RMIT International University Vietnam Master of Business Administration ASSIGNMENT COVER PAGE Subject Code: BUSM3262

Subject Name: Business Operation

Location where you study:

RMIT Vietnam Sai Gon South Campus

Title of Assignment: Andrews Vision Statement File(s) Submitted: Andrews Vision Statement

Students Name: Nguyen Quang Thuan s3176183 Hoang Bich Ngoc s3372728 Ho Tan Loi s3393455 Ngo Ngoc Thien Thanh s3210207 Students Email Address: S3176183@rmit.edu.vn

Learning Facilitator in charge:

Mr. Hannarong Shamsub

Assignment Due Date: 26/03/2013 Date of Submission: 26/03/2013 Number of Pages including this one: 24

Word Count: 1617 words

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TABLE OF CONTENTS
1. 2. 3. INTRODUCTION: .................................................................................................................. 6 SITUATIONAL ANALYSIS: .................................................................................................. 6 STRATEGIC DISCUSSION: ................................................................................................... 8 3.1. 3.2. 4. Andrews Overall Strategy: ............................................................................................ 8 Measurable performance indicators: ........................................................................... 11

OBJECTIVES AND IMPLEMENTATION OF DEPARTMENTS:...................................... 12 4.1. 4.2. 4.3. 4.4. 4.5. 4.6. R&D ................................................................................................................................ 12 Marketing....................................................................................................................... 12 Production ..................................................................................................................... 13 Human resources .......................................................................................................... 14 TQM ............................................................................................................................... 14 Finance ........................................................................................................................... 14

5. 6. 7. 8. 9.

BUDGET: ............................................................................................................................... 15 EXIT STRATEGY (Appendix 8) ........................................................................................... 16 CONCLUSION...................................................................................................................... 16 REFERENCES: ...................................................................................................................... 17 APPENDIXES: ....................................................................................................................... 18

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LIST OF FIGURES
Figure 1: Porter's Five Forces adapted from Porter (1979) ................................................................. 7 Figure 2: Porter's Generic Strategies Adapted from Porter (1980) .................................................... 9 Figure 3: Ansoff's Growth Matrix ..................................................................................................... 9 Figure 4: Market Segment Percentage ............................................................................................. 10 Figure 5: Weight of Each Department Budget.................................................................................. 16 Figure 6: Porter's generic strategy................................................................................................... 18 Figure 7: Porter's generic strategy................................................................................................... 19

LIST OF TABLES
Table 1: Objectives and KPIs ........................................................................................................... 11 Table 2: Pricing Strategies............................................................................................................... 12 Table 3: Sales Forecast ..................................................................................................................... 13 Table 4: Departmental budget break down ....................................................................................... 15 Table 5: Departmental budget.......................................................................................................... 15 Table 6: R&D Implementation plan ................................................................................................. 20 Table 7: R&D Schedul ..................................................................................................................... 21 Table 8: Pricing, Promotion and Sales Budgets ................................................................................ 22 Table 9: Automation Schedule ......................................................................................................... 22 Table 10: Capacity Schedule ............................................................................................................ 23 Table 11: Human Resources Implementation Plan ........................................................................... 23 Table 12: TQM Implementation Plan .............................................................................................. 23 Table 13: Capital Structure Plan ..................................................................................................... 24

