CAPSIM Annual Report Digby

Annual Report Team Digby Market: F66137
Sam Aziz, Rafael Canales, Eric Louis, Mayra Molina and Michael Sammons MANA 4322 - 006 Dwight Long
Prepared by:

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TABLE OF CONTENTS
Letter to Investors 2
Introduction 3
Mission Statement 4
Original Strategy 4
Environmental Analysis 4-24
Conclusion 25-26

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Dec 29th, 2022
Dear Investors,
2021 has proven to be an extremely exciting year for the management team here at Digby Sensor’s. Upper management was very pleased at all the hard work and dedication that our company employees exerted over the course of the past year. None of which would have been possible if it was not for our loyal shareholders. We truly appreciate your continued support this past year and the future years to come. The management here understood that with five other competitors in the market that Digby Sensor has required a strategy that would ensure a competitive advantage in our target markets. Upon completion of analyzing both market segments Digby Sensor’s decided on a total of three products to meet the demand of the low and high tech market’s.
During the first several years of our successful operation, Digby Sensor’s main goal was to launch those products in their respective markets while increasing automation to pass on the savings in terms of price down to our customers. The management team also performed strategic analysis on the perceptual map and discovered many of the products clustered together so Digby Sensor has decided to position its products slightly away from competition in order to gain more of a competitive market advantage.
In the beginning of year 2019, Digby Sensor’s began to re-purchase outstanding shares to further increase our stock price. This strategic decision enabled our stock price to be the highest that our company was able to achieve. This greatly helped Digby Sensor’s final stock price to close out at $77.28 per share in the year 2022. Which is an overall increase of 691% over the course of the past eight years. With all of the products in the market and the majority of the investments complete, Digby Sensor’s was able to issue a dividend of $1.00, $2.00, $4.00 per share in years 2020, 2021 and 2022 respectively.
Digby’s dedication to you, its shareholders, is what continues to fuel our company in our ever-increasing success.
Best Regards,
Johnny Cash
Chief Executive Officer

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INTRODUCTION:
Since the beginning, the goal of Digby Sensors has been to set this company apart from other competitors and create brand loyalty with consumers. Digby set out to achieve this by offering quality products to customers at a reasonable price. Upon split up of the sensor monopoly by the government, there were five other very similar companies in competition with one another. An important decision was to determine through strategic analysis where to appropriately position our products. After reviewing the low and high tech market growth rate, Digby decided it would be in the best interest of the company to target both markets. With the growth rate in the low-tech industry being 10%, Digby estimated the demand to be 10.4 million units and the growth rate in the high tech industry as 20% with an annual estimated demand in year eight of 9.2 million. With these figures, Digby decided that it would be best to offer one product in each industry as well as a product located in the overlapping region among the low and high tech industry.
Once this strategy was selected, it was time to put it into action. Our three products were named Dallas, DOES and Daze and upper management understood the importance of launching these products as quickly as possible. This meant that in the early years, the company would be much less profitable and Digby would have to recover this lost revenue in the later rounds. Upon review of the pricing of similar products by competitors, Digby decided to offer competitive pricing. In launching the products as early as possible Digby will be able to minimize production costs and pass on the savings to consumers in regards to a lower priced product. The management team has outlined their strategy-based decisions on a year-to-year basis to enable a view of what made Digby successful.

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MISSION STATEMENT:
The Mission of Digby Sensor’s, Inc. is to provide low and high quality sensors to the electronic sensor industry for worldwide distribution. Digby Sensor’s will produce a variety of sensors in the Low and High Technology markets by utilizing established market specific Research and Development methods. These sensors will be priced competitively within this highly differentiated market. Thus, Digby Sensor’s is committed to providing products that have high quality attributes as well as have excellent designs. ORIGINAL STRATEGY:
In the beginning, Digby Sensor’s, Inc. leadership decided to concentrate on a strategy of being a Cost Leader with an emphasis focusing on the Product Life cycle. By utilizing this strategy, we focused on keeping our Material, Production, Research, and Development costs low in order to compete with other companies within our specific industry based on price. In doing so, we introduced products into the High Technology market every other year and allowed our products to move through the perceptual map until it was the right time to revise that product. Our company’s efficiency and effectiveness will be evaluated not just by looking at our stock price but by also analyzing and measuring the performance of our company in terms of the Return on Sales and Return on Equity. ENVIORNMENTAL ANALYSIS:
Round zero – ending December 2013:

