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  • Optimizing market mixAugmenting revenue streams Managing talent and innovation
  • ANSWER WHY
  • “Robots are more consistent and gentle than people and can provide higher throughput with better yield when handling wafers and solar cells. Components like thin film solar panels are too big and awkward to be handled manually.”
  • Patent Award ProgramWe recognize our innovators with a special award when they are issued a U.S. patent.Referral BonusesThe quality of iRobot's talent base is our competitive advantage
  • Patent Award ProgramWe recognize our innovators with a special award when they are issued a U.S. patent.Referral BonusesThe quality of iRobot's talent base is our competitive advantage

S S Presentation Transcript

  • Robots that make a differenceThe road ahead
  • Our understanding Overview Your Business Business model Market Manufacture Develop Research/ Jetta Design Kim Yat Business of designing, developing and marketing robotsSituation Analysis Alternatives Recommendations Implementation Conclusion -2-
  • Our understanding Overview “Vision led” approach Business model Business centered on innovation Impact Time Innovation is important going forwardSituation Analysis Alternatives Recommendations Implementation Conclusion -3-
  • Our understanding Overview Business Segments Business model Industrial Non- 8% 35% US Business centered on innovation Business segments 37% 55% 65% US Home Military cleaning Revenue concentrated in USSituation Analysis Alternatives Recommendations Implementation Conclusion -4-
  • Our understanding Overview Your Position Business model Market Leader Home Cleaning Robots Business centered on innovation Business segments Revenue Growth CAGR 16% Position in industry Need to sustain market positionSituation Analysis Alternatives Recommendations Implementation Conclusion -5-
  • Our understanding Overview What got you here Business model Business centered on innovation ` Blue Hedging Business segments ocean through Financial strategy diversifi- prudence cation Position in industry Success factors Strategic alliances R&D and innovationSituation Analysis Alternatives Recommendations Implementation Conclusion -6-
  • Where you want to be Overall Objective High To provide a robust project output in a timely fashion requires expert knowledge across all the Innovation relevant adjacent industry segments. Low High Market shareSituation Analysis Alternatives Recommendations Implementation Conclusion -7-
  • Where you want to be Overall Objective High To provide a robust project output in a timely fashion requires expert knowledge across all the Innovation relevant adjacent industry segments. Low High Market share Specific ObjectivesSituation Analysis Alternatives Recommendations Implementation Conclusion -8-
  • Where you want to be Overall Objective High To provide a robust project output in a timely fashion requires expert knowledge across all the Innovation relevant adjacent industry segments. Low High Market share Specific Objectives Market Share Innovation Optimize market Cement market Talent Strategic mix leadership development AlliancesSituation Analysis Alternatives Recommendations Implementation Conclusion -9-
  • Challenge Threats to Revenue Streams Home cleaning Military robots robots Volatility and Competition from unknown demand strong players of US government Technology Obsolescence of technologySituation Analysis Alternatives Recommendations Implementation Conclusion - 10 -
  • Challenge Threats to Revenue Streams Home cleaning Military robots robots Volatility and Competition from unknown demand strong players of US government Technology Obsolescence of technologySituation Analysis Alternatives Recommendations Implementation Conclusion - 11 -
  • Challenge Threats to Revenue Streams Challenges Home cleaning Military robots robots Optimizing market mix Volatility and Competition from unknown demand strong players of US government Augmenting revenue streams Technology Obsolescence of technology Managing talent and innovationSituation Analysis Alternatives Recommendations Implementation Conclusion - 12 -
  • Winning Formula Challenges Strategic Bets Optimizing market mix Strategic Talent Augmenting revenue streams Alliances Model Managing talent and innovationSituation Analysis Alternatives Recommendations Implementation Conclusion - 13 -
  • Winning Formula Target Challenges Strategic Bets High Optimizing market mix Innovation Address Challenges Strategic Talent Augmenting revenue streams Alliances Model Low Market High Share Managing talent and innovationSituation Analysis Alternatives Recommendations Implementation Conclusion - 14 -
