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Atlas

Inc.

Supporting the World, One Computer at a Time


December 5, 2010
Circe Cansino Stefan Bernardi Alexander Green Michael Peters

Atlas

Inc.

Table of Contents
1. EXECUTIVE SUMMARY 1.1 MISSION STATEMENT 1.2 VISION STATEMENT 2. ENVIRONMENTAL ANALYSIS 2.1 CURRENT PERFORMANCE 2.2 MARKET DEMAND 2.3 COMPETITION & INDUSTRY KRAMERICA PIRUM TECH TH!S OUT 2.4 MARKET SHARE 2.5 CUSTOMER ANALYSIS COSTCUTTER INNOVATOR MERCEDES WORK HORSE TRAVELER 2.6 COMPETITOR POSITION & VALUE 3. SWOT ANALYSIS 3.1 3.2 3.3 3.4 3.5 STRENGTHS WEAKNESSES OPPORTUNITIES THREATS INTERPRETING THE SWOT ANALYSIS 4 5 5 6 6 7 8 10 10 10 12 13 13 14 15 16 17 18 20 21 21 21 22 22 23 25 25 26 26 26 27 27 27 28 28 28 29 29 29 29

4. BCG MATRIX 5. STRATEGIC MARKET OBJECTIVE/ PLAN 5.1 STRATEGIC MARKET PLAN 5.2 BRANDS HERCULES 4.0 TITAN 2.0 HERMES 3.0 APOLLO 2.0 ARTEMIS GOLD ZEUS ATHENA 2.0 PEGASUS POSEIDON 2.0 PROMETHEUS 6. MARKETING MIX STRATEGY 6.1 PRICE

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6.2 PRODUCT 6.3 PLACE 6.4 PROMOTION 7. MARKETING BUDGET SUMMARY 8. PROFIT PLAN SUMMARY 9. PERFORMANCE EVALUATION

30 31 31 32 33 34 35 35

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1.

EXECUTIVE SUMMARY

In the culmination of the first two years of business, Atlas Inc. has established itself as one of the top companies in the microcomputers industry. Based on our financial performance, marketing performance, investments in the firms future, and creation of wealth, Atlas has proved itself as a worthy competitor and is well on its way to becoming the market leader. We entered the market targeting the largest segments (Workhorse and CostCutter) with two brands that would prove to be very profitable. We created 8 more brands to meet the demands of the growing market, and grew at an astounding rate of 190% on average throughout the 8 quarters. The struggle to remain market leader from quarter 6 onward was due to high operating costs including high expenditures in advertising and brand engineering. The investments made in brand engineering, and later research and development, to better our brands were very strategically implemented, and one that we believe will prove to be profitable in the near future. Atlas capitalized on several core competencies throughout the 8quarter cycle so as to create a strong competitive advantage in several areas. Consistently, Atlas maintained a market-leading share of market, concluding with 31% and experiencing a market share growth rate of 221% from start to finish. Atlas also boasted the largest sales force (135 sales people) and remained deeply invested in these sales people through extensive training and sales incentives. More brands were made available for sale (10) than any of Atlas competitors and the corporation gained high price judgments for these brands. Due to economies of scale, Atlas earned discounts on the cost of goods sold and the fact that a profit was turned on every available brand that the company offered was another subtle but crucial factor for Atlas. The two most influential aspects of Atlas success was its large investment in both Research & Development and sales offices. Investment in R&D enabled additional product features and therefore an ability to more efficiently and completely meet customer needs, while the vast, global expansion of sales offices facilitated both local and regional service for Atlas computers. Atlas Inc. recognized the true value in investing in Research and Development, because it provided value to the consumer, and helped cover all of the needs that each customer had. For this reason, Atlas Inc. invested in Research and Development every quarter once it was made available, investing over $1,000,000 into it in their pursuit of bringing the highest value to the customer. Atlas Inc. plans to continue to invest in R & D in order to continue producing the best computers in the market. Atlas, Inc. entered Quarter 9 with 17 offices in all five market segments, with plans to open another sales office in Guangzhou in Quarter 9, leaving only 2 cities without Atlas Inc. selling its computers. Atlas also entered Quarter 9 with 135 employees, which nearly doubles the next competitor, with plans to hire 7 4 | Atlas Incorporated

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more employees for the Guangzhou sales office. Atlas invests in sales promotions in an effort to make its sales force that much more effective, and will give its employees an incentive to sell more. Atlas Inc. plans to make both its sales force and its computer brands highly effective in order to sustain a competitive advantage over its competitors. Atlas Inc. ended Quarter 8 with profits of $4,840,615 and a cumulative Net Profit of $3,751,771. This was the fourth quarter of consecutive growth and indicative of the quarters to come. With an expected increase of 10% in sales, Atlas Inc. plans to generate $5,463,518 in profit, for a cumulative net profit of $9,215,289. Atlas Inc.s offices across the globe, a highly effective sales force, and an excellent portfolio of computers will allow Atlas to enjoy a bright future where it carries the world of microcomputers on its shoulders.

1. 1

MISSION STATEMENT

Atlas Inc. aims to bring its customers the highest valued computers for the best price in the market while serving its customers needs.

1. 2

VISION STATEMENT

Atlas Inc.s vision is to revolutionize computers to give you the utmost efficiency and peace of mind. We aim to construct our technology in a way that takes simplicity to a new level to deliver trustworthy value so that you will always look to Atlas Inc. to be your primary technological provider. At Atlas Inc., we take our business seriously. Because we know you do too.