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The ending of this round earmarked the beginning of the simulation. Every company was identically situated within the electronic sensor market with one product. Each of these products comprised 16.6% of the total market share in both the High and Low-tech segments. All products in this market started with a price of $11.17 per share to build upon as well as a Return on Equity of 19% and Return on Sales of 6%. Even though, all teams started out with an even market share it would slowly spread out more diversely among the six teams. From the initial start Sensor’s Digby’s company had a Sales and Promotional budget of $1,000,000, which was the same amount that the remaining five companies started out with as well. These budgets laid the groundwork and provided the initial funding for the marketing department to advertise the products that were being engineered by the Research and Development department. Our team understood the significance of advertising. With that being said, we did not want to leave anything to chance and have our customers come across our product by accident. Instead, we wanted our products to be discovered purposefully.
Round one and two– ending December 2014 and December 2015
Under new first year management, we saw ourselves face some challenges to get the company back on track. As a Cost Leader with Product Lifestyle Focus our goal was to research and produce products of quality and durability at the lowest price possible in order to gain a quick competitive advantage in the marketplace all while keeping internal costs to a minimum. Unsure of the public’s reaction to a revision of our product we wanted to be conservative in our approach.
Our management team decided it was in the best interest of the company to fore hold introducing a new product into the market and to keep focus on our current product, Daze, to

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revise it to target the high-tech market segment in accordance with our overall strategy. We focused on Daze by investing heavily into capital expenditures and marketing. Industry analysis suggested high-tech customers sought out a product that performed efficiently and had an effective size. In order to revise Daze into the high-tech market, management changed Daze’s size coordinates from 13.6 to 12.5 and increased its performance from 6.4 to 8.0. This placed Daze in the ideal position to dominate the high-tech market. Customers also considered the product’s age, which they preferred to be at 0 years in their purchasing decisions. Price and mean time before failure, although not as important, were also criteria in their purchasing decisions. The size and performance revisions made to Daze were closely targeted to these preferences.
Digby invested an additional million into promotion and another million into our sales budget, this brought each to two million overall. This would give the opportunity for Daze to gather the attention and accessibility it would need to capitalize on market share. We wanted Daze to be distinguished by customers in order to gain us brand loyalty. In pricing Daze at $40.98, we wanted to be competitive in the industry, but also keep our margins high enough to meet profit margins. At the end of 2015, Daze had captured 82% of customer’s awareness and 32% of customer’s accessibility. The low customer accessibility score was due to our conservative forecasting schedule. We simply did not supply enough products in order to be accessible to customers.
Being unsure of how the market would react to changes in management, Digby’s management team decided it would be conservative in forecasting sales for 2015. Market analysts predicted the growth of the high-tech market to increase by 20%. From the 1.2 million units sold in 2014 we forecasted to only sell to 17% of the overall market, which led to a sales

