CANNONDALE CORPORATION

1. CANNONDALE CORPORATION • PRESENTED BY: • THE GOLDEN ACHIEVERS

2. BUSINESS POLICY AND STRATEGY FALL 2001

3. AGENDA • Executive Summary • Introduction of Recommendations • Questions and Answers

4. EXECUTIVE SUMMARY • Aging plant and equipment • High brand image and reputation • Trade-in bikes for newer Cannondale models • Introduce 2 new bicycles • Patents • Innovative Website

5. EXECUTIVE SUMMARY CONTINUED • Develop 5 additional motorcycles - Steve • Baby Strollers - Dan

6. RECOMMENDATION #1By: Pam Sacco • Weakness: Aging plant equipment. • Opportunity: Expand into foreign markets. • We will build a new construction site in Europe • IMPLEMENTATIONS: • Evaluate the favorable and unfavorable aspects of building the plant in each of the European countries

7. RECOMMENDATION #1CONTINUED • Obtain the necessary financing at the lowest rate to build the plant. • Build the plant in the location that offers the greatest potential for profitability based on labor costs, favorable government policies and proximity to suppliers and retailers.

8. RECOMMENDATION #1CONTINUED • EVALUATION: • We will monitor our industry growth in the European market biannually to see if we are achieving the desired results. • We will segregate the financial data from the operations of the plant and evaluate quarterly to determine the plant’s profitability.

9. RECOMMENDATION $2By: Pam Sacco • Strength: High brand image and reputation • Threat: High level of competition in the industry • Craft a new marketing strategy to capitalize on our high image • IMPLEMENTATION: • We will increase our marketing budget by 3% to finance the strategy

10. RECOMMENDATION #2CONTINUED • Emphasize the quality of our product in all media advertisements. • Focus our marketing strategy to capitalize on the knowledge and quality of the service provided by our specialty retailers. • EVALUATION: • Use customer surveys to measure the results of our efforts.

11. RECOMMENDATION #2CONTINUED • Monitor trade journals and publications to evaluate our image with industry specialists.

12. RECOMMENDATION #3BY STEVE GEBHARDT • Strength: Strong distribution network of specialty retailers. • Threat: Low switching costs. • Institute a program where customers can trade-in their older bikes for newer Cannondale models.

13. RECOMMENDATION #3CONTINUED • IMPLEMENTATIONS: • Allow the retailer to keep the profits from the sale of the traded-in bike. • Offer a 5% discount to the retailer on every bike sold in this manner. • EVALUATION: • Evaluate our market growth and profit margins quarterly to insure the trade-in policy is having the desired effect.

14. RECOMMENDATION #3CONTINUED • Monitor the reactions of competitors anticipating possible counter offensive moves.

15. RECOMMENDATION #4BY DAN DiLORENZO • Strength: Strong flexible manufacturing system. • Threat: High level of product differentiation. • We will introduce two new bicycles into each of our product categories, Mountain, Road, Multisport recreational and Specialty.

16. RECOMMENDATION #4CONTINUED • IMPLEMENTATIONS: • Utilize consumer surveys to determine the products and features desired in each of the product categories and rate these in order of practicality and ability to develop. • R&D department will develop those determined by the above process.

17. RECOMMENDATION #4CONTINUED • Test the product for quality by using our Q-Lab and in racing events when possible. • Place those products that pass our quality testing into the market. • EVALUATION: • Our sales force will monitor the sales of these products quarterly and executives will make decisions regarding their continued production of these lines based on these reports.

18. RECOMMENDATION #4CONTINUED • Use customer surveys to determine if the products are well received. • Monitor competitor reactions to these new product lines.

19. RECOMMENDATION #5BY FRAN PAOLINI • Strength: High use of patents and proprietary owned technology. • Threat: High degree of diffusion of technical know-how in the industry. • Increase our ability to prevent our rivals from copying our designs before we are able to capitalize on them.

20. RECOMMENDATION #5CONTINUED • IMPLEMENTATIONS: • Continue to patent our technologically superior processes and innovations. • Pursue legal action against companies that infringe upon our patents. • As a condition of employment our employees will contractually agree not to divulge proprietary owned technology for one year after resignation or termination.

21. RECOMMENDATION #5CONTINUED • EVALUATIONS: • Carefully evaluate our competitors new products to determine if our patented products or processes are being infringe on. • Use employee satisfaction surveys to determine if our contractual agreements with our employees are creating a negative reaction.

22. RECOMMENDATION #6BY FRAN PAOLINI • Strength: Innovative Website. • Opportunity: Number of retailers is high minimizing leverage on producers. • Sell bicycle accessories except for components via the internet. • IMPLEMENTATIONS: • Obtain the services of an e-commerce company to market these products via the internet.

23. RECOMMENDATION #6CONTINUED • Integrate our manufacturing function, suppliers and distributors into the Web based system to insure the fastest order to delivery times. • EVALUATION: • We will segregate the financial data from the sales of these accessories and evaluate them quarterly to determine profitability.

24. RECOMMENDATION #6CONTINUED • Sales force will file quarterly reports on the reactions of our Specialty retailers to this strategy. • We will monitor trade journals and publications to watch for our competitor’s reactions to the strategy.

25. RECOMMENDATION #7BY STEVE GEBHARDT • Weakness: Weak financial position. • Threat: Mature growth rate in bicycle market. • Develop five additional motorcycles to be introduced to the public. • IMPLEMENTATIONS: • Evaluate the product feature wants of the high-end motorcycle users.

26. RECOMMENDATION #7CONTINUED • Capitalize on the similarities of the value chains of bicycles and motorcycles in producing, marketing and delivering the products. • Test the products for quality by using our Q-Lab and in racing events. • Place these products that pass our quality testing into the market.

27. RECOMMENDATION #7CONTINUED • EVALUATION: • We will segregate the financial data from the sales of these accessories and evaluate quarterly to determine profitability. • We will monitor competitors in the motorcycle industry for possible aggressive strategic moves.

28. RECOMMENDATION #8By: Dan DiLorenzo • Strength: Loyal customer base • Threat: Products are a discretionary purchase. • Diversify into the baby stroller market • IMPLEMENTATION: • Evaluate the opportunities and threats in the stroller industry as well as our strengths and weakness in this market. If we determine there is a good fit, we will proceed.

29. RECOMMENDATION #8CONTINUED • Expand on our Pennsylvania plant for the purpose of producing the strollers. • Institute the best practices from out current operations into the development and production of the strollers. • Target our current loyal customer base that is young and likely to have or will have children in the near future.

30. RECOMMENDATION #8CONTINUED • Market the products emphasizing the quality of a Cannondale product. • EVALUATION: • We will segregate the financial data from the sales of these bikes and evaluate quarterly to determine profitability. • We will analyze demographic data to determine if our current customers are purchasing the strollers.

31. RECAP OF RECOMMENDATIONS • Build new plant in Europe • New marketing strategy on our high image • Trade in older bikes for Cannondale models • Introduction of 2 new bicycles • Patents • Expansion of Website • Develop 5 additional Motorcycles • Baby strollers