UNIVERSITY OF ECONOMICS HO CHI MINH CITY

..…•••…..

Subject: INTERNATIONAL BUSINESS SIMULATION

Class: DH42IBC16

Instructors: TRAN HONG HAI

TRUONG THI MINH LY

LE MINH TUAN

INDUSTRY 6

OPERATING REPORT IN YEAR 8th

BFLY COMPANY (6B)

Members:

1. Pham Ngoc Thien Tu 7. Tran Nguyen Minh Chi

2. Pham Ngoc Ky Duyen 8. Truong Gia Bao

3. Nguyen Thu Thao 9. Hoang Thi Thu Trang

4. Chau Hieu Nghi 10. Hoang Thi Hoai Linh

5. Huynh Tan Huy 11. Pham Thi Quynh Trang

6. Nguyen Thi Nhat Phuong

1
Contents
I. INTRODUCTION 4
II. ANALYSIS PERFORMANCE IN YEAR 8. 4
1. Industry Analysis. 4
1.1. Market and size. 4
2. Competitors. 4
2.1. AC Camera. 5
2.1.1. North America and Europe Africa. 5
2.1.2. Asia-Parcific and Latin America. 8
2.2. UAV Drone. 11
2.2.1. North America and Europe-Africa. 11
2.2.2. Asia-Pacific and Latin America. 15
III. IMPLEMENTED STRATEGY OF YEAR 820
1. Performance Highlight. 20
2. Assembly and Facility Operating. 23
2.1. Report of AC Camera Design. 23
2.2. Report of UAV Drone Design: 26
3. AC Camera Segment Performance 28
5. UAV Drone Segment Performance. 30
6. Financial Statement. 33
IV. PLAN FOR YEAR 936
1. Product Design. 35
1.1. AC Camera. 35
1.2. UAV Drone. 36
2. Marketing. 36
2.1. AC Camera. 36
2.2. UAV Drone. 36
3. Compensation and facilities. 37
3.1. Compensation. 37

2
3.2. Facilities. 38
4. Finance. 38

3
I. INTRODUCTION

We are BFLY company and sell two main products that are Action Captured (AC)
camera and Unmanned Aerial View (UAV) drone. The headquater is based in Taiwan.
We compete head-to-head in four market regions across the world: Europe – Africa,
Asia – Pacific, Latin America and North America. These products are quite well-known
and favored by customers. In most recent year (Year 5), the company had worldwide
sales of 84,000 AC cameras and 140,000 UAV drones. Prior year, revenues were
$331.4 million and net earnings were $15 million, equal to $0.75 per share of common
stock.

II. ANALYSIS PERFORMANCE IN YEAR 8.

1. Industry Analysis.
1.1. Market and size.

The report shows that the average wholesales price in year 8 were much higher than
in year 7. The demand for both AC Camera and UAV Drone was lower than
forecast. In particular, the demand for AC Camera was -17,6% lower than forecast
and the demand for UAV Drone was -17,8% lower than forecast. Moreover, the
price and P/Q rating were sensitive, especially in Asia-Pacific the average
wholesales price per unit was increased slowly than others.

2. Competitors.

Company Net EPS ROE Stock Credit Image

Name Revenues ($/Share) (%) Price Rating Rating
($000s) ($/Share)

Almond 532,767 5.18 47.0 159.10 A 74

Beo Ngay

BFLY 572,725 4.20 39.5 126.14 A 77

Company

CENRA 482,494 3.09 30.5 86.04 A 70

D 681,976 4.18 38.0 125.74 A- 91

Company

Eyes Pro 522,108 4.88 40.1 147.98 A 76

Company

4
 We ranked in the fourth place but the point for changing from year 7 that we got
was highest. In the next year, we will continue to follow the previous strategies to improve
our place.

