2. Foursight’s Executive Team
Executive Team from left to right: Jake Brown- COO, Miguel Quintero- CIO, Teri Bunn- CEO,
Christopher Estrada- CMO, Eugenie Chung- CBDB, Jonah Chung- CFO
- Teri Bunn, our CEO, has a few years of professional experience in the Managerial Industry. She has worked on
multiple school projects other than the IBSCS Competition such as the Diversity in Leadership Conference held at
CSULB in 2015 and the Boeing Case Study Competition. Currently, she is an MBA candidate with an emphasis in
Project Management and Strategy using her expertise to help manage company affairs.
- Jake Brown, our COO, our Chief Operations Officer, brings 3 years of management experience, in which he
was in charge of hiring, scheduling, and inventory management for a small business to the team. He is
currently pursing a bachelor’s degree in business management and bachelor’s degree in supply chain and
operations management. Jake’s real world experience and problem solving skills will help the team compete
at a high level.
- Miguel Quintero, our CIO, has organizational experience in working in data-driven environments. He is
graduating with a bachelor's degree in international business, which included a research component. His
education and a minor background in accounting and rhetoric helps him fulfill his role in the company.
- Christopher Estrada, our CMO, is graduating with a bachelor’s of science in Business Administration
with an emphasis in Marketing. He is currently developing statistical and analytical skills to utilize Big
Data. He has worked with several CSULB student run marketing teams as a Director of Marketing and
creative art.
- Eugenie Chung, our COO, has been a working professional for the last 9 years, and a business owner and
operator for the last three. Her experiences founding a successful business, along with the educational
backing stemming from her undergraduate studies in Business Management and Psychology at CSULB,
enable her to successfully serve as Chief Business Development Officer.
- Jonah Chung, our CFO,is obtaining a BS degree in Finance and is aspiring to work in as a financial analyst in the
business industry. He volunteers primarily on campus with the integration of incoming freshman through the CSULB
SOAR program and has also participated in the Boeing Case Study Competition alongside our CEO.
3. Contents
Contents...............................................................................................................................................................2
Executive Summary..............................................................................................................................................3
Our Vision .......................................................................................................................................................4
Our Mission .....................................................................................................................................................4
Situational Description and Its Analysis .................................................................................................................4
External Market Analysis ..................................................................................................................................4
Internal Market Analysis ...................................................................................................................................5
Swot Analysis ......................................................................................................................................................7
Objectives and Goals ............................................................................................................................................8
Strategies and Tactics ...........................................................................................................................................9
Funds Required and Their Use.............................................................................................................................11
Appendix A........................................................................................................................................................12
Summary of Key Financial Data ......................................................................................................................12
Appendix B........................................................................................................................................................13
Consolidated Pro Forma Income Statement (000s) ............................................................................................13
Appendix B (con.)............................................................................................................................................14
Consolidated Pro Forma Income Statement (000s) Continued............................................................................14
Appendix C........................................................................................................................................................15
Pro Forma Cash Flow Sheet (000s)..................................................................................................................15
Appendix C (con.)............................................................................................................................................16
Pro Forma Cash Flow Sheet (000s) (con.).........................................................................................................16
Appendix D........................................................................................................................................................17
Pro Forma Balance Sheet (000s) ......................................................................................................................17
Appendix E........................................................................................................................................................18
Sales Forecast.................................................................................................................................................18
Appendix F ........................................................................................................................................................19
GAR – Goals Attainment Report......................................................................................................................19
4. Executive Summary
Foursight is a prominent manufacturer of high-quality and multi-feature pens that provide
our customers with reliable writing utensil alternatives. Our company defines itself by being at the
forefront of writing utensils, offering solutions to those that want the most out of their personal and
professional lifestyles. This summary will provide details to our company’s internal and external
market conditions that Foursight faces, of which the company has used to create our goals and
strategies. Our financial and forecasting plans, will outline how our company expects to reach our
desired optimal strategic industry position and generate shareholder value through the end of our
company’s seventh year.
The high-quality pen industry is highly competitive among the top six companies – in which
Foursight is fighting for the top position in market share. Foursight’s headquarters are located in
Southern California with our primary manufacturing location in the Merica 3 region. As of the end
of year 3, we also have manufacturing locations in the Pandau region and can still expand our
manufacturing and sale venues as needed in both countries. Foursight is proud to be a global
company and the economy in Merica has proven to be a stable and steady growth for us since our
company’s inception. Having two separate and independent markets means that Foursight will
continue to observe sales and expand production areas to create a diversified production footprint
that will permit the company to plan for contingencies by having high production levels in multiple
locations.