2. 2. 1

ENVIRONMENTAL ANALYSIS CURRENT PERFORMANCE

Profitability of Marketing Division


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Quarter Quarter Quarter 3 Quarter 4 Quarter 5 Quarter 6 Quarter 7 Quarter 8 1 2

Revenues Rebates Cost of goods sold Gross margin

0 0 0 0

0 388,010 0 2,900

4,499,74 9,532,94 29,475,92 32,160,92 17,764,234 5 9 1 5 86,563 155,038 227,225 280,412

244,200

0 336,714 0 48,396

3,215,45 5,838,25 18,378,42 20,442,80 10,340,836 2 0 6 8

1,197,73 3,539,66 10,817,0 11,473,9 7,196,173 0 1 83 17 638,000 857,000

Sales office leases Sales force expense Brand promotions Special programs Ad creation/revision Point of Purchase Display expenses Advertising expenses Engineering cost for new brands Market research

0 0 0 0 0 0 0

0 145,000 220,000 439,000 0 354,128 641,397 0 0 0 0 0 0 0 60,000 0 0 0 60,000 0

968,000

1,275,33 2,006,575 2,749,868 2,882,874 8 0 0 60,001 5,600 0 0 210,000 18,000 59,600 199,876 90,000 25,200

82,300

210,149

29,999

34,000

91,102 236,432 772,878 2,142,567 1,855,070 0 240,000 120,000 40,000 100,000 100,000 300,000 100,000 360,000 100,000

906,825

0 120,000 72,800 0

60,000

100,000

Operating expenses 72,800

120,00 1,497,82 2,772,81 6,296,61 5,274,14 690,230 5,415,142 0 9 7 4 7

Operating profit Research and development costs Set up costs for new sales offices Net profit for division Cumulative net profit for division

4,520,46 6,199,77 -72,800 120,00 -300,099 766,844 1,781,031 641,834 9 0 0 0 0 0 0 2,956,27 0

994,900 1,421,285 1,279,155 360,000 426,131 200,000

0 250,000 140,000 390,000 310,000 -72,800 370,00 -690,099 2,499,42 781,834 0 6

80,000

2,899,18 4,840,61 4 5

3,751,77 -72,800 442,80 1,224,63 1,914,73 4,414,15 1,088,84 3,988,028 1 0 4 3 9 4

Our current sales have reached a total of $11,473,917 in revenue based on a total of 10,758 units sold. Based on our total cost of goods sold ($20,442,808) and the rebates that we offered (totaling $244,200), our gross margin is $11,473,917. 6 | Atlas Incorporated

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Subtracting our total operating expenses of $5,274,147 from this gross margin, our operating profit was $6,199,770. Removing from this our R&D costs and our set-up costs for new sales offices, our net profit for the division was $4,840,615 while our cumulative net profit for the division was $3,751,771.

2. 2

MARKET DEMAND

The market began with a total demand of 1,281 in Quarter 3. By Quarter 8, the size had grown to 32,577. The following two bar-graphs indicate the market demand in Quarter 3 as compared to the market demand in Quarter 8.
QUARTER 3

QUARTER 8

The difference in total market demand represents a growth rate of 2,543%. Below is a graph depicting the total market demand for Atlas computers as compared to those of its competitors, segment by segment.

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Market Demand
Company CostCutt Innovato Mercede Work Hor Travel Demand
er rs s se er Tech Th!s Out Pirum Kramerica Atlas Incorporate 862 1,752 493 1,953 1,306 1,086 922 1,790 1,028 1,715 1,137 2,284 1,195 1,407 3,646 2,706 1,528 1,036 2,549 2,182 5,798 10,905 5,116 10,758 Total

As indicated herein, Atlas held the highest total demand for the CostCutter, Innovator, and Mercedes segments. In terms of the Work Horse and Traveler segments, Atlas ranked second for both. Given the current growth rate of the market, the market both as a whole and within each segment has a high potential for growth. If spread across the six quarters between Quarter 3 and Quarter 8 this growth rate equates to an average per quarter growth rate of 424% per quarter, assuming even growth. The actual average change in growth from Quarter 3 to Quarter 8 is 190%, calculated by averaging the growth rates from quarter to quarter. This is based on a linear growth model, but unfortunately the Product Life Cycle works on a bell curve, and the market has already started to top off, indicating an entrance into the maturity stage. Which means that instead of growing to almost double the current amount of units, the market will probably grow to anywhere between 37,500 units to 42,500 units, in quarter 9.

2. 3

COMPETITION & INDUSTRY

Compared to the industry as a whole, Atlas Incorporated did fairly well. Atlas performed above average in every category except for marketing effectiveness, finishing 0.2 point below the industry average. 8 | Atlas Incorporated

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Industry Results For Quarter 8


Minimum Maximum Average Atlas Incorporated Total Overall Financial Performance Market Performance Marketing Effectiveness Investment in Future 0.31 9.78 0.16 0.68 1.04 15.94 23.21 0.39 0.74 1.70 6.81 16.21 0.28 0.70 1.32 9.63 19.28 0.33 0.68 1.45

Overall, Atlas Incorporated finished second behind Pirum, with a Total Performance score of 9.634 as compared to Pirums 15.935. Atlas ranked second behind Pirum in financial performance (19.277 versus 23.206), market performance (0.330 versus 0.390), and wealth (1.536 versus 2.208), ranked last in marketing effectiveness (0.682), and second in future investment behind Tech Th!s Out (1.445 versus 1.704).