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forecast of 700,000 units for 2015. At the time of the forecast decision, we wanted to avoid the holding costs of excess inventory, but take a risk on stocking out in the market. The overly conservative approach cost us to be ranked last for the year ending 2015 in our industry as far as sales with $31.97 million.
For research and development, we chose to increase our capacity by 170,000 for 2016, and to increase our automation to 4.0. In doing so, Digby wanted to minimize variable costs and aim for a contribution margin of 40%. Material costs could be reduced by 9.7% and labor costs decreased by 12.4% for 2015. Increasing plant capacity and automation with a low sales forecast led to 113 separated employees, which resulted in a $565 million Human Resource expense, for the end of 2015.
Digby’s management team also aimed to keep financing at a minimum during 2015. No issuance of equity or debt, the reason being was to keep our stock price from diluting, and to keep expenses related to interest payments down. The Board of Directors also elected not to issue out any dividends in order to reinvest profits in the company. Our share price for 2015 jumped $4.14 to rank us 3rd in our industry. Our bond rating increased from BBB to AA.
Sales for 2015 were $31,977,599, a decrease of 3.1% from the year prior. This was offset by high selling, general, administration expenses, and underutilized capacity due to a conservative forecasting approach. Cumulative profits were at $5,435,564 an increase of almost two-fold from the previous year. This was due to investments in keeping variable costs down and the separation of 113 employees. Digby’s management analyzed the errors and developed a plan to capitalize on their mistakes in 2016.

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In 2016, management wanted to focus on increasing the production of Daze and introducing a new product into the market. Another goal for Digby was to prevent losing potential customers to competitors by making sure there was enough inventory to accommodate consumer demand. The management team also wanted to concentrate on the price and reliability of Daze to not only keep current customers satisfied, but also to gain new customers in both markets. The decision management had for Daze was to not revise it for 2016 and allow it to fall into the specifications for the low-tech market.
Digby’s Sensors introduced, Dallas, a new product designed with a plan to hit the market in the fourth quarter of 2017. The costs to research Dallas included: capital expenditures for an additional 600,000 plant capacity and a 3.0 automation going into 2018.
One main concern for management was the underestimate of sales forecasts for 2015. To correct this problem management took a much more in depth look at both markets and the competitors’ units sold to each segment. Through industry analysis Digby was able to identify that the whole industry under produced for the market. To adjust the sales forecasts management calculated the units sold and multiplied it by the estimated growth of 20% for the high tech segment and 10% of the units left for the low-tech market. This time around, management estimated they could capture about 20% of the overall market. The goal led to an optimistic sales forecast of 1,535 units for 2016.
For marketing, Digby Sensors determined to keep an aggressive marketing campaign. In the decision of not revising Daze, the specification would allow it to fall into the low-tech market segment. Digby kept the promotional and sales budget at $2 million each. By doing so, we wanted to capture as much of the new low tech customers as possible. This enabled us to finish

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the year with 100% customer awareness and 55% customer accessibility for Daze. As for pricing decisions, we analyzed the industry prices from the previous year and anticipated what low-tech customers wanted. Low-tech customers favored price as a high buying criteria. In determining this, we chose to price Daze at $39.99 which was a little higher than the pricing spectrum for low tech, the reason for doing so was to bite into the price range of some high tech sensor buyers to capture a piece of both markets.
In order to produce the 1,535 units for Daze we opted to fully utilized plant capacity we bought in 2015. While aiming to keep our contribution margin within a target range of 30%- 40% we incurred a slight increase in variable costs. With a decision to not buy any excess capacity for the year, the company was faced with the addition of 174 new employees in order to complement both shifts. Management invested heavily into human resource development with $5,000 for each new recruit and an additional 80 hours of training. This investment was aimed to boost the productivity of the new employees and to decrease turnover.
To complement the capital investments to assist Daze in becoming a star in the market, Digby’s management issued $3 million worth of bonds. The $3 million reserve was to help for any shortfalls in forecasts and underestimates of expenses. Digby’s finance team still felt it was in the company’s best interest to withhold any issuance of equity to prevent devaluation of its stock price.
The optimistic sales forecast for 2016 led Digby to incur an emergency loan of $5.8 million. This was largely due to holding costs incurred from products still on-hand and a larger than expected hiring expense. We also saw a 2% decrease on return on sales with sales at $52.8 million. The decrease was attributed to the pricing of Daze, which was higher than we had

