ACME Inc. Q4 2008 Executive Update
Prepared by the Executive Steering Committee under the Leadership of James White, CFO
ACME Inc. faces an important new challenge. Our privileged position as the premier name in high‐quality musical instruments, the choice of the concert professional, is threatened by new technology. Electronic alternatives become more important every day. Yet our most important product line, acoustic instruments, is addressing the slowest‐growing market segment in the industry.
Our answer to this challenge is change and development. This 5‐year business plan guides ACME Inc. through the transition to new technology. We will continue to develop and expand our position in keyboards, speakers, and related electronic equipment, while slowly reducing our present dependence on acoustics.
Our new plan is ambitious. We expect a dramatic increase in sales and profits, as shown in the chart Business Plan Highlights. Greater growth rates are expected for keyboards, speakers, and electronic equipment, all of which grow between 10% and 20% per year.
The worldwide market for musical instruments is a very mature, very competitive market. Overall market growth is estimated between 6% and 8% per year, in both units and value. Distribution patterns vary a great deal by segment, from the mass retail distribution of the low end to the specialized distribution of the high‐ quality and high‐price segments. ACME Inc. operates in a narrow part of the market; instruments and equipment are sold to professionals who insist on the highest‐quality sound. Most of our customers are concert musicians.
The market forecast shown here refers to the segment of the market relevant to ACME Inc., which is of course the very high‐quality professional music segment. The acoustic instruments segment, our most important market segment, is expected to grow at a very slow 2% [continues]
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