MicroWorld This is a report done be the Executive Committee to evaluate the different aspects of MicroWorld to determine the overall performance; mainly being that of the executive committee, financial, and market. We will then report our results, and show our plans that will help guide MicrosWorld´s future.

08 Otoño

Final Report

W e b M a r k e t p l a c e B u s i n e s s S i m u l a t o r

MicroWorld Business Summary

Executive Committee

Isaac Rodriguez – President and VP of Accounting and Finance

Alma Espinoza – VP of Sales Management

Nikita Schupbach – VP of Marketing

Andrea Viridiana Perez Gonzalez – VP of Marketing Research

Edgar Pantoja – VP of Human Resources

Roberto Herrera – VP of Manufacturing

Mission Statement

Our mission is to produce state of the art products with the highest

technology to achieve complete customer satisfaction.

Vision

To become the world technology leader while providing the most reliable

products on the market and providing the best world-class service.

Overall Decision Making Politics

All important macro decisions pertaining to MicroWorld are made in

consensus by the entire directive team. Such decisions are made in

collaborative decision-making sessions where all members of the

Executive Committee jointly vote on overall directions of the company.

Each member brings a certain expertise to his or her decision-making

area, however we believe that mutual decision-making helps stream

operations and assure that the optimum choice is being made.

EVALUATION OF TEAM PERFORMANCE

Isaac Rodriguez

Roles Played:

Contributions Made:

Adjustments needed:

Alma Espinoza

Roles Played:

Contributions Made:

Adjustments needed:

Nikita Schupbach

Roles Played: VP of Marketing; alongside with the VP of Marketing Research,

executed the MicroWorld marketing campaign.

Contributions Made: Helped alongside with the other departments, design

brands, price them, and develop a marketing campaign for them. In the end the

contribution was significant due to the fact that MicroWorld outperformed

TecnoZone in terms of market performance, where we scored .69, which was .11

higher than TecnoZone.

In addition, attended all Executive Committee meetings, and did all necessary

work to maintain the integrity of MicroWorld.

Adjustments needed: Market Effectiveness was lower than the competitors. This

may be due to Ad-Copy judgments, which were significantly low. An

adjustment in advertising and its concept is needed.

Andrea Viridiana Perez Gonzalez

Roles Played:

Contributions Made:

Adjustments needed:

Edgar Pantoja

Roles Played:

Contributions Made:

Adjustments needed:

Roberto Herrera

Roles Played:VP of Manufacturing, alongside with the VP of Sales

Management, executed the whole process of manufacturing thru quarters.

Contributions Made: Helped alongside with the other departments, decide how

and when to produce, target and replenishment point, production rules, the

operating capacity, quality improvement, what to do with unwanted inventory.

My main contribution was to improve the production process and lower the

stock out rates, and being always trying to satisfy the demand of our products.

Adjustments needed: Mainly on the operation capacity, so we can satisfy the

demand and reduce stock outs.

EVALUATION OF FINANCIAL PERFORMANCE

EVALUATION OF MARKET PERFORMANCE

I. Customer Opinion

Brand Deigns

During the course of eight quarters, MicroWorld has launched eight different

products. Four of those were discontinued due to poor market performance and

acceptance; two others were upgraded due to excellent market performance.

Our first brand that was unable to achieve an acceptable customer opinion was

our brand Da Vinci. Da Vinci was originally designed for our Innovator market,

but was unable to achieve a brand judgment score of more than 70. After the 4th

quarter we could not continue with a brand that did not attain the excellence our

company wished to portray.

Da Vinci than became Da Vinci Pro during the fifth quarter. We were able to

make some improvements to the product itself, but we were still unable to reach

at least a score of 70. With another failure, we decided it was best to design a

new product that would better fit our Innovator market.

MicroSeries+ was our answer to our Innovator market problem. We gave them

more for the same price. Unfortunately, MicroSeries+ performed worse than Da

Vinci Pro with a score of 44.

We attempted to resolve the MicroSeries+ problem by upgrading it to

MicroSeries++; again giving more for less. Even with that, our brand judgment

score continued to drop, that to of 38. Curiously enough, it was performing

better in the Traveler market, with a low score of 55.