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estimated in comparison to our competitors, and by the capital expenditures needed to bring Daze’s production up to par. The high pricing consequently led consumers to the competition’s products. Daze had sales of 1.3 million units up from 780,000 units sold in the previous year, while leaving 312,000 units on hand. Cumulative profit for 2016 totaled $9.21 million; this is due to our targeted contribution margin of 31.3%.
Daze dominated the high tech market in 2016 with a 22% market share. This was in favor of the optimal positioning our research and development team analyzed in the prior year. The investment in human resources increased our productivity index by a staggering 7.3%, which was ranked highest in the industry. The stock price of Digby increased by only $.20, which ranked us 5th in our industry, to close at $15.50 a share. No dividends were declared during the year. The face of amount of $866,667 in bonds payable was to mature and be paid at the end of this year; this decreased our cash flow, and attributed to the emergency loan we encountered, as we did not fully account for this expense in our reserve cash of the $3 million in debt for 2016. Our S&P bond rating slipped “AA” to a “B” from the issuance of new debt.
Looking ahead into 2017, Digby’s focus will be repaying the short-term loan incurred, planning the production, marketing for Daze, and our new market entrant, Dallas.
Round three – ending December 2017
Year 3 was a year in which we wanted to position ourselves towards our long-term goals. We knew that this year would be the year in which we had to make sure that any decision we made would not hurt us in the end. We started a new product in which to build on called DOES. DOES was born and was in fruition this year; to be a product sold in the high-tech segment in the

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coming year. We also decided to stay with our goal of not issuing too much long-term debt or any bonds to try to position ourselves to not owe much in the coming years.
In terms of Sales for the year, we did $62,906,634, which was a very respectful number considering we only had one real product in the circuit still with another on its way in the coming year. In addition, this is the year we decided to build a product called Dallas, which will be talked about more in year four and how we decided to deal with that product. The main positional strategy of Dallas going forward into year four was to branch it away from the ideal market position of competitors and put it into the underserved market segments of which we could capitalize on and have that area of the market to ourselves. Figure 3.1 below gives statistics on our overall financials for year three.
(Figure 3.1)
In regards to the stock price itself, our stock went up to $16.42, which we liked seeing because we did not want to drop in stock price at all through any of the years, we made this a long-term goal when we started this company. Our profits were low because of the production we had building up our newer products, so we used this year as buffer to help us set a trend of

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higher profitability in the coming years. Daze was our product for bringing in great profit for our company, and we were equally happy with the results daze was producing.
With Daze being our main product in our line right now, we were happy to see that customers were appreciating Daze’s $35.00 stock price, as demand was greater than expected and we stocked out on it this year. Unfortunately, this means we also did not forecast enough for the demand and lost out on further sales that could have helped us, but we did not receive an emergency loan this year and over forecast the demand either. Figure 3.2 below gives product Daze’s statistics in the Low Tech Segment for year three.
(Figure 3.2)
Overall, year three was a necessary stepping block for our company to make sure we continue future growth and to make sure we move ourselves into the ideal positions in the market place. We are happy with the results we produced and have built the necessary stepping blocks for future years to come.
Round four – ending December 2018

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Year 4 had its difficulties in terms of what we were trying to achieve. On the outset, we wanted to make sure we did not open up too many bonds or have much in terms of long-term debt. As such, we continued this trend into year four to stay out of the red. With two solid years behind us, we wanted to launch our third product to really drive our market growth and continue our trend in rising stock price. While we saw great benefit in two of our products, Daze and DOES, one of our products was starting to give us a major problem that would be deemed unacceptable to continue.
Dallas was a product in which we wanted to launch as a low-tech product in an area of the circles that was completely open in that area of the market. Unfortunately, due to the way we positioned the product, it was on the edge of the market and that was our biggest problem with trying to launch this product. Dallas was on the edge of the market, which meant that we would be trying to ultimately push money into the product to try to position it back into a better place in which we could find a competitive advantage when compared to the other companies in our industry. Ultimately, we decided to kill the product because it would be too costly to try to continue the product, and with that, we put the capacity to one and let Dallas be killed on our production line. This decision was one of the hardest for our company to make, as we had already put much effort into what we wanted to do with it in long-terms means. We learned a great deal from this mistake, and concerning how we positioned products from hear-on-out, would position our products in better positions.
In terms of the Sales for the year, we did $81,016,258, which was quite the jump from prior year. As mentioned before, last year was the necessary stepping blocks for the future years and we were quite happy to see a jump in not only sales, but also profits as well at $5,444,479. This ultimately meant that our product was selling and it was selling big in terms of where it was