  • Winning Formula Target Strategic Bets High Innovation Core Growth options Supply Talent Chain Model Low Market High ShareSituation Analysis Alternatives Recommendations Implementation Conclusion - 15 -
  • Analyzing the market mix Alternatives New 6 1 Consumer robots in US 7 2 Military robots in US 5 Consumer robots in non- 3 USSegment Military robots in non- 4 US 2 3 5 Aerospace in US 1 4 6 Alternative energy in US Current US Geographical Market Non US 7 New Segment in non-USSituation Analysis Alternatives Recommendations Implementation Conclusion - 16 -
  • Analyzing the market mix Growth Options Prioritization High Consumer Military Place Strategic Bets Core Growth Options robots, US robots, US 1 2 Market Market Attractiveness Growth 1 Market Size Market Share Regulation 2 Funding Do Not Invest Status Quo Overall 4.75 2.25 Low High Accessibility to iRobot Unfavorable Magnitude FavorableSituation Analysis Alternatives Recommendations Implementation Conclusion - 17 -
  • Analyzing the market mix Alternatives Growth Options Prioritization High Place Strategic Bets Core Growth Options 1 Consumer robots in US 2 Military robots in US 6 Market Attractiveness Consumer robots in non- 1 3 3 US Military robots in non- 4 US 5 5 Aerospace in US 7 2 6 Alternative energy in US 4 Do Not Invest Status Quo 7 New Segment in non-US Low High Accessibility to iRobotSituation Analysis Alternatives Recommendations Implementation Conclusion - 18 -
  • Winning Formula Core growth options 1.Consumer robots in US 2.Consumer robots in non-US Strategic Bets Core growth options Strategic Talent Alliances ModelSituation Analysis Alternatives Recommendations Implementation Conclusion - 19 -
  • Winning Formula Core growth options 1.Consumer robots in US 2.Consumer robots in non-US Strategic Bets Core growth options Strategic Talent Alliances Model Capture opportunities in consumer robotsSituation Analysis Alternatives Recommendations Implementation Conclusion - 20 -
  • Winning Formula Strategic bets Core growth options 1.Consumer robots 1.Alternative energy in in US US 2.Consumer robots in non-US Strategic bets Core growth options Strategic Talent Alliances ModelSituation Analysis Alternatives Recommendations Implementation Conclusion - 21 -
  • Your Winning Formula Strategic bets Core growth options 1.Consumer robots 1.Alternative energy in in US US 2.Consumer robots in non-US Strategic Bets Core Growth options Strategic Talent Alliances Model Diversification into new business segmentsSituation Analysis Alternatives Recommendations Implementation Conclusion - 22 -
  • Winning Formula Strategic bets Core growth options 1.Consumer robots 1.Alternative energy in in US US 2.Consumer robots in non-US Strategic bets Core growth options Supply Talent chain modelSituation Analysis Alternatives Recommendations Implementation Conclusion - 23 -
  • Winning Formula Strategic bets Core growth options 1.Consumer robots 1.Alternative energy in in US US 2.Consumer robots in non-US Strategic bets Core growth options Supply Talent chain model Twin support for strategic stabilitySituation Analysis Alternatives Recommendations Implementation Conclusion - 24 -
  • i-home - Core growth(US) I- home Creating blue oceans in consumer markets Aim Automating processes within a home Concept >Middle class households Segment & innovators NPV: 65M RewardSituation Analysis Alternatives Recommendations Implementation Conclusion - 25 -
  • i-home - Core growth(US) i- home Churning the blue oceans i-secure Augmenting i-vacuum i-sanitize Identifying and fulfilling more consumer needs Innovating i-garden i-cook Pioneering new leading edge technologiesPricing i-care Situation Analysis Alternatives Recommendations Implementation Conclusion - 26 -
  • i-home - Core growth(US) i- home Churning the blue oceans i-secure Augmenting i-vacuum i-sanitize Identifying and fulfilling more consumer needs Innovating i-garden i-cook Pioneering new leading edge technologiesPricing i-care Cement leadership in consumer segment through innovation Situation Analysis Alternatives Recommendations Implementation Conclusion - 27 -
  • i-home - Core growth(US) i-care 1. Needs and 2. Product features and 3. To market strategy opportunities development Growing silver-hair and disabled marketPricing Situation Analysis Alternatives Recommendations Implementation Conclusion - 28 -
