final report after 15 years in industry

EVEREST Performance Highlights Net Revenue Trend Annual Earnings per Share Trend Return on Equity Trend Credit Rating Trend Image Rating Trend Stock Price Trend P/Q ratings of AC and UAV

UEH UNIVERSITY BUSINESS SCHOOL FACULTY OF INTERNATIONAL BUSINESS — MARKETING

UEH

UNIVERSITY FINAL REPORT

Subject: International Business Simulator EVEREST Company — Industry 11

Instructor : Mr Ha Quang An

Student name : Hoang Le Bao Tran

Le Thanh Binh Nguyen Xuan Mai Vo Ngoc Thy Ngan Lam Thanh Truc

1.5 lmage Rating .- - c1 2n vn vn TT TT Khen nhe Hy 6 Ill Performance highlights in Marketing - ST TS SSSSssss se 7

4.2.4 Latin America V Production Strategy

5.1 Expansion of Assembly Capacity 5.2 Overtime

5.3 Employee Training VI Financial Statements and Strategy VI The lesson we learned from Globus

6.1 Determine the right strategy for your business 6.2 R&D plays an extremely important role 6.3 Finance plays a very important role 6.4 Marketing strategy

6.5 Production cost

LIST OF FIGURES

Figure 1.1 Figure 2.1 Figure 2.2 Figure 2.3 Figure 2.4 Figure 2.5 Figure 2.6 Figure 3.1 Figure 3.2 Figure 3.3 Figure 3.4 Figure 3.5 Figure 3.6 Figure 3.7 Figure 3.8 Figure 3.9

EVEREST Performance Highlights Net Revenue Trend

Annual Earnings per Share Trend Return on Equity Trend

Credit Rating Trend Image Rating Trend Stock Price Trend

P/Q ratings of AC and UAV products

AC Camera’s sales in North America AC Camera’s sales in Europe-Africa AC Camera’s sales in Asia-Pacific AC Camera’s sales in Latin America AC Camera’s sales in total UAV Drone sales in North America UAV Drone sales in Europe-Africa UAV Drone sales in Asia-Pacific Figure 3.10 UAV Drone sales in Latin America

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Figure 3.11 UAV Drone sales in tot YOUr Computer

Figure 3.12 Marketing costs chang

LIST OF TABLES

Table 2.1 The summary of E Company’s EPS Table 2.2 The summary of E Company’s ROE Table 2.3 The summary of E Company’s Credit Rating Table 2.4 The summary of E Company’s Image Rating Table 2.5 The summary of E Company’s Stock Price Table 5.1 The summary of the operating profit of companies in the Industry 11 Table 5.2 The summary of E Company’s financial statements

| Overall assessment and strategic vision 1.1 Overall assessment

In Year 6, the company's financial situation was quite stressful because we promoted investment activities (try to maximize R & D, factory expansion, marketing investment, ) so it is necessary to use large sums of money Therefore, we did not get a good position in Game-to-Date Score this year, and cannot buy stocks next year

In the next early years, our financial situation was quite exhausted due to both strong investment but facing the unforeseen business strategies of the competitors leading to unprofitable business results, then causing the Debt/Equity ratio to climb However, with the strategy that the company set out in the trial of operation, the company focused heavily on building facilities and equipment, investing in product R&D and buying back shares as much as we

can

Starting from Year 8, the financial situation began to change positively due to the strong business situation However, the company continues its investment strategy, and because of low-interest debt, it still uses debt to buy shares and maintain cash Credit Rating remained stable at A-, A

From Year 13 to 15, the financial situation is good, but in Year 13 Credit Rating down to B is due to the company's strategy, 1 year debt And in our final 3 years, thanks to the decision to cut R&D down to zero, stop buying shares, the revenue increased, profits increased sharply, dividends were distributed to shareholders, contributing to increasing the credit ratio to A+ and keeping the company's Ending Cash at a high level

(indusiry 11)

Financial Year5 Yea6 Year7 Year8 Year9 Year10 Year11 Year12 Year13 Year14 Year 15

EPS (eamings per share! $0.75 $0.41 $2.12 4.20 $8.20 $8.40 $8.70 1 $16.93 $17.29 $23.93 ROE {retum cn equity) 14.0% 70% 29.7% 447% 77.0% 104.3% 156.2% 261.7% 14104 907% Stock Price $12.00 $6.25 $60.82 $128.24 $261.23 $255.94 $259.86 $521.96 $509.01 $631.22

(0005) Te rotal 334128 431,409 467,218 779923 $21,439 914,131 953,169 1,010,120 1,155,621 Ac Camera — North America 285.0 324.1 314.2 297.0 265.3 293.6 321.0 3446 378.5

TƯ as Market Share 125% 13.6% 122% 12.3% 12.1% 12.8% 126% 12.7% Europe-Africa 240.0 288.8 277.9 246.3 230.8 250.1 2559 2744 Market Share 12.5% 14.3% 12.7% 12.0% 124% 129% 12: 126% Asia-Pacific 185.0 266.3 216.4 227.2 240.0 255.5

