12.1 Broad Cost Leader

A Broad Cost Leader strategy maintains a presence in all segments of the market. The company will gain a competitive advantage by keeping R&D, production and material costs to a minimum, enabling the company to compete on the basis of price, which will be below average. Automation levels will be increased to improve margins and to offset second shift/overtime costs.

Mission Statement

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

Tactics

Research & Development: 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: Our company 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 second shift/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 assets/equity between 2.0 and 3.0.