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in the market. Finally, we did have one small emergency loan this year due to over forecasting, which was $268,855. This emergency loan was an unfortunate setback, but could have been far worse had we not ultimately killed Dallas when we needed to and had we over forecasted even more than originally intended. Figure 4.1 below shows our financial statistics for year four.
(Figure 4.1)
In regards to product Daze, we were happy to see results in market share had increased from the prior year to 22%. This percentage in market share is what helped keep daze in a competitive position through year four, with 1,443 units sold in the industry. In addition, our awareness in the industry was a solid 100%, which meant ultimately that customers were fully aware of our product in terms of availability. We continued to keep the price at a respectful $35.00, which we deemed as a company a competitive price when looking at other products in the Low Tech industry. Our only mistake when it came to daze was stocking out this year as the industry still demanded more of our product, as such, we could have capitalized on more units sold and ultimately created an even better position for ourselves. Overall, our goals were met with product Daze and we were entirely happy with the results we were seeing in the industry as a whole. Figure 4.2 below gives our yearly statistics for product Daze.

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(Figure 4.2)
Year four we saw our stock price continually gravitate in an upwards trend to a closing price of $20.53. We had accomplished our milestone of making sure we never dropped in stock price to keep our shareholders happy and our company continuing to blossom into something great in terms of what we were trying to accomplish.
Overall, we were very happy with the results for this year, as we had made big jumps in all segments of the market and continued to trend upwards in terms of our stock price. While we did have a setback in product Dallas, one ultimately had to be done to ensure that our company did not have any major problems going forward.
Round 5 & 6 – ending December 2019 & 2020 Round five and six are the years that we really started focusing on bringing up our stock price moving forward. The foundation fast track is the report that our management team focused on into making key decisions for the year.
In year 2019, Digby Sensors with a market share of 18.42% was at a steady rise, fighting for our market share. While trying to compete with

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other competitor is, their decisions made our goals very difficult in the end. To implement some of our goals into getting a higher market share we invested in a few things. We invested heavily in sales budget and on our promo budget. Daze with amazing 18% markets share in the low-tech segment, our hybrid Does with market share of 4% and 3% on both low and high-tech, and Dallas our high-tech product with a market share of 9%. In the process of trying to keep these products in the game we invested a total of $5.4 million for promo budget, with this amount of spending our customer awareness was 100%, 86%, and 70% respectively. Our management team believes that all things being equal the more customers know about our product the higher our sales will be.
Our management also invested heavily in sales budget spending $6 million for the year. By spending this amount of cash, our management team was able to capture 75%, 75%, and 84% accessibility. The closer and easier the product is available to the customer the larger our sales will be. To the left the market share of our company remains at a high 18.42%, which is the third largest in our industry. If management keeps making strong and smart decisions our products will remain strong and could indeed grow into a much larger piece of the pie if not grow then remain a strong leaders in market share for this industry. The way to do this would be to keep an eye on our competition and try to differentiate ourselves from them. We would need to make our products unique so that consumers would demand our product over any others.
The management’s investment paid off in in this year because Daze received the best customer survey compared to the rest of the competition. Daze had a customer survey score of 42 compared to the second highest of 35. The management believed that because the customer survey was at an all-time high the demand for the product would increase. In this year our product for daze stocked out, we did not produce enough product to meet demand. However, by