  • i-home - Core growth(US) i-care 1. Needs and 2. Product features and 3. To market strategy opportunities development Average Annual Cost of Home Health Aide $54 Growing silver-hair and $52 disabled market + 2.7% $50 US$/000s $48 Rising cost of care-givingPricing $46 $44 $42 2004 2007 Median household income Source: Genworth Financial 2007 Cost of Care Survey Situation Analysis Alternatives Recommendations Implementation Conclusion - 29 -
  • i-home - Core growth(US) i-care 1. Needs and 2. Product features and 3. To market strategy opportunities development Growing silver-hair and disabled market 307 million Rising cost of care-giving 89 million (29%) Large market size Total US population Caregiving population Source: US Census 2009Situation Analysis Alternatives Recommendations Implementation Conclusion - 30 -
  • i-home - Core growth(US) i-care 1. Needs and 2. Product features and 3. To market strategy opportunities development • Understand care needs from eldercare experts Product development •Leverage on Warrior robot (payload) technology i-care •Telepresence robots: Keep an eye, monitor medication adherence Product features •Bed lifting, grocery carrying •Integrated health monitoringSituation Analysis Alternatives Recommendations Implementation Conclusion - 31 -
  • i-home - Core growth(US) i-care 1. Needs and 2. Product features and 3. To market strategy opportunities development Existing i-home retailers portal Robot- Social linking media App Increased Smart home brand exhibition loyalty Eldercare i-care Patient Increased ease Conference Identification and flexibilitySituation Analysis Alternatives Recommendations Implementation Conclusion - 32 -
  • i-home - Core growth(US) i-care 1. Needs and 2. Product features and 3. To market strategy opportunities development Existing i-homei-Care for my mom without quittingSocial media retailers portal Robot- linking App my job Smart home Increased brand exhibition loyalty Eldercare i-care Patient Increased ease Conference Identification and flexibilitySituation Analysis Alternatives Recommendations Implementation Conclusion - 33 -
  • i-globe – Selling globally I- globe Geographical diversification Aim Identify potential markets Concept Global Partnerships Method NPV: 32 M RewardSituation Analysis Alternatives Recommendations Implementation Conclusion - 34 -
  • i-globe – Selling globally Timing & Expansion Schedule High DE FR JP Labor Cost SP IT UK SK CH BR IN Low Low High GDP per CapitaSituation Analysis Alternatives Recommendations Implementation Conclusion - 35 -
  • i-globe – Selling globally Timing & Expansion Schedule TIER 1 (1-2 years): Expand Now High Germany, France, Japan DE  Favorable market conditions for expansion FR 1 Tier  Systematic expansion: Enter 1 market at the time JP Labor Cost SP Tier 2UK IT SK CH Tier 3 BR IN Low Low High GDP per CapitaSituation Analysis Alternatives Recommendations Implementation Conclusion - 36 -
  • i-globe – Selling globally Timing & Expansion Schedule TIER 1 (1-2 years): Expand Now High Germany, France, Japan DE  Favorable market conditions for expansion FR 1 Tier  Systematic expansion: Enter 1 market at the time JP Labor Cost SP TIER 2 (2- 4 years): Wait and see Tier 2UK IT Spain, Italy, United Kingdom, South Korea SK  Assess market conditions  Source for suitable partners CH Tier 3 TIER 3: Do not invest for now BR IN India, China, Brazil Low  Current market statistics are not Low High extremely unfavorable for GDP per Capita expansionSituation Analysis Alternatives Recommendations Implementation Conclusion - 37 -
  • i-globe – Selling globally Selecting partnership as a distributor model • Leveraging on the success • Distribution network and of partnership model muscle • Providing superior product to retailers • Local knowledge • Helping retailers understand product • Opportunity to cross-sell • Allowing global access to new productsSituation Analysis Alternatives Recommendations Implementation Conclusion - 38 -
  • i-shine – Strategic Bets in Solar i-shine US Solar Revenue and Installation Growth 35 30 Revenue 30 Aim Installation 25 Diversify 25 20 20 15 15 Concept Precision 10 10 robotics 5 +21% 5 CAGR 0 0 Method Joint- venture & 2009 2014 strategic alliances Dividend Wafer manipulation expertiseSituation Analysis Alternatives Recommendations Implementation Conclusion - 39 -
  • Industry Insightsi-shine – Strategic Bets in Solar 2005 – 2010 Investments in U.S. Solar by Component Product Symbol Type Polysilicon Wafer Source: Cell Announcements – fDiMarkets.com Site Selection Magazine Module Thin filmSituation Analysis Alternatives Recommendations Implementation Conclusion - 40 -