2.1. AC Camera.
2.1.1. North America and Europe Africa.
- Analysis of competitors in the industry:
(Market segment, characteristics, scale, position of companies in the Industry):

5
6
 a. Eyes Pro Company:
Eyes Pro Company hit the high-end market in the product segment, according to my company's
prediction, the company was using the "TOP OF THE LINE" strategy for its products in
two North America markets with $ 496 and Europe-Africa rates of $ 472, a P / Q Rating
of 6.6 *. Eyes Pro Company located its products with the highest price for AC camera
products in the market. Accordingly, they invested a product's P / Q of 6.6 * and stood at
a high P / Q in the market. They also hit hard on Marketing campaigns (> + 11%) (Retailer
Support, Advertising Budget, Website Displays, Sales Promotions - Weeks Discount,
Warranty Period) their expenses on the above Marketing tools were also among the
highest. compared to other companies especially the Retailer Support for $ 23.17. Because
the company's products were at a high level, their highest-end market segment should be
AC Camera Units Sold low in the market (164), with a small market share (15%). Perhaps
because of the amount of customers they aim to be high-class luxury customers, favor the
Luxury Brand. Although using the Top of the line strategy, however, the quality of
company E has not yet reached the price they offered and it was easy to be competitive by
quality.

b. D Company:

7
Company D had a P / Q quality product (5.5 *) which was a good rating compared to the
price range provided by D Company. With good quality and extremely affordable prices
in the market ($ 284 ), my company predicted that this business was using the "MORE
VALUE FOR MONEY" strategy, so the fee that the company invested in marketing
strategy was quite modest, on the market average ( Retailer support, website display) only
Advertising budget was quite high. With the characteristics of the "MORE VALUE FOR
MONEY" strategy, Company D was still working well. At a price of $ 284, the company's
market share was the highest (33.1%). Mainly targeted at customers who like similar
quality but only need to pay a more reasonable fee.

c. CUTTING EDGE:

EDGE CUTTING this year had improved marketing investment for products, they had
increased prices much more than Y7 and promoted marketing strategies, Retail Outlet.
Their market share accounted for the lowest percentage in the market. The market segment
that CUTTING EDGE still wanted to send was amateur customers who did not require too
high product quality to meet basic needs at a reasonable price.

d. Almond Beo Ngay:

Almond Beo Ngay's AC camera products they produced with P / Q quality (5.6 *)
compared to $ 352 price - this price had been adjusted to be more suitable for quality
compared to Y7. According to our company 's prediction they were using strategy MORE
VALUE FOR MONEY and wanted to spend a lot of money on Retail Outlets objectives
(Multi-Store Chains, Online Retailers, Local Retailers) for the purpose of increasing their
Image Rating instead of P / Q quality. So they had a quite good Market share rate and a
good number of machines sold. In the market share A company had improved a lot
compared to Y7.

- Analysis of direct competitors - rivals with the same strategy:

Our company Y8 had decided to use MORE VALUE FOR MONEY strategy for our
company. And according to that our direct opponent was D Company. In addition to the
price and quality of products like Almond Beo Ngay and Eyes Pro Company it was also
possible that this company was using the More value for money strategy, which we could
identify as a competitor in their market segment

- Competitive behavior and Marketing strategy of direct competitors?

8
Companies were competing directly to our company, Almond Beo Right, D Company and
Eyes pro company.

• With Almond Beo Ngay they positioned their products at the average price in the market
segment ($ 352 for Europe-Africa and $ 364 for North America) with a P / Q rating
of 5.6 *, the investment levels High-quality retail and marketing support
(Advertising Budget, Website Displays) this year they improved the quality to
match the price but the marketing did not invest heavily.
• With D Company They made the quality of our company P / Q rating (5.5 *) but at a low
price ($ 284) that could impact the sense of shopper in our segment. Customers can
fully consider the D Company product with our company in terms of price and P /
Q rating. However, their low prices also affect their marketing strategies lower than
ours.
• With E Company although company E, in the market, they might want to use the "TOP
OF THE LINE" strategy, but with the quality and price they offered, we thought
they were in the same segment with our company. . quality was not too different but
high price was a weakness of company E. They invested too much for Retailer
Support seems no longer good for Y8 anymore.

2.1.2. Asia-Parcific and Latin America.

- ASIA-PACIFIC

9
In Asia- Pacific, Market average had P/Q rating 5.8 stars, price was 344$ and market share
20%.

My company B had a price equal to the market average(344$), the P / Q rating was 6.5
stars, ranking second in the market after Co.E 0.1 stars. The company had a higher market
share than last year (up from 16.7% to 19.5%) accounts for the third highest market share
in the market after company D (31.6%) and A (25.6%).

Company A had a P / Q rating of 5.6 stars and a selling price of $ 275, which was lower
than the market average. Combined with strong investment in retail locations, company B
had a 25.6% market share in the market. Also considered as a competitor to company B
when this company focused on investing in improving product quality.

Company C sold for $ 389, much higher than the market average, but the 4.9-star P / Q
rating was the lowest in the entire market, so Co.C's market share dropped to 11.3%..