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EXECUTIVE SUMMARY The transformation of the sensor industry from Monopoly to Oligopoly has imposed challenges and competition for the six major players in arenas of product quality, price and customer satisfaction to sustain long term profits and gain market shares. Analysis of situation illustrates that the market possesses high barriers to entry, high supplier power but low buyer power and threat of substitute, all of which contribute to high rivalry among existing firms. This report is a brief and to the point study about vision, mission and strategy, making use of academic theory and applying it to the Capsim competition. The study delves deeper into situational analysis, strategic discussion and budgeting plan for Andrews Company to compete against others in sensor industry. Acknowledging challenges and opportunities of the market as well as the interdependence and price rigidity characteristics of an oligopoly market, Andrews adopts the Differentiation strategy to maintain presence in every segment aiming towards a wide range of customers to maximize revenues and market shares. The company accepts high cost investment in different operating areas, especially research and development (R&D) marketing and production (capacity and automation) to differentiate the products in quality and customer awareness, retention and acquisition to fulfil customers diversified expectations and demands. Moreover, Andrews adopts the product development approach to expand the product portfolio. Despite the Differentiation strategy, the company concentrates more on segments of Low End, Performance and High End. The report provides a framework of measurable performance indicators adapted from the Balanced Scorecard model to set the objectives concerning perspectives of financial, internal business process, customer and learning and growth with specific targets and years. The strategies, goals and implementation of departments are also proposed. The R&D decisions explain specific details of product lines positioning to match different buying criteria priorities. For marketing decisions, Andrews decides to adopt penetration pricing for traditional and low end while referring to skimming pricing for the others. Promotion and sales budgets as well as sales forecast are highly focused with estimates measurement to maximize and enhance customer awareness, accessibility and the companys segmental potentials. In production decisions, a deviation of 10% is set to manage the risks of inventory cost. Different methods of boosting in production are controlled carefully until TQM is applied to reduce costs. Decisions of Human Resource and TQM are discussed as well aiming to productivity enhancement and cost reduction. The capital structure plays an important role in maintaining the sufficient operating cash flows.

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Overall, budgets are allocated the most for production in the first three rounds due to heavy investment in automation and capacity. Marketing expenditures also account for the second largest proportion but scattered quite evenly to maintain the market interest. The report finally explains two exit strategies concerning segment selecting and restructuring in case the performance situations become unfavourable.

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1. INTRODUCTION: Numerous economic studies, supported by numbers, appear to be tilting in such a way as to suggest that different industries can sustain different levels of profitability (Porter, 1980). Porter (2008) also insists that long-term profitability relies heavily on the companys strategic responding to competition.

2. SITUATIONAL ANALYSIS: The transformation of sensor market structure from Monopoly to Oligopoly has resulted in severe competition among six main players. Given the fact that competition could possibly improve product quality, lower the price, and satisfy customer requirements, the understanding of competitive forces influencing the sensor industry would assist the company to develop a strategy to sustain long-term profits. In this sensor market, the industry is divided into five main segments: traditional, low-end, high-end, performance and size which are differentiated regarding price, age, ideal position and reliability (MBTF). For this reason, the competition will be analysed based on six main corporate functions: R&D, Marketing, Production, Human resources, TQM (Total quality management) and Finance. An intelligent combination of investment and funding decisions would strengthen the company competitiveness. The following chart describes the five competitive forces that shape strategy in sensor industry.

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Figure 1: Porter's Five Forces adapted from Porter (1979)

Barriers to Entry (high)

_Specific knowledge and technology

required

Power of buyers (Moderate)

_Customer's requirements are changing constantly regarding price, ideal position (performance and size), age and reliability (MBTF) significant perceived level of product differentiation _The percentage of buyers is relatively higher than sellers, buyers could not put any pressure into businesses to get them providing products at a lower price _Products are mostly standardized in each segments along with or no switching cost low level of customer loyalty

_Significant capital requirements (plant, manufacture, R&D and etc...) _Organizational economies of scale

Rivalry among existing firms (High)

_The sensor industry is characterized by only six players competing in the same five segments high concentration and harsh competition
_Promotion and sales budget are generously spent to gain awareness and develop customer accessibility

Supplier Power (High)

_High cost expenditure for inventing new products and upgrade existing products _High level of employee solidarity, strong labor union high bargaining power regarding labor negotiation

Threat of Substitutes (Low)