Market Share 125% 16.2% T1.9% 10.6% 11.1% 11.5% Latin America 130.0 198.4 144.4 164.8 1748 189.0 Market Share 12.5% 17.1% 114% 9.2% 11.0% 1.6% 1.6%

8400 10776 9529 8910 Market Share 125% 151% 121% 109% UAV Drone —North America 520 653 552 707

S_ Market Share 125% 13.6% 10.6% 13.6% 146% 142% 141%

(Set) Europe-Africa 430 47T 452 518 736 732 Market Share 125% 122% 105% 120% 138% 146% 1454 Asia-Pacific 28.0 285 318 480 50.1 456 606

Market Share 125% 103% 10% 129% 142% 1214 149% Latin America 170 163 187 22.0 319 286 Market Share 125% 10.2% 106% 125% 148% 119% 124%

4.056 (units per PAT) UAV Drone 1,500 1,831 1,918 2,014 2,108 2,208 2,315 2,425 2,524 2,728 Labor Cost ——— AC Camera 33.67 33.49 31.00 30.13 29.31 28.51 28.13 26.92 (Sunt asserbied UAV Drone 65.38 52.57 48 51 470 45 11 43.75 4246 38 90 Production Cost -AC Camera 156.97 166.71

(Gheritascerbied) UAV Drone 90622 96464 1 1,072.08 1,058.82 1,088.44 1,173.49 1,132.93 195.84 194.25 207.85 21467 197.18 94255 15829 950.66 16471

Marketing Cost — AC Camera 17.73 2271 29.51 31.94 43.33 51.79 43.59 39.03 19.36 (S per unit sod) UAV Drone 77.71 99.81 12210 13479 15046 15137 15570 171.71 17220 12442 Operating Profit - AC Camera 29.33 23.20 4114 79 45 135 51 149.98 173.08 (3 per unit sold) Margin 13.1% 99% 16.1% 24.1% 33.6% 406% 453% UAV Drone 65.75 -1914 20825 28185 6.2 633 97 68283 93673 Margin 6.3% -1.7% 14.0% 17.7% 24.0% 248% 309% 357% 439

Years 8 - 12: Investment stage: Focus on investing heavily in R&D, marketing, stock buyback, and factory expansion At this stage, while investing heavily, thanks to the appropriate strategy drawn up from Year 6 and 7, the business situation is extremely efficient and profits are maintained at a high level, meeting investors’ expectations

Years 13 - 15: Finishing stage At this stage, the company realized that competitors were moving to tactically imitate the Top of the line product, so the company decided to immediately switch to the lower segment so as not to have

to compete with competitors After that, the company will stop investing in R&D, stop buying back shares, invest only in a small number of workstations, and expand the factory for AC Camera and UAV Drone The goal of this stage is to maximize profits, pay off debt, pay dividends to improve financial ratios and improve scores and rankings

Il Financial Performance Highlights 1.1 Net Revenue

Overall, AC Camera and UAV Drone’s net revenues went up from Year 5 to Year 15 In Year 8, 2 figures for AC Camera and UAV Drone had similar numbers which is about $293,523 and $290,523 respectively After that, the situation improved for both products as we ended up in Year 15 with total net revenues of $1,155,621

For AC Camera, there is a 36% increase in net revenues from Year 6 to Year 9, but then, they saw a decline for the next 2 years which is around $373,000 From Year 12, net revenues started to increase sharply from $398,829

to $511,285

For UAV Drone, the net revenue figure increased by about $45,000 each year from Year 6 to Year 9 From Year 9-Year 11, there is a 20% increase in net revenues and then, a significant rise by about $66,000 between Year 11 and Year 12 In the next 2 years, there was a slow increase in net revenues but in Year 15, there was an increase by $74,000 from 570,692 to 644,336

1.2 Annual Earnings per Share This chart shows how the earning per share increased over time for our company This is calculated by using the net income divided by the outstanding number of shares

Table 2.1 The summary of E Company’s EPS

— EPS

a uj

ROE = After Tax Profit/(Beginning Equity + Ending Equity) + 2

Figure 2.3 Return on Equity Trend 1.4 Credit Rating

The chart shows how our credit rating has changed throughout the years In Year 6, our credit rating suffered a serious drop (B-) because of low net sales revenue in Year 6 resulting in our beginning cash balance in Year 6 of only $5,000,000 not enough to pay off our 1-year debt in Year 5 ($10,175,000) However, the credit rating graph displays a positive growth that is consistently increasing between Years 6 to 9 From Year 9 to Year 12 we again entered a period of credit rating decline because we borrowed a lot of long-term bank loans for stock repurchases and other expenses The credit rating increased to its maximum point, which is an A+ in Year 15 as our profits were stable and in large numbers and the image we created grew even more when we were able to repay the loan on time

