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Exotic Shoes Company Report

Financial Performance
(7 Year Trends)

Net Revenues

Global Unit Sales (Branded and Private-Label)

Global Market Share

Earnings per Share (EPS)

Return on Equity (ROE)

Stock Price

Credit Rating

Image Rating

Our strategic vision for Exotic Shoes was to develop and produce footwear to meet the demands of an array of consumers with appealing attributes including style, quality and a arrange of selection at a lower cost than rivals.

ROE EPS Credit Rating Image Rating Stock Price Global Market Share

2017 13.4% $ 5.14 A 69 $ 61.07 19.2%

2018 15.0% $ 5.40 A 72 $ 70.23 22.1%

2019 17.0% $ 5.65 A 74 $ 80.76 25.4%

Comments
12% increase per/yr 5% increase per/yr M aintain credit rating M ore style/quality @ lower cost 15% increase per/yr 15% increase per/yr

We believe the targets above are reasonable based on our performance during the last 7 years. Our projection of increasing net revenues will help us achieve investors expectations for ROE & EPS. Our global market share for wholesale is currently 26% as our internet sales has been a weakness of Exotic Shoes. Last year, we did lower our price in order to be more competitive online, which should increase our global market share.

Best Value Strategy S/Q rating: invested in superior materials (70%80%), enhanced styling and features, continuous improvement, training and pay incentives

Strong Retail Partnership: major investment in sales support and quick delivery times Low-Cost Structure: kept labor costs low by manufacturing in Asia and Latin America and kept warehousing cost lowest in the industry

Started with 5 SQ rating and incrementally increased to 7 SQ rating Major investment in advertising and celebrity appeal to establish a strong brand name worldwide Sold plant in NA and opened plant in LA, where production costs were more favorable

Decreased our on-line price in the last two years to $69.00 as we anticipated an internet pricing war

Our strategy for private label was not a major part of our sales strategy but it was carefully utilized to take advantage of excess capacity allowing Exotic Shoes to spread overhead costs and maintain a low cost structure We started the first few years bidding consistently but then changed our strategy to only sell private-label when we anticipated a good bidding opportunity as a reasonable profit margin

Production: Used a higher % of superior materials (70-85%) Gradually increase in style/features up to $32K Consistently spent around $1 per/pair on TQM Every year used many combinations to create 7 star quality at the cheapest cost Work force: To encourage worker productivity, we increase base salary by 2-3% in Y11 Y15 We offer competitive incentive pay $1 - $1.25 We increased best practices training from $1M to $1.3M over the seven year period

Used 90% of long-term debt to finance expansion New plant in Latin America Increase capacity in Asia-Pacific Tax advantage on interest paid In Y17, we paid back several loans to achieve A credit rating In Y16 and Y17, we re-purchased 2.5 million shares when our stock was at its lowest point Increased our stock price to $61 in Y17 due to less supply and higher demand for our stock Stock price increased larger due to our operating results

After Y11, we eliminated any dividend payouts We invested our profits to assist with expansion Our competition was not offering any dividends Our projection for Y18 and Y19, we would consider paying a small dividend based on Our operating performance What are competitors offering as a dividend Based on our EPS targets, our projection would be to offer $0.25 in Y18 and $0.50 in Y19 if our company targets are reached

Team C was our strongest competitor in both the branded and private label segments worldwide

Team D would be our second closest competitor, however they are beginning to sell very high-end footwear and are targeting a smaller share of the market

To outcompete Team C in the next 2 years, we would need to do the following: Significantly increase investment into advertising with the exception of Latin America. Team C invested more money in every other region than our company did last year. Significantly increase the number of endorsement deals that we execute. In the last year, Team C had 5 deals in place, whereas we had 2.

To outcompete Team C in the next 2 years, we would need to do the following:

All companies were making the same quality shoes and created a pricing war. The concern is that if you bid too low, you can take a loss on the cost of production.
To out compete Team C, we should implement a strategy of producing a slightly better quality shoe (S/Q 5). This will creating a new pricing dynamic. We can be more aggressive in our pricing. This should result in increased sales.

The following are the lessons learned on how to compete and succeed in this game

Develop a company identity. Do you want to be high-end brand, low end brand etc.
Develop an Operating, Sales and Advertising strategy for how you intend to achieve the identity that youve identified Stick to your strategy! Be who you are! Do not make sudden and drastic changes to your approach. Make minor adjustments based upon the threats presented by your competitor