Company D sold the lowest price of $ 274 but the product quality was high with 5.5-star
P / Q rating, combined with discounts and strong marketing activities, the company had
the highest market share in market up to 30.8%.

Company E with the highest price of $ 439 and highest quality of 6.6 stars of P / Q rating.
Investing heavily in marketing activities but the market this year was a good quality
product development company with reasonable price so company E only accounts for
12.7% market share.

- LATIN AMERICA

10
In Latin America, Market average had P/Q rating 5.8 stars, price was 343$ and market
share 20%. Our company B developed product quality in this market and had a P /
Q rating of 6.5 stars higher than the market average with a higher price of $ 358,
accounting for 16.9% of the market. part of the market. This was a price sensitive
market but B was overvalued so it had a small market share.
The direct competitor in this market was company A. Company A with the lower P / Q
rating of 5.6 stars and selling at the lower price of $ 285 lower than the market
average. Although A was not a strong investment in marketing activities, but the
market share was reduced to 21.4% ranking 2/5 of market.

11
Company C had the lowest P / Q rating of 4.9 stars compared to the market average. Co.C
invested in marketing activities and With a high price in a market that is sensitive
to prices and low product quality, the company had a small market share of 14.3%.
Company D had an average P / Q rating of 5.5 stars, had invested in models development
and marketing, so it had the highest market share of 33.2% beacause Co.D D had a
low price but high quality in a price-sensitive market, while developing marketing,
retailers should occupy the highest market share in the market.
Company E had a 6.6 stars quality and $ 426 was the highest in the market, because of the
high valuation that the market share of E is at least 14.2% but E had a very strong
investment in marketing and retailers.
2.2. UAV Drone.
2.2.1. North America and Europe-Africa.

Almost companies invested greatly in North-American and Europe-Africa Market.

BFLY Company competed directly Eyes Pro Company with top of line marketing
strategy.

❖ North-America Market:

Our company – BFLY Company had 20% of market share. With 6.4P/Q we set the price
was 2,150$ and invested strongly in Search engine advertising, retailer recruitment.
Because of high P/Q and resonable price, we gained a lot of market share more than last
year in this segment.

⇨ In the next year, we will continue the strategy to gain more market share.

12
- D company used low-cost, low-price marketing strategy. With the lowest price in
this segment, D Company got the biggest market share which was 25.2%. They
invested $2300 for website displays and $4000 for search engine advertising.
- While Eyes Pro Company set 2,122$ for price with 6.3, Cutting Edge Company set
2,249$ for price with 6
⇨ UAV Drone Units Sold of Eyes Pro Company were quite higher than Cutting Edge
Company.

13
The delivery cost ( $45.26/ unit sold), marketing cost ( $174.37/ unit sold) were lower than
average industry, but operating profit ( $549.85/ unit sold) were high, so in the next year
we will change much by cutting operating cost.

In year 8, the market share increased from 17.8% to 20% and the sale decreased from $48.4
to $51.9 of units.

❖ Europe-Africa Market:

Our company – BFLY Company had 19.2% of market share. With 6.4P/Q we set the price
was 2,215$ and invested strongly $5,295 in Search engine advertising, $106.59 per unit in
retailer recruitment.

14
 - Both D company used low-cost, low-price marketing strategy. With the lowest price
in this segment, D Company got the biggest market share which was 26.4%. They
invested $2300 for website displays and $3000 for search engine advertising.
- While Eyes Pro Company set 2,058$ for price with 6.3, Cutting Edge Company set
2,206$ for price with 6
⇨ UAV Drone Units Sold of Eyes Pro Company were lower than Cutting Edge
Company.

In year 8, the market share increased from 17.5% to 19.2% and the sale inccreased from
$49.2of units.

15
The delivery cost ( $129.24/ unit sold), marketing cost ($206/ unit sold) and operating
profit ( $560.88/ unit sold) were higher than average industry.

2.2.2. Asia-Pacific and Latin America.

- Market Asia-Pacific

A and C companies attacked more aggressively in this Year 8. B and E companies

were still using strategy top-of-the-line but lighter investment this year. And D company
remains the same strategy at low prices, thus capturing the highest market share 31.4%.