  • i-shine – Strategic Bets in Solar Strategic bets Precision Robotics Solar Wafer Manufacturer Penetrate Solar Power Optimize production Segment using new technology Financial Capabilities Technological know- how Strategic FitSituation Analysis Alternatives Recommendations Implementation Conclusion - 41 -
  • Sowing the seeds Talent model Key Components 1 i-home YouTube video competition to identify conceptualizers 2 Referral bonus for staff who recommend a valuable new hire 3 Attract solar researchers through a patent award programme 4 Intervarsity robotics competition  Internship full-time 5 Hire on campus in India (IIT, BITS)Situation Analysis Alternatives Recommendations Implementation Conclusion - 42 -
  • Sowing the seeds Talent model Key Components 1 i-home YouTube video competition to Hitting the ground running identify conceptualizers + 2 Deep talent capabilities in Referral bonus for staff who innovation recommend a valuable new hire + 3 Develop expertise in solar Attract solar researchers through a research patent award programme + Constant pool of analysts 4 Intervarsity robotics competition  + Internship full-time Global capability and perspective 5 = Hire on campus in India (IIT, BITS) International growth SUCCESSSituation Analysis Alternatives Recommendations Implementation Conclusion - 43 -
  • Optimizing Quality Supply Chain Phase 1 Phase 2 Phase 3 Processes Post-Manufacturing/ Development Manufacturing Optimization • Communicate anticipated production and component needs • Assist in input selection Prevent shortrunsSituation Analysis Alternatives Recommendations Implementation Conclusion - 44 -
  • Optimizing Quality Supply Chain Phase 1 Phase 2 Phase 3 Processes Post-Manufacturing/ Development Manufacturing Optimization • Communicate • Progress anticipated monitoring production and • Interim production component needs assessment • Assist in input • Provide input selection clarification Prevent Anticipate shortruns shortrunsSituation Analysis Alternatives Recommendations Implementation Conclusion - 45 -
  • Optimizing Quality Supply Chain Phase 1 Phase 2 Phase 3 Processes Post-Manufacturing/ Development Manufacturing Optimization • Communicate • Progress • Relaying anticipated monitoring optimization production and • Interim production feedback for component needs assessment incorporation • Assist in input • Provide input • Quality selection clarification assessment scorecard Prevent Anticipate Manage quality shortruns shortrunsSituation Analysis Alternatives Recommendations Implementation Conclusion - 46 -
  • Financial Impact Financial Impact 25 20 Key Points Operating Profit (US$ m) 15 101 i-Shine Macro Economics 5 -GDP i-Globe -Industry MS 0  NPV (i-Home) = i-Home US$65m -etc. -5 2010 2011 2012 2013 2014 2015 2016 2017 2018 -10  NPV (i-Globe)2Business assumptions -15 =US$38m- Price -20- Penetration  NPV (i-Shine) =- Growth- Costs Sensitivity analysis US$32m- etc. 25  Expected Total NPV = 20 US$134 million Operating Income (US$ m)3Financial assumptions 15- Costs- Productivity 10  Discount rate = 13%- WACC 5 Base 0 Down -5 2010 2011 2012 2013 2014 2015 2016 2017 2018 -10 -15 -20Situation Analysis Alternatives Recommendations Implementation Conclusion 4 - 47 - 7
  • Implementation Timeline New Product New Market 2010 2011 2012 2013 2014 2015i-home Product development i-care i-garden i-cook Marketing Launch IT Apps Germany Francei-globe Search for partner Japan Negotiate contract Commence operationsi-shine Search for partner Solar Negotiate contract Commence research & development Talent You-Tube video model competition Robotics challenge Recruitment from Indian UniversitiesSupply chain Implement quality monitoringSituation Analysis Alternatives Recommendations Implementation Conclusion - 48 -
  • Monitoring risks of recommendations Triggering options to address a scenario should focus on the underlying drivers of the scenario. Scenario Primary Drivers that Trigger Measurable Factors to Trigger Point the Scenario Monitor Delays in securing distributor Cost overruns in product developmentBelow expected market acceptanceSituation Analysis Alternatives Recommendations Implementation Conclusion - 49 -
  • Monitoring risks of recommendations Triggering options to address a scenario should focus on the underlying drivers of the scenario. Scenario Primary Drivers that Trigger Measurable Factors to Trigger Point the Scenario Monitor 1.Disagreements over 1.Implementation 1.Delay > 3 months Delays in partnership structure schedule securing distributor 1.Technology limitations 1.Number of R&D hours 1. >50% increase in R&D necessitating increased 2.Budget variance hours Cost overruns R&D in product 2. >50% cost overrun development 2.Increase in skilled hires 1.Immaturity of markets 1.Market share 1.Market share < 5%Below expected after 3 years 2.Unproven research market acceptance capabilities in new segmentsSituation Analysis Alternatives Recommendations Implementation Conclusion - 50 -