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remaining conservative and not taking too much risk we stopped ourselves from getting and emergency loan from big al.
The sales for this year were of the charts our company was able to net profit of 4.9 million after all expenditures and dept. fees were paid off. The sales for the rounds are as follows 88.8 million in sales compared to leader, which sold 130 million. The management team made some deep analysis and looked at few things. First, we asked, how was Baldwin able to sell 40 million more than we did? Baldwin had four products to sell, they had larger market share, and they were making bigger risks than we were doing.
Our company remained conservative for the eight years, so taking on more risk could not be a solution. Our management team remained conservative but focused on improving the products we had to maximize production as well as maximize profit. To maximize profit and to improve the quality of our products our management decided to invest heavily in Total Management Quality (TQM). We invested $6.75 million, which was a large expenditure in our income statement. The return on our investment was actually better than we expected we were able to reduce our material cost by 10.87%, labor cost by 13.57%, R&D cycle time by 40.01%, reductions on admin costs of 14.64% and a demand increase of 13.89%. Overall investment in TQM was successful in the end by reducing our labor, material and admin costs we were able to increase out contribution margin. Increasing the contribution margin made our books look favorable and helped us with the net profit of 4.9 million. The reduction in R&D Cycle time and the increase in product demand help increase our sales by letting us sell our product earlier, this also contributed to the 4.9 million net profitability and made our income statement favorable to our stakeholders.

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In year 2020 management made wise choices by allocating our resources, we were able to excel at making large profit with little investment. The management team was highly efficient our ROA rose to 23.2% from 10.4% in 2019. With this increase on our Return on Assets, we were able to give our investors and idea how effectively our company was doing on its earnings. The ROA for the second in line was Chester with a 19.9% which means our company was exceeding our competition on the basis of using our assets efficiently an in return making higher earnings that the rest of the industry.
The sales for this year were great because of how much our product quality has increased and we were able to produce more products because of capacity availability. We sold 1.646 million units of DAZE, 600 thousand units of DALLAS and 750 thousand units of DOES. The only inventory we had for DAZE was 3,000 units this made our carrying cost very low compared to the competition, which had thousands of inventory on hand. The sales for the year were 101.985 million compared to the highest Baldwin 148.438 million. Our management team realized that trying to catch up to the competition was going to be a long struggle so the focus for the next couple of years would be on the stock price. In the process of increasing the stock price, our management team decided to purchase some treasury stock. The purpose of the purchase was to reduce the number of shares outstanding. By reducing the shares outstanding, the earning per share would increase and in return, our stock price would increase. In this year, we purchased 2.832 million shares of stock and issued $1.877 million in dividends. Surprisingly enough the net cash position was positive, even after spending about 5 million we able to have a

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cash position of 7.2 million. In doing so, this type of cash payout operations payout the competition was going in the negative for their cash position. The management team saw the situation, took advantage over it by increasing the value of the company, and remain a leader in net cash position.
The market share for this year increased from 18.42% to 19.23%. The graph above shows an increase in market share from our competitors. The market share was transferred from Erie, which suffered a great loss from 11.03% to 7.94%. The way our management team was keeping up with the market share was accomplished by repositioning the products in the perception map. As the years went by the products were aging and moving slightly to the upper left hand corner. In order to keep the market niche and stay within the industries our management took into consideration the low-tech and high-tech buying criteria.
The buying Criteria for low segment and high segment varies significantly. To remain competitive in the market for years 2019 and 2020 management had to follow a few criteria age, ideal position, price, and MTBF. Age and price were about 70% importance, which are the variables our management team focused on.
The ideal age for low-tech is 3 years. For year 2019, DAZE our best product was an age of 3.9 and getting older. In order to keep the product competitive, we repositioned it in the perceptual map to get an age of 2.8 for 2020. The repositioning of the product gave a stronger position and greater chance of capturing more market share because of the demand consumers were looking for. DALLAS, our high-tech product, we always tried to bring the life of it close to zero but most of the time it seemed impossible. With great management efforts, the position by 2020 was .7 very close to the ideal age. DOES, our hybrid product, we tried to keep the ideal

