All images used under US Fair Use for non-profit, educational purposes

1. All images used under US Fair Use for non-profit, educational purposes

2. Virtus Tech Management Team • Joseph Antonucci: VP Marketing, Marketing Research • Ryan Knouse: President, VP Manufacturing • Celina Shang: VP Sales Management • Ivy Wang: VP Accounting & Finance

3. Table of Contents • Overview of our company • Our company’s strategy • Financial Strategy and Quarterly Results Breakdown • Virtus Tech’s current and future situation

4. Overview of our Company Our company and competitors

5. Mission Statement “Our mission is to offer a user friendly, reliable product with high quality service worldwide.”

6. Our Products Our brands were developed around a Latin term we associated with our consumers Opus – Work Viatori – The Traveler Habilis – Easily Managed Novus – New

7. Company Overview • Market Performance (Quarter 11) • Total Market Share: 10% • Total Market Demand: 13,639

8. Financial Performance

9. In Our Second Year • Created 3 new brands • Opus III, • Viatori II, • Habilis • Increased sales force expense • Took out an emergency loan

10. Our Company’s Strategy From the beginning of the game until now

11. Original Strategy • When starting our company we decided to: • focus on large, highly competitive segments • focus on largest geographic markets, even if they are more expensive • build a market position and defend it • sidestep the competition whenever possible • Originally built our factory in Paris targeting the European Market

12. Target Segments We first focused on the Work Horse and Traveler segments

13. How Strategy Changed • We decided to expand from just offering products in Europe to beating our competition to Brazil • We eventually saw that we could not just defend our market position in two segments so we first expanded our strategy to include a Cost Cutter brand and then a brand for Innovators

14. Effects on Performance • One of our strongest tactics was that we always had one of the highest advertising budgets, one of the largest sales forces, and a very high reliability judgment score • When we finally expanded to include another brand, focusing on Cost Cutters, in Quarter 7 we probably saved our company • When we expanding to include an Innovator brand in Quarter 9 this really solidified our position

15. Lessons Learned • In Quarter 6, we over estimated our demand and ended up needing an emergency bank loan from Guido • After this we cut back on spending for three quarters until we felt our company was in a more stable financial position • As a team we decided to allow too many quarters to pass before investing in R&D and fell behind other teams • We ultimately had to accept that the only way to succeed was by adjusting our strategy and taking calculated risks

16. Financial Strategy and Quarterly Results Breakdown Our company’s cash flows, sales, and earnings

17. Cash Flows • Cash flows were primary focus of our financial strategy • Main goal for much of the game was to avoid bankruptcy while investing as much as we could in the future; profitability would come later • Quarters 1 and 2: anything above zero was suitable • Quarters 3 through 6: aimed for $600,000 or higher • Quarters 7 and 8: at least $3,000,000 • Emergency loan made us desire a greater safety net • Quarters 9 and 10: at least $10,000,000 • Result of greater profitability

18. Cash Balance

19. Breakdown of Quarterly Cash Flows • Q1: Invested most of available cash into CD; marketing research was only expense • Q2: Withdrew $0.75m from CD to fund building of plant and set up of sales offices • Q3: Production costs were high relative to sales • Q4: Lower operating cash flow due to higher advertising, sales force, & R&D expenses • Q5: Received $5m from venture capitalists; used to open new sales offices and expand plant capacity; $3m was placed into CD

20. Breakdown of Quarterly Cash Flows • Q6: Withdrew $2m from CD in order to fund large ($4.7m) R&D expenditures but ultimately had to take out $0.83m emergency loan • Q7: First quarter with positive operating cash flow after delaying R&D expenses • Q8: Increased R&D expenditures resulted in return to negative operating cash flow • Q9: With R&D complete, strong positive cash flow with introduction of new brand • Q10: Strong sales along with high beginning cash balance let us put $8m into CD, pay back loans

21. Sales Revenue

22. Sales Growth

23. Sales Numbers • Q3: Sold over 600 units of the Opus; lost all potential sales of the Viatori due to stock outs • Q4: Much less stock outs due to increased operating capacity; introduction of Opus II • Q5: First sales period for Opus III and Viatori II • Q6: Huge growth largely a result of expanding into Brazil; almost zero sales lost to stock outs

24. Sales Numbers • Q7: Growth fueled by introduction of Habilis; almost half of demand not met • Q8:Inability to spend on R&D in Q7 hurt us as other companies improved their brands • Q9: First sales period for Novus • Q10: Quarter with highest gross profit ratio (54.6%)

25. Financing Structure • We decided to issue debt only if it was absolutely necessary • Only took out $2,000,000 in conventional loans • Went with conventional over long-term for several reasons • Used to pay off emergency loan and provide cash for necessary expenses • Both were paid off in Quarter 10 • Potentially missed out on market share and profits by not using funds from debt to further our company’s growth

26. Earnings per Share

27. Cumulative Earnings per Share

28. Return for Investors • Book value of Virtus Tech at end of quarter 10 is $24.4m • If firm was sold at this price, every investor with $1 million put into the firm would earn $2.71 million • This is a return on investment of 171.19%! • In reality, firm would likely sell at a higher price • Company’s profitability in Q9 and Q10 more than made up for the losses suffered in previous quarters

29. Our Current and Future Situation Where our company is and where it is headed

30. SWOT Analysis • Strength: • High Profitability in cost cutter market • High reliability judgment among customers • High pricing judgment for all products • Weakness: • Low brand judgment for workhorse and travelers • Low ad copy judgment compare to competitors • Overall defensive position in the market

31. SWOT Analysis • Opportunity: • More R&D investments could develop better product for innovators • Target Mercedes market • Expand to more markets geographically, including USA and Canada • Threats: • High competition in Europe and Brazil • High competition in target customer segments • Decrease in work horse and travelers markets due to brand judgment

32. Competitor Analysis • High, dense competition in the Europe market • 8 companies both have presence • Relatively low competition in Brazil • Still have 5 companies • Relatively less competitions in the city • Competitors have equal or less sales force and number of inserts in the media • Strong competition is one of the main sources of threat

33. Future Strategy • R&D Investments • Invest in R&D to improve new features, manufacturing efficiency as well as product liability • Product improvements • Improve products for workhorse and travelers • Innovation in products for innovators • Decrease manufacturing costs to provide cheaper products for cost cutters

34. Future Strategy • Geographic market expansion • USA and Canada • Factory expansion and sales force expansion • Expand factory capacity to increase production force • Increase sales force in both existing markets and future markets • Implement special sales force program to encourage employees

35. Questions & Comments Thank you!