1. Maxwell Harry
Hoang Lee Dang
Jorden Runeberg Muesli Operational Plan 2/27/2016
Muesli Operational Plan
Introduction
The competitive Muesli cereal market has shown profit potential over the past eight quarters. Two companies, A
and D, have shown that by planning for the future and knowing yourconsumer you can be very successfulin the cereal
market. While both these companies were successful in their relative portion of the market, we believe Company D
established an effective plan early on that lead them to victory. This was done through knowing their customer’s
spending habits, keeping their products simple, and investing in production capacity early.
The most popular products throughout the 2year period were the 1 Kg Nut Muesli, 1 Kg Raisin Muesli, 500 g Nut
Muesli, and the 500 g Raisin Muesli (Figure A-1). Company D recognized this trend and only produced four products
which were 1 Kg Nut Muesli, 1 Kg, Raisin Muesli, 500 Kg Original Muesli, and 500 g Raisin Muesli. Keeping their
products simple allowed them to keep material costs down.Company A, on the otherhand, spread themselves out too
thin with producing 7 different products (Figure A-2). Due to Company D’s superior strategy and planning, we
recommend purchasing this company at our upper-limit valuation of $5 billion.
Sales
Looking at sales overtime, Company D has good potential going forward. Companies A and D are the two
companies that reveal visible trend. Showing that they understand customers and are able to capture demands. On
the otherhand, companies B and C sales line seem quite inconsistent,and to us, that is a red flag. We were able to
narrow our options down to the two companies, A and D. When considering current remaining inventory levels, we
found out that at the end of the eighth quarter Company D still have 100 million units remaining; while Company A
only has 16 million units.This happen throughout the 2-year period. We considerthis is one of the biggest
weaknesses of Company D (details below in Strengths and Weaknesses).However considering our developing
strategy,our team could turn the table around and resolve high ending inventory level. Marking down is one
possible option which leaves us to focus on optimizing our supply chain and distribution networks. Our target is to
lower the cost of sales and getting into the volume business.(Figure A-11)
According to Figure A-12, Company D was able to maintain consistent market share (low 25.79% in quarter 6 and
7; high of 35.54% in the fourth). Company D has the largest market share with average of 28.85% on all 4 products,
similar to B, and was able to deliver a similar result in number of goods sold (Figure A-12). Company D’s strategy
is once again proving that they understand the market. They maintained their market share by keeping their product
prices low throughout the two year period (Figure A-13). Company D has a strong and balanced presence in all three
markets, which is not easy to acquire. By having this foundation, Company D will have the advantage to strengthen
its retail channels as well as to launch new products.
Marketing did play a key role in the success ofeach company. Companies A and D spent exponentially more on
marketing in the two year span than companies B or C (Figure-14). Company C did spend money on marketing but
it seemed like an afterthought in the later rounds.The amount spent by companies A and D on marketing seems to
have a good effect on total net income, since these two companies had the highest total net income (Figure A-7).
Production
Knowing how much and what to produce were keys to being successfulin the Muesli cereal market. Recognizing
our customer’s buying patterns then being able to keep up with the demand played a huge role in Company D’s
success.Fromday 1 in the first quarter, Company D was conservative by focusing on only three products. From there
they decreased their set up time immediately and made sure to avoid stockouts on those three products (Figure A-3).
With this decreased set-up time, Company D was able to start up production on the 1 Kg Raisin Muesli in the fourth
quarter once they recognized the product was in high demand (Figure A-4). Companies D and A also increased their
production capacity by 30% during the first quarter to be able to produce 30,000 units at a time as opposed to 21,000