  • Risk mitigation plans i-Globe Look for alternative distributors Delays in securing distributor + Adopt direct-to-retailers approach i-Home Cost overruns in product development Partner schools in R&D of home-care products i-Shine Shelve partnership plans Below expected market acceptance + Explore alternative industriesSituation Analysis Alternatives Recommendations Implementation Conclusion - 51 -
  • What we have delivered Summary and payoffs Challenge addressed Target i-home • Blue oceans in consumer •Optimizing market mix High markets •Augmenting revenue streams • 65M NPV Innovation •Managing Innovation i-globe •Marketing vacuums •Optimizing market mix internationally •Augmenting revenue streams • 38M NPV i-shine •Marketing vacuums •Optimizing market mix Low Market High internationally •Augmenting revenue streams Share •32M NPV •Managing Innovation Talent Model •Dynamic management of talent •Managing talent and innovation 7% increase in US Market Share Supply + •Ensuring quality of products •Augmenting revenue streams Chain Lead industry in innovationSituation Analysis Alternatives Recommendations Implementation Conclusion - 52 -
  • AppendixOur understanding Strategic bets i-Robot i-CookBusiness model i-shine strategic core Stock price i-secureInnovation led approach i-shine US components Managing PLC i-sanitizeBusiness segments i-shine alliance Domestic distributionIndustry position International distribution I-globeSuccess factors Talent model Patent breakdown Labor cost by countryObjectives Sowing the seeds Third party developers Country analysisChallenges Growth prioritization matrixWinning formula Optimizing Quality Military Germany Robotics Sector Supply chain OpportunityAlternative analysis Enabling technology I-ShineOption matrix Financial Impact Industry Analysis 1Consumer vs Military Financial performance i-home Industry Analysis 2Market mix analysis Consumer market selection Solar Sector Growth US Vacuum Solar Sector SupportCore growth options Implementation Caregiver statusi-home strategic core Risk monitoring Opportunity cost Talent Modeli-home options Risk mitigation Cost of giving care Total Rewards Strategyi-home needs Implementation timeline I phone appi-home features Product company Financial Impactsi-home to market Conclusion Alternatives Analysis Summary slide I-garden I-homei-globe strategic core i-garden 1 I-globei-globe schedule i-garden 2 I-shinei-globe partnerships i-garden 3 Combined NPV Combined revenue - 53 -
  • i-Robot - 54 -
  • iRobot Stock Price - 55 -
  • Managing PLC - 56 -
  • Domestic distribution model - 57 -
  • International distribution model - 58 -
  • Military opportunities - 59 -
  • Military – enabling technologies - 60 -
  • Patent breakdown - 61 -
  • Third party developers - 62 -
  • Why consumer marketsRevenue by Location 27-Dec-08 2-Jan-10 $ $United States of America 233,860 202,705 $ $International 73,761 95,912Revenue by Segment 27-Dec-08 2-Jan-10 $ $Consumer 158,589 164,239 $ $Military 113,512 120,343Segment Comparison Market Market Size Market Growth Share Regulation Dependence on FundingGlobal Consumer $2,318,181,818 23% 7.085% Low LowUS Military $11,000,000,000 18% 1.094% High High - 63 -
  • Why not integrate along the value chain Cyclical Demand Higher fixed cost = higher risk - 64 -
  • Why not expanding within US with Vacuum Situation Implication Market saturation Stagnant sales growth Poor economic recovery Lower domestic demand Poor prospects of B2B Tough to achieve scale (Fragmented) - 65 -
  • i-home - 66 -
  • Caregiver status - 67 -
  • Opportunity cost of caretaking - 68 -
  • i-home App developers OptmizedApps.com is a mobile application consultancy and development company that is dedicated to assisting both global business and small to medium users in developing high quality, award-winning applications. We are not just your average order takers; as developers we bring over 15 years of development and application consulting experience to the table so we build what you need and what you want, as well as deliver it on time and in budget. Fast and cost effective service are our hallmark; we are the company you should turn to when you are looking for a partner in developing new ways to operate, and new ways to get things done. i-secure i-vacuum i-sanitize i-home i-garden i-cook Pricing i-care - 69 -