Balanced Scorecard For Quarter 8


Company Name Total Financial Market Marketing Investme Performan Performan Performan Effectivene nt in Wealth ce ce ce ss Future 9.634 0.305 15.935 1.379 19.277 9.782 23.206 12.568 0.330 0.160 0.390 0.225 0.682 0.700 0.743 0.685 1.445 1.039 1.074 1.704 1.536 0.268 2.208 0.418

Atlas Incorporate d Kramerica Pirum Tech Th!s Out

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KRAMERICA
Kramerica was not one of Atlas major competitors as they struggled in numerous areas throughout the 8 quarters. In total performance, they ranked last with 0.305 as compared to our 9.634. Financially, Kramerica also had difficulty as their Financial Performance score was ranked last at 0.160. As well, they ranked last in both future investment (1.309) and wealth (0.268).

PIRUM
Pirum was Atlas primary competitor for most of the 8-quarter cycle. In total performance, Pirum ranked first at 15.935. This was a product of their market-leading performance financially, in marketing, and wealth. Their weakest performance was in future investment, where they ranked third behind Tech Th!s Out (1.704) and Atlas (1.445).

TECH TH!S OUT


Tech Th!s Out was another company that Atlas did not compete with directly. Overall, they ranked third in total performance, a result of a third place ranking in terms of finance (12.568), marketing (0.225 and 0.685), and wealth (0.418). Tech Th!s Out did, however, lead the market in future investment with a rating of 1.704, 0.384 points higher than the industry average.

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Total Market Share: Quarter 8 In terms of share position, Atlas Incorporated finished with a slight advantage, leading the market with a 31% share. Pirum ranked a close second with 30% share of market, while Tech Th!s Out and Kramerica tied with an equal share of market, each owning 18%.

Total Market Share: Quarter 5 Throughout the 8-quarter cycle, however, Atlas had held a larger share of market than this in two earlier quarters. In Quarter 5, our leading share position peaked with a market share of 43%, as indicated by the adjacent graph.

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2. 4

MARKET SHARE

Atlas Incorporated had a total market share of 31% and completed the eight quarters as the market leader in terms of market share.

Market Share
Company CostCutte Innovator Mercede r s s Work Horse Traveler Total Market Share

Tech Th!s Out Pirum Kramerica Atlas Incorporated

13.8% 29.3% 16.2% 40.4%

25.6% 14.7% 20.3% 25.6% 19.6% 22.2% 34.3% 37.3%

14.1% 35.2% 18.8% 31.7%

24.5% 38.9% 17% 19.4%

18.3% 30.8% 18.8% 31.9%

Atlas led the market in several segments: CostCutter (40.4%), Innovators (34.3%), and Mercedes (37.3%). Within the other two segments, Work Horse and Traveler, we ranked second behind Pirum, our primary competitor. Total Market Share: Quarter 3 As compared to our Quarter 8 share of market (31%), Atlas initial share of market from Quarter 3 was merely 14%, equal to that of Tech Th!s Out. At this point, Kramerica dominated the entire market with a 54% share, while Pirum held only 16%. From Quarter 3 to Quarter 8, Atlas market share increased by a rate of 221%. This share of market growth rate was larger than Pirum (187%), Tech Th!s Out (128%) and Kramerica (-66%). Analyzing growth quarter by quarter, the average equates to about a 9% increase per quarter. Given this 12 | A t l a s I n c o r p o r a t e d

Atlas quarterly increase, the market share potential for Quarter 9 would be approximately 34%.

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2. 5

CUSTOMER ANALYSIS

For each target market segment, the needs of Atlas customers were unique and differed from all of the others. Below is a segment by segment analysis of what the customers required and the priority of different features and services. Any rating over 110 indicates an exceptionally strong customer need with high-priority.

COSTCUTTER

Here, the customer was looking for a low price and a simple computer, easy to operate, easy to maintain. For the CostCutter segment, the number one priority was that the computer allowed them peace of mind, meaning that it was safe, secure, and entailed no hassle (133). They wanted a computer easy to use (127) and easy to setup (125). This was inherently a low-cost segment (123) and simplicity (121; 116) was integral to CostCutter needs. Additionally, they desired productive operators (120) and competent sales personnel (115), a function of customer service. In terms of business functions, CostCutter users are largely in office and administrative services (126), general and corporate management (113), and data processing (110). Consequently, this segment placed a very high importance on word processing (125), bookkeeping and budgeting (114), and data management (109) applications. 13 | A t l a s I n c o r p o r a t e d

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For Atlas, the Titan 2.0 and the Poseidon 2.0 were the products targeted at the Cost Cutter segment, aimed to address low-cost, security, and ease-ofuse.

INNOVATOR
The innovator segment was one of the least price-sensitive and was focused on the function of the computer for the purpose of high-powered, artistic uses. Their primary concern was fast access to graphical images (129), followed by ultra-fast responsiveness (125; 124) and fast computer to computer links (124) combined with the ability to see and work on multiple programs (123). The wanted a fast processing computer (123) and favoured performance over price (121), especially in catering to individual customer needs. Regarding business functions, the Innovator segment was composed primarily of engineers (123), planned managers (115), and data processers (113). Because of Innovator needs, the applications most highly sought after by the Innovator segment were web design management (126), technical graphics (126), and statistical analysis (124). For Atlas, the Hermes 2.0 was the product targeted at the Innovator segment, aimed to address graphical performance, quick 14 | A t l a s I n c o r p o r a t e d

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responsiveness, and functionality in terms of multitasking and computer linking.