At this market, our company with the top of the line quality and performance
strategy, the market share of our was 17.9% . Increase 0.6% compared Year 7. Price our
Company was 1,817$ higher with average 1,740$ and P/Q rating was 6.4 stars highest
quality in the market. In this Year, we had high invested in Search Engine Advertising
(1,989$) higher 17.9% compared with average market (1,687$). The right investment in
Marketing had captured the second highest market share (17.9%) after company D
(31.4%), but still lower than average market (20.0%).

16
 The direct competivetor with our company was E company with market share was
17.2% increased by 2% compared to Year 7. Price was 1,750$ and P/Q rating was 6.3
stars. This company attached great importance to investing in Marketing, Website Displays
was 1,057$, Search Engine Advertising was 1,886$ and Retailer Recruitment was 207,66$.
Investing heavily in marketing but not effective, Company E's market share was still low
(17.2%).

A company which market share closed to our company (17.8%). Price was 1,739S
increased 449$ compared Year 7 (1,290$) , P/Q rating was 5.8 stars increased 0.9 stars (4.7
stars in Year 7). Focused on investing in marketing about Website Displays and Retailer
Recruitment was higher than our company.

Company C invested heavily this year. Price was 1,986$ highest in the whole
market, increased 513$ compared to Year 7. While P / Q rating only increased 0.4 stars.
Investment marketing was higher than the market average. High investment costs, high
prices while the quality was not good, the company's market share was the lowest (15.7%).

D company occupied the biggest contest 31.4%. Price was 1,410$ and P/Q rating
was 5.5 stars. Strong investment in Marketing.

17
 In this Year, our company had optimized costs. Delivery Cost and Marketing Cost
of our company almost equal to the industry average. Operating Profit was 231.60$ lower
industry average 245.26$. Warranty Claim Rate and Warranty Repair Cost were highest in
the industry.

In the Asia-Pacific region, units sold increased from 30.20 to 31.30 and market share
slight increased from 17.2% to 17.9%.

- Latin America Market

18
 In the region, with the top of the line quality and performance strategy, market share
of our company was 18.9%, increased by 1.4% compared to Year 6. P/Q rating of our
company was highest with 6.4 stars. Invested in Website Displays was still low. Total
Demand was decreased by 18,9% compared to Year 7(19.3%).

Company E, price was 1,823$, P/Q rating 6.3 stars. The price was too high in this
price sensitive area while the quality equal to the market average. So the market share of
company E was low (16.6%). In this Year, E company invested in Retailer Recruitment
was high, but still not satisfactory.

Company C was overvalued while the quality was still not superior, and the cost of
investment in Marketing was high, making up the lowest market share (12.9%). Investing
heavily in marketing but not properly investing had made company C spend a lot of costs
while collecting was still negligible.

Same with Asia- Pacific Market, D company occupied the biggest contest 32.0%.
Price was 1,410$ and P/Q rating was 5.5 stars. Strong investment in Marketing.

19
 The cost of investment in Delivery and Marketing was close to the industry average.
But Operating Profit was still low (84.87). Warranty Claim Rate and Warranty Repair Cost
were highest in the industry.

In the Latin America region, units sold decreased from 19.30 to 18.90 and market share
increased from 17.5% to 18.9%.

III. IMPLEMENTED STRATEGY OF YEAR 8th

1. Performance Highlight.
a) Overviewed what we achieved in year 8

20
- EPS: #3 with $4.20
- ROE: #3 with 39.5%
- Stock price: #3 with $126.14

21
- Credit Rating: A
- Image Rating: #2 with 77
- Overall: #4
They indicateed the situation in year 8 was higher than year 7 , we hold fourth place. All
our measures (Scoring measures, Other measures) in year 8 were higher than Investor
Expect. The company maintains a stable level of production and, in addition, upgrades its
product line accordingly to maintain a competitive advantage with the companies in
industry. In overall, we ranked 4st, the distance between us and others was not far. We
have to try to improve this position!
EPS, and ROE, Stock prices: was quite stable and also increased sharply. Thanks to these
strategies:

• Product design: This year, we decided to increase the quality of the AC

Camera from 5.8 - 6.5 from year 7 to year 8, with High Image Sensor, Image
Quality, Picture Mode, all necessary for personal use.

We increased R & D activity from $ 32,000 to $ 40,000.

