Investment and Andrews Company

934 WordsOct 13, 20134 Pages
Dear Board of Directors, Upon implementing a Broad Differentiation strategy, Andrews Company desired to have highly demanded products in each of the market segments, hold the majority market share compared to our competitors and increase the value of our firm by the year 2021. We believed that this strategy could get us to that point and we have successfully done so. The start up of Andrews Company proved to be more difficult than anticipated due to high costs in marketing and R&D, investing in automation of sensors and due to our decision to take out most of our loans in the early stages of our product, leading to negative profits for the first two years. However, Broad Differentiation lucratively brought Andrews market share up to…show more content…
Andrews also spent money each year on training employees for a maximum of 80 hour and recruiting spend of about $4.5 million each year, increasing our productivity index to 129.9% by the end of 2021. At the beginning of 2016, Andrews made an executive decision to invest in total quality management. Of a budget of $4 million, we allotted $1.5 million in 2016 and 2017, then another $600 thousand in 2018. After this amount was spent, we would have seen diminishing returns and opted to cap out at $3.6 million. The substantial investment allowed us to reduce labor and material costs, while increasing demand, thus allowing us to steadily increase profits each year, especially during this three-year span when competitors did not spend enough in TQM. The Future of Andrews Andrews Company will continue to use its method of broad differentiation in the upcoming years and plans to issue stock in order to help with investing in capacity issues that we’ve had in the past. We will continue to spend on marketing, research and development and compensating our employees adequately in order to keep our high market share. Distinguishing our products will continue to be of the utmost importance, offering clientele a superior design. Appendix Exhibit 1 MS Compared to Competitors Exhibit 2 Sales vs. Variable Costs
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