posted revenues were higher compared to quarter two (figure 1), because the company sold most computers in the workers segment, allowing us to increase the income of the 3rd Quarter. Besides operating profit decreased from -1394632 to -529,200, which indicates that the next semester with our strategy, we can leave these negative figures and begin to make a profit. In addition, earnings per share rose from -19 in the first quarter to -13, we hope that the next decision becomes positive.

It can be concluded that although our net income is negative due to earlier decisions taken in recent quarters, we realize that our strategy to improve in the third quarter, we reduced spending and losses and that for the next semester, with better management, we achieve a positive net income and achieve greater profitability.

Chart 2. CashFlow

Figure 2. Performance of Rymax´s cash Figure 3 Performance of Rymax´s CashFlow

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Source: Marketplace game

In the chart 2. we can realize that our cash flow improved in the last quarter as revenue we had from second to third year, increased from $ 187.20 to $ 1,190,771, which was an increase of more than a million dollars, due to the FlashMax our computer was very good positioned in the workers market giving large profits and sales, allowing in this last year, our net operating cash flow decrease their negative amount and ultimately cash balances, give us a balance of 669,375, which is encouraging, because we have a strong computer market and the strategies planned for the coming years, we will further increase our revenue and keep a balance in the flow of much larger box that was had in the last March quarter. In the figure 2 and 3, we can see also the performance of the cash and the CashFlow of Rymax Company, which increased in the last quarter.

Chart 3. Balance Sheet

Source: Marketplace game

Figure 4. Balance Sheet Volume

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Source: Marketplace game

In the chart 3, It can be seen that Rymax has done well on their balance sheet, because its volume is increased as shown in Figure 4. In addition the company has no debts for now, which keeps it stable.Market performance:

In recent years, Rymax has improved its performance in the market with their brands, because in the second quarter suffered a minor mistake in the segment of workers, but the last half recovered, improving its brand and its participation in the market, which positioned it among the best in this segment as seen in Figure 5:

Figure 5. Brand Concept

Source: Marketplace game

As can be seen in the brand concept (figure 5), our computer The FlashMax was well positioned in the segment of workers with 73/100, which puts us as the preferred brand by

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customers in this segment. Also we increase in the last year our segment size as seen in this Figure:

Figure 6. Segment Size

Source: Marketplace game

Also in the last quarter we increased our market share, increasing the size to 10% of what we had before in the second year. In addition also it increased our share in the segment of workers to 16%, which is our target market, because our computer was well received by customers, as we can see in the figure 7.

Figure 7. Market share

Source: Marketplace game

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Although our competitors as Phoenix and San Miguel Corp. has greater market share as shown in Figure 7, Rymax has been improving its brand and is starting to gain more ground, which with the proposed strategies for the coming years is estimated to increase by 30% participation, with better positioning and gaining more acceptance of our computer the FlashMax in the segment of workers, that is our main goal.

About Mercedes segment: As we can see in the segment of Mercedes (figure 8), has not been achieved greater participation because of errors that had the mark, but despite that, we are in this market with a share of 9% which we have confidence that the next quarter, increase our demand in that segment. Also in the third year he ventured into this segment, because in the previous quarter only fixed in the segment of workers. It is planned to improve advertising and brand The DeluxMax, in order to increase demand.

Figure 8. Mercedes

Source: Marketplace game

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About Travellers segment: Rymax has no share in this segment, because the two approaches are the Workers and Mercedes, which in Figure 9 you can see that you do not have a computer and a share in this segment.

Figure 9. Traveller

Source: Marketplace game

About the price: As for prices, Rymax has maintained an excellent concept in prices, giving a good acceptance with our customers to both brand The FlashMax directed for workers as directed The DeluxMax Mercedes segment. We also have prices that are competing with our competitors, besides having a good concept of reduction of $ 75, which is in the average of our competitors.The following figures 10, 11 and 12 detail how this is our concept of prices for our two brands and compared with our competitors:

Figure 10. Prices´ Concept

Figure 11. World market – workers Figure 12. World market - Mercedes

Source: Marketplace game

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About advertising: As shown in Figure 13, our concept of advertising to our computer The FlashMax is excellent compared to our competitors, we are the higher score, which indicates that we are well positioned in the segment of workers. The problem was with our computer DeluxMax that by mistake in advertising, the greater acceptance occurred in the segment of workers and low in the Mercedes segment, which was the loss of sales and customers. But already know our mistake, and for next year we want to improve that feature and have a good advertising campaign for this computer The DeluxMax.

