Letter to Stockholders

Since Firm E’s take over nine years ago our car company has reported financial gains every year. Firm E continues to set the industry standard for car companies in many ways. Our company is poised for taking advantage of market transitions in unique ways such as utilizing alternative energy vehicles. Our results are due in part to our successfully implementation of strategy and planning, giving way to new vehicles that will evolve along with the car industry.

Vision: Product Innovation

We believe Firm E’s leadership is based upon two major factors. First is a vision of how the industry will evolve every three years. Second, how effective was the strategy Firm E was in executing and as such will be measured by such factors as market share gains, stock price, consumer needs, and return on marketing. To Firm E, vision is means to see and anticipate the future of the car industry. We believe that things will change for the better as consumers head toward alternative energy vehicles.

Balanced Strategy: Customer Market Segments and Geographies

Firm E’s strategy is built around three principles that our firm held onto throughout the years. First is our ability to detect change in the industry due to consumer and competitive pressures. Second, our different backgrounds brought about ways to think about the future using different viewpoints. Third, our collaboration and teamwork brought about a fun address our situation. Our firm considered this industry like a strategy game and like all games, our firm plays to win. We used this competitiveness for developing new products, analyzing customer segments, handing B2B, and looking at what our competitors are doing.

To address the growth in new markets, we added approximately 250 dealerships across the country in nine years. Firm E continues to achieve profitable growth through the years despite the added costs. Firm E has been expanding rapidly and because of it our company is the most profitable out of our competitors.

Progress and the Future

Looking at all that was achieved nine years ago, it feels like a couple months ago when Firm E took over this company. Before our firm was in charge, the company had little direction of where to go next. Sales were stagnant and our technology was out of date. The company did not take advantage of what the B2B had to offer. Today, our company has double its sales, stock price, and became the industry leader in car sales. We have contracts with four B2B companies and our firm is looking to acquire more. With our look toward the future, Firm E anticipates change and plans to innovate the way consumers see cars.

Thank you for your continued support as we take Firm E forward.

Situational Analysis

Before starting our takeover of Firm E we performed some analysis of the company and developed three strategies that our Firm believed were the key to our success. They are the following:

Analysis: Explore opportunities in B2B market to sell more products. Planning: To achieve this strategy we first needed to increase dealer coverage to meet B2B requirements. From there we would improve our cars based on the B2B car requirements. Firm E also would create a delivery vehicle to enter two of the three B2B markets that sell delivery vehicles. This would provide guaranteed sales of at least one-hundred thousand vehicles and a maximum of two-hundred thousand vehicles per year.

Analysis: Increase technology capabilities to increase value and quality of cars to compete with other firms. Planning: Increase technology capabilities every year to produce better vehicles at a lower cost. By the end of year eight we are not the highest of all the firms but we are comparable with them. We did not improve them for two periods due to high debt of our company.

Analysis: Improve vehicle fleet to gain and steal market share from our competitors Planning: We would perform major and minor upgrades to meet the requirements of the target markets. Repositioning would also occur based on consumer needs. Since our firm also wanted to increase our fleet size it was in the company’s best interest to add another development center. This would allow the development of a new vehicle while upgrades occur in the other two.

SWOT Analysis

The following SWOT Analysis is of Firm E at the end of year 8 Strengths| * Highest Market share among competitors * Only Firm with a delivery vehicle * Strong hold on B2B market * Highest stock price among competitors * Highest dealer rating among competitors * Very high and consistent return on marketing| Weaknesses| * Not utilizing development centers to their fullest capacity * Estruck has a declining performance * EGreen has not been performing as expected * Our company is slowly losing market share * Our cars are not the utilizing the technology upgrades| Opportunities| * Increasing price of gas has driven customers to alternative energy vehicles * Increased consumer interest in family vehicles * New consumer segment, AEV value seekers, is a very large consumer segment. * New consumer segment, High income utility vehicle, is a very profitable group * New consumer segment, enterpriser truck vehicle, might fix slumping truck market| Threats| * Increasing price of gas has driven customers away from some of our products * Alternative energy vehicles are rapidly gaining consumer interest * Our competitors are producing better cars that target the new consumer markets