No substitute products

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3. STRATEGIC DISCUSSION: 3.1. Andrews Overall Strategy: 3.1.1. Vision We enhance customers desire. 3.1.2. Mission To serve the evolving technological needs of all customers offering value and excellence in all products and services; To be financially sustainable providing long term competitive return to our shareholders; To create a rewarding and cooperative environment for employees to prove and advance. 3.1.3. Core value A commitment to innovation and superiority A commitment to dedication to all customers needs A commitment to working integrity and cooperation 3.1.4. Generic strategy 3.1.4.1. Corporate strategy:

Based on Porters generic strategy, it is important for Andrews to select between two fundamental options among competitive scope and competitive advantage. The general view is that oligopolistic market structure comprises six main players competing in five segments. Andrews aims to maintain a presence in every segment so that the company would gain competitive advantage through differentiating their products from others. For this reason, Andrews focuses on broad competitive scope and willing to invest money for the differentiation in positioning. As a result, Andrewss general strategy is Differentiation in which by focus on R&D and marketing, the company creates products with superior customer satisfaction scores. Specifically, continuous improvement of product quality is carried out each round to compete in high-end, performance and size segments. New product is released in high-end and performance segments to ensure the competitiveness and gain market shares. For the low-end and traditional segments, TQM and automation are carefully invested to minimize cost so as to maintain low prices for customers preference. team. For marketing, Andrews dedicates strong investment in promotion and sales budget as well as HR to produce high skilled production

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Broad

Cost Leadership

Differentiation

Competitive Scope
Narrow

Cost Focus
Cost

Differentiation Focus
Differentiation

Competitive Advantage
Figure 2: Porter's Generic Strategies Adapted from Porter (1980) Regarding Ansoffs growth matrix, Andrews has to choose the growing method expanding either product or market. As operating in oligopolistic market structure, Andrews aims to develop new products to compete in existing market. It is obvious that Andrews will apply product development in Ansoff growth matrix.

Existing markets

Market Penetration Market Development

Existing Products

Product Development

New Markets

Diversification
New Products

Figure 3: Ansoff's Growth Matrix

3.1.4.2.

Segmentation strategy: (Appendix 1)

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3.1.5. Core market segment

Market Segment Percentage

9% 8% 11% 33%
Traditional Low End High End Performance Size

39%

Figure 4: Market Segment Percentage Andrews will maintain five segments to avoid lost sales. However, Andrews will pay much more attention to compete in Low-end, Performance and High-end segments.

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3.2. Measurable performance indicators:

Table 1: Objectives and KPIs (adapted from The Balanced Scorecard, Kaplan and Norton, 1996)

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4. OBJECTIVES AND IMPLEMENTATION OF DEPARTMENTS: 4.1. R&D By modifying performance, size and MTBF, R&D department decisions decide the positioning of the product lines. By considering the buying criteria of customers, R&D cycles are scheduled to ensure that the products fulfil the top two prio rities of customers expectation while maintaining the product lines within the positioning map. Particularly, from round 4, with the advantage of TQM to reduce costs and R&D duration, R&D is scheduled to position products of High End, Performance and Size in ideal positions. Implementation plan (Appendix 2) 4.2. Marketing 4.2.1. Pricing:

Table 2: Pricing Strategies (adapted from Foundations of marketing, Pride & Ferrel, 2010) Based on the buying criteria of each segment, the price elasticity of demand is highly acknowledged in the Traditional and Low End segments while this characteristic is quite disregarded in segments of High End, Performance and Size. Taking that into account along with the annual decrease of 0.5 in the price range, the difference in fixed and variable cost, Andrews employ the penetration pricing strategy for the first two segments with focus on maximizing production capacity while maintaining low prices to match customers preferences so as to earn profits. For the other three segments, the skimming pricing strategy is adopted Page 12 of 24

with concentration on quality and functionality thus production is limited but the price should be premium to gain not only profits but also market shares.