Figure 13. Concept of advertising

Source: Marketplace game

C. Assessment of current situation and the market

1. Customers: Currently with our customers, there is good acceptance and we managed to meet their needs in what they ask for a computer for both: Workers segment as the Mercedes segment. As we saw in the previous graphs on the assessment of the mark, The FlashMax was the most accepted was from our customers because we gave them what they most needed, as shown in Figure 14. In addition, our prices were well accepted by them, which conclude that we are doing our best and giving an

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excellent computer to our clients. In our computer: the DeluxMax, the acceptance does not come to great standards because we didn’t included the manufacturing program in our computer, which is what our customers demanded more as seen in Figure 15. Compared to our competences. That's why for the next year, we want to make The DeluxMax, adapted to the needs of our customer and satisfying them the most as we can delivery.

Figure 14. The FlashMax- Customers preferences Figure 15. The DeluxMax- Customers preferences

Source: Marketplace game

2. Competition

The situation of Rymax according to the competition in the last quarters, 2nd and 3th, have not been very equitable because each company has developed different strategies to reach the market demand and also their specific needs. RYMAX is pursuing the Workhorse and Mercedes segments with their two brands that are Flashmax and DeluxMax for each segment mentioned before. But

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our competition had reached more market share in the 2nd quarter in the two segments that we are.

7%

44%

9%

40%

Market Share

RYMAX

San Miguel Tech

SMARTECH

Phoenix Corp.

As a company we consider that is necessary to know how other firms are having participation in each segment:For the Workhorse segment:

12%

43%

0%

45%

workhorse

RYMAX

San Miguel Tech

SMARTECH

Phoenix Corp.

For the Mercedes segment:

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For the

Traveler Segment:

In general, the situation besides the other companies was pretty bad for us because we had a very low demand in the 2nd quarter. Firms like San Miguel and Phoenix have more market demand because of the things that they are offering to the consumer. Another issue that we have in this semester were the segments in which we were supposed to work. For example we planned to work in Workhorse and Mercedes, but we didn’t produce for the segment of Mercedes and this was a very big problem because we were not following our strategy and the competition took advantage of this.

In the following chart we can see how each brand was accepted by the demand:

Demand of the Brand

Brand CompanyWorkhors

eMercedes Traveler Total

FlashMax RYMAX 31 0 0 31BigMax RYMAX 50 0 0 50

SSaintSan Miguel

Tech302 0 0 302

WingBox San Miguel 0 0 207 207

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100%

Mercedes

RYMAX

San Miguel Tech

SMARTECH

Phoenix Corp.

58%

1%

41%

Viajero

RYMAX

San Miguel Tech

SMARTECH

Phoenix Corp.

TechSmartPRO SMARTECH 1 98 0 99SmartSWIF

TSMARTECH 0 0 2 2

EasyWork Phoenix Corp. 315 0 0 315SkyTech Phoenix Corp. 0 0 145 145

In the 3th quarter our situation have improved in some way better. But we have to keep working and designing new strategies. The following char show us the market for the last quarter and also how the competition keep gaining more participation:

If we can appreciate, Phoenix and Rymax had gain a little bit more participation than the previous quarter. So, San Miguel and Smartech had lost a little but, the first company mentioned have no problems in assuming that lost because is a company that keeps with a high market share. And according to each segment for this 3rd quarter we have the following:For the segment of Workhorse:

16%

49%0%

35%

Workhorse

RYMAX

San Miguel Tech

SMARTECH

Phoenix Corp.

For the segment of Mercedes:

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10%

40%

8%

43%

Market Share

RYMAX

San Miguel Tech

SMARTECH

Phoenix Corp.

9%

19%

73%

Mercedes

RYMAX

San Miguel Tech

SMARTECH

Phoenix Corp.

For the segment of Traveler:

49%

14%

37%

Traveler

RYMAX

San Miguel Tech

SMARTECH

Phoenix Corp.

Another important fact is to know where the other companies are stablishing their offices or point of sales, the following char would help us to understand the location of each firm:

Competition in the cityGlobal Market

City RYMAXSan Miguel

TechSMARTECH

Phoenix Corp.

