Pencil Manufacturing Company Vision-To become a $100 million company by 2025 Mission - Providing school children with a smooth writing experience Established - 2012, Current Head Office Dallas, TX: Factory - Sherman, TX (10,000 sq. ft) Currently served markets - DFW Metroplex, Amarillo, Lubbock -all Texas: Oklahoma City, Tulsa ok (Total of 500 school supplies outlets) Total Workforce -100 (30 at HO and 70 in factory), Current Annual Revenue is $20 million and Profit is $2 M (Dec 2020). 40% revenue from wooden pencils (No.2 pencils), 20% from plastic pencils, 20% from recycled material pencils, 10% from erasers (not manufactured by you), 10% from sharpeners (not manufactured by you). Erasers and sharpeners both imported from Vietnam, rebranded and sold. You have an investor friend of the founder's son who is willing to invest $10 million over 2 years. Company is headed by Founder-Owner President (NSU Alumna/Alumnus) and assisted by Executive Vice President (son of founder-Duke University Alumnus); VP Finance, Supply Chain and IT (OSU Alumnus), VP. Operations (Factory Head); VP Marketing & Sales. President directly controls HR function through the recently promoted Asst. Vice President - HR (OU Alumna). VP-Ops and VP-Mktg & Sales are both OSU Alumni. Competitor Name (Founded) HO Factory Revenue (2019) Workforce Market Spread Crayools (1985) San Jose, CA CA $500 M $40M 2000 40 states Tulsa Writing Materials (2008) Broken Arrow OK, MO, AR, C 550 for pencils Products (% share of co. revenues) Black leaded Wooden (10%) and Mechanical Pencils (20%), Erasers (596), Sharpeners (15%), paper (40%) glue (10%) Wooden Pencils (20%), Pencil Leads (80%) (black-all diameters, all number types) Multi-colored lead pencils (12 color packs 40%), 24 color packs -60%) made of wood Black Wooden pencils (2596), environment- friendly recycled material pencils (75%) Different types of pencil-specific wood (85%), all varieties of artistic pencils (1596) Tulsa $120 M $15 M YellowNBlack Writers (1999) GA, AL, MS, LA 650 TX Atlanta Atlanta $150 M $20 M OD Supplies (2015) Little Rock 125 | AR, OK, TX $20 M Little Rock $5 M School Equippers (1970) $750 M $15 M 225045 States Maryland Maryland D Focus Some Additional Information (Macro-Environment): 1) The worst of the Covid-19 crisis is over