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age at around 2, by year 2020 the age for DOES was 1.8. Pricing the product was a difficult task but we decided early in the game that we were going to pursue a low cost leadership strategy to try to capture the market interested in low price but high quality products.
The result for the past 2 years were phenomenal our management not only kept us a leader in the industry but also increased our market share, profits, margins, and made the working environment for our employees friendly. The employees did not have to work overtime not only this great benefit but also the benefit of our profit sharing program that helped increase the productivity. The more sales we had the employees would benefit. A win-win situation corporation was happy, employees happy and the shareholders are happy.
Round seven and eight – ending December 2021 and 2022
In the year 2021, Digby Company was doing very well with its stock price at year-end of $59.28. Management continued to focus on acquiring more market share for the two low-tech products and its one high tech product. Management was concerned because by the end of 2021, the company had lost market share of .37% of its market and this was one of the reasons for an excess inventory. The inventory was not much but it was a cost to the bottom line. Management was concerned with inventory problems because of the two emergency loans it had to deal with in the past. The cost associated with inventory was very costly to the bottom line. The inventory problem was only for one product because Dallas and Does had stocked out.
Management felt it had a good product and therefore decided not to reduce drastically the prices for the products but we were surprised by the other competitors who priced there products as low at $27.00 compared to ours at $30.99 and $32.99. This was something we would need to consider for the following rounds.

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At the end of 2020, we had a closing cash position of close to 21 million and with another successful year ahead, we decided to issue a dividend in 2021 of $2.00 to help our stock price. At the end of 2021, our stock price had increased by $10.51. In addition, our bonds were rated at AA bonds.
Management was aware that we had to continue and invest in the Promo and Sales to maintain our 100% customer awareness. We invested in $10,800,000 to help promote and make our products assessable to our clients. Also, we invested $8 million in TQM to help and lower our cost. The results were a reduction of material cost of 11.80%, labor reduction cost of 14%, reduction in Research and Development of 40.01%, and reduction of administrative cost of 59.23%. This help our contribution margin increase to 38.3%. Our productivity index was the second highest at 126.2% and our employee turnover percent was only 5.7%, which was the lowest in the industry.
As we made plans for the following year, we continued to focus on reducing our variable cost and increasing our market share by offering good quality products. The team met and had many different points of views about pricing but after much analyzes of the market we decided to continue and offer the product at a higher price than our competition but we need to pay close attention our forecast.
Also, we decided that the market was becoming very competitive in the high tech and therefore, we would continue with our three products with only one competing in the high tech market. The focus would be shifted to investing in activities that would reduce the overall cost of producing the product.

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As we begun 2022, management was looking ahead to the companies futures and market and need to continue to strive to offering a good product at a reasonable price. The market was becoming increasingly competitive and we had to pay attention to our rivals in the market. We had invested in our capacity for our three products and know we could focus on bringing down cost for each product.
At the end of year 2021, the market was very competitive in the low tech with the industry producing more than was being demanded. The inventory left over for the market was around 1,343,000. As we looked at this analyzes we had to be conservative with our forecast. We planned to produce 2,756,000 units in the low-tech market.
By the end of 2022, we had reached a cumulative profit of $119.6 million and had increased our contribution margin to 41%. The seven years of observing and analyzing, the market has given the management team the experience to deal with the ever-changing market. We stocked out of all three product and even though we could have probably sold a few more units, we need to keep an eye on our inventory level.
Our stock price was the highest it has ever been with a price of $77.28. When management begun overseeing the company the stock price was $11.17, this means we have increased the stock price by $66.11. Also, we continued to issue a dividend. The dividend issued for this year was $4.00. Management hoped to reward the shareholders for their continued trust and share with them some of the profits earned. Our bonds were now being rated as AAA bonds. This will help us finance our debt at a lower interest rate. This is very important as Management considers expanding its product line. We would like to focus on niche market in