Table 2.3 The summary of E Company’s Credit Rating

Y6 Y7 Y8 Y9 | Y10 | Y11 | Y12 | Y13 | Y14 | Y15 (B+) | (B+) | AY | AY} AD) A} A] A | A] A

B- A- A A A- A- B A- A A+

Table 2.4 The summary of E Company’s Image Rating

6 Stock Price

Figure 2.5 Image Rating Trend

The above graph shows a great linear relation from Year 5 to 15 The price increase is good as it shows the company is growing and therefore increasing in value Our year-end stock price started at $12 just like the other companies and steadily grew until year 9 then it stalled for three years which was caused by a decrease in net revenue (the selling price was too high) At the end of Year 12, we recovered from the previous year and saw a $110 increase in stock price, which was still much higher than investor expectations

Table 2.5 The summary of E Company’s Stock Price

$600 $400

competitors to develop a better strategy for the following years We employed the global best cost strategy from Year 9 to Year 11 and our goal is to become the “top of the line”, hence, our P/Q Rating was reported at 6.2; 6.9; 6.7 stars In

Year 12, Company E decided to gradually decrease the P/Q rating as compared

to the previous year to 6.5 stars to limit the risk when competing directly with Company G - the main competitor in the same segment From Year 13 to Year 15, we wanted to maintain our competing capability, thus, we kept increasing our P/Q Rating from 7.0 to 7.6 stars

3.1.2 UAV Drone Overall, P/Q Rating increased each year but with different levels according to the strategy for a specific year From Year 6 to Year 9, P/Q Rating rose from 4.2 to 5.9 stars which benefited from high investment in R&D Specifically, there was a big increase by 0.7 stars between Year 7 and Year 8 as we focused on providing high-quality products and wanted to keep a distance from our rivals so that we can maintain our competitive advantage In order to conduct the first 3-year plan, we increased from 5.9 to 6.7 stars to help our company reach our goal which is to become the market leader From Year 12 to Year 15, it is

reported that P/Q Rating was 6.9; 7.4; 7.9, and 8.0 respectively

3.2 Sales 3.2.1 AC Camera 3.2.1.1 AC Camera’s sales in North America

— Units Sold —— Market Share

expensive price as compared to the rivals In the following years, the figure witnessed dramatic growth and reached a peak of 378.5 units in Year 15

Besides, the highest market share was 13.6% in Year 6 and then the number decreased considerably and hit the lowest point of 11.8% in Year 8 From Year 9 to Year 15, the figure experienced a fluctuation around the average of our industry Although Company E did not lead the market, we met the goal we expect in this market

3.2.1.2 AC Camera’s sales in Europe - Africa

Meanwhile, the highest market share was 14.3% in Year 6 and then dropped significantly and reached the lowest value in Year 8, which was 11.5% In the following years, the figure fluctuated from around 12.5% and gained 12.6% in Year 15

3.2.1.3 AC Camera’s sales in Asia-Pacific

Overall, the AC Camera sales and market share in Asia - Pacific both followed the same trend In addition, they also witnessed the lowest point in Year 8 in this region

After failing strongly in Year 8, there was a gradual rise in the number of sales from Year 9 to Year 15 In Year 15, Company E reached the highest value, with 355.3 units Regarding the market share, it was considered stable at approximately 11%

3.2.1.4 AC Camera”s sales in Latin America

In Year 6, thanks to the low price, we sold a huge number of products, but then we dropped to the lowest point in Year 8 which was reported at 128.0 units (9.2%) After considering the marketing strategy, Company EVEREST developed marginally both the number of sales and market share from Year 9 to Year 15 In the final year, Company E gained better figures with 255.3 and

Overall, the trend of 2 lines for units sold and market share followed the same pattern until Year 12 In the last 3-year period, it also has some differences

In Year 8, Company E struggled with the negative context of sales and market share, with a total of 891.0 units and 10.9% of the market share After stabilization until Year 11, the total AC Camera sales grew dramatically to the peak of 1,300.4 units in Year 15 However, the market share decreased slightly to exactly 12% in the final year

3.2.2 UAV Drone 3.2.2.1 UAV Drone sales in North America

There was a decline in the number of units sold between Year 6 and Year 8, which was 65.3; 55.2; 70.7 respectively After that, the figure went up to 86.3 units sold in Year 11 and then we saw a slight decrease in Year 12 In the last 3 years, there was an 8% increase in units sold with the number of units sold for Year 15 being 99.7

The lowest market share is 10.6% in Year 7 and then the number reached the highest value in Year 10 which is 14.6% After that, the figure went down gradually and reached 14.5% in the last year From Year 9 to Year 15, although the figure experienced changes, we were still a market leader in the industry

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3.2.2.2 UAV Drone sales in Europe - Africa

Units sold increased from 47.7 in Year 6 to 73.6 in Year 11, but then, the figure for units experienced a slight decline by 0.4 in Year 12 After that, it went up to 84.0 in Year 15

The figure for market share also had the same situation with the lowest number being 10.5% market share in Year 7 We became the market leader from Year 10 with 13.8%, and then, the number kept increasing to 15.1% in Year 14 However, a decrease in market share in the last year to only 14.6%, but we still keep a distance from our competitors

3.2.2.3 UAV Drone sales in Asia - Pacific

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spending money on retailer recruitment, but we still made it to become the 2nd in the industry

3.2.2.4 UAV Drone sales in Latin America

3.2.2.5 UAV Drone sales in Total

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