MERCEDES
The Mercedes segment was essentially the luxury segment for which low price was not a concern. The top priority was fast processing and output (133) followed closely by speed and the capacity to handle large tasks (132). Graphics were also important (130; 129) as was service (130). Mercedes customers wanted to be able to work on multiple programs at once (127), to have a computer capable of being tailored to special applications, and, again, were minimally bothered with high price, preferring high performance to low cost (127). Similar to the Innovator segment, the Mercedes segment used the computers for high powered business functions, especially production process control (125), engineering (124), and planned management (123). The result of this is that they sought manufacturing process control (132), communications with other computers (121) and technical graphics (120) application features. 15 | A t l a s I n c o r p o r a t e d

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Atlas, the Zeus 2.0 and the Athena 2.0 were the brands targeted at the Cost Cutter segment, aimed to address graphical performance, quick responsiveness, and functionality in terms of multitasking and computer linking.

WORK HORSE
The Work Horse segment wanted a simple computer for a lot of use; essentially, this was the standard computer. Security, ease of use, and easiness on the eyes were all priorities for this segment, as were availability (119), computer to computer links (119) and quick service response time (119). This was a price-conscious segment (120) that also valued an established brand name (118). The Work Horse segment was primarily focused on general office functions, particularly financial management (123), office and administrative services (122), and general and corporate management (119). These functions correlated to the applications required by this segment, which included, most importantly bookkeeping and budgeting (127), word processing (127), and communications with other computers (121). 16 | A t l a s I n c o r p o r a t e d

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For Atlas, the Pegasus and the Hercules 4.0 were the products targeted at the Cost Cutter segment, aimed to address security, ease-of-use, and lowcost.

TRAVELER
This was a segment which valued ease of road-use (126; 124), email capability (127), and portability (122) primarily. Secondary priorities were similar to those of the Work Horse segment: easiness on the eyes (121) and fast computer to computer links (120). This segment also valued a small environmental footprint and a small size (120), as well as security (119). As far as business functions were concerned in the Traveler segment, most customers prioritized marketing/sales (136), general and corporate management (118) and engineering (109) business functions. For Atlas, the Prometheus, the Apollo, and the Artemis Gold were the products targeted at the Cost Cutter segment, aimed to address graphical performance, quick responsiveness, and functionality in terms of multitasking and computer linking.

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2. 6

COMPETITIVE POSITION & VALUE

Competitor Tactical Highlights


Tech Th!s Out Pirum Kramerica Atlas Incorporated
Total Demand 5798 1090 5116 5 10758 6 9 6 17 55 87 60 135 9 5 6

Number of Sales Offices

Total Sales Force Last Quarter

Number of Brands for Sale

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Average Price

10 2630 2632 2837 2820 24 95 42 102 1 16 0 10

Total Local Inserts

Current Quarter Balanced Scorecard

In reviewing Atlas Incorporateds competitive position, there are several ways in which Atlas exceeded its competition and others where they fell behind and were less effective than its competitors. In Total Demand, Atlas ranked second behind Pirum with a demand of 10785 as compared to 10905. The other two companies had only about half as much Total Demand as Atlas and Pirum, with Atlas generating about 1.86 (Tech Th! s Out) and 2.10 (Kramerica) times more demand respectively. In sales offices, Atlas dominated the market opening a total of 17 offices versus 9 (Pirum) and 6 (Tech Th!s Out and Kramerica). Sales offices were the top priority for Atlas throughout the 8-quarters as they pushed to hold that largest share of the global market. Atlas Total Sales Force was foremost as compared to the other three competitors with 135 total sales people versus 55 (Tech Th!s Out), 87 (Pirum), and 60 (Kramerica). On average, Atlas had 68 more sales people than its competitors. Atlas also led the market in total brands with 10, compared to 9 (Tech Th!s Out), 5 (Pirum), and 6 (Kramerica). The average price per computer for Atlas was $2820, while the industry average was about $2730 representing an average 3% and $90 cheaper than that of Atlas and two other companies had lower average pricing than Atlas. As well, Atlas led the industry with 102 inserts, an average of about 48 inserts more than competitors. Despite leading in Total Number of Sales offices, Total Sales Force, Number of Brands for Sale, and Total Local Inserts, Atlas Balance Scorecard did not reflect its success as compared to Pirum, because of the fact that its prices were above the industry average.

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3.

SWOT ANALYSIS

OPPORTUNITIES STRENGTHS

Consistently maintained a high total share of market Continual large investments into R &D Have the largest sales force Most brands available for sale Turning profit on every available brand Have high price judgment of our brands Have strongly invested in employees (training & sales incentives) Maintain the largest number of

WEAKNESSES


An opportunity for growth/ expansion Continual need for new and better

Have lower overall brand judgment


High competition as well as a loss of

Very operating expenses share high of market to Pirum


Possible loss of profit due to

3.1

HREATS cannibalization within our own product


lines

STRENGTHS features within the products

Opportunities to out compete other competitors in sales force efficiency

Loss of overall profit for all companies due to the prisoners dilemma

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Atlas Atlas Incorporated has had a great deal of success in its first 8 quarters; one of the many factors that have led to this success are the strengths contained within the company.

Inc.