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which we currently do not see much competition. As our three products are becoming well established, the profits could be used to expand the company.
Our strategy was to invest in TQM activities, which had not been maxed out. We invested 3,200,000 in those activities that management could predict an improvement to our cost. This investment helped us obtain a reduction in material cost of 11.8%, a reduction in labor cost of 14%, reduction in research and development cycle time of 40.01% and a reduction in administrative cost of 60.02%.
Management understood the importance of maintaining 100% awareness and trying to reach 100% accessibility. Therefore, we continued to invest in our promotion and sales budget for each of our products. By the end of the year, we had maintain 100% awareness and had reached accessibility of 99%.
We continued to invest in our most valuable assets, which are our employees. We were able to see the investment in our Human Resource pay off. We continued to have the lowest turnover rate at 5.7%. In addition, our productivity index rose to 130.6%, which was the second highest in the industry. This is very important as Management want to expand into other markets. The training that is being provided to our employees is an investment, which will pay off in the end.
We were able to maintain most of our market share at 18.18%. We could have achieved more market share if we had increased our forecast but as always this is a fine line Management has to walk on. We need to get as close to our forecast as possible without having to carry excess inventory. We will continue to strive for acquiring more market share.

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The future of Digby Company is looking very bright now. The company is looking to expand into more markets by offering products at a competitive price. Management will continue to focus on cutting cost, maximizing sales by accurate forecasting (avoiding inventory excess), investing in employees and investing in TQM activities. CONCLUSION
The future of Digby Sensor’s is looking very promising in the year 2022. The company is currently in the process of executing contracts with external suppliers in order to expand their sales to more international markets. This will begin to open up a completely new market for the company as well as additional products to meet the needs of the expanding markets. With the ultimate goal of minimizing excess inventory carrying costs, reducing costs and maximizing sales in targeted industries.
As a part of implementing this global strategy, Digby established these partnerships in 2022. Digby expects to start exporting future products at the beginning of year 2023. Upper level management has initiated the standup of a market tiger team for both the low and high tech market segments that will assist with the sales of products globally as well as researching innovative initiatives to begin outsourcing product cost through investment in foreign markets. Digby has scheduled the importation of foreign manufactured sensors available for resale in the year 2023.
With eight years of planning innovation and implementing the outlined results is clearly seen in the increasing stock price due to the hard work, due diligence and perseverance of the employees at Digby’s Sensors. The stock price of Digby’s started out at $11.17 per share and by

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year, eight had increased 691% to a closing stock price of $77.28. During the first four years, Digby’s stock price remained fairly unchanged but had a slow, steady increase year-to-year. This was mostly due to the expenses that Digby incurred from the launching of its three products in the early years of its inception. In the year 2019 is when things finally began to change for Digby due to all three products being in the market. This year was when Digby began to differentiate itself from three closely following competitors as seen in Figure 4.3 below.
(Figure 4.3)
There were four main areas that enabled Digby to achieve this level of success the past four years: market share, sales, profit and contribution margin. Digby’s market share started out at 10.4% in year 2015 and peaked at 19.5%. This played a major role in the success of Digby in the sensor industry. Sales started out at $31,977,599 and peaked at $119,632,917 with an industry average of $109,656,427. Profit for Digby Sensors started out at $2,941,858 and reached a high of $17,486,960 in year 2022. The contribution margin started at a low of 28.1% and reached a high of 41%. There is always room for improvement and Digby Sensor’s will strive to improve in all four areas.

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The management made carefully thought out decisions and discussed them with all levels of the organization prior to making any necessary changes to balance the interest of the shareholders as well as the business. Every year that passed provided management the opportunity to position Digby Sensor’s in a better position for the upcoming years. Digby took advantage of every opportunity to improve their position against competitors by improving the forecasting methods, repositioning products or decreasing the price based on competitor’s decisions. Digby expects to further improve on its successes in the sensor industry and provide an increased return on investment for its shareholders.

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