Chicago-NORAM X XSan Pablo-LATAM X

París-EMEA XShanghai-APAC X XCentro de Red X X X X

Our firm hasn’t a direct competition in the same city, this mean that we weren’t able to open new offices and compete in other regions. Another important fact is the price judgment of each firm. Customers are always willing to pay the cheaper

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but they prefer high quality, in many cases this is difficult to reach, but the price is always going to be a variable that people will always consider:

Competitors PricesGlobal Market

Company Brand PriceRebat

ePriority

RYMAX The DeluxMax 3.100 100 2RYMAX The FlashMax 2.500 75 1

San Miguel Tech

SSaint 2.000 100 3

San Miguel Tech

WingBox 2.750 100 2

San Miguel Tech

Worker 2.500 100 1

SMARTECH SmartPRO 3.000 100 1SMARTECH SmartTRAVEL 2.500 50 2

Phoenix Corp. EasyWork 2.450 51 1Phoenix Corp. SkyTech 2.700 51 2Phoenix Corp. GoldenByte 3.900 100 3

In what is publicity our competition it is investing a lot in advertising as we can see in the following chart:

Phoenix is the one that is having more publications in the different magazines for each segment that they are selling the computers. The compensation to the workers is another important factor for the company to run, if you keep the employees with a good motivation they are going to have a better performance.

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As we can see the productivity in the company in the part of the vendors is the highest of the companies competing in this market, but also is important to know the compensation with workers in factory that is the following:

The highest productivity in the market is for Phoenix, the key factor here for compensate the workers is giving one more week of vacations.

3. Company’s strengths and weaknesses

Strengths

Future Investment

Our company, RYMAX, has invested a considerable amount of money in assets that will help us to have a better development in the future as manufacturing and employees that will increase the production and reduce costs.

Human Resources Management

Our company, RYMAX, has decided that our employees should be well remunerated, a complete insurance and an average of three weeks of vacations, satisfying their needs and getting the maximum efficiency from them.Our company, RYMAX, has reached an

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Manufacturing Productivity optimal point where the leftovers of inventory are the smallest and the demand’s projection is pretty accurate saving us warehousing costs.

Financial RiskOur company, RYMAX, hasn’t incurred into strong debts and we are actually equal to the rest of the companies.

Weaknesses

Total Performance

Our company, RYMAX, has a total performance of 0 because, although we are having an acceptable performance in many of the factors considered, the financial performance is low even negative and earnings are not produced by the company.

Financial Performance

Our company, RYMAX, hasn’t achieved a balance between the revenues and costs, leading us to negative numbers because of the excessive expenses and for not being able to generate enough incomes.

Market Performance

Our company, RYMAX, is not well positioned into consumers mind because we are fulfilling their need with our products and not using the right publicity to locate us in a good spot and that is a reason why we possess a small market share.

Wealth

Our company, RYMAX, has not being able to generate wealth to our invertors because the lack of incomes and excessive costs that haven’t let us make profits.

Assets Management

Our company, RYMAX, has not been capable of use the assets we have to increase the sales in a considerable percentage because, even though we have many assets, we don’t have the other assets that complement and generate incomes.

4. Major problems/opportunities to be dealt with in next year

Major problemsBank loan At worst scenario, if we do not get the

4 million investors, applying for a

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bank loan of 2 million.

Intense Competition

The concept of brand and price competition exceeds that of our company, and we remove market share in our core segment.

Rapid technological changeThe competition to create a superior technology offered by our company

The deceleration the growth rate of PC market

The growth rate of the computer market is slowing and the near future and the markets are close to saturation

Opportunities

Acquisition of technology through investment and R&D licenses

Dabble with new technology in computer DeluxMax through R&D

license with the company Smartech.

Investing in technology for FlashMax computer.

InvestorsNegotiations with investors for a maximum amount of $ 4,000,000

D. Strategy for the next year in business

Marketing Strategy

Apparently we are working a loss to our products The profitability of the brand is negative sales and revenue decreases the negative when you are going by subtracting the total cost , the only thing to highlight the gross margin is positive taking profits and that a from advertising costs very high that reduce earnings . Recommendations would be: • Increase the sales force, this would be an obligatory action. • Handle with advertising Effective ads

SALES CHANNELS

Sales OfficeIncrease the profitability of channel sales offices at least 10 % of sales revenue.

Increase the number of sales offices in the other markets.

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Q4 : Sao Paulo and ShanghaiQ5 : ChicagoQ4. In the Paris office: To hire 8 people directed to the workhorse segment and 4 people aimed at Mercedes segment and 1 staff. This strategy aims to offset the advantage that our competitors have in sales offices and sales force.Q5. In Sao Paulo and Shanghai sales offices hire at least 7 people per channel: 4 people aimed at workerhorse segment and 2 persons aimed at Mercedes segment and a sales staff.Q6. To hire 7 people at Chicago office with the same division of staff other offices

Web sales Increase the profitability Web center channel at least 1% of sales revenue

Increase website traffic by spending 6 updates or tactics.Increase the likelihood of purchase once the visitor is on your site by spending 7 updates or tactics.Increase staff for assistance in customer sales and support to enhance customer satisfaction in the process.