4.2.2. Promotion and Sales Budgets Marketing is one of the primary focuses of Andrews. Regarding marketing expenditure, because the priority is to achieve 100% customer awareness and 80% of customer accessibility in round 4 while taking into the fact that awareness drops 33% annually, budgets allocated to promotion are annually more than sales. When the maximum awareness is accomplished, budgets for promotion are diminished to $1,400. Also, in segments with new products released, the sales budgets maintain within $3,000. Promotion and Sales Budgets (Appendix 3) 4.2.3. Sales Forecast Sales Forecast = [Industry Demands x (1+Industry Growth) x Potential Market share] Adjustment for sales forecast is reviewed annually based on the state of economy, the intensity of competition and competitors strategies.

Table 3: Sales Forecast 4.3. Production Due to the fluctuation of inventory, economy states, competition and competitor strategy, production schedule is set to take into consideration the deviation of 10% of sales forecast. However, concerns are emphasized on maintaining the minimum level of remaining commodities to avoid inventory carrying cost. Additionally, in the first 3 years, production is schedule to utilize plants at 100% at max to reduce variable cost. For second shift, while this technique is adopted for Traditional and Low End to maximise capacity, it is delayed because of

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high variable cost in segments of High End, Performance and Size until round 4 (when TQM model could be applied and automation takes effect). Capacity table (Appendix 4)

Investment in capacity focuses on Low End, Size and Performance to fulfil the demands of projected sales. Capacity for new products is planned to be purchased from round 2. Automation table (Appendix 5)

Automation is initially heavily invested in Low End and Traditional segments until round 4. From round 5, thanks to the advantage of TQM to reduce costs and R&D duration, automation is invested in all segments so as to reach at max in round 8. 4.4. Human resources Andrews understands that employment investment is one of the key forces for enhancing productivity and high-skilled workforce. For this reason, Andrews tries to: Avoid labour strike by offering competitive benefit package, profit sharing and annual raise in labour contract. More importantly, this ratio will be levelled up to 10% each year beyond employees expectation to avoid labour strike. Maintain low turnover rate from 6.5% to 7% and achieve 125% productivity index by round 8 through maximizing recruitment spending and training hours every year from round 2. Implementation plan (Appendix 6) 4.5. TQM During round 4 and 5, TQM will be spent significantly to reduce material, labour, and administration costs, R&D cycle time, and increase demand simultaneously. This investment will be scaled down to maintain the impacts and minimize costs. Implementation plan (Appendix 7) 4.6. Finance Andrewss financial objective is to keep the stock price increasing by averagely $20 annually and maintaining debt/equity ratio at 40/60 Equity: Andrews must act decisively to maintain leverage ratio from 1.3 to 1.8 (safe range). The central purpose of this action is to ensure that the equity could cover the debt. If the leverage goes beyond 1.9, stocks will be issued to maintain the leverage ratio within the safe range. All stocks will be bought back in the last three rounds.

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Debt: In the short term, bonds will be issued in round 1, 3, 4 and 5 respectively. Above and beyond, two bonds will be retired in round 3 at high interest rate; then, a long term debt will be borrowed with a relatively lower interest rate.

The cash flow has to maintain above $2 million every year to avoid emergency loan. Dividend will be paid to shareholders at $0.5 per share in case the company earns profits

Implementation plan (Appendix 8)

5. BUDGET:

Table 4: Departmental budget break down (Unit: $000)

Table 5: Departmental budget (Unit: $000)

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Weight of Each Department Budget

5% 4% 6% R&D 29% Marketing Production TQM 56% HR

Figure 5: Weight of Each Department Budget With reference to the above chart, production occupies the highest percentages of company budget (56%) due to investment in automation and capacity to reduce the labour cost and enhancing production volumes in the long term. Following by marketing expenditure capturing more than 29% of total budget, promotion and sales budgets are among the most significant focus of the company. 6. EXIT STRATEGY (Appendix 8)

7. CONCLUSION To effectively implement the Differentiation strategy, Andrews emphasizes on innovation and operation efficiency by investing heavily into R&D, marketing, HR and TQM to bring differentiation in all segments. Besides, sensible funding and financial decisions should be made for the company to avoid emergency loan and remain financially sustainable. More importantly, strategic adjustments and competitors movements should be reviewed annually to adapt timely.

