Trends in Annual Total Revenues

Trends in Annual Earnings Per Share (EPS)

Trends in Annual Return on Equity Investment (ROE)

Trends in Credit Rating

Trends in Image Rating

Trends in Year-End Stock Price

Trends in Year-End Global Unit Sales

Trends in Year-End Market Share

Company B’s Strategic Vision

• Our strategic vision involved differentiating ourselves from our competitors on quality, image, and socially conscious practices. It is our belief that our strength in these areas represented a significant competitive advantage as compared to other industry players.

EPS, ROE, Credit Rating, Image Rating, and Stock Price Performance Targets for next two years

Performance Targets

Year 17 Year18 Year 19 Year 20

EPS 5.30 9.47 $5.45 $5.70

ROE 23.1% 37.6% 20% 20%

Credit Rating

B+ A B- B

Image Rating

76 73 75 79

Stock Price $77.00 $194.00 $105.00 $115.00

Internet Competitive Strategy

• Maintain internet market share at 15% or higher

• Stay price competitive relative to industry benchmarks

• Maintain at least a 15% profit margin/shoe in every region

• Pass certain costs to our consumers whenever possible (free shipping)

Year 11

Year 12

Year 13

Year 14

Year 15

Year 16

Year 17

Year 18

0

5

10

15

20

25Internet Market Share

Market Share

Avg. 15.8%

Year 11

Year 12

Year 13

Year 14

Year 15

Year 16

Year 17

Year 18

0

5

10

15

20

25

30Internet Profit Margin Per Shoe

Overall Profit Mar...

Avg. 21.3

Internet Market Competitors

• Company E in all markets

• Companies C,F and D based on market share.

Competitive Strategy for Wholesale Market and How It has Evolved

• Stay price competitive overall in early years to retain market share.

• Maintain 15% or more market share in North America, Asia/Pacific, and Latin America each year

• Maintain 10% or more market share in Europe/Africa

• Have highest celebrity appeal in all regions• Always be one of top three advertisers• Raise prices in latter years

Wholesale Market Competition

• Our strongest and most direct competitor in all regions is Company E

• We view both Company D and Company F as competitors more for the market share and profit that they earn each year than anything else.

Private Label Market StrategyN.A.

OfferedN.A.Sold

E/AOffered

E/ASold

APOffered

APSold

LAOffered

LASold

Yr 11 - - - - - - - -

Yr 12 280@ $28.75

280w/ 18%MS

280@ $31.75

280w/ 24.8%MS

200@ $26.00

200w/ 15.5%MS

289@ $30.99

289w/ 37.1%MS

Yr 13 570@ $31.75

0 470@ $33.00

0 507@ $31.75

0 186@ $33.50

0

Yr 14 - - - - - - - -

Yr 15 - - - - - - - -

Yr 16 - - - - 146@ $36.00

146w/ 9.6%MS

147@ $36.00

147w/ 13.4%MS

Yr 17 - - 432@ $45.00

432w/ 24.1%MS

- - 233@ $38.90

233w/ 12.1%MS

Yr 18 - - - - 161@ $36.00

161w/ 8.5%MS

230@ $40.00

230w/ 19.7%MS

Private Label Competitors

• Our competitor changes from year to year, depending on how we decide to play the market.

• We are not trying to compete with any one company on prices, we just hope to pick up the extra demand for a favorable profitability margin.

Production Strategy

Plant Capacity• Concentrate most of our production in the most cost

effective regions• Focus all capacity in the appropriate regions to meet

expected demand excess overtime capacity used in Private Label

• Upgrade facilities and resources as often as finances allow

• Construction of new plants take place only when absolutely necessary

Production Strategy

Asia Branded Production• Use lowest amount of superior materials possible

w/o sacrificing our 7 SQ rating• Maintain at least 90% production of all expected

demand with our Asian plants• Balance our workers’ incentive pay and base wage

changes with that of the industry average• Pursue Six Sigma and Best Practices only to increase

productivity; never sacrifice Profit Margin

Production Strategy

Latin American Branded Production• Use lowest amount of superior materials and style

w/o sacrificing our 5 SQ Rating• Maintain enough capacity to only fulfill the major

demand needs of our Latin American customers• Keep all other costs as low as possible due to LA’s

high setup costs • Use plant upgrades to bring setup costs down; slowly

begin to offer more models

Company B’s Finance Strategy

Loans:

• Maintain D/A ratio of .5• $200 million 10 yr. loan in

year 11• Year 15 $15 million 5 yr.

loan• Year 16 $150 million 10 yr.

loan• Year 17 $42 million 5 yr.

loan

Dividends:

• $1.00 dividends paid in years 12-14, 16 and 17

• $2.00 in year 18

Future Actions

• Continue to further upgrade plants • Build more capacity in Asia plants based on

forecasts in global demand• Return to our dominance in regard to being

socially responsible (Gold Star Awards)• Continue to aggressively pursue possible

celebrity endorsements (Have at least 3 signed each year)

Strategies/Actions for Out-Competing Rivals

Lessons Learned

• Competing year-to-year required constant adjustment to plan

• Biggest challenge was how to keep production costs low enough to off-set socially conscious activities/celebrity endorsements.

•