At the same time MicroSeries++ was being introduced, we also introduced our

new brand XSeries, which was initially designed for the Mercedes market.

XSeries was a success and failure at the same time. We failed to achieve an

acceptable performance with the Mercedes market (score of 68), but curiously

enough we managed to receive a score of 85 with the Innovator market. We had

accidently stumbled upon the correct product for the Innovator market.

As a result we had to discontinue MicroSeries++, and replace it with the new

and imporvedXSeries+, redirected to the Innovator market instead of the

Mercedes market. As seen in figure 1 below, we managed to receive a score of

88. However in the last quarter we made some improvements to the XSeries+

brand, and we were able to achieve goo market performance in the Innovator,

Mercedes, and Work Horse markets. XSeries+ turned out to be our most well

received product

Station Travel, was our longest standing brand; from the very first quarter

Station Travel achieved a good Brand Judgment score. We ran with the same

product until the very last quarter. Even during the last quarter, as seen in Figure

1, it continued to score well, with a score of 71.

During the very last quarter we also made some improvements to the Station

Travel brand, and launched Station Travel+, which proved to be even more

widely accepted by our customers, scoring a Brand Judgment of 76.

Brand Cost Cutter

Innovator Mercedes Work Horse

Traveler

Station Travel+

32 7 1 26 76

Station Travel

43 4 1 25 71

XSeries+ 19 88 71 72 22 Figure 1: Brand Judgment

*Note: All brands received the same score in Europe and the United States. The

last quarter where we entered the Canadian market has no purchased

information.

Prices

During the last quarter, we were left with only three existing brands: Station

Travel, Station Travel+, and XSeries+.

During the last quarter, we finally changed the price of our brand Station Travel

from $3,800 to $3,400; we decided to give our customer significant savings for

those who continued to show their loyalty to our old brand. Station Travel

received a score of 100 in its assigned market.

Station Travel+ was competitively priced at the same price as the previous price

of the Station Travel. This made our upgrade very affordable, the Traveler

market giving a score of 95, as seen below in Figure 2.

Due to the fact that XSeries+ received an upgrade during the last quarter, we

raised the price even more. It was outrageously priced to attract the Mercedes

market, and to cover costs. As a last quarter strategy we raised the price, making

it barely affordable by the Innovator market. The Mercedes market, however,

showed no concern due to the pricing strategy.

On top of everything, Microworld finished the eighth quarter with a reliability

score of 71, outperforming TecnoZone by one point.

Brand Cost Cutter

Innovator Mercedes Work Horse

Traveler

Station Travel+

58 100 100 84 95

Station Travel

65 100 100 94 100

XSeries+ 42 73 96 62 69 Figure 2: Price Judgment

Note* Table 2 shows United States statistics, however, Europe differs only by 1-

2 points in each category, which is not significant.

Advertising

During the eighth quarter, we had more ad-campaigns than in any other previous

quarter (6 different campaigns). During each quarter we had to change our ad-

campaigns, because they received very low scores. Even by our eighth quarter

we were unable to improve our Ad-Copy Judgment in any kind of significant

way. In spite of our low scores, we still created a high demand for our products.

II. Market Demand

By Company

At the moment, there are only two known companies: MicroWorld and

TecnoZone. Both companies participate in different markets. TecnoZone tends

to focus on the Cost Cutter and Work Horse markets, whereas, MicroWorld

tends to focus on the Innovators and Mercedes markets.

The only market where the two companies are in real competition, is the

Traveler market. As seen below in Figure 3, TecnoZone has the majority of this

market, with a total demand of 2,285, and MicroWorld with a total demand of

1,423.

As seen below, TecnoZone has a higher total demand than Microworld, with

total demands of 6,687 and 5,032 respectively.

Figure 3: Market Demand by Company

By Brand

By the eighth quarter we were operating in the United States, Europe, and

Canada. United States is where we consistently sell more, then Europe, and

finally Canada.

Our brand Station Travel outperformed Station Travel+ by a small amount, even

though Station Travel+ is the new and improved brand. Our brand XSeries+

made huge strides outselling any of our previous brands in previous quarters.