Foursight’s objective is to offer a high quality product. We have set our sights in proving that
the market will respond to quality and therefore have a goal of 23% market share by the end of year
7. We have also dedicated ourselves as a management team to increasing earnings per share and
return on investment by 10% annually starting year 5.To do this, the company will utilize the
strategies discussed in this document.
Foursight will meet our customers’ wants and desires for their writing references by offering
a high quality product with the most up to date technology and features. In order to achieve this, the
company has committed itself to investment in research and development and staff training and
delivering that a quarterly investment of $200k in R&D and $100k in training will meet our
company’s expectations of providing the best product at a reduced cost. We will increase our
advertising by at least 20% to optimize our forecasted sales. Foursight is committed to making sure
every customer has access to our product and so a buffer stock of 10 - 20% or more will be put in
place. To obtain our lower costs goals, we are expanding our overseas manufacturing into Pandau in
order to optimize the lower production costs. We currently anticipate that we will be able to finance
our future investments and working capital through our current internal operations. For the next 4
years, Foursight will relate more value for shareholders by increasing ROI by 8% annually through
year 7. To reach this goal, we will raise the net income by at least 8% annually and start paying
dividends from the end of year 4.
5. Our Vision
Our vision is to provide contemporary industry professionals with a writing tool that will fulfill their
wants and needs at the right price. We produce our products and deliver them in a safe, reliable, efficient,
and environmentally sound manner that makes our employees and customers proud to be a part of the
Foursight vision. Over the next four years, we are striving to become a performance leader in the industry
and provide the best quality product for our customers at a reliable and affordable price.
Our Mission
At Foursight, our mission is to produce quality pens and bring them to the contemporary individual,
at competitive prices, in order to gain market share. We support our mission by investing in the training of
our employees. In turn, the investment will lead to a cost reduction in the manufacturing of our product.
Thus, we aim to benefit our stakeholders by adding value to their investment, as we increase our profit
margin.
Situational Description and Its Analysis
External Market Analysis
Macro Environment
Foursight is operating domestically in Merica and internationally in Pandau at the end of our 3rd
year. We are headquartered in Merica 3 in the city of Long Beach, California, from which we distribute our
products to additional sales venues in Merica and overseas to Pandau. We are constructing a new plant in
Pandau to increase production.
Economic characteristics of Merica and Pandau.
The GDP of Merica dipped nearly 4 points this year from 100 to 99.03 in our first Quarter and ended
the year at 96.61. The GDP is forecast to increase substantially in the next 4 quarters. Pandau’s GDP has
been relatively stable, dropping to 99.91 in quarter 1, peaking at 102.72 in quarter 2, and ending at 100.08
for the year. Pandau’s GDP is forecast to drop to 96.25 and stay near that level throughout the next year.
Global demographicsof country environments
Merica has a diverse population with a low growth rate, 25% of which is through immigration. Their
standard of living affords them to purchase quality products. The workforce is highly skilled and mobile. A
quarter of its population has a college education. Pandau’s large population is at an annual growth rate of
2.3% with some of the most densely populated areas in the world. Over 50% of Pandau citizens are under
the age of 20. They have a relatively high standard of living.
Legal and regulatory
There is a 39% percent tax on corporate income in Merica. It has no value added tax or a capital tax
on corporations. There are also import and export taxes, payroll taxes, principally social security, state and
local taxes, and taxes on real property. Pandau offers several benefits and tax breaks to exporters in the
country. General tax on corporate income is 39%. Other taxes in Pandau are payroll taxes, principally social
security, local taxes, taxes on salaries, and taxes on real property.
6. Business Environment
1. Target Market. Foursight aims to be the best provider by offering high quality products at a reduced
cost. Therefore our target market is a large demographic ranging from lower-middle class to upper
class and age range from 13-60 that primarily reside in urban and suburban areas.
2. Market Size. The market size for Foursight is very large. More than 75% of the population use pens
and the demand for pens is very consistent as the need for pens does not fluctuate. There is a large
demand for everyday pens and there is also a demand for high quality pens as well. Foursight will be
able to make an impact on the industry by not only producing high quality fancy pens for upper class
citizen but also mass produce everyday pens that are more durable, last longer, and cost less than
other regular pens.
3. Competitors. The current business environment is very tight and there are a lot of opportunities to
fill a niche. Currently, LIONS VENTURE, LLC and Hydrate are our competitors for production
capacity. LIONS VENTURE, LLC recently ramped up production by opening a 8 line plant in
Pandau and Hydrate also opened a 4 line plant in Pandau. LIONS VENTURE, LLC and Hydrate
both seem to be filling a low cost provider, which would explain their decisions to increase capacity.