• Be more objective in the Brand Features

Sales Channel Strategy

Until the quarter 3 we handled a focused strategy in the Paris-EMEA market in both segments with a sales office.

In addition RYMAX has a Web center to have a scope in all markets worldwide. Below detailing strategies to increase sales

Human Resource Strategy

Goal Increase worker productivityCompensation Sales ForceIncreased holiday weeks from 2 to 3Health Benefits Package: offered employees a complete health PACKAGECompensation of factory workersPension increase regarding his salary to 6%Rymax will offer three weeks of paid leave for their workers

Manufacturing Strategy Although our company RYMAX has suffered a hard time with a low performance because of many mistakes, the manufacturing area has developed in a very significant way by trying to reduce unit costs, increasing the number of mistakes that workers make and the useless warehousing costs. During these trimesters, a

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high plant capacity was installed, nearly 50 units per day, hoping that we could be able to get into a strong market share from the beginning and being able to satisfy all the demand that we may possibly generate. Unfortunately, our marketing performance wasn’t the best and we were not able to generate enough demand for our products and, therefore, we were producing under a small demand and were not able to exploit the whole capacity we had acquired. Our plan for this trimester is to develop a good product and produce it in a massive way, so we can be able to apply economies of scale and being able to reduce the cost per unit even more than the previous trimesters. We are planning that for the fifth trimester to analyze the results and notice if our strategy worked and decided if we should expand even more our plant capacity producing a massive production and make our costs even lower. For the last trimester, it would be very hard to do any change because it would be our last decision and the game will be over, so we should probably keep the same strategy we were applying during the last exercise.Another issue we will try to improve during these last trimesters is the effectiveness in our operational capacity. Our workers, as any human, make mistakes during the process of building a computer, but, as they keep performing the same task every day, they are capable of reducing these mistakes in a very significant percentage, making the process go on and producing fewer computers with failures that generate costs to our company.One issue that should never be forgotten and that is one of the main tasks from the manufacturing area is the inventory. The inventory is the backup you plan to leave in your plant shells in order to be capable of satisfying an extra demand that you do not project at the beginning of the exercise and never leave a client without your product which could generate a loose of a considerable group of clients. So far, we have been very conservative about the inventories from our products lines and always leave just the right amount, so we are sure to not incur into meaningless warehousing costs that takes could take a big part of our profits in case we lose the control of these inventories. We are planning to keep this strategy during the next trimesters because is getting good results and we will try to keep an accurate demand projection.This strategy will let us exploit our maximum plant capacity, keeping the lowest cost per unit, developing and enhancing the productivity from our workers and saving space and money by not expending too much money on warehousing and get the highest grade in the balanced scored card in manufacturing productivity and helping to upgrade our total performance.

Financial Strategy

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Financial Impact Matrix Strengths RYMAX

Nº Strengths Impact

High Medium Low

S1

Good cash management, the company has the resources necessary for their operations.

X

S2The rotation of the finished products, the company handled it differently

X

S3Sales have increased in recent quarters

X

S4There have been no emergency or conventional bank loan.

X

S5Inventory turnover, the company is handled efficiently

X

S6The fixed asset turnover, the company is handled efficiently.

X

S7The total asset turnover, the company is handled efficiently

X

Financial Impact Matrix Weaknesses RYMAX

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Nº WeaknessesImpact

High Medium Low

W1Retained earnings have been negative

X

W2cash account increases over time

X

W3The gross profit margin in the last three quarters has been an increase.

X

W4Significant investments for the purchase of assets

X

W5The net profit margin in the last three quarters has been an increase.

X

W6The return on assets over the life of the company

X

W7The return on capital paid to shareholders.

X

Matrix Financial Strategies

N° Weakness Strategic Activity Goal 1 Rymax has not

made significant investments for

make a bank loan and convince

Build 2 distribution centers.

Having largest distribution

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the purchase of assets and technology

investors interested in the industry

Buy and exchange technology with other companies in the industry through licensing

centers in international markets and launching an efficient computer market

2

Production costs and excess inventory that manages the company are very high so there is a reduction in gross profit in the same.

Reducing production costs and products stored in warehouse

optimal resource management through economies of scale

Having one of the lowest costs in the production of computers

3

Net income of the company in the last 3 quarters have been negative

Boost sales in coming quarters

Provide better computer market and recruit more employees

Achieving an increase of 25% and 30% on future sales

4

Rymax has not made profit sharing to its members

Able to obtain profits to pay dividends

Distributing retained earnings to our partners and investors as appropriate

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