XSeries+ is by far the most demanded product made by MicroWorld

Figure 4: Market Demand by Product

MicroWorld

TecnoZone

United States

Europe

Canada

Total

Per Sales Person

MicroWorld has two different channels to sell their products: Sales Office

Channel and Web Channel. As seen below in Figure 5 our Sales Offices out-sale

our Web Chanel by almost 50%.

However, our two Web Offices only employ 8 people, giving average sales per

person of 216. Our Sales Office employs 48 people on its staff, giving average

sales per person of 67. Although the Sales Offices outperform our Web Offices

in terms of total sales, this analysis shows that our Web Offices are more

productive.

Figure 5: Sales by Channel

III. Competitors Tactics

Segments Targeted

As seen before in Figure 3, most of TecnoZone´s demand comes from their

Cost-Cutter market. They have obviously chosen to put most of their attention

into maintaining that particular market.

Their secondary market is the Traveler market, where they compete heavily with

MicroWorld. Here they have created a larger demand for their, whether it is

financially viable or not.

There last market, where they make any significant sales, is in the Work Horse

market. This is probably not a focus for them, but runoff from the Cost-Cutters

market.

Marketing Tactics

Web Office

Sales Office

During the first 7 quarters, TecnoZone had very few regional and local inserts.

By the eighth quarter, they had put more regional inserts than Microworld, but a

few less local inserts.

TecnoZone had 484 regional inserts, and 91 local inserts for three different

products. Their market performance and effectiveness was at .58 and .63

respectively. Their performance was lower than MicroWorld, but their

effectiveness was higher.

OPERATIONS REPORT FOR THE BOARD

I. Market and Financial Performance

Market performance: The next table represents the market share of the 2 existing

companies, TecnoZone and Microworld.

Company Cost Cutter

Innovator Mercedes Work Horse

Traveler Total Market Share

TecnoZone 99.7% 3.2% 0.1% 82.8% 61.6% 57% Microworld 0.2% 96.7% 99.8% 17.1% 38.3% 42.9%

Figure 6: Market Share

As we can see on the table, markets as CostCutter, Innovators, Mercedes and Work

Horse had a few competition level, CostCutter and Work Horse was attacked by

TecnoZone, meanwhile Innovators and Mercedes by our company Microworld. The big

competence was on Traveler segment, witch TecnoZone had the majority % of sales,

with 61.6% and our company 38.3%. The big difference is that our company focused in

the top 2 expensivemarkets, witch means large profits.

For the total Market Share, TecnoZone had the majority part, with 57%, and

Microworld (us) 42.9%, but as I mentioned above, we took the top 2 expensive markets.

We can say that our performance on the market was great, because we focused on

Innovators and Mercedes markets and we gain almost a 100% of that market.

II. Valuation of Firm

Figure 7: Cumulative Balance Scorecard

Cumulative Results for last four quarters ending in quarter 8

Minimum Maximum Average Microworld

Total Overall 8.66 21.89 15.28 21.99

Financial

Performance

23.98 24.26 24.12 24.25

Market Performance 0.58 0.69 0.63 0.58

Marketing

Effectiveness

0.63 0.66 0.66 0.63

Investment in future 2.27 4.35 3.31 4.35

Wealth 0.89 1.00 0.95 0.89

Human Resources 0.84 0.84 0.84 0.84

Asset Management 1.05 2.58 1.82 2.58

Manufacturing

Productivity

0.35 0.41 0.38 0.35

Financial Risk 0.84 0.96 0.90 0.84

Financial Performance: Measures how well the executive team has been able to create

profits for its shareholders.A positive number is always desired and the larger the better.

As we can see, our financial performance is a good one; our lowest score was 23.98 and

the top 24.26.

This result means that 24.26isthe net profit from current operations per share of stock.

Market Performance: Is a measure of how well the managers are able to create

demand in their primary and secondary segments, if there are 3 firms, a good score

would be greater than 0.5. If there are 8 teams, a good score would be greater than 0.35.

In this point, we think that our market performance was just great, because we had 0.58

witch is better than the good score (0.5), this means that we were able to create enough

demand for our products in the primary and secondary segments of the market we

choose.