2. Maxwell Harry
Hoang Lee Dang
Jorden Runeberg Muesli Operational Plan 2/27/2016
units. In quarter 6, Company A increased their capacity by another 25% to produce 40,000 units at a time. This
benefitted Company A’s strategy by be able to produce a large amount of all their different products.
During quarters seven and eight, all the companies decided to stop producing products as they knew they would
need to sell all of their remaining product. According to Figure A-5, companies A, B, and D all sold most of their
inventory away without producing anymore. While this was done to increase their overall score at the end of the
simulation, this is something we kept in mind when purchasing a company. With having little stock at the start o f
quarter 9, it is very important we keep in mind the setup time and production capacity for each company.
Procurement
Company D really was a benefactor of not producing products with seasonality to them. The blueberries and
strawberries prices to purchase would fluctuate from day to day making it difficult to purchase the items for the best
reasonable price. Since these products were so difficult to procure it forced the purchase price to be way higher than
other products.Companies A & B both decided to sell products that included fruits. Because of this, both companies
suffered from uncertainty and high average procurement prices. In reference to the chart (Figure A-6), Company A
was purchasing blueberries on average for a price of €4.08 and strawberries for €3.17. Company B on average would
purchase strawberries for a price of €4.44. Companies C & D didn’t purchase any fruits. Because of this,their highest
average procurement price for a product was only about €2. Both company A & B were purchasing products fordouble
that cost (Figure A-6). What helped Company D be so successfulin the simulation was the fact they didn't constantly
have to worry about changing demand for the seasonalfruit products.Company D was able to know what price they
could buy their raw materials at with a very high amount of certainty. Going forward with this company, the same
strategic plan should apply. Do not sell fruit related products and procure the cheaper raw materials. Based on sales
of each respective product, the cheaper raw materials nut and raisin were among the most popular muesli products
sold in the industry. These are the products that need to be focused on and Company D is already doing a great job
with that. All indications would lead to believe that these will still be the popular products going fromquarters 9-12.
Finance
Financially Company D is very healthy. Company D was the only group to consistently make a profit in every
quarter beginning in the first quarter (Figure A-7). Every other team incurred a loss for the end of the first quarter.
This indicates that Company D knows how to delegate funds responsibly. This is the type of behavior that makes
purchasing the company that much more appealing. The responsibility of money is also shown in Company D’s efforts
to pay off bankloans. We discovered that compared to the other teams, Company D consistently had less cash on hand
than everyone else throughout the two years of operation. After some digging we found that this was most likely
because Company D was using cash to pay off their debts.In the bank loan chart at quarter 6 you can see a huge dip
overall in cash on hand by all teams because they start to realize they need to pay the bank to avoid losing so much on
interests (Figure A-9 & A-8). Thankfully for Company D’s case they were ahead of the curve on this aspect and had
been chipping away at their debt as early as possible leaving less to pay in interest. All the other teams were making
money and just sitting on it. Which in business this isn't always a good idea. You want your money to be put to work.
Company D also has the highest accumulation of equity after the two years. During the two years of operations,
Company D always held the best equity for each quarter. At the end of quarter 8, Company D had reached almost €5
million in equity (Figure A-10). The last 4 quarters Company D slowed down the pace on net income, so for quarters
9 through 12 we would have to get this to change back to the pace Company D had during the first year of operations.
During first year Company D had an income of €153 million and the second year they had a net income of almost €90
million. This slower pace is a little cause for concern but from these two years the average income per year equals
€121 million which is a number we really like.
Strengths and Weaknesses
There were two companies in the supported data that immediately stuckout to us as investors. Companies A and D
both had an impressive revenues and net income. We decided to settle with Company D because there seemed to be
more advantages associated with D than compared to every other team. Some of those strengths we liked was the fact
that D was a company that was chipping away at debt (Figure A-8). As investors of a company the last thing we want

3. Maxwell Harry
Hoang Lee Dang
Jorden Runeberg Muesli Operational Plan 2/27/2016
to do is purchase a company and inherit all this debt. So if a company has little to debt to begin with compared to
others in the industry then it makes them a very good option. Anotherstrength associated with Company D was their
leading market share of 28.85% (Figure A-12). By purchasing a company that already has a strong customer base
within the industry, it makes our job a little easier. Another strength we discovered Company D possessed was the
fact that they were not attempting to produce any items with fruit involved. This move by Company D makes the
procurement of raw materials a much easier process because they are not having to deal with fluctuating prices due to
the seasonality of fruit. The most popular products sold between the industries happened to be the 1 Kg and 500 g
Raisin and Nut Muesli (Figure A-1). These raw materials were not that expensive since they are not cyclical therefore
reducing the price for procurement.
There is no such thing as a sure thing when it comes to investing,so of course there are some weaknesses associated
with the purchase of Company D. To start, we noticed that Company D was selling plenty of product to consumers.
While we like to see this,we noticed that Company D’s ending inventory for each quarter was very high compared to
other companies. Up until about quarter 6, Company D consistently had a lot in unsold inventory (Figure A-5). This
could be chalked up to a potential forecasting problem where they would over forecast what was needed to sell. It
didn’t seem to affect them much financially since they still had the largest net income after two years. It is definitely
something to keep an eye on moving forward once we take controlfor quarters 9 through 12.To go with this,Company
D tried to sell off all inventory before the start of quarter 9. This is a problem for quarter 9 but we aim to bounce back
from it in the following quarters. Anotherweakness Company D has is that quarter’s 4-8 income increased at a much
smaller pace than quarters 1-4. During quarters 1 through 4 the net income was €153 million while quarters 4 through
8 net income was about €90 million (Figure A-7). Some could see this as an indication that the company has hit its
stride early on and is now tinkering out. Becoming more of a cash cow rather than a shooting star. It is worrisome to
see the numbers be much lower in year two than year one but we do not think this trend will continue after the purchase
of the company.
Strategic Plan
After analyzing all the data given during the 8 quarters amongst the 4 different teams, Company D stood out to us
the most. To make a strategic buying decision, an equation was used from entrepreneur.com (Figure A-15). To use
this equation, the average net income per year had to be examined. Since every 4 quarters equals a year, we added the
net income of quarters 1-4 with the net income of quarters 4-8 then we divided by 2. This number was €121,627,252.3.
Now that the average yearly income was calculated, we divide the current long term Treasury Bill percent from the
number. Currently long-term T-bills are at 2.35% in the United States.Company D isn’t a United States company, but
we the investors are, so that's why we used valuation using Treasury bills to get a good concept of how much to
evaluate the company at. So after dividing 2.35% from €121 million we come up with a totalof €5,175,627,757. This
is why we think our price of €5 billion to invest is reasonable.This number is very high considering this company has
only been around for two years thus far. We see a lot of potential with this company making the investment worth it.
A strategy going forward with Company D would be to continue selling the same products they are currently selling.
They did a great job of understanding demand and doing it a relatively cheap cost compared to other companies.
Inventory related issues going forward will be looked into with greater detail to discoverwhy Company D was holding
so much in inventory. Better forecasting of demand will help greatly with this. Since Company D sold so many
products throughout the two years we will invest more capacity. The goal is to always have our products on the shelf
before the competitors. With increases in capacity this can be achieved. The south region is where we will have most
of our focus for sales since that's where most of the revenue generated from in the first two years of the company’s
existence. We will invest in TQM that allows our company to reduce major costs such as machinery and labor. By
doing so, we will reduce overall costs in the company allowing us to undercut our competitors in price within the
industry. This will make our margins big and keep prices low for consumers.
Also for quarters 9 through 12 we will consider creating a new product of 500g nut muesli. The 500g nut muesli
was number 4 of the top 5 products sold in the industry (Figure A-1). Company D produced 4 of the top 5 most popular
products with the 500g Nut Muesli being the only one not sold by Company D. In the procurement of raw materials,
Company D already buys the 500g bag and nuts.With increases in capacity it should be easier to start producing this