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8. REFERENCES: Ansoff, I 1957, Strategies for Diversification, Harvard Business Review, Vol. 35 Issue 5 Sep-Oct 1957, pp. 113 - 124 De Wit, B & Meyer, R 2010, Strategy Process, Content, Context: An international perspective, 4th edn, South-Western Cengage Learning, Croatia. Kaplan, R.S & Norton, D.P 1996, the Balanced Scorecard, Harvard Business School Press, Boston, Massachusetts Pride, W.M. &Ferrel, O.C 2010, Foundations of marketing, 4 th edn, South-Western Cengage Learning, Croatia Porter, M.E. 1980, Competitive Strategy, Free Press New York, pp.12 20, pp. 66-75.

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9. APPENDIXES: 9.1. Segmentation strategies: 9.1.1. Low-end and Traditional segments: Capturing more than 70% of total industry, low-end and traditional are among the most important segments in sensor market. Given that fact, the central buying criteria of customers for these segments are Age and Price; following by ideal position and reliability. At a result, Andrewss strategies must focus on broad competitive scope and simultaneously minimizing cost. Up to a point, low cost leadership strategy is chosen to compete in low-end and traditional segments. Key strategies taken by Andrews to compete in these segments include: Minimizing cost through investing on automation, TQM and productivity index Producing large quantity to take advantage of economies of scales Competitive pricing strategy

Competitive Advantage
Bro ad

Cost Leadership Differentiation

Competitive Scope
Na rro w

Cost Focus

Differentiation Focus

Low Cost Differentiation Figure 6: Porter's generic strategy

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9.1.2. High-end, Performance and Size segments: On the contrary, price is not sensitive in high-end, performance and size segments. For these segments, Andrews focuses on a broad competitive scope and willing to invest money for differentiation. Their current strategy is differentiation in which Andrews is willing to invest money to upgrade their product satisfying c ustomers demand for premium products. More details, Andrews strategies for these segments include: Investing significantly in TQM to reduce R&D cycle time, and increase demand Spending heavily on sales budget and promotion to gain awareness and enhance customer accessibility.

Competitive Advantage
Bro ad

Differentiation

Cost Leadership

Competitive Scope
Na rro w

Cost Focus

Differentiation Focus

Low Cost Differentiation Figure 7: Porter's generic strategy

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9.2. R&D: Segment Traditional Priorities Age Price Low End Price Age High End Positioning Age Revision cycle Every three year to adjust the age close to 7 and positions within the perceptual map Every four year to adjust the age and positions within the perceptual map Every year to keep the age close to 0. Release new products From year 4, with support of TQM, all segmental commencing products should be revised to continuously meet the from year 3 to ideal position gain more Increase MTBF to max in year 5 to enhance market shares customers preference Gradually increase MTBF annually from year 2 to reach max in year 4 Release new products commencing Every year to keep the age close to 0. from year 4 to From year 4, with support of TQM, all segmental gain more products should be revised to continuously meet the market shares ideal position Every year to keep the age close to 0. From year 4, with support of TQM, all segmental products should be revised to continuously meet the ideal position Increase MTBF to max in year 5 to enhance customers preference Table 6: R&D Implementation plan Strategy

Performance

MTBF Positioning

Size

Positioning Age

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Segments

Product names Able

Attributes Pfmn Size MTBF Pfmn Size MTBF Pfmn Size MTBF Pfmn Size MTBF Pfmn Size MTBF Pfmn Size MTBF Pfmn Size MTBF Red

R1 (2014) 5.5 14.5 17500 3.7 16.3 14000 9.1 10.9 23000

R2 (2015) 7.1 12.9 17500 3.7 16.3 14000 10.2 9.8 23000 R&D for new product 11.4 14.6 26000

