Capstone - Chester

Topics: Marketing, Inventory, Strategic management Pages: 9 (2562 words) Published: April 2, 2008
Chester Company

Our Mission
To serve all stakeholders, customers, and employees while becoming a global leader in the digital market.

At Chester Company, we are striving to become a broad cost leader in the electronic sensor industry. We are dedicated to offering a diversified product line at affordable prices to create the best value in the industry.

Strategic Objectives
In order to gain strategic advantage through cost leadership we will be focusing on multiple core competencies. These competencies include: •Human Resources
Plant Utilization

We will be focusing on cumulative profits, ending market share, ending stock price and market capitalization in order to appeal to investors and for our company’s growth and benefit.

In the first year our main focus will be to raise capital through issuing stocks and long term bonds. Our goal is to issue $10 million in stock and $20 million in long term bonds. This capital will go directly to plant improvements in automation. We will increase the automation on Able to 6, Acre to 7, and the other products one full point. We will also increase capacity of Acre and Able 100,000 units each. This will significantly lower the production costs for future years. Profits will be very minimal in the first year due to these large increases in automation and capacity.

The second year we will continue to increase capacity and automation. We will also begin to make investments in TQM. This will continue to make our company more efficient and lower costs. These cost saving will begin to show as we will be able to produce at a lower cost than our competitors and therefore sell at lower prices than our competitors. We will begin to gain market share as the low cost leader. The goal in this round will be $5 million in profits. If this goal is met, we will offer a dividend to our investors between $0.25 and $0.50 per share. Market share should be increased in the second year to 20% in all markets.

In the third year we will continue to increase automation and capacity, though at a slower rate. We will increase our investments in TQM to help lower costs and produce more efficiently. These cost saving will be transferred to the consumer through lower prices. This will increase demand and market share will increase.

Research and Development
Description of Products:
Cake-Traditional product that will drift slowly toward middle of the perceptual map •Cedar- Low End Product that will not be repositioned until round 4. •Cid- High End product that will be moved to the high end area of the perceptual map. Product will perform better and get smaller over time. •Coast- Performance Product that will drift to the performance area of the perceptual map •Cure- Size Product that will consistently become smaller over time with slight gains in performance.

The product positioning is shown in the following chart along with ideal ages and MTBF.

ProductSegmentIdeal AgeMTBF
CakeTraditional1.5-2.5 (Best at 2)14000-19000
CedarLow End4-7 (Best at 7)12000-17000
CidHigh End0-1 (Best at 0)20000-25000
CoastPerformance.5-2.0 (Best at 1)22000-27000
CureSize1-2 (Best at 1.5)16000-21000

In order to keep the high end, performance, and size ages down we will be using the research and development to update the products. This way we can keep the products positioned and at the same time monitor the age of the products. We will also be keeping the MTBF numbers low. We will remain in the acceptable range while at the same time lowering material costs. This will provide direct cost savings to customers while maintaining acceptable levels of reliability.


We will be setting prices very aggressively compared to our competitors and the market standard. We will use these lower prices to increase demand and increase market share. This will keep sales revenues and overall profits higher.

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