Strategy Themes

Market research study

Manufacturing process

How to enter overseas market,

if at all

Capacity to be built into

production plant

Dealing with price volatility of input

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Fixed-price contracts

Maintain high inventory

Revise product price

periodically

Do nothing Don’t do study

Focus on current market

Study current market + overseas partner’s market

Study global market

Use existing

manufacturing process

Design & build next

generation mfg process/

capability

Outsource mfg

Minimal development

strategy

Meet current market share

and new overseas market

Meet current market

share

Meet potential global

market share

Enter with local partner

Do not enter

Direct investment to

enter

Pilot/test market entry

Sell through established distributors

Re-engineer and replace

volatile input

Improve existing process

High development

strategy

Strategy 1: Minimal development

Minimal risks/conservative development for the Delta division responsible for the new product

Advantages:

- Low capital risks in short term for Delta division that is responsible for the new product

- Maximizes investment capital today for Gamma division (the “new” division responsible for untapped markets that is developing three new products)

- Greater protection for surviving a bad year

- Low investments (in R&D, tech, recruiting, etc)

- Focus on what we know/do best with Delta

- Control quality of the Delta product/services we are producing/manufacturing

Disadvantages:

- Low investment on Delta could be high-risk in the long-term, company could lose its core Delta market share before investment in Gamma pays off

- Opens markets for Delta competitors to establish strength/ownership

- Less “future-proof” if Gamma requires greater investments

- Low Return On Investment

Strategy 2: High development

Ambitious and high development of the Delta division responsible for the new product

Advantages:

- Focus investment on known products (as Delta is the “traditional” division of ZyrTex) in markets to be confirmed by research

- Potentially greatly increased market share, income and cashflow once the ROI/break even points are reached, due to increased pool of customers and next-gen fabrication process

- Potentially generates greater future investment capital for Gamma division, if Delta pays off

- More global recognition of the brand, overall stronger value proposition, making ZyrTex a stronger competitor

Disadvantages:

- High investment in next gen manufacturing and entry in new market implies high risks

1) Greater exposure to losses

2) Potential of borrowing from future cash flow

3) Less capital for Gamma at first and potentially in the long term if results from Delta expansion are lackluster

- Could disrupt the core activity, if global entry falters or new fab process fails in current market