InPremier and Sol Capture recently released high quality high cost products, which indicates they
are aiming for a upper-middle class and upper class demographic. While our competitors have been
successful in their individual areas we are confident that we can succeed by providing the high
quality products that InPremier and Sol Capture provide while selling them at prices that LIONS
VENTURE, LLC and Hydrates demographic can also afford. Foursight’s best provider strategy aims
to achieve success in both of these markets.
Internal Market Analysis
Marketing
Foursight offers pens of great quality at attractive prices. Marketshare in year 3 was 17.19%, ending
at 14.5%, and peaking at 19.7% in quarter 3. Our goal was to maximize our market share in the first 3
quarters before shifting into higher quality positioning in the 4th quarter with a bigger focus on profitability.
Finance
Our cash balance at the end of year 3 was $1.9 million and we have managed our cash reserves up to
expectations throughout the previous 4 quarters to meet the overseas operation expansion. We have
capitalized on the capacity expansion in Merica which allows us to catch up with the surge in market
demand over the last two quarters of year 3.
With a net income of $306K in year 3, we achieved a net profit margin x.xx% and ROE of x.xx%.
These results are very encouraging given the fact that we have heavily invested in plant expansion and
innovation in year 3.
At the end of year 3, our debt-to-equity ratio remained stable at xx.xx% and interest coverage stood
at xx.xx, (place) highest in the industry. Our credit rating of x was maintained and Altman Z score improved
from x.xx to x.xx at the end of year 3. We ended the year with EPS of x.xxx and stock price standing at
x.xx, an increase of xx% compared with last year.
7. Production / Operations
In order to meet the overall business objectives and goals, we have established the following operational
goals:
Have no product stock outs in any quarter
Reduce product cost by 20% by year 5
Keep safety stock within 10-20% in all areas
Steadily invest in R&D and increase by 1-4 thousand each quarter
Following our business plan, we have increased our investment in training costs over the first 4 quarters. We
started in year 3 quarter 1 with $68,000 in training and by year 3 quarter 4 we had increased training to
$97,000. This increase of $29,000 shows our dedication to lowering costs. Similar to training we also
increased our investment in R&D in year 3. We started in year 3 with $75,000 in R&D and by the end of
year 3 we had increased R&D to $98,000. This increase of $23,000 is consistent with our strategy of being
able to have access to new models. Our production can adequately produce for our demand. We opened two
new lines in year 3 quarter 2 and started production for a four-line plant in Pandua in response to our
forecast that our demand will increase in year four. Overall we have adequate production capacity, and
increased investment in both training and R&D all of which support our strategic plan.
Personnel
At Foursight we believe that our employees are vital parts of our success and expansion in our
market. Our employees starting pay and commissions have increased during year three and will continue to
see both salary and commission rises in the future. Between our starting salary and sales commission, our
sales personnel average 7,200 units of sales, which are some of the highest numbers in our market. Striving
to have the most efficient employees we have also increased training by $29,000 over four quarters and this
number is expected to continually grow in the future. We believe in compensating our workers for the work
they do and we strive to continually be investing in training in order to keep our workers up to date with the
latest innovations.
Organization and General Management
Our operational goals are reducing costs, steady investments in R&D, matching production output
closely with forecasted sales, and expanding production capacity in proportion to expanding sales. Our team
is aiming to achieve a best provider strategy and therefore one of the main goals for operations is lowering
costs.
Our first strategy for our operation goals is to reduce the amount it costs to produce goods. Sticking
with our best provider strategy, it is important that we invest in training, as it will decrease the cost of our
product allowing us to sell it at a cheaper cost in order to maintain profit. Increasing steadily in R&D is also
important as it allows us to get access to new model numbers.
Matching production output with sales is important because it reduces our holding cost. By limiting
our safety stock and closely forecasting sales we can produce close to the exact amount we need and overall
lower costs. Our goal is to keep safety stock between 10-20% therefore keeping holding costs low but still
maintaining enough product in order to eliminate a stock out. Expanding capacity is also important but
making sure that it is in proportion to forecasted expansion. Having more lines producing than overall
demand will cause unnecessary costs and having too few lines puts us at risk of stocking out. By forecasting
how much we need to produce, it will allow us to plan when to open a new plant or add new lines.
8. Swot Analysis
Strengths Weaknesses
Highly trained staff
Productsafety stock
High quality product
Large production capacity
Consistently increased
advertisement
R&D spent
Selling expense
Net income
Certificates of Deposit too low
Loss in marketshare
Loss in workforce
Opportunities Threats
Real GDP growth in Merica
Increasing marketshare
Few competitors in target
markets
Becoming a Best Provider
Increasing inflation
New productmodels
Pandau’s decreasing real GDP
Competitor’s international
production plant
9. Objectives and Goals
Foursightaims to meet the following goals and objectives:
GeneralCompany Objectives:
Capture and maintain 23% market share by the end of year 7.