R3 (2016) 7.1 12.9 17500 3.7 16.3 14000 11.3 8.7 23000 11.6 8.4 23000 12.4 13.9 26500 R&D for new product 6.1 7.6 19000

R4 (2017) 10.0 9.9 17500 3.7 16.3 14000 12.5 7.5 23000 12.5 7.5 23000 13.4 13.2 27000 13.4 13.2 27000 6.8 6.6 21000

R5 (2018) 10.0 9.9 17500 5.7 14.3 14000 13.4 6.6 25000 13.4 6.6 25000 14.4 12.5 27000 14.4 12.5 27000 7.5 5.6 21000

R6 (2019) 10.6 9.4 17500 5.7 14.3 14000 14.3 5.7 25000 14.3 5.7 25000 15.4 11.8 27000 15.4 11.8 27000 8.2 4.6 21000

R7 (2020) 10.6 9.4 17500 5.7 14.3 14000 15.2 4.8 25000 15.2 4.8 25000 16.4 11.1 27000 16.4 11.1 27000 8.9 3.6 21000

R8 (2021) 10.6 9.4 17500 5.7 14.3 14000 16.1 3.9 25000 16.1 3.9 25000 17.4 10.4 27000 17.4 10.4 27000 9.6 5.6 21000

Traditional

Low end

Acre

Adam High end Axe

Aft Performance Albert

10.4 15.3 25500

Size

Agape

4.7 9.6 19000

5.4 8.6 19000

Note:

R&D for Traditional & Low end & new products Yearly R&D for High end, Performance & Size Table 7: R&D Schedule

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9.3. Marketing: 9.3.1. Pricing, Promotion and sales budgets: Round Traditional Able Low-end Acre High-end Adam High-end Axe Performance - Aft Performance - Albert Size - Agape Price Promotion budget Sales budget Price Promotion budget Sales budget Price Promotion budget Sales budget Price Promotion budget Sales budget Price Promotion budget Sales budget Price Promotion budget Sales budget Price Promotion budget Sales budget 1 27.50 2,000 2,000 21.00 2,000 2,000 38.50 2,000 2,000 2 27.00 2,000 2,000 20.50 2,000 2,000 38.00 2,000 2,000 3 26.50 1,500 1,500 20.00 2,000 1,500 37.50 2,000 1,500 37.50 2,000 1,500 32.50 2,000 1,500 32.50 4 26.00 1,500 1,500 19.50 1,500 1,500 37.00 1,500 1,500 37.00 2,000 1,500 32.00 1,500 1,500 32.00 2,000 1,500 32.00 1,500 1,500 5 25.50 1,400 1,500 19.00 1,400 1,500 36.50 1,400 1,500 36.50 1,500 1,500 31.50 1,400 1,500 31.50 2,000 1,500 31.50 1,400 1,500 6 25.00 1,400 1,500 18.50 1,400 1,500 36.00 1,400 1,500 36.00 1,400 1,500 31.00 1,400 1,500 31.00 1,500 1,500 31.00 1,400 1,500 7 24.50 1,400 1,500 18.00 1,400 1,500 35.50 1,400 1,500 35.50 1,400 1,500 30.50 1,400 1,500 30.50 1,400 1,500 30.50 1,400 1,500 8 24.00 1,400 1,500 17.50 1,400 1,500 35.00 1,400 1,500 35.00 1,400 1,500 30.00 1,400 1,500 30.00 1,400 1,500 30.00 1,400 1,500

33.50 2,000 2,000

33.00 2,000 2,000

33.50 2,000 2,000

33.00 2,000 2,000

32.50 2,000 1,500

Table 8: Pricing, Promotion and Sales Budgets (Unit: $000) 9.4. Production: 9.4.1. Capacity table Round 0 Round 1 Round 2 Round 3 Round 4 Round 5 Round 6 Round 7 Round 8 1800 1800 1800 1800 1800 1800 1800 1800 1800 1400 1400 1400 1600 1800 2100 2500 3200 3200 900 900 900 900 900 900 900 900 900 600 600 600 800 900 900 900 900 900 600 600 600 750 950 950 1150 1150 1150 Buy 500 500 500 500 500 500 Buy 500 500 500 500 500 Table 9: Automation Schedule 9.4.2. Automation table