4. Maxwell Harry
Hoang Lee Dang
Jorden Runeberg Muesli Operational Plan 2/27/2016
product since Company D is buying all the raw materials anyway. By doing this, Company D is effectively selling the
top 5 most popular products.A strong marketing plan should keep Company D’s market share at the number one spot
making a smooth entry for their new product of 500g Nut Muesli.

5. Maxwell Harry
Hoang Lee Dang
Jorden Runeberg Muesli Operational Plan 2/27/2016
Appendix – Muesli Operational Plan
Figure A-1 – Total Sales Revenue for Each Product

6. Maxwell Harry
Hoang Lee Dang
Jorden Runeberg Muesli Operational Plan 2/27/2016
Figure A-2 – Production Comparison between A and D

7. Maxwell Harry
Hoang Lee Dang
Jorden Runeberg Muesli Operational Plan 2/27/2016
Figure A-3 – Average Set-up Time by Quarter for Company A and D

8. Maxwell Harry
Hoang Lee Dang
Jorden Runeberg Muesli Operational Plan 2/27/2016
Figure A-4 – Company D: Production by Quarter and Material Description
Figure A-5 – Ending Inventory for Each Round

9. Maxwell Harry
Hoang Lee Dang
Jorden Runeberg Muesli Operational Plan 2/27/2016
Figure A-6 – Average Procurement Price (Euros) of Materials

10. Maxwell Harry
Hoang Lee Dang
Jorden Runeberg Muesli Operational Plan 2/27/2016
Figure A-7 – Net Income/Loss for All Companies over 8 Quarters

11. Maxwell Harry
Hoang Lee Dang
Jorden Runeberg Muesli Operational Plan 2/27/2016
Figure A-8 – Sum of Bank Loan (Euros) by Quarter per Company
Figure A-9 – Sum of Cash on Hand (Euros) by Quarter per Company

12. Maxwell Harry
Hoang Lee Dang
Jorden Runeberg Muesli Operational Plan 2/27/2016
Figure A-10 – Total Equity (Euros) by Quarter and Company
Figure A-11 – Total Sales by Quarter for all Companies

13. Maxwell Harry
Hoang Lee Dang
Jorden Runeberg Muesli Operational Plan 2/27/2016
Figure A-12 – Market Share
Figure A-13 – Average Product Price by Teams

14. Maxwell Harry
Hoang Lee Dang
Jorden Runeberg Muesli Operational Plan 2/27/2016
Figure A-14 – Marketing Expense Accumulated of 8 Quarters
Figure A-15 – Valuation Equation Source
http://www.entrepreneur.com/article/66442

15. Maxwell Harry
Hoang Lee Dang
Jorden Runeberg Muesli Operational Plan 2/27/2016
Member Roles
Maxwell Harry – Production
Hoang Lee Dang – Sales
JordenRuneberg –Procurement&Finance