Consistently maintained a high total share of market Continual large investments into R & D Have the largest sales force Most brands available for sale Turning profit on every available brand Have high price judgment of our brands Have strongly invested in employees (training & sales incentives) Maintain the largest number of sales offices (allowing for both local and regional service) Have earned discounts on costs of goods sold, due to economies of scale Higher overall ad copy judgment

3.2

WEAKNESSES

Every company contains weaknesses and Atlas is no different, weve identified these weaknesses and in the future will look to improve upon them. Have lower overall brand judgment Very high operating expenses

3.3

OPPORTUNITIES

Within a market there are many opportunities to seize. We at Atlas Inc. continually try to identify which opportunities would allow Atlas to maintain progress within this market. An opportunity for growth/ expansion Continual need for new and better features within the products Opportunities to out compete other competitors in sales force efficiency

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3.4

THREATS

Markets also present threats that can hurt Atlas movement forward and by fully realizing these threats we can invest in strategies to combat them. High competition as well as a loss of share of market to Pirum Possible loss of profit due to cannibalization within our own product lines Loss of overall profit for all companies due to the prisoners dilemma

3.5

INTERPRETING THE SWOT ANALYSIS

The SWOT Analysis provides Atlas a great opportunity to identify our strengths, weaknesses, opportunities and threats. After having identified these we can take our weaknesses/ threats and convert them into strengths/ opportunities.

MATCHING OPPORTUNITIES AND STRENGTHS


Atlas realizes that with the opportunity for expansion and growth in the market, that we can match that with one of our core strengths, in having the most sales offices, and continue this growth and expansion. We plan to open sales offices in all locations through the next few quarters. This has, and will continue to lead to a competitive advantage for our company. Atlas has also notices how beneficial R & D can be to a company in terms of innovation. Weve matched this with our strength, our continual high investments in R & D, which can lead to higher brand judgments in the future.

CONVERTING WEAKNESSES & REDUCING THREATS

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A pivotal part of a SWOT Analysis is converting weaknesses to strengths, as well as converting threats into opportunities. Throughout the last few quarters, and particularly in quarter 8 we realized a threat in the intense competition from Pirum, predominantly in the realm of the traveler segment. Having noticed this we designed a new brand in Prometheus to more directly compete with Pirums traveler brand. This was a strategy that we hoped would steal SOM from Pirum in the traveler segment, and it rightfully did so, changing Pirums traveler segment SOM from 38% to 36%, and conversely changing Atlas from 19% to 29%. We also realized a weakness we had throughout the last few quarters, in that we had by far the highest advertising costs. This in turn was hurting our net marketing contribution, so we cut advertising costs to match it more to that of Pirum. By reducing our advertising costs and stealing SOM from Pirum, we converted weaknesses to strengths as well as converting threats into opportunities.

4.

BCG MATRIX

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High

Stars
M ar ke t G ro w th
Prometheus Hercules 4.0 Titan 2.0

Question Marks
Apollo 2.0 Hermes 2.0

Athena Zeus 2.0 2.0 Cash Cows Low

Pegasus Gold Artemis Poseidon 2.0 Dogs

High Market Share

Low

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5.

STRATEGIC MARKET OBJECTIVE / PLAN

100

5.1

STRATEGIC MARKET PLAN Titan 2.0

M ar ke t 66 At 5.2 BRANDS tr Poseidon 2.0 ac tiERCULES H 4.0 2.0 Hermes ve ne Artemis Gold ss 33

Hercules 4.0 Pegasus

Zeus 2.0 Prometheus Athena 2.0

Apollo 2.0

The Hercules model was one of Atlas first 33 66 models, created in quarter 2. All the Competitive Advantage brands Atlas has were named to match mythology and the company name in some way. The Hercules brand was named after Hercules the powerful Greek Demigod and would be our workhorse 25 | A t l a s I n c o r p o r a t e d

100

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hence why it was designed to appeal to one of our target markets, the workhorse segment. Throughout the span of these last 8 quarters the Hercules model has been one of our highest selling brands. We were able to offer the Hercules at a very low price due to the high level cost advantage we achieved by selling over 1,000 units. Throughout the lifespan of the Hercules brand, as R & D made more features available, and as we realized which features would better fit the customer needs, on top of the original components we added a high capacity hard drive, added presentation software and removed manufacturing control software. We also added a 17 monitor, high performance processor, an uninterruptible power supply and expansion slots. As all these features were added we continually saw the sales of the Hercules increase. In the position that Hercules falls in we decided to take a defensive strategy in protecting our position. We did this because throughout the entire 8 quarters we were the market leader for most of that time period.

TITAN 2.0
The Titan was also one of our first models released in the 2nd quarter. The Titan was named from the great Titan Gods; the name was also used as a play on words for the advertising campaign in Titan Your Wallet. This model was designed to appeal to one of the largest segments, the cost cutter. This has also been one of our highest selling brands because we offered it a very low price. This is again because we sold over 1,000 units achieving a high level cost advantage. Again as more information on customer needs and more features came available to the Titan, we added, on top of the original components a CD read/write drive, a high capacity hard drive, database software, and a mid-range processor. We added features to the Titan with the target market in mind, the Cost Cutter is looking for a cheap, low-end computer and we gave them this in the Titan. We again took a defensive strategy in protecting share position with the Titan during the game because it was a brand judgment score leader for most of the 8 quarters. But in quarter 8 Pirum and Tech Th!s Out surpassed the Titan in brand judgment so we may now take an offensive, improve position strategy.

HERMES 2.0
The Hermes brand was developed in the 4th quarter. The Hermes brand was named after the great messenger of the Gods. We originally intended for the Hermes to be geared toward the workhorse segment, but 26 | A t l a s I n c o r p o r a t e d

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after market research came back we realized it fit the innovator segment better. With that in mind we added, on top of the original components an uninterrupted power supply and removed presentation software. With the Hermes weve been using an offensive strategy to improve our position in the innovator segment.

