Revitalizing Baldwin: Generating Profits through Innovation and

Risk Management

October 9, 2014

BADM 682

Revitalizing Baldwin

What are Sensors?

Executive Management TeamPresident/Vice President Finance: Tina Pryce

Vice President Research and Development: Steven Herndon

Native Washingtonian Graduate of Clark Atlanta University in Atlanta,

Georgia Works in commercial real estate in the department of

securitization and investments

Vice President Production: Betsy Adeboyejo

Native Washingtonian Senior Writer and Journalist at the American Bar

Association Former Senior Speechwriter for the Postmaster

General of the United States, Jack Potter and the former Mayor of Washington, D.C., Mayor Anthony Williams

An award winning journalist with a proven track-record for delivering high impact marketing and media results

VisionBaldwin is a start-up sensor company based here

in Washington, D.C. We specialize in the traditional and low end segments of the industry market that has the customer in mind with regard to these three areas:

O affordabilityO moderate products O reliabilityWe provide sensor solutions to other manufactures

as opposed to business to consumer solutions.

The Power of SensorsFollow

Float

Trigger

Warn

Analyze

CAPSIMO Baldwin is part of a simulated business

program through CAPSIM. Baldwin competed for eight rounds, between years 2015 through 2022.

O The team finished last in the competition, but f irst in resil iency.

“Don’t play the victim. As long as your business still has a pulse, it’s in your power to turn

things around.” “Profits aren’t Everything, they’re the only thing,” George

Cloutier

O “People who create businesses create change—and in the process make life easier, richer and better for millions.” Eric Schurenberg, editor in chief, Inc. Magazine

O That’s what Baldwin tried to do through its sensor business.

O We made what we thought were appealing and affordable products, that were marketed to our respective customers, produced and financed.

O But our profits didn’t reflect the effort.

FAILURE

SUCCESS

Cost Leadership Strategy

Another American Turnaround Story

CAPSIM RESULTS

RES U

L TS

Andrews BALDWIN Chester Digby Erie Ferris

ROS - 11.87% - 42.69% 4.05% 8.44% 18.31% 7.04%

Asset Turnover 1.56 0.85 1.15 1.12 0.92 1.33

ROA - 18.57% - 36.34% 4.66% 9.43% 16.88% 9.34%

Leverage - 55.63 - 0.92 1.74 2.31 1.85 1.99

ROE - 1033.00% - 33.38% 8.09% 21.76% 31.24% 18.56%

Emergency Loans $60,533,205 $86,600,849 $0 $0 $0 $0

Sales $198,001,408 $52,475,158 $273,965,078 $412,477,382 $279,963,747 $303,285,786

Variable Costs $183,832,951 $44,696,176 $207,361,942 $274,998,347 $139,833,926 $216,321,071

SGA $22,586,904 $11,694,328 $19,917,079 $30,737,226 $16,423,402 $23,377,660

EBIT ($17,805,112) ($11,414,481) $28,055,057 $81,321,097 $98,003,196 $46,358,033

Profit ($23,503,647) ($22,400,947) $11,095,543 $34,803,997 $51,248,248 $21,352,016

Cumulative Profit ($48,142,625) ($114,275,889) $52,707,481 $124,095,771 $142,847,855 $85,564,557

Stock price $1.00 $1.00 $65.31 $133.76 $157.41 $95.61

Market Capitalization $2,163,220 $3,682,192 $185,725,725 $337,241,949 $393,666,251 $233,197,904

SandP Rating DDD DDD BB CC BB B

Working Capital $4,398,042 $0 $135,292,148 $74,651,820 $62,327,586 $47,203,887

Days of Working Capital

8.1 0 180.2 66.1 81.3 56.8

Free Cash Flow ($70,443,751) ($29,242,714) $32,868,831 $51,367,677 $51,631,615 $27,720,128

Plant and Equipment $140,800,000 $99,950,000 $203,580,000 $344,100,000 $342,000,000 $209,400,000

Total Assets $126,568,012 $61,637,539 $238,325,903 $368,904,573 $303,661,270 $228,544,437

Plant Utilization 191.01% 56.39% 144.94% 133.71% 176.31% 130.75%

Traditional Segment Share

26.27% 5.17% 20.46% 17.89% 30.20% 0.00%

Low End Segment Share

12.77% 2.22% 15.01% 21.69% 48.31% 0.00%

High End Segment Share

0.00% 3.36% 20.99% 26.18% 0.00% 49.47%

Performance Segment Share

23.51% 2.86% 10.27% 34.84% 0.00% 28.52%

Size Segment Share 0.00% 2.25% 24.90% 38.83% 0.00% 34.03%

Overall Market Share 14.18% 3.22% 17.86% 25.38% 23.99% 15.37%

Complement 1750 445 1257 1483 855 1077

Overtime 0.04% 0.04% 0.04% 0.00% 0.00% 0.00%

Turnover Rate 10.92% 9.13% 9.33% 8.69% 8.99% 8.67%

Productivity Index 100.00% 100.00% 108.58% 110.10% 105.53% 109.90%

DECEMBER 31, 2022- SENSOR MARKET INDUSTRY -

Explanations to our Shareholders

Results- ROS

Results- ROA

Results- ROE

What could Baldwin Do?

O 1. LiquidationO 2. MergeO 3. File for BankruptcyO 4. Sale off Plants

What could Baldwin Do?O Emergency Exit

P = .229 (86,600,000) 1 – (1 + .229) ^-5

P= $30, 825,147.14 + 7.5% (Big AL Interest)=$3.3 Billion=$3.3 Billion

From Bankruptcy -Financial Independence

O Heinz (the ketchup company)O Henry John Heinz, started his company in 1869

selling horseradish. In 1875 the company had to file for bankruptcy due to an unexpected bumper harvest- After 1 year of planning – Created Tomato ketchup, into the market.

O Walt Disney, animator, 8 years prior to creating Mickey Mouse in 1928, Disney filed for bankruptcy because his primary customer of his business had filed for the same. Without the orders, Disney claimed that he could no longer pay his employees or the rent.

TheoryBaldwin Team

Chasm TheoryO The Chasm demonstrates that companies

typically see fast growth in the first two market segments, Innovators and early adopters, only to significantly slow and often completely stall when trying to move into the larger early majority market.

The ChasmO The chasm represents the gulf between two

distinct marketplaces. It falls between an early market dominated by early adopters and insiders who are quick to speculate about the benefits of the new development and the conservative mainstream market where the financial returns can be delivered

Technology Adoption Life Cycle (TALC)

O The Technology Adoption Life Cycle is viewed as a bell-curve, representing the opportunity to sell products into a given market.

Early MarketO Technology enthusiasts (techies) -

Look for state of the art technology.O Visionaries - are industry revolutionaries

looking for a breakthrough application that will give them a competitive business advantage.

Mainstream MarketO Pragmatists - want to see the solution

working live at customer sitesO Conservatives - Does not see value in

technology but fear being left behindO Skeptics - are defenders of the status quo

and want solutions that have no risk

Life CycleO Decreased Life Cycles as part of innovationO The provision of decreased life cycles as it

pertains to generation of revenue.O Change in business processes or

procedures by making use of the Business process development life cycle.

Business process Development Life Cycle Diagram

Business process development life cycle Diagram (Papzoglou and Van Den Heuvel, 2007, p.80)

Risk Management O Risk management (Contingency Planning) O Risk Management as a debt solutionO Planning revolving around risk analysis and

probability impactO Evaluate loans and the risks involved with

over or under capitalization

http://www.youtube.com/watch?v=ijLfY06br4A

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