• Marketing: We changed marketing fee for AC camera in all regional

markets. And our price for AC changed significantly:

In North America price was from $322 to $371

In Europe - Africa, price was from $ 319 to $ 370

In Asia Pacific price was from $294 to $344

In Latin America price was from $308 to $358

Our marketing costs in year 8 were not completely high in the industry. Our
strategy was to get the highest possible profit. With AC products, our P / Q
was really high compared to our competitors and in year 7, our price was the
third highest. UAV Drone: Pretty good quality.

• Regarding product quality: we had improved the quality of UAV

Drone. The company had increased product quality from P / Q 6.0 to 6.4.
With this P / Q, we thought the company could compete exclusively when
other competitors would upgrade P / Q.

22
 • In 3 years, the company's strategy was to focus on profitability and
good cost control: the company increased P / Q. Significant product
marketing as a product website, vendor information, retailer and retailer
recruitment compared to last year. In addition, the company had adopted high
pricing strategies in North America, Europe - Africa ($ 2,150 and $ 2,215)
and cheaper in Asia - Pacific and Latin America ($1,817 and $1,835 dollars).

- Image rating:

In year 8, the company invested in image rating development, its image rating was 77 (rank
2nd )

We increased it by editing P/Q, CSRC efforts. We just paid for a factor in CSRC:

- Improved working conditions.

- We wanted to create a better manufacturing and administrative system such as: facilities,
cafeteria, safety equipment, better working conditions,.... in order to guarantee and
encourage our employees to work more effectively.

23
2. Assembly and Facility Operating.

2.1. Report of AC Camera Design.

24
AC Camera production:

- In the 8th year, we continued to maintain the more values strategy for AC Camera.
P / Q for ACC Camera of our company was 6.5, this was a high number compared
to the average and lower than the first company 0.1 We did not need to overtime for
many consecutive years. The regular time was 816.9 and this was also the total
assembly unit.
- We spent 40000$ for AC Camera R&D Expenditures. The 8th year was higher than
the 7th year $4000. We still followed the company's plan to promote R&D for the
early years. The R&D cost of our company was the highest in the market.

AC Camera Assembly Facility:

25
 - The unit of space available for workstations and the number of workstations in year
8th remains the same as the 7th year was 300 and 280. We think the company was
not overloaded and needed to be overtime so we didn't add space available for
workstaions and new workstations.

AC workforce statistics include:

- Base Wage Per PAT Member: $21.028 / worker equivalent 1% .

- Incentive Bonus: $2.40 / unit was equal to 7th year

- Attendance bonus for workers at $700 / worker

- Best Practices/Productivity Improvement Training: $1000 / worker was the amount

of money we spend on training workers .

In the work force statistics section for AC Camera, we had adjusted some places for wages.
In general, the numbers decreased but not significantly, to match the company's finance
but at small numbers. We kept 1% for base wage per PAT member, 2.4 $ for intensive
bonus and $ 1000 for best practices/productivity improvement training but decreased in
per worker.

These still did not greatly reduce the productivity of employees in the company. In the next
year we will consider higher numbers in paying salaries and bonuses to employees better
to encourage them.

The camera production and assembly costs are as follows:

Costs of product structure:

- Image Sensor Size: is 11mm as same as 7th year. It cost $9.4 / unit
- LCD Display Screen with decreased size of 920k pixels at a cost of $9.4/ unit. The
new image quality is 2704x2028 pixels (cost $7.52/unit) and 8/3 ph oto modes.
- In addition, Camera Housing, Editing / Sharing Capabilities, Included Accessories,
Extra Performance Features are $16, $16, $16, $22.09.
- Total c ost of labor and training: $25.623
- Allowance for warranty repairs: $4.605
- Plant operations and maintenance: $12.650

Depreciation of plant and equipment $7.638

Total Camera Production/ Asembly C ost: $176.183

26
Image sensor size and LCD Display screen remained the same in the past years and the
quality of images and photo modes had changed but the cost has decreased. The costs of
camera housing, editing/sharing c apabilities, included accessories and extra perfomance
features were increased.

In general, the total cost had increased but total cost of labor and training was decreased
($26.430 in year 7th ) , the allowance for warranty repairs slightly increased, but still Plant
operations and maintenance and depreciation of plant and equipment remains the same as
the previous year.

2.2. Report of UAV Drone Design:

27
UAV Drone production

- Overview, the company’s UAV drone products still focused on to the market
segment of top of the line in year 8th. P/Q rating of UAV drone design was
increase from (in year 7th) 6.0 to (in year 8th) 6.4 .The product R&D expenditure
in year 8th is the same as year 7th of $18,000. The cumulative product R&D
expenditures in year 8th was $ 81,000.