Marketing Effectiveness: Is a measure of how well the managers have been able to

satisfy the needs of the customers as measured by the quality of their brands and ads.

Customer perceptions of the firm’s brands and ads in its primary and secondary

segments are used to measure customer satisfaction. The two scores are then averaged

to obtain the indicator for marketing effectiveness. The score ranges from 0 to 1.0. A

good score would be greater than 0.8.

The marketing effectiveness that we scored is 0.63, witch means is not the best but is

not bad also, because the range is from 0 to 1.0 and we obtained 0.63, this means that

we weren’t able to satisfy the needs of our customers as far as quality of the brands and

ads, we satisfy the 63% of our customers needs. We just failed by 17% to achieve a

good score, we think that this happened to us because we also sold products on other

segments, like Work Horse and CostCutter, but their needs are totally different to our

product features.

Investments in the Firm's Future: Reflect the willingness of the executive team to

spend current revenues on future business opportunities. They are necessary but risky.

The score is always greater or equal to 1.0 and a good score would be greater than 3.0.

As we can see on the table, we had an excellent score, we reached the 4.35 and our

average was 3.31 witch is a good score, this means that our firm is willing to spend on

future business opportunities. This means that our firm is always trying to innovate and

create new products for the costumers.

Creation of Wealth: Is a measure of how well the executive team has been able to add

wealth to the initial investments of the stockholders.A value greater than zero and less

than one indicates the executive team is relying upon the initial stockholder's

investments to pay day-to-day expenses plus invest in the future. A value greater than

one indicates the firm is adding wealth to the stockholders.

On this point, we have a good score also, because 0.89 means that we are almost adding

wealth to stockholders, and we actually are paying our expenses and investing for

future, so in a few time we will be able to generate wealth.

Human Resource Management: Is a measure of how well the executive team is able

to recruit the best employees, satisfy their needs and motivate them to excel. Sales force

productivity and factory worker productivity are averaged together to obtain a single

score.The scores range from zero to 1.00 and a good score would be greater than 0.80.

On the Human Resource Management we achieve a score of 0.84, we are above the

good score witch is 0.80, this means that our enterprise has good employees, and we

actually take care of them by satisfying their needs and motivating them to achieve

more for the company.

Asset Management: Is a measure of the executive team’s ability to use the firm’s

assets to create sales revenue.Thus, a very good score would be 3.0

Our company score on this point is 2.58, we are below the good score but this doesn’t

mean is bad, because we actually achieve good profits meaning good sales, so maybe

we didn’t managed our assets on the best way we could but we did an excellent work on

other parts to create enough sales to achieve profits.

Manufacturing Productivity: Measures the executive team’s ability to efficiently

create reliable products. Reliable products are a high priority of all customers and thus it

is the first measure of manufacturing productivity.The score ranges from 0.0 to 1.0. A

very good score would be 0.80.

In this part, we achieved a 0.35 score, we had troubles on this part because we had to

change our product a few times and also had some stock outs because we didn’t

improve our operating capacity at time, but we had good results at the end, we increased

our production and achieved good results such as sales and profits.

Financial Risk: Measures the executive team's ability to manage debt as a financial

resource. The financial risk indicator is based upon the degree to which debt is part of

the capital of the firm. As debt increases relative to the total capital, then the financial

risk associated with the company increases. Conversely, as the proportion of equity in

the total capital increases, then the perceived financial risk in the firm decreases.A value

of 1.00 would indicate there is no debt and, therefore, no perceived financial risk.

On financial risk we scored 0.84, and our average was of 0.91, a great result, because

we are just below 1 by 0.16, meaning that our company has a low debt meaning a low

financial risk. A low financial risk in a company is a great indicator because means that

the company is doing great with its own resources.

As a conclusion our company did great during the quarters, we achieve good scores in

almost every aspect, and in those witch we didn’t achieve a good score weren’t so bad,

they never reached bad values. We can say that our firm is stable and valuable, because

it was able to earn good profits and show nice results.

III. Departures From Plan; Justification

PRESENT PLAN FOR THE FUTURE