  • Product comparison within i-home Market Market Technology Overall Opportunity Accessibility compatibility rankingi-care High High High 1i-garden Med Low High 2i-cook Med Low Low 3i-vaccum Low High High 4i-secure Low Low Low 5i-sanitize Low Low Low 6 - 70 -
  • i-home - Core growth(US) i- garden 1. Needs and 2. Product features and 3. To market strategy opportunities development A surprisingly high percentage (80%) of U.S. households has a private lawn. The potential collective effect on our Large number of US house daily lives is significant. Consumers annually spend around $40 billion per year to maintain and improve their yards, and hold with lawn the growth is accelerating as the U.S. population matures. Lawns, flower gardening, shrub care and general landscaping are important components of local economies. The personal and public benefits are well-documented.Pricing Summer Winter Lawn Mowing Snow Shovel - 71 -
  • i-home - Core growth(US) i- garden 1. Needs and 2. Product features and 3. To market strategy opportunities development • Understand care needs from garden owners Product development •Leverage on existing technology i- garden •Human Robot Interaction (Programming) Product •Semi-Autonomous operations features •Snow shoveling/ Lawn mowing - 72 -
  • i-home - Core growth(US) i- garden 1. Needs and 2. Product features and 3. To market strategy opportunities development Existing i-home retailers portal Robot- Social linking media App Increased Smart home brand exhibition loyalty Eldercare i-garden Patient Increased ease Conference Identification and flexibility - 73 -
  • i-home - Core growth(US) i-cook 1. Needs and 2. Product features and 3. To market strategy opportunities development Automation of Kitchen appliancesPricing - 74 -
  • i-home - Core growth(US) i- secure 1. Needs and 2. Product features and 3. To market strategy opportunities development Safety ConcernsPricing - 75 -
  • i-home - Core growth(US) i- sanitize 1. Needs and 2. Product features and 3. To market strategy opportunities development Growing silver-hair and disabled marketPricing - 76 -
  • i-globe - 77 -
  • Hourly compensation costs U.S. dollars, and as a percent of Table 1. Hourly compensation costs in costs in the United States manufacturing, Hourly Compensation Costs Country or Area in U.S. dollars U.S.=100 1997 (1) 2009 1997(1) 2009 Norway 26.97 53.89 119 161 Denmark 24.64 49.56 109 148 Belgium 28.23 49.40 125 147 Austria 27.38 48.04 121 143 Germany 29.26 46.52 129 139 Switzerland 28.33 44.29 125 132 Finland 22.17 43.77 98 131 Netherlands 23.44 43.50 103 130 France 24.99 40.08 110 120 Sweden 25.11 39.87 111 119 Ireland 17.15 39.02 76 116 Italy 19.67 34.97 87 104 Australia 19.12 34.62 84 103 United States 22.67 33.53 100 100 United Kingdom 18.24 30.78 80 92 Japan 22.28 30.36 98 91 Canada 18.89 29.60 83 88 Spain 13.91 27.74 61 83 Greece NA 19.23 NA 57 Israel 12.32 18.39 54 55 Singapore 12.15 17.50 54 52 New Zealand 12.37 17.44 55 52 Korea, Republic of 9.42 14.20 42 42 Portugal 6.38 11.95 28 36 Slovakia 2.86 11.24 13 34 Czech Republic 3.24 11.21 14 33 Argentina 7.43 10.14 33 30 NA=data not available. (1) With the exception of Estonia and Greece, 1997 is the first year78 - are available for all economies. - data
  • Country scores 2010 GDP per Labor Population OverallCountries capital/$US Score costs Score size/mil Score ScoreJapan 42325 10.0 30.36 6.5 127.4 1.0 5.8South Korea 20165 4.8 14.2 3.1 49 0.4 2.7Germany 40512 9.6 46.52 10.0 82 0.6 6.7France 40591 9.6 40.08 8.6 66 0.5 6.2UnitedKingdom 36298 8.6 30.78 6.6 62 0.5 5.2Italy 33828 8.0 34.97 7.5 61 0.5 5.3Spain 29875 7.1 27.74 6.0 46 0.3 4.5China 4520 1.1 1.36 0.3 1341 10.0 3.8India 1176 0.3 1.18 0.3 1196 8.9 3.2Brazil 10471 2.5 8.32 1.8 191 1.4 1.9 - 79 -
  • Growth Prioritization Matrix Growth Options Prioritization Select Attractiveness ConsiderationsHigh  Market Size Place Strategic Bets Core Growth Options  Market GrowthMarket Attractiveness Select Accessibility Considerations  Can iRobot adapt its current expertise in the new segment/market  Customer Characteristics Divest Holdings/Do Not Invest Consolidate Low High Accessibility to iRobot - 80 -
  • Germany’s Robotics Sector - 81 -
  • i-shine - 82 -
  • Consideration of Different Industries Historical robot use – Size of currentCurrent R&D – Future Looking market Conclusion: Energy sector is a rapidly developing robotics sector - 83 -
  • Industrial robot per 10,000 employed - 84 -