UAV Drone Assembly Facility:

- The unit of space available for workstations in the year 6th (110) and the number
of installed workstations (100) was stable

UAV Drone workforce statistics include:

- Base Wage Per PAT Member: $21,018 (up by $0,208) / worker equivalent 1% . At
this rate, we will encourage workers to work well and rise labor

28
 productivity.,Incentive Bonus: $4.60 / unit was down by $3.0 of 7th year , but still
control costs and encourage workers to work hard.
- We raised up to Attendance bonus for workers at $800 / worker and. Because we
recognized that raising the attendance bonus and raising basic wages for a worker
to 1%, still ensuring benefits and motivating workers to work effectively.
- We cut down Fringe Benefit Package from $2,000 to $1,600 per worker.
- Best Practices/Productivity Improvement Training: $1000 / worker was the amount
of money we spent on training workers .This year we increased the cost of training
as we wanted to augment the productivity to increase competitiveness
- Total Number of Workers Employed is 364. This might indicate that we had
increased and decreased reasonable labor costs but still had enough workers to meet
the market demand.

UAV Drone production and assembly costs are as follows:

- UAV Drone Components and Features

● Built-In Camera : The cost per unit was 259.23$
● Battery Pack: The cost per unit was 148.50$
⇨ Total Cost of Components and Features: The cost per unit was 919.67$
- Assembly Labor Costs
● Regular-Time Labor: The cost per unit was 61.22$
● PAT Training: The cost per unit was equal to the 6th year of $0.63
⇨ Total Drone Production/Assembly Cost: The cost per unit was $1,242.04.

3. AC Camera Segment Performance

a) Overview:

Average wholesale price to retailers: higher than year 7 and had a slight difference between
the four regions, particularly in North America and Europe-Africa (397 and 381), which
had higher prices than the other two regions (344 and 343) due to the large demand
disparity in these 4 regions. While demand for AC Camera in North America and Europe
– Africa is 1,155 and 1,085 respectively, demand for this product in Asia – Pacific and
Latin America is only 1,085 and 765, down by -6.8% from Year 7. According to the

29
forecasts, demands for this product in the next three years will continue to increase.
Besides, the products prices will also increase.

4. Regular AC Camera Sales:

In year 7, the company changed its P/Q ratio (6.5*) in renovation in product design. We
recognized that investment in product quality, R&D and marketing was increasing for more
business results.

30
Market research indicated that most buyers in North America and Europe – Africa will buy
the brand with a higher P/Q ratio while most buyers in Latin America and Asia Pacific will
buy the brand with cheaper price - leading to greater revenue for camera brands have higher
P/Q rates in North America and Europe - Africa and greater revenue for low-cost camera
brands in Latin America and Asia Pacific region. So the company decided to increase the
price as well as cost. And there are difference in each area as follows:

● North America and Europe – Africa

- Marketing cost: The company has increased its investment in marketing

- Promo Discounts: Inspite of the higher quality, the company decided to increase

the Promo Discounts to our customers.

● Latin America and Asia-Pacific regions

- Average Wholesale Price to Retailers: increase up to $344 and 343/ unit in Asia-Pacific

and Latin America.

- Marketing cost: In Asia-Pacific and Latin America, increase retailer support, advertising
and

website expenditures.

- Promo Discounts: the company decided to increased some promo discount.

c) All AC Camera Operations

All AC Camera Operations, Net Revenues, Operating Costs, Operating Profit,

Operating Profit, and Gross Margin were geographically different. The operating profit

31
increased at the four region rest. We almost increased Marketing for all regions.

5. UAV Drone Segment Performance.

a) Overview

Average wholesale prices to retailer were much higher than year 7 and had a slight
difference between the four regions ( North America: 2,076; Europe-Afica: 2,040 ; Asia
Pacific: 1,804; Latin America : 1,915). Have the large demand disparity in these 4 regions
, while demand for UAV Drone in North America and Europe – Africa was 260 and 220
respectively, demand for this product in Asia – Pacific and Latin America was only 175
and 100. In this year, the demand was lower than forecast 17.8%. The demand for UAV
Drones was expected to increase by about 11.3% annually.

b) Direct Online Sales:

32
 Due to the price difference as well as the demand for UAV Drone between 4 areas,
the revenue from these 4 areas were different. While sales in North America and Europe –
Africa reached 77,479 and 66,035, Asia-Pacific and Latin America , revenue was 41,246
and 23,525 higher than y7 . Consequently, Operating Profit was also significantly different,
in North America;Europe – Africa; Asia-Pacific and Latin America (21,711; 17,603; 6,314
and 1,641)

c) 3rd – Party Online Retailers

Similar to the Direct Online Sales form, the Gross Revenues, Net Revenues,
Operating Profit, Operating Profit Margin, the percentage of Total UAV Drone Unit Sales
also had a relative difference between these four geographical areas due to the price
differences and the needs of the local people. However, at the year 8 Operating Profit
Margin had chance in 4 regions compared with year 7 such as in North America, Europe
33
- Africa was 24.8% and 24.5%%, in Asia – Pacific and Latin America was 7% and -0.5%
. At the year 8, in Asia – Pacific and Latin America, Operating Profit Margins were higher
than y6. In y9, our company will continue to give some decisions in order to increase profit
in four regions more than year 8.

d) All UAV Drone Operations

In All UAV Drone Operations, Net Revenues, Operating Costs, Operating Profit, Unit
Demand and Sales, and Warranty Period were geographically different. Especially the
figures belonged to the profit. The Operating Profit in North America, Europe-Africa are
28,537; 23,669; which were improved better than in y7, and Asia Pacific and Latin America
were 7,249 and 1,604, which were higher than y7. The Warranty Period was continued
90days in North America, Europe-Africa, Asia Pacific and Latin America . In the next year,
we should have more promotional plans to improve Opearating Profit in Asia Pacific, Latin
America.

6. Financial Statement.

34
Total revenues increased from 512,629 in year 7 to 572,725 in year 8. In this year8, though
the total revenues increased more than year 7 but not much, the sales revenues increased
lightly on four market, Asia Pacific was the region having an outstanding sales figures in
this year 8.

The company financial statements in Year 8 were:

- Beginning cash balance: $65,394

- Receipts from Sales: $563,041
- Interest on Year 7 cash balance: $1,177
⇨ Total cash available: $629,612
- Interest coverage ratio: 18.37
- Current Ratio: 2.28
- Credit Rating: A
At the end of year 7, the company’s total assets were financed with 43% debt and 57%
equity. In year 8, the company’s total assets were financed with the ratio not much change
with last year at 40% debt and 60% equity. Besides, A significant rose in net profit margin

35
(from 11.5% in year 7 to 14.0% in year 7) showing the profitability of the company was
going well day by day, which meant the company using the capital effectively and gaining
more competitive advantage than competitors.

In this year, our company aimed at continuing spend more money on Delivery, Marketing
(Search Engine Marketing) and Administrative than last year helping the company
enhanced online sales capacity to expand company’s market share. In addition, we also
spent more money on Payments to Component Suppliers.

In this year 8, we decided to repurchased 690 shares at the price of $94.94 per share and
adjust the dividend from 0 to $0.5 per share and led to total devidend payments to
shareholders was $9,505 for 19,010 shares of stock outstanding.

In conclusion, with the main purpose was getting the market share and follow our main
strategy in this industry, we focused investing on Marketing to be on top of searching
online, adjusting technical numbers on both AC and UAV Drones in order to find the
suitable specification that ensures increasing P/Q rating and lower cost. Lastly, the less
important purpose of our company in this year is to increase ROE and EPS rate in order to
get the rates matching with investor expectations.

IV. PLAN FOR YEAR 9th

1. Product Design.
1.1. AC Camera.

Increase the quality of AC camera. Specifically, increase P/Q rating from 6.5 to 7.0.
Because we expect the average P/Q of the market at year 9 to be 6.6, All companies
increased P/Q in last year. So we decide to increase the AC quality to this segment to
compete. Including:

⮚ Increase image sensor size to 12mm because the most popular AC cameras on the
market use a 12mm sensor size.
⮚ LCD Display Screen with an average size of 920k pixels at a cost of $9.00 / unit.
However, the new image quality is the strength that we attach great importance to
in a camera product. With a resolution of 2740x2028 pixels (cost $7.2) and 8/3 photo
modes ($8.1), our products will focus on middle class
⮚ In addition, Camera Housing, Editing / Sharing Capabilities, Included Accessories,
Extra Performance Features are at a high cost (16,16,18) with a high quality

36
 ⮚ Increase the R&D cost to 36.000.000$. Invest in R & D for long-term purposes,
after R & D has been accumulated to a high enough level they will help us save on
production costs.
1.2. UAV Drone.

