Our performance this week closely met our expectations as we’re recovering from the impact of the emergency loan in the 3rd round. Our stock price has seen a significant increase. Although there’s still a considerable gap from the top position, it appears we’re moving in the right direction.

Figure 1 , Ending stock price for Round 4

Figure 2 , Financial Statistics for Round 4

As this moment the competitor that worth most of our attention will be Digby and Andrew. Digby is the current leader in stock price and cumulative profit, compared with the previous round, their growth has slowed down a bit and sales have also declined to a certain extent. I think this has something to do with Andrew increasing the production volume and regaining the market share he originally deserved. But by all accounts, Digby is by far the healthiest company.

Based on observations from the past two weeks, I believe Andrew made a significant misstep by selling off production capacity in the first round. If the company’s initial funding challenges could have been addressed through additional bonds and loans, then selling production capacity (which is often seen as an early trade off investment) might not have been the best route. This reduced capacity, combined with an underestimation of their product’s strengths, led to substantial opportunity costs for Andrew. While Andrew still maintains a certain R&D edge, this advantage isn’t as pronounced as it was during the second and third rounds.”

 

Market Situation

The period of volatility in traditional markets is over

Figure 3 , Market Segment Analysis for Traditional for Round 4

As anticipated last week, ‘Eat’ continues its transition into the lower-end market. Given the current landscape, I don’t foresee any company will introducing a new product into the traditional sector soon. Moreover, no one appears to have a distinct advantage or shortfall in this domain. Hence, for the foreseeable future, success in the traditional market will hinge primarily on a company’s management prowess. Key performance determinants in this space will be Accounts Receivable (AR), automation, and production capability and maybe even HR.

Digby may have advantage this round, but we can make a stronger push in lower end

For the Low-end market, I still hold the belief of that a significant investment might not justify the risks. 

Figure 4 , Market Segment Analysis for Low-end for Round 4

Dell’s R&D won’t conclude until 2/3/29, which is in round 6. Hence, they’ll retain an advantage with their product having an ideal age closer to 7.0 for the most parts of the year, which forms 24% of the buying criteria. Despite their product potentially falling out of the optimal range aka “solid line” this year, Dell’s competitive pricing combined with a high automation level might enable them to secure a larger market share this round.

To counteract this, we should consider reducing our price in the Low-end segment to at least align with Dell’s, and further invest in automation. However, expanding our production capacity might be overreaching. In the Low-end market, price wars can erupt, and if that transpires, we might struggle to recoup our investment.

Looking beyond round 5, by the end of round 6, Dell’s product age will approach 5.8, whereas our product, “bead”, will age to 6.3. Notably, as of the end of round 4, Andrew hasn’t commenced revising their Low-end product. If they delay this action, they might not be able to optimize their product’s age. Given these projections, it’s feasible that we could capture a larger market share in the Low-end segment by round 6.

"Digby" are in a good position for High end in Round 5

Figure 5 ,High-end product as of Round 4, Notice the “Duck” revision date.

As of R4’s conclusion, Digby boasts the highest customer survey score. Notably, the revision for their high-end product, “Duck”, was not completed until 12/10/2027 (R4). This implies that for most of R4, they were marketing a product not optimally positioned in R&D. While this impacted their performance in R4, it does set them up favorably for R5. However, they might underestimate their market share for the next round, as elaborated in the “Case Study for Digby”(I will do later, in summary, I believe they did nothing right, but also nothing wrong). Their delayed R&D might be due to poor timing. 

There’s also the possibility that they might forget adjusting their price and promotional budget for R5.”

Andrew will win in size market, and we are very behind.

Figure 6 , Past performance and spec for Andrew’s Size product as of Round 4

Figure 7 , Ideal Position of all product

As illustrated in the above figures, Andrew has consistently increase their production capabilities in the size market for the past 2 rounds. Also for the past four rounds, they’ve adeptly positioned their product at the ideal spot. I anticipate that for round 5, they will position their product at (PFMN 7.5, Size 6.5), which will likely solidify their technological lead.

Figure 8 , Actual vs Potential market share for Size, Round 4

At the moment, our team is at a R&D disadvantage in the size market. With Andrew addressing their production challenges and other teams outpacing our December survey results, our market share is poised to take a hit. This could be a moment to scale down production and channel resources into R&D. This strategy could position us to rival and possibly outperform Andrew by Round 6.

 

Figure 9 , Product in Size segment, Round 4

Our team can skipping the fifth round to focus directly on the sixth round’s competition. Over the past two rounds, Andrew has identified and seized the opportunity in the size market, ramping up their production capacity dramatically. We can leverage this situation. 

It’s almost certain Andrew will dominate size market for the next round. They currently have an untapped potential market share of 20% in this segment. If they can sustain their product superiority into the sixth round (and it seems probable given the absence of strong competitors), they would need at least an additional 200 units of production capacity. (This is based on the round 6 total market demand of 5,438 units, with 45% of it being 2,447 units. Factoring in Andrew’s current capacity, this results in a gap of at least 200 units, assuming they maximize their second shift). However, given their strong market performance, Andrew might invest even more in production capacity and automation for size segment. This would represent a substantial investment. By introducing a competitive product in the sixth round, we might not be able to unseat Andrew’s leading position in the size market, but we can exert significant pressure and slow down their return of this investment. This could potentially lead Andrew to overstock, causing them in over stock inventory.

 

Market Prediction

Traditional Market:

  • No expected significant market shifts.
  • Baseline prediction with a 10% buffer indicates a need for 2,100 units.
  • This accounts for 18% of the round 5 demand, aligning with our market share from the previous round of 18%.
  • As “Eat”, leaves the traditional sector further away, we may able to have even more share, but even in the case of stock out, which is unlikely to happen, 2100 units shall not be too far away from potential.

Low-End Market:

  • Our product will distanced approximately 2.4 from the ideal age at the start, while Andrew and Digby will be around 1.6.
  • By the round’s end, Andrew and Digby will drift to about 2.6, and ours will be closer to the ideal age at distance of 1.4.
  • An in-depth study could provide more clarity, but a baseline prediction of 2,595 units currently seems apt.
  • If aiming for more market share, additional units could be produced, but it shouldn’t surpass our potential from last year adjusted for growth (2,789 units). Exceeding this could introduce unnecessary risks out weight the potential loss of the opportunity cost in case if we under produced.

High-End Market:

  • Uncertainties exist with Digby’s production strategy. As if they even realized their product lead can be a question mark. It is likely they may stock out or over max price. 
  • It’s advisable to produce based on the baseline number near 1100 units to balance risks associated with overstock or stock-out situations.

Performance Market:

  • Maintain the status quo and produce around 1,050 to 1,100 units.

Size Market:

  • Given Andrew’s projected dominance and challenges from other competitors:
    • Reduce production to approximately 900 units.
    • If a significant product revision is decided upon our product, which may pushing R&D completion to R6, production should be further trimmed to 600 units.

Figure 10 , Prediction after adjustment for Round 5