Raise investor ROI by 10 % annually.
Increase stock prices by 20 % annually.
Raise EPS by 10% annually.
Grow net income by at least 10% annually
Marketing Objectives and Goals:
Maintain highest market share of competitors with a differentiated best – provider strategy.
Increase sales by 20% annually.
Introduce a two new models by the end of year 4 and one new model in subsequent years.
Maintain an advertising strategy that leads the industry in market awareness by increasing
advertising by at least 20 % per year.
Production / Operations and Goals:
Reach an increased savings level once every other year. Attaining savings level of at least 3 by year
7.
Maintain the ability to add capacity to Pandau and Merica plants, as needed. This enables the
production of at least 70% of merchandize worldwide at either plant.
Maintain a 10 - 20% safety stock every quarter beginning Year 3, Q1 through Year 7.
Finance Objectives and Goals:
Archive a Return-on-Equity (ROE) of 8% annually
Maintain the Credit rating at 2 and upgrade the rating to 1 (highest rating) from the end of year 5.
Improve the Altman Z score to 3 by the end of year 6.
Maintain a sound capital structure with Debt to Equity ratio being kept at below 30% at any time.
Human ResourceObjectives and Goals:
Increase sales per salesperson to 9,000 units in Merica and 5,000 units in Pandau. We also must
maintain enough staff to meet project sales.
Reduces turnover to less than 10% per year.
10. Strategies and Tactics
General Company Strategy
Foursight will compete in the market, increase shareholder value, and differentiate itself from its
competitors by employing a broad differentiation strategy. This strategy will allow us to achieve a
sustainable competitive advantage by producing unique, high quality products with features our customers’
want. Generous investment policies in research and development and training, will result in continuously
being the first to market with new models as well as having low production costs.
Marketing Strategies
Foursight is committed to bringing a high quality differentiated product to the market. With that in
mind, we expect to maintain the highest market share of those companies that will choose to compete on a
differentiated strategy. Our product, one that will maintain the highest quality with the most features in all
markets, will allow us to be flexible with our prices with each new model will allow us to see increased
profits based on the market, but will also signal to the market the higher perceived value of owning the
latest. Based on our aggressive advertising strategy and forecasts we have set a goal to increase sales
volume by 10% annually.
In order to meet these expectations, we will have to lead the market in introducing new technology
and maintain an aggressive advertising strategy. Foursight plans to introduce 2 new models in year 4 and
follow that up with one new model in the subsequent years, all with the highest quality and improving
features. The company will also increase advertising by 20% year over year. We will spread the increase in
advertising dollar equally over each Merica location with the highest expenditure in our home area, Merica
3, to capitalize on the low storage costs in that region. We will maintain a lower overall advertising amount,
only increasing 15%, in Pandau because of the limited sales volume in this market.
Production / Operations Strategies
The production department is highly committed to Foursight’s overall business goals and objectives.
IN order to reach a new, increased savings level per y ear and attain a savings level of at least 4 by year 7;
we will invest heavily in training our employees. The training policy will be to consistently invest a
minimum of $100K every quarter, stating quarter 1 of year 4.
We ended year 3 with the production of a 4 line plant in Pandau, we also began by expanding our
Merica plant by adding 1 additional line to it at the beginning of year 3. Another 2 lines of capacity are
scheduled to be added to a plant by year 4 quarter 3. This will allow us to expand our production capacity if
needed and enable the production of at least 70% merchandise at either the Merica or Pandau plants. We can
then rest assured during unpredictable growth, or in the case of a catastrophe that at least one plant can pick
up production for the other.
The production team will employ a level production strategy. During low demand quarters, we will
still produce at capacity to ensure there is enough inventory to cover sharp boosts in sales and demand. We
will also ensure we have enough capacity to cover standard peak seasonal periods in quarter 2 and quarter 4.
This strategy will allow us to maintain an inventory level at the end of each quarter equal to at elast one
month of sales.
11. Finance Strategies
Foursight has set a policy of keeping cash reserves in the home area to meet at least 25% of total
operating expenditures and investment requirements in the enxt quarter. The quick ratio is also maintained
at 2.5 or higher in every quarter. Our company will begin paying a dividend beginning in year 5. The payout
ratio is projected at 20% of EPS. The company will also buy back shares beginning at the end of year 5,
reducing the number of outstanding shares by 5% annually. In the period from year 5 to year 7, we plan to
retire 25% of the outstanding bonds in each year to reduce the debt-to-equity ratio to below 15%. These
strategies will support the stock price, and consequently have positive effect on our company’s Altman Z
score and credit rating.