In the next year, we expect to increase the P/Q from 6.4 to 6.8 with the sensible cost
production. And total projected cost of components and features is 162,933. We will adjust
some details of UAV Drone following :

Product structure:

+ Built in camera: from Significant Upgrade to Major Upgrade

+ Obstacle sensors: from 360 0 Enhanced to 360 0 Best Available .

2. Marketing.
2.1. AC Camera.
- In Y9, in marketing, we decided to re-examine the key elements of investment
- We intend to increase dramatically in the Retailer Support and Website Displays
and invest in other factors to increase marketshare and sell more goods at Y9.

2.2. UAV Drone.

2.2.1. North America and Europe-Africa.

North-America Market: we will change the strategy from top of line to more value for the
money so that we could increase market share and unit sold. Moreover, we countinue to
cut delivery cost, operating cost, but still invest strongly for marketing.

Europe-Africa Market: we also use more value for the money strategy, but the price in
this market is higher than North-America market. Instead of upgrading robotic for UAV,
we are going to enhance productivity of workforce or install workstation in order to avoid
overtime.

2.2.2. Asia-Pacific and Latin America.

In year 9, we decide to increase the marketing cost for UAV higher than year 8, but
we only increase slightly . We will also continue to promote marketing by focusing on
Search Engine Advertising. Specifically:

37
 ⮚ In the Asia Pacific:
- We decide to increase the Discount Offered to 3rd-Party Online Retailers is 15%,
the Website Product Displays / Info is slightly increase from 655 thousands dollars
to 772 thousands dollars, the Search Engine Advertising is increase from 1,989
thousands dollars to 2,506 thousands dollars and Retailer Recruitment / Support
Budget is increase from 830 thousands dollars to 997 thousands dollars. Keep the
warranty period is 90 days.
⮚ So we increase price in here from 1,817$ to 2,174 $.
⮚ In Latin America:

In year 9, the Exchange rate in here is good, so we decide to increase strongly the
marketing cost up to equal to the Asia Pacific. Specifically, the Discount Offered to 3rd-
Party Online Retailers increase to 14%, the Website Product Displays/Info is slightly
increased from 646 thousands dollars to 887 thousands dollars and the Search Engine
Advertising is increased from 1,864 thousands dollars to 2,104 thousands dollars. Retailer
Recruitment / Support Budget is increase 1,036 dollars. Keep the warranty period is 90
days.

⮚ So we increase price in here from 1,835$ to 2,207$ that higher than in the Asia
Pacific.

3. Compensation and facilities.

3.1. Compensation.

In the 9th year, we plan to increase our employees' salaries. Because of their efforts over
the years, as well as in the 8th year, the salary is slightly reduced. Employees in the
company are always trying their best and never n eed to be overtimes as well as we do not
have to spend more to have more space for workstations, install more workstations or
upgrade robotics.

We will increase the attendances to the same amount of $ 800 or up to $ 850 (because this
year the company only has $ 700, down $ 100 from every year) for AC Camera and $850
to $900 for UAV Drone.

38
- Intensive bonus can increase from $ 2.5 to 2.7 for AC Camera and $7.6 (as same as year
7th ) in year 9th for UAV D rones.

We consider about robotics upgrade between AC Camera and UAV Drones if necessary.

With these desicions we can create better motivation for employees, encourage their morale
so that they can do better and increase productivity.

3.2. Facilities.

In the past few years the company has not added more plant facilities. The current
situation is that the workstation and workstation spaces of both ACC and UAV of
the company are the lowest in the industry. ACC has 300 workstation spaces and
280 installed workstations and UAV has 110 workstation spaces and
100installedworkstations. In the next year we will upgrade more for UAV because
it is more difficult to install UAV than ACC but current factory cost for UAV are
lower than ACC. We will consider increasing workstations for ACC if necessary to
increase productivity. Companies will upgrade robotsics if they are overtime.

4. Finance.
- In order to increase ROE and EPS, I ecourage our company should
● Maintaining devidend at $0,5 per share.
● Repurchasing 525 shares (because in year 9 the price of stock is increasing
higher than last year)
- In my opion, it does not the right time for us to Early repayment 10 year loans and
issue stock.
In year 9, we should use cash on hand spending on upgrade workstations, robotics
upgrades, assembly facilities expansions.

39