Able Acre Adam Aft Agape Axe Albert

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Able Acre Adam Aft Agape Axe Albert

Round 1 Round 2 Round 3 Round 4 Round 5 Round 6 Round 7 Round 8 4 7 7 7 10 10 10 10 5 8 8 10 10 10 10 10 3 3 3 5 6 8 9 10 3 3.5 4 6 7 8 9 10 3 3 3 5 6 8 9 10 Buy 5 6 7 8 9 10 Buy 6 7 8 9 10 Table 10: Capacity Schedule

9.5. Human resources Round Turnover rate Recruiting spend ($) Training hours Productivity Index 100% 1 10.0% 2 7.0% 5,000 80 102% 3 6.9% 5,000 80 107.3% 4 6.8% 5,000 80 112.4% 5 6.7% 5,000 80 116.7% 6 6.6% 5,000 80 121% 7 6.5% 5,000 80 125% 8

Table 11: Human Resources Implementation Plan 9.6. TQM Round Process Management Initiatives CPI systems Vendor/JIT Quality Initiative training Channel support systems Concurrent engineering UNEP green programs TQM initiatives Benchmarking Quality Function deployment Effort CCE/6 sigma training GEMI TQEM sustainability initiatives TOTAL 15,000 14,000 Table 12: TQM Implementation Plan (Unit: $000) 1,503 4 1,500 1,500 1,500 1,500 1,500 1 1,500 1,500 1,500 1,500 1 1 1 1 1,500 1,500 1,500 1,500 1,500 1,500 1,000 1,000 1,500 1,500 1,500 1,500 1 1 1 2 3 4 5 6 7 8

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9.7. Finance Round number Issue bonds Retire bonds Issue stocks Retire stocks 17,000 20,000 Round 1 18,000 Round 2 Round 3 77,235 37,235 20,000 25,000 25,000 Table 13: Capital Structure Plan (Unit: $000) 9.8. Exit strategies: According to De Wit & Meyer (2005), the paradox of strategic planning is the consideration between deliberate and emergent strategies. However, there is no company that purely applies only one of those but in conjunction with each other. For the long term strategic planning, Andrews Company applies deliberate strategy to set the direction for all departments. Emergent strategy will be applied to ensure Andrews adaptation to the market trend and the unpredictability of competitors strategy. At the beginning of the competition, Andrews will maintain all 5 segments to at least keep the market share. However, based on the trend of the market, Andrews will pay more attention in the segments that the company excels at. For other weak segments, if it is required to exit, Andrews plans to have two exit strategies depending on the situation. The first exit strategy is transferring the product in that segment into another strong segment through R&D. This action will provide the benefit for accessibility of strong segment and maintain the awareness of the product, which means save costs for both promotion and sales. However, disadvantage of this strategy is it could take long time to transfer, which could result in loss sales if the product is still at the old segment but could not compete with competitors. Moreover, while maintaining the product, all associated costs such as promotion, sales, and admin will be incurred. The second exit strategy is quitting producing product in the weak segment and selling all the capacity of that product line. In case of remaining stock, capacity will be sold gradually until this product is out of stock. The advantage of this strategy is avoid all related costs such as promotion, sales, admin and get cash in selling capacity. However, the negative side is market share of this segment will be lost immediately, which then results in lower profit. In case the product in weak segment still has the potential to be sold in that segment and the time to transfer into the strong segment is up to 2 years, its production will be scaled down and apply the first exit strategy. Otherwise, second strategy will be put in place. 35,000 22,000 Round 4 45,000 Round 5 55,000 Round 6 Round 7 Round 8

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