SMART Objectives

Objective: Produce a Delivery vehicle by period threeReasoning: Our firm wanted to produce a cheap delivery vehicle used exclusively for B2B contracts. There was a minimum of one-hundred thousand in sales with a maximum of two-hundred thousand sales. Given the profit of each vehicle our firm would be making four to eight thousand in profit on each vehicle.| Objective: Obtain a stock price of $100 by period sixReasoning: Our firm wanted to be financially successful and we would measure this by stock price. Since our company is high in debt due to upgrades we felt that it would be in the best interest to use a different metric. Our company has been successful in achieving this goal.| Objective: Develop three new vehicles by year eight Reasoning: Our firm wanted to diversify the market by having a vehicle in a majority of each type. By the end of year eight our firm only produced two new vehicles, a delivery and AEV.

We first wanted to develop a delivery vehicle for the B2B market. Our decision in making an AEV was due to the lack of competition in the marketplace with regards to that vehicle type. Once we noticed our AEV was not gaining ground as we liked we held back on our third vehicle.| Objective: Enter the B2B market with vehicles that would turn at least $1,000 profit per vehicle sold by year twoReasoning: Our firm felt that the B2B market was a key to a successful company. With guaranteed sales, our firm believed that we would be able to make significant profit. By entering the market as early as possible, our firm would gain a hold of bonuses each company would be offering. Our firm also believed that this would act as a form of advertising, getting as many of our vehicles into our consumer’s hands as possible |

Firm E Corporate Marketing Strategy

Strategy
* Focus on increasing the Efizz, Euro and Estruck technology to exceed market expectations. * Continuously upgrade our vehicles technology every couple years to stay ahead of the competition and adapt to changing market conditions. * Develop new vehicles for markets that have good growth potential and few competitors. * Obtain B2B contacts that are profitable

* Add new dealers in areas were coverage is low to increase market presence * Focus advertising theme on market hot buttons

Reasoning
* By upgrading technology to exceed the market expectations we were able to catapult ahead of those competitors that didn’t improved technology, allowing us to take market share. * By continuously upgrading every couple years we were able to stay ahead of the competition and continuously take market share from competitors * The development of the Egreen allowed us to enter the AEV market which only had one competitor (Comet) and huge growth potential. * We were able to obtain B2B contracts with the Efizz, Emich and Euro which represented 302,000 units with an average profit margin of 20%. * The addition dealer coverage increased our market awareness and expanded our vehicle sales. * By focusing on the hot buttons in each market we were able to maximize our overall ROM.

Firm E Vehicle Marketing Strategy

Efizz: Family Car
Strategy
* Focus on the 2F Market
* Upgraded technology to exceed market expectations to but still make sure we can be profitable and price competitive in the 2F market. * Continuously upgraded technology every couple years to stay ahead of the competition and adjust to market needs. * Focus the advertising theme on Safety

* Target B2B contacts were the Efizz meets requirements and will be profitable. * Increase advertizing and promotion when a new model or upgrades are completed.

Reasoning
* The Family market is the largest vehicle market and the 2F market makes up a large portion of the overall Family market. By exceeding the markets technology requirements at a price that was within the market range were able to take market share from the competition. * By continuously upgrading every couple years we were able to stay ahead of the competition and continue to take market share. * The Safety advertising theme focused in the Hot Button for the 2F market * The increase in dealers gave us a better dealer cover and allowed us to cover a much large portion of the US market. * The technology upgrades and increased dealer coverage allowed us to obtain the Euro Car Rental B2B contract with increased our Efizz sales by 70,000 units annually with a 10% margin.

Euro: Utility
Strategy
* Focused on the 5U utility market
* Upgraded technology to exceed market expectations to and yet still be profitable * Continuously upgraded technology every couple years to stay ahead of the competition and adjust to market needs. * Focus advertizing on the 5U hot button

* Target those B2B contacts were the Euro meets requirements and will be profitable.

