15 Capstone® Computer Strategies - 15.1 Andrews - Cost Leader with a Product Lifecycle Focus
15.1 Andrews - Cost Leader with a Product Lifecycle Focus
The Andrews computer team will adopt a Cost Leader with a Product Life Cycle Focus strategy, concentrating on the High End, Traditional, and Low End segments. We will gain a competitive advantage by keeping R&D costs, production costs, and raw materials costs to a minimum, enabling us to compete on the basis of price. Our "product life cycle" focus will allow us to reap sales for many years on each new product we introduce into the High End segment. Products will begin their lives in the High End, mature into Traditional, and finish as Low End products before they are retired and their assets harvested.
Vision Statement
Reliable products for mainstream customers: Andrews brands offer value. Our primary stakeholders are bondholders, stockholders, customers, and management.
Research and Development (R & D)
We will introduce a new High End product every 2 years and retire our Low End product when it becomes obsolete (falls outside the Low End segment circle). We will gradually phase-out our Performance and Size segment products (Aft and Agape). We will ultimately have a steady stream of products lined up along the High End, Traditional, and Low End segments.
Marketing
The Andrews team will spend modestly on promotion and sales budgets in our targeted segments (High, Traditional, and Low). Our prices will be lower than average for those segments. For Aft and Agape: we will price at the top of the expected range and discontinue advertising & sales budgets as we retire these products. After we establish our cost leadership position, we will revisit our situation to explore options to improve awareness and accessibility.
Production
We will significantly increase automation levels on products we intend to keep for more than three years (Adam and Able) and spend the money necessary to set-up highly automated plants for our new products as they are launched. We will sell off the plants for Aft and Agape over the next few years.
Finance
We will finance our investments primarily through long-term bond issues, supplementing with stock offerings on an as needed basis. When our cash position allows, we will establish a dividend policy and begin to retire stock. We are not adverse to leverage, and expect to keep debt/equity between 2.0 and 3.0. We measure performance in terms of stock price, ROE, and ROS.