APOLLO 2.0
The Apollo brand was also developed in the 4th quarter. The brand was named after Apollo, who was the son of Zeus and was well know for being the God of light and the sun. We designed the Apollo brand to fit the traveler segment. As more information on customer needs became available we decided to add, on top of the original components business graphics software and presentation software. We felt that the brand would appeal more to the traveler segment with these software additions. Weve also invested in R & D that will be available in the 9th quarter, which will allow us to add long-life battery for portable. This addition will highly appeal to the travel segment. With Apollo we were using an offensive strategy, in improving position because we were constantly combating Pirums SOM in the traveler segment.

ARTEMIS GOLD
The Artemis brand was designed in the 5th quarter, and was targeted towards the traveler segment. The brand was named after Artemis, who was the Goddess of the wilderness. We designed the Artemis brand to be a higher end option for the traveler segment. Throughout the lifespan of the brand, on top of the original components we added a DVD drive, web design software, a high performance processor, uninterruptible power supply, and expansion slots. Again weve also invested in R & D that will be available in the 9th quarter, which will allow us to add long-life battery for portable, which will make this brand more applicable to the traveler segment. Weve chosen an offensive strategy, particularly that to improve position because again were trying to gain SOM back from Pirum in the traveler segment.

ZEUS 2.0
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Atlas

Inc.

The Zeus brand was also designed in the 5th quarter and was aimed toward our main target market, the Mercedes segment. The brand was named after Zeus, who was a Greek God, known as the father of Gods and men. We had to wait until the 5th quarter to design this brand because this was the first quarter R & D was available. Zeus has been the most profitable brand weve had to date due to its high level of sales, over 2,000 units. Zeus also has the highest profit margin at $1,646 per unit. Throughout the lifespan of the brand we added as many features as would be available, including an expanded keyboard with hotkeys. With R & D continually becoming available the Zeus brand is prime for updates. The Mercedes segment is continually looking for innovation and our investments in R & D will maintain this brand as our most profitable. With the needs of the Mercedes segment in mind we will maintain an offensive strategy with Zeus, particularly an invest to grow strategy.

ATHENA 2.0
The Athena brand was again design in the 5th quarter, and was also aimed toward our main target market, the Mercedes segment. The brand was named after Athena, the Goddess of wisdom, warfare, and crafts. The Athena brand was meant to be a slightly lower end version of the Zeus; available for the more price conscious Mercedes segment. The Athena model differed from the Zeus in that it only has a CD drive (vs. DVD), a 19 monitor (vs. 21), and a standard keyboard (vs. expanded w/ hotkeys). We took a defensive; optimize position strategy with this model because we wanted to have a model available that could improve our already dominant SOM in the Mercedes segment.

PEGASUS
The Pegasus brand was also designed in the 5th quarter, and was designed to fit the needs of the workhorse segment. The brand was named after the winged divine horse of Greek Mythology. The Pegasus brand was designed to offer a slightly different version than that of the Hercules. The Pegasus model differs from the Hercules model in that it doesnt have web design software or an uninterruptible power supply, however it does have an ultra high performance processor (vs. high performance processor). This was an offensive; optimize position strategy because we were fighting to earn back SOM from Pirum in the workhorse segment.

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Atlas

Inc.

The Poseidon brand was again originally designed in the 5th quarter, and was designed to appeal to the cost cutter segment. The brand was named after Poseidon, who was the God of the sea. The Poseidon model was designed to offer more high-end features than those of the Titan. The Poseidon model differs from the Titan in that it has engineering graphics software, expansion slots, and a high performance processor (vs. mid-range processor). This was a defensive strategy, in particular an optimize position strategy because we have been, and still are the market leader in the workhorse segment.

POSEIDON 2.0

PROMETHEUS
The Prometheus is the last brand we designed in quarter 8, it was specifically made to mock Pirums Forelle 3, which was targeting the traveler segment. The brand was named after Prometheus, who was a Titan and the brother to Atlas. We mocked every feature the Forelle 3 had in creating the Prometheus, in doing this we stole the SOM the Forelle 3 had in quarter 8. In its first quarter being sold the Prometheus proved its worth by achieving a cost advantage, selling over 1,000 units. Weve also invested in new R & D for quarter 9 which will allow us to add long-life battery for portable. The Prometheus was clearly an offensive strategy used to improve position and steal SOM from Pirum.

6.

MARKETING MIX STRATEGY

6.1

PRICE

Brand Hercules 2.0

United States 2,399

Canada 2,399

Brazil 2,399

Europe 2,399

China 2,399

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Atlas 1,750 3,100 2,400 2,850 4,399 3,600 2,599 2,450 2,495 1,799 3,100 2,700 2,800 3,950 3,500 2,500 2,400 2,495 1,750 3,200 2,400 2,850 4,399 3,600 2,599 2,450 2,495 1,799 3,100 2,800 2,900 4,450 4,200 2,550 2,450 2,495

Inc.

Titan 2.0 Hermes 2.0 Apollo 2.0 Artemis Gold Zeus 2.0 Athena 2.0 Pegasus Poseidon 2.0 Promethe us

1,750 3,100 2,400 2,850 4,399 3,600 2,599 2,450 2,495

Performance-based pricing was used since prices were set based on the price that consumers were willing to pay in each region, and the productprice position of our competitors. A multi-segment pricing strategy was used based on the differing needs and price sensitivities of the customer base. As the market matured, we used our differentiating benefits of R&D to establish a plus-one pricing strategy. We were able to use price as a differentiating factor for our Cost Cutter segment, by setting our prices lower than our competitors, while providing product features that were consistent with the needs and usage behaviors of this segment according to market research.