We will use retained earnings to finance the business expansion as this is the funding source of
lowest cost. Bond issuanance will be used to provide additional funds after the retained eranings have been
exhausted. Bond issuance, hwoever, will be avoided when debt-to-equity ratio exceeds 30% and the
company will then turn stock issuance.
Human Resource Strategies
At Foursight our company success is dependent on investing in our people and keeping them as part of our
team. With that said, we expect to keep our turnover rate at below 10# to keep a consistent presence in the
market. We will do so by offering a competitive compensation package that will allow for an annual salary
adjustment comparable to GDP increases of x% and a bi-annual commission raise of x-x%. We also expect
each of our sales representatives to generate x,xxx sales units in Merica and x,xxx units in Pandau and will
maintain enough staff to reach that goal based on sales projections. In order to reach this sales force capacity
we will check forecasted sales one quarter in advance versus the amount of staff on hand and hire based on
the next quarters projections.
12. Funds Required and Their Use
1.2 million (Pay in full) for a factory (two lines) in Merica A by year 4, build another factory in
America B by year 5. Assuming higher demand, extend line extension in any Merica extension in
year 7. Total cash requirement 1.2 million to 4 million dollar. Invested 4 line plant in Pandau dated
in year 3.
Use for expansion in production(factory), pay off bond, repurchase stock, invest in CD only of
higher than 5%, in certain dilemma; get loan from bank.
Issue one million dollar worth of stock to pay majority of the factory in year 4. Issue stock is
recommended during higher prices(CPI). Want sufficient cash flow in avoidance for emergency loan
and investment in CD.
Bond payment 100k quarterly by year 4(bond retirement), repurchase stock by year 5. Give out
reasonable dividend to shareholders by year 4.
Current building in Pandau is quarterly 699k, assuming inflation remain the same.
19. Appendix E
Sales Forecast
Section 1: FORECAST OF PROJECTED INDUSTRY SALES IN UNIT (000) FOR EACH
MARKET
1 Year 4 Year 5 Year 6 Year 7
Q1 Q2 Q3 Q4 TOT TOT TOT TOT
M1 520 655 625 725 2560 2700 2825 3055
M2 553 570 545 645 2280 2580 2710 2880
M3 535 555 530 630 2220 2490 2500 2685
P 373 425 400 500 1700 1945 1945 2090
TOT 1981 2205 2100 2500 8760 9715 9980 10710
Section 2: COMPANY FORECAST IN MARKET SHARE FOR EACH MARKET
2 Year 4 Year 5 Year 6 Year 7
Q1 Q2 Q3 Q4 TOT TOT TOT TOT
M1 19.2 19.4 19.6 19.8 20 21 22 23
M2 19 19.2 19.4 19.6 19.8 20.8 21.8 22.8
M3 18 18.2 18.4 18.6 18.8 19.8 20.8 22.6
P 20 20.2 20.4 20.6 20.8 21.8 22.8 23.8
TOT 19 19 19 19 20 21 21.4 21.1
Section 3: COMPANY FORECASE IN UNITS (000) FOR EACH MARKET
3 Year 4 Year 5 Year 6 Year 7
Q1 Q2 Q3 Q4 TOT TOT TOT TOT
M1 111 131 125 145 512 540 565 611
M2 104 114 109 129 456 516 542 576
M3 101 111 106 126 444 498 500 537
P 75 85 80 100 340 389 389 418
TOT UNIT 391 441 420 500 1752 1943 1996 2142
TOT
$(000) 3190 4410 4200 5000 17520 19430 19960 21420
20. Appendix F
GAR – Goals Attainment Report
Foursight CSU, Long Beach W8C7
Goal Attainment Report
Year 4 Year 5 Year 6 Year 7
MARKETING Goal Actual Goal Actual Goal Actual Goal Actual
Company Market Share 20 21 22 23
Gross Sales Growth 30% 31% 32% 33%
Salesperson Productivity 10200 10500 11000 12100
PRODUCTION
Savings Level 2 3 4 5
Model # 2 3 4 5
Unit Production Cost $ 4.41 4.67 4.98 5.26
FINANCE
Growth Net Income 20% 22% 23% 24%
Net Income to Equity % 20% 17% 19% 21%
ROI % 10% 15% 20% 25%
EPS (growth) 11% 11% 11% 11%
Stock Price(growth) 12% 12% 13% 13%
