15 Capstone® Computer Strategies - 15.3 Chester - Broad Cost Leader

15.3 Chester - Broad Cost Leader

The Chester computer team will adopt a Broad Cost Leader strategy, maintaining a presence in every segment. 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 Cost Leader orientation will allow us gain a competitive advantage based upon low prices. Our products will keep pace with the market, offering improved size and performance. We will price below average. We will increase automation levels to improve our margins and to make it acceptable to run overtime (which we can also view as a second shift).

Vision Statement

Low priced products for the industry: Chester brands offer solid value. Our primary stakeholders are bondholders, customers, stockholders and management.

Research and Development (R & D)

We will keep our existing product line, maintain a presence in every segment, and work to keep our products up to date in each segment despite high automation levels.

Marketing

The Chester team will spend modestly on promoting and selling products in our industry. Our prices will be lower than average. 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 all products. However, because automation sets limits upon our ability to reposition products with R&D, we automate more in the slower moving Traditional and Low End segments than in the fast moving High End, Performance, and Size segments. We will prefer overtime to capacity expansions.

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 market share, stock price, ROE, and profits.