Reasoning
* We targeted the 5U Market because there was only one other competitor, customers were less price sensitive and it made up a large portion of the Utility market. * Our focus on technology to exceed market expectations allowed us to take market share from the Awsome * Continuously upgrading every couple years allowed us to stay ahead for changing market demands and the competition. * The advertising theme focused on styling which resonated better with the customers vs. Performance * Our technology improvements and additional dealer coverage allowed us to obtain Parts-Worth Utes B2B contact which represented 32,000 units at 34% margin

Estruck: Truck
Strategy
* Focused on the 1T Truck market
* Upgraded technology to exceed market expectations to and yet still be profitable * Continuously upgraded technology every couple years to stay ahead of the competition and adjust to market needs. * Focus advertizing on the 1T hot button

* Target those B2B contacts were the Estruck meets requirements and will be profitable.

Reasoning
* We targeted the 1T market since it was a larger market in comparison to the 3T market and the only competitor was the Detonka. * The 1T market is highly price sensitive so we had to increase technology to meet market requirements and yet not over exceed them so that we were still profitable. * Our technology upgrades and positioning our MSRP below the Dentonka allowed us to increase our market share in the 1T market * The advertising theme focused on the hot button Performance * There wasn’t a profitable truck B2B contact so we didn’t peruse any B2B contacts for the Estruck.

EGreen: AEV
Strategy
* Develop the EGreen to target the AEV 5A market
* Focus on market requirements for technology, size and price to take market share from the Comet. * Make sure Advertising and Promotional expenditures are adequate enough for the launch of the new EGreen

Reasoning
* We targeted the 5A market since the Comet was the only vehicle servicing the AEV market, the market had a high growth rate and since the customers have a low price sensitivity we were able to set prices to obtain a 29% margin per unit. * The 5A market is low price sensitive so we had to increase technology to meet market requirements and yet not over exceed them so that we were still profitable. * Since the Comet was in the market for several years before we released the EGreen were not able to overcome their technology position but by positioning ourselves as a lower cost alternative we were able to gain 22% market share. * The advertising theme focused on the hot button Styling

Emich: Delivery
Strategy
* Develop the Emich for the B2B delivery contacts
* Focus on B2B requirements for technology, size and price

Reasoning
* The Emich was developed with the sole purpose to obtain profitable B2B contacts * We targeted the Dareborn Distress and Packages R Us contact when developing the Emich. We development focused on using the bare minimum technology, size and engine to obtain the contact and keep cost low. * The two Delivery contacts required 200,000 units and we were able to get a $6000 profit per units sold.

Conclusion/Discussion

What Went Well:

Concentrate on main product
We looked the market and found that our main product is the Efizz, because the Efizz took 8.3% market value at period zero, and the family market is the biggest market even though there are five family cars in family market. We did a major upgrade on Efizz, which debuted at period three. At period three, new Efizz came up, and our market share increase 6.7%. Our stock price increased 11.09. From period three to the end, Efizz kept the leader position in the family market. The Efizz is definitely our star product.

Collect right information by using tools
Stratsim has tools to help us collect information. We used these tools to make reasonable price for each product. Whenever we did an upgrade on our products, we used test markets to find the best price. Another important tool is the focus group. From focus groups, we knew how many products we would sell in exact market. It is always good to know the market as our company would save more money than what each test was worth.

Look into the future
We developed an AEV car at period six, and it sold 59,000 units when it showed in market and it sold 99,000 units at the end of period 8. Another long-term strategy that we did is focusing on B2B market. We did not have many competitors in B2B market, so our firm was very successful. We also developed a delivery car exclusively for the B2B market, and it contributes 200,000 unit sales each periods.

What Went Bad:

Increase capability too much
As we took a leadership from period three, we held optimistic attitude that demand of our products will be much larger than our capability, so we increased capability at each period. Unfortunately at period six rising gas price and weak economic hurt auto sales that led to rising inventory. Our firm needs to forecast and anticipate demand better. Future Expectations:

Our recommendation to the following firm is that they do not upgrade products frequently but continue to follow our competition with upgrades. While upgrading increases the cost of cars our firm does not want to have the worst vehicles on the market. Our goal is to find a balance point between sales and cost, and maximize profit.