  • Solar Market justification US Solar Revenue and Installation Growth Is Fueled by Government Growth Funding and Technology Advances 35 30  Industry growth will likely be driven by government Revenue (in Billions USD) Revenue incentives and public policies, such as production tax 30 25 Installation credits, feed-in-tariffs, and Renewable Portfolio Installation (in GW) 25 Standards 20 20  ARRA allocated nearly $70B in funding to energy- 15 related initiatives, including loan guarantees and tax 15 credits for renewable energy manufacturers 10 10  Technological advances have driven cost 5 +21% 5 improvements, increased output, and improved CAGR conversion efficiency 0 0 2009 2014 Annual U.S. Installed Capacity (MW) Energy Demand, Price Volatility and Environmental Concern Also Propel 357 Solar Demand  Price increases for traditional energy will likely bring 220 solar closer to grid parity and increase demand  Traditional fossil fuel sources are prone to 140 105 unpredictable price volatility whereas prices of 84 66 renewable are more stable  Growing concern over environmental issues will likely 2003 2004 2005 2006 2007 2008 maintain increased demand for solar - 85 -
  • Growth Trends in Solar - 86 -
  • Solar Wafer - Manual labour - 87 -
  • Solar Wafers - 88 -
  • Talent - 89 -
  • Total rewards strategy Rewarding Employees Career Opportunities Compensation •Career Planning •Base Pay •Mentoring Programs •Annual Bonuses •Competency Modeling •Long-Term Incentives •Training Programs Increase Employee •Other Financial & Non- •Work Experience Financial Rewards Retention Culture Motivate & Encourage •Leadership Styles “Total Rewards” Innovation •Communication/ Decision-Making Strategy Physical Environment •Nature of Work •Employee Participation/ •Interaction with Others Empowerment •Flexibility •Internal or External Focus of Organization Benefits Enhance Employee •Health, Dental •Vision Care Productivity •Paid Time Off •Life Insurance •Short/Long-Term Disability •Retirement Plans •Spending Accounts •Other Benefits - 90 -
  • Alternatives Evaluation Alternatives NPV $m 1 Consumer robots in US 65.1 2 Military robots in US 30.7 Consumer robots in non- 3 37.7 US 4 Military robots in non- US 20.0 5 Aerospace in US 20.1 6 Alternative energy in US 31.6 7 New Segment in non-US 35.0Situation Analysis Alternatives Recommendations Implementation Conclusion - 91 -
  • i-Home NPVKey AssumptionsAverage selling price $350Market penetration 0.25% i-HomeInitial Year (2011) Revenue $ 26152479 20Revenue Growth 15% Operating Income (US$ m) 15Gross Margin 31%Operating Expenses - R&D 2 000000 10Operating Expenses - Marketing 5& Selling $3000000Operating Expenses - General & 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Administrative $3 000000 -5Growth in Operating Expenses -10(Marketing & Selling + General& Administrative 3% Situation Analysis Alternatives Recommendations Implementation Conclusion - 92 -
  • i-Globe NPVKey AssumptionsAverage selling price $350Market penetration 10%Initial Year (2011) Revenue $7560000 i-Globe 12Revenue Growth 23% 10Gross Margin 31% Operating Income (US$ m) 8Operating Expenses - R&D $- 6Operating Expenses -Marketing & Selling $1500000 4Operating Expenses - General 2& Administrative $1500000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Growth in Operating -2Expenses (Marketing & -4Selling + General &Administrative 5%Situation Analysis Alternatives Recommendations Implementation Conclusion - 93 -
  • i-Shine NPVKey AssumptionsAverage selling price $13 000Market penetration 5%Initial Year (2011) i-ShineRevenue $10000000 12 10Revenue Growth 20% Operating Income (US$ m) 8Gross Margin 30% 6Operating Expenses - 4R&D $ 1000000 2Operating Expenses - 0Marketing & Selling $1000000 -2 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Operating Expenses - -4General & Administrative $2000000 -6Growth in OperatingExpenses (Marketing &Selling + General &Administrative 5%Situation Analysis Alternatives Recommendations Implementation Conclusion - 94 -
  • Combined NPV 50 40 Operating Cashflow (US$ m) 30 20 i-Shine i-Globe 10 i-Home 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 -10 -20Situation Analysis Alternatives Recommendations Implementation Conclusion - 95 -
  • Revenue Breakdown $1,800 $1,600 $1,400 $1,200 i-Shine $1,000 i-Globe $800 i-Home $600 Organic Revenue $400 $200 $- 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020RevenueBreakdown 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020OrganicRevenue 100% 88% 88% 88% 89% 89% 89% 89% 89% 89% 89%i-Home 0% 7% 7% 7% 6% 6% 6% 6% 6% 6% 5%i-Globe 0% 2% 2% 2% 2% 2% 2% 3% 3% 3% 3%i-Shine 0% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%Situation Analysis Alternatives Recommendations Implementation Conclusion - 96 -