6.2

PRODUCT
Brand Segment Work Horse/Costcutter/Innovator Cost Cutter/Workhorse Mercedes/Innovator/Workho rse Traveler Traveler Mercedes/ Innovator/Workhorse Innovator/Mercedes/Workho rse WorkHorse/Cost Demand 1,141/439/12 1,203/341 323/308/39 439 262 1,715/874/10 6 589/246/122 647/186/7 Brand Judgement 74/71/42 71/58 55/70/49 63 61 65/86/66 78/53/62 68/66/41

Hercules 4.0 Titan 2.0 Hermes 2.0 Apollo 2.0 Artemis Gold Zeus 2.0 Athena 2.0 Pegasus

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Atlas Cutter/Innovator Workhorse/Costcutter Traveler/Workhorse

Inc.

Poseidon 2.0 Prometheus

136/125 1,481/17

54/62 76/36

Ten brands were designed to fit the needs and usage behaviors of the 5 segments in the market. Brands were altered according to brand judgment and demand. Each quarter, we evaluated our competitors brands in comparison with ours and adjusted to compete with those brands. We opened with two brands targeting our Cost Cutter and Work Horse segments. Our product line was extended in quarter 4 and again in quarter 7 in order to meet the needs of more customers in each segment. For quarter 9, we developed one more brand for the traveler segment in order to steal share of market from our leading competitor. Early in the market, we took an offensive strategy to try to gain market share. When we became market share leaders in quarter 5, we took a defensive strategy, analyzing our own weaknesses. As the market matured, we used a Flanking strategy by investing in R&D to innovate our products to try to gain a competitive advantage. For all segments besides Cost Cutter, which was differentiated mainly through price, we differentiated by creating incremental benefits and value through product features to enhance quality, and through performance and durability of our products to drive quality.

6.3

PLACE

United States New York Atlanta Chicago Los Angeles

Canada Montreal Toronto Calgary Vancouver

Brazil Curitiba Rio De Janeiro Sao Paulo

Europe Paris Rome Berlin London

China Shanghai Beijing Guangzhou

We created service differentiation to add value to our brands through the opening of sales offices, and hiring sales people to fill those offices. In Quarter 9, we opened a sales office in Guangzhou, China (In bold). We opened sales offices in seventeen of the twenty available cities, giving us a distribution advantage over our competitors. 31 | A t l a s I n c o r p o r a t e d

Atlas

Inc.

For quarter 9, to continue increasing our service benefits, we invested in the following programs: professional training, incentive, and demonstration kit programs. We plan on open offices in all twenty cities available, and properly train our sales force to better suit the needs of our customers. All of our products were offered in each of the 17 cities in order to create absolute availability and reduce search costs for our customers.

6.4

PROMOTION

Company Atlas Pirum Kramerica Tech Th!s Out

Total Local Ad Inserts Q7 190 57 96 12

Total Local Ad Inserts Q8 172 85 96 12

Our advertising judgments were relatively competitive, but we realized that while we were gaining market share, we were turning lower profits than our leading competitor Pirum. Since we raised brand awareness early on, as seen by our market share lead in most segments, we saw the need to cut back on advertising, and instead invested in our sales force and research and development to better serve our customers with each of our brands. Where advertising was critical in the early market, as the market matured, it became less so. Though we did cut back drastically, advertising is still an important cost, especially as we enter new cities to do business.

7.

MARKETING BUDGET

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Atlas

Inc.

Marketing Budget
Quarter 8 Quarter 9 Explanation of Q9 Increases Opened office in Guangzhou in Quarter 9 (lease is $31,000)

Sales office leases

968,000

999,000

Sales force expense

2,882,874

2,907,374

Hire Sales Force for our new office opened in China in Quarter 8 (7 people, total $24,500)

Brand promotions

82,300

88,000

Offer bonuses to the 7 new sales people in China ($5,700 increase)

Special programs

210,149

221,049

Need to train the new sales people from China ($10,900 increase)

Ad creation/revision

29,999

60,000

Need to change the ads for Apollo 2.0 and Prometheus to account for the new R&D.

Point of Purchase Display expenses

34,000

34,000

Already have Point of Purchase Displays for all brands, not creating a new brand so more point of purchase displays are not necessary.

Advertising expenses

906,825

942,825

Need to Advertise in Guangzhou for all the brands. An increase of $36,000.

Engineering cost for new brands

60,000

60,000

Need to Modify Apollo 2.0 and Prometheus for the addition for the long lasting battery for portable computers.

Market research

100,000

100,000

No change. Already purchase research for every region, no need to purchase more.

Research and development

R&D Investment in Office software-word, spreadsheets -

SUMMARY
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Atlas

Inc.

Atlas, Incorporated has always focused on expanding into different territories, helping bring its computers to many new customers and increasing its sales and therefore profit. However, with a growth minded strategy, Atlas Incorporated adds more costs than its competitors. By adding another office in Guangzhou in Quarter 9, the cost for office leases increases to $999,000. With Atlas Inc. opening a new office, other costs come with it, such as staffing the office, which led to a $24,500 cost per quarter. After hiring the new staff, brand promotions and special programs are required to keep the sales force competitive and hard working. This leads to a $16,600 increase for both of the programs. With a new sales office in Guangzhou also leads Atlas Inc. to having to put another $36,000 in advertising. So with Atlas, Inc. making the Guangzhou office operational cost Atlas, Inc. $108,100. Atlas, Incorporated is also looking to open another office in Belo Horizonte, which will cost Atlas, Inc. $40,000. By seeking to open another office, Atlas keeps with its mission to continually expand into more markets and thus grow its sales. These costs made up part of the total costs, but the majority of the costs came from Research and Development. Atlas, Inc. plans on spending $1,705,542 on a new release of Office software-word and spreadsheets. With this addition to the options for Atlas computers, customers can expect to get a greater value for the price they pay. This also gives Atlas, Inc. a competitive edge over its competitors, and should lead to greater sales in the quarters to come. Atlas, Inc. has always kept an eye on the future and seeks to improve itself in any way possible. So, Atlas, Inc. has invested in Research and Development in every quarter that it has been available, and seeks to continue this, but it costs $30,000 per computer brand to apply these new additions to the different brands. So, Atlas will have to spend $60,000 on Engineering Costs for new brands. Both of Atlas Traveler Computer Brands will need to be changed to account for the longer lasting battery, a product of Quarter 8s Research and Development Investment. Since these brands will both changing, their advertisements need to change to match what the brand offers. Since it costs $30,000 to alter an ad, and two brands were altered, it will cost an additional $60,00 to update these advertisements. It costs $120,000 for Atlas to change two brands and change their corresponding advertisements. For Atlas, Inc. to continue to grow, it will require strategic altering of brands, in order to keep its costs low. But as of right now it seems that Atlas, Incorporated is looking very strong for the future, and can look for sizeable returns on these investments.

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Atlas

Inc.

8.

PROFIT PLAN

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Atlas

Inc.

Profitability of Marketing Division


Quarter 8 Revenues Rebates Cost of goods sold Gross margin Sales office leases Sales force expense Brand promotions Special programs Ad creation/revision Quarter 9 Explanation of Q9 Increases We can assume a 10% increase based on past quarters, but the market is in the maturity stage (increase of $3,216,092).

32,160,925 35,377,017 244,200

268,620 10% more units sold (an increase of $24,420 rebates) 10% more units sold, means the cost goes up by 10% as well (an increase of $2,044,281)

20,442,808 22,487,089 11,473,917 12,621,308 968,000 2,882,874 82,300 210,149 29,999

999,000 Opened office in Guangzhou in Quarter 9 (lease is $31,000) 2,907,374 88,000 Hire Sales Force for our new office opened in China in Quarter 8 (7 people, total $24,500) Offer bonuses to the 7 new sales people in China ($5,700 increase)

221,049 Need to train the new sales people from China ($10,900 increase) 60,000 Need to change the ads for Apollo 2.0 and Prometheus to account for the new R&D. Already have Point of Purchase Displays for all brands, not creating a new brand so more point of purchase displays are not necessary.

Point of Purchase Display expenses Advertising expenses Engineering cost for new brands Market research Operating expenses Operating profit Research and development costs Set up costs for new sales offices Net Profit for Division Cumulative Net Profit for Division

34,000 906,825 60,000 100,000 5,274,147 6,199,770 1,279,155 80,000 4,840,615 3,751,771

34,000

942,825 Need to Advertise in Guangzhou for all the brands. 60,000 100,000 5,412,248 7,209,060 1,705,542 40,000 5,463,518 9,215,289 R&D Investment in Office software-word, spreadsheets - new release Set up and office in Belo Horizonte, Brazil ($40,000) Need to Modify Apollo 2.0 and Prometheus for the addition for the long lasting battery for portable computers. No change. Already purchase research for every region, no need to purchase more.

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Atlas

Inc.

SUMMARY
Atlas, Incorporated has been experiencing five quarters of consecutive growth, and so it is reasonable that it can expect to see some more growth in this next quarter. The market is currently in the Maturity Stage of the Product Life Cycle, and fewer customers are entering into the market. Atlas, Inc. is also competing directly with Pirum for the highest share of market, but Atlas Inc seems better poised to take over the highest share of market within a few quarters, starting in Quarter 9. Atlas Inc. finds itself in almost all of the worlds markets with the most computers. With this in mind, Atlas Inc. plans to keep making each of its brands better and more valuable at a cheaper price than that of its competitors, and continually take over a higher overall share of market. This is why Atlas Inc. expects a 10% increase in numbers, because its investment in the future will finally come into play and lead Atlas Inc. into a position to become the number one computer provider in the market.

9.

PERFORMANCE EVALUATION

In evaluation our first two years of business, we have gained high share of market and realized a high profit margin. Atlas Inc. offers two products for each of the 5 customer segments. As of quarter 9, we will have established 18 sales offices throughout the global market, and with our plan to have offices in every available city, we will expect to dominate the industry with a distribution advantage. As our goal is to be the leading company in the market, we will convert our weakness to strengths and take full advantage of our opportunities. Our prices will remain competitive, and we will closely evaluate all operating costs to limit spending. We have been able to gain market leadership in three of the five market segments, and will continue to capitalize on our strengths in those segments. In order to become the total market leader, we will capitalize on our competitive advantages and continue investing in research and development to increase the value of our products. Though our performance in the first 8 quarters has 37 | A t l a s I n c o r p o r a t e d

Atlas not produced a position as market leader, the management of Atlas Inc. strategizes long term, and we expect to become the most dominant company in the microcomputer industry.

Inc.

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