  • I-home 2010 2011 2012 2013 2014 2015 $ 39 774 $ 45 740 Revenue 0$ 26 152 479 $ 30 075 351 $ 34 586 654 652 849 $ 27 627 $ 31 771 Cost of Revenue 0$ 18 165 655 $ 20 890 503 $ 24 024 079 690 844 $ 7 986 $ 9 184 $ 12 146 $ 13 969 Gross Profit 0 824 848 $ 10 562 575 961 005 Operating Expenses $ 2 000 $ 2 000 $ 2 000 $ 2 000 $ 2 000 R&D 000 000 000 $ 2 000 000 000 000 $ 3 000 $ 3 090 $ 3 182 $ 3 376 $ 3 477 Marketing & Selling 000 000 700 $ 3 278 181 526 822 $ 3 000 $ 3 090 $ 3 182 $ 3 376 $ 3 477 General & Administrative 000 000 700 $ 3 278 181 526 822 $ 8 000 $ 8 180 $ 8 365 $ 8 753 $ 8 955 Total Operating Expenses 000 000 400 $ 8 556 362 053 644 $ (8 000 $ (193 $ 819 $ 3 393 $ 5 013 Operating Income (Loss) 000) 176) 448 $ 2 006 213 908 361Situation Analysis Alternatives Recommendations Implementation Conclusion - 97 -
  • I-globe 2010 2011 2012 2013 2014 2015 $ $ 14 068 Revenue 0 $ 7 560 000 $ 9 298 800 11 437 524 155 $ 17 303 830 $ $ 9 771 Cost of Revenue 0 5251217.312 $ 6 458 997 7 944 567 817 $ 12 019 335 $ $ 4 296 Gross Profit 0 $ 2 308 783 $ 2 839 803 3 492 957 338 $ 5 284 495 Operating Expenses $ $ R&D - $ - $ - - $ - $ - $ 1 500 $ $ 1 823 Marketing & Selling 000 $ 1 575 000 $ 1 653 750 1 736 438 259 $ 1 914 422 $ 1 500 $ $ 1 823 General & Administrative 000 $ 1 575 000 $ 1 653 750 1 736 438 259 $ 1 914 422 $ 3 000 $ $ 3 646 Total Operating Expenses 000 $ 3 150 000 $ 3 307 500 3 472 875 519 $ 3 828 845 $ (3 000 $ $ 649 Operating Income (Loss) 000) $ (841 217) $ (467 697) 20 082 819 $ 1 455 650Situation Analysis Alternatives Recommendations Implementation Conclusion - 98 -
  • i-shine 2010 2011 2012 2013 2014 2015 Revenue 0 $ 10 000 000 $ 12 000 000 $ 14 400 000 $ 17 280 000 $ 20 736 000 Cost of Revenue 0 7000000 $ 8 400 000 $ 10 080 000 $ 12 096 000 $ 14 515 200 $ 6 220 Gross Profit 0 $ 3 000 000 $ 3 600 000 $ 4 320 000 $ 5 184 000 800 Operating Expenses $ 1 000 R&D $ 1 000 000 $ 1 000 000 $ 1 000 000 $ 1 000 000 $ 1 000 000 000 $ 1 276 Marketing & Selling $ 1 000 000 $ 1 050 000 $ 1 102 500 $ 1 157 625 $ 1 215 506 282 $ 2 552 General & Administrative $ 2 000 000 $ 2 100 000 $ 2 205 000 $ 2 315 250 $ 2 431 013 563 $ 4 828 Total Operating Expenses $ 4 000 000 $ 4 150 000 $ 4 307 500 $ 4 472 875 $ 4 646 519 845 $ (4 000 $ (1 150 $ (707 $ (152 $ 1 391 Operating Income (Loss) 000) 000) 500) 875) $ 537 481 955Situation Analysis Alternatives Recommendations Implementation Conclusion - 99 -
  • Financial Ratios Profitability 2010 2011 2012 2013 2014 2015 Product Gross Profit Margin 40.85% 40.85% 40.85% 40.85% 40.85% 40.85% Contract Gross Profit Margin 89.69% 89.69% 89.69% 89.69% 89.69% 89.69% Average Gross Profit Margin 47.53% 47.45% 47.39% 47.33% 47.28% 47.23% EBIT Margin 14.19% 14.11% 14.52% 15.32% 16.38% 17.64% Net Income Margin 9.94% 9.87% 10.17% 10.72% 11.47% 12.35% Return on Equity 9.94% 9.87% 10.17% 10.72% 11.47% 12.35%Situation Analysis Alternatives Recommendations Implementation Conclusion - 100 -
  • iRobot Financial Snapshot 2010 2011 2012 2013 2014 2015RevenueProduct revenue $ 270 065 $ 321 879 $ 382 910 $ 454 821 $ 539 589 $ 639 557Contract revenue $ 42 809 $ 50 322 $ 59 154 $ 69 536 $ 81 739 $ 96 084Total revenue $ 312 874 $ 372 202 $ 442 064 $ 524 357 $ 621 328 $ 735 641Cost of revenueCost of product revenue $ 159 743 $ 190 391 $ 226 490 $ 269 025 $ 319 165 $ 378 296Cost of contract revenue $ 36 194 $ 42 546 $ 50 012 $ 58 790 $ 69 107 $ 81 235Total cost of Revenue $ 195 936 $ 232 936 $ 276 502 $ 327 815 $ 388 272 $ 459 531Gross Margin $ 109 506 $ 130 271 $ 154 722 $ 183 525 $ 217 465 $ 257 474 35% 35% 35% 35% 35% 35%Operating ExpensesResearch and Developmment $ 17 747 $ 20 747 $ 23 747 $ 26 747 $ 29 747 $ 32 747Selling and marketing $ 48 447 $ 56 584 $ 65 353 $ 74 793 $ 84 947 $ 95 863General and administrative $ 38 116 $ 46 786 $ 56 167 $ 66 305 $ 77 251 $ 89 059Litigation and related $ - $ - $ - $ - $ - $ -Total Operating Expense $ 104 310 $ 124 118 $ 145 267 $ 167 845 $ 191 946 $ 217 669Operating (Loss) Income $ 5 196 $ 6 153 $ 9 456 $ 15 680 $ 25 519 $ 39 805Interests and Taxes (Income) Expense $ 1 559 $ 1 846 $ 2 837 $ 4 704 $ 7 656 $ 11 942Net income $ 3 637 $ 4 307 $ 6 619 $ 10 976 $ 17 863 $ 27 864Net income attributable to commonstockholders $ 3 637 $ 4 307 $ 6 619 $ 10 976 $ 17 863 $ 27 864Net income per common shareBasic $ 0.15 $ 0.17 $ 0.26 $ 0.44 $ 0.71 $ 1.11Situation AnalysisDiluted Alternatives 0.14 $ $ Recommendations 0.17 $ 0.26 $ Implementation 0.43 $ 0.70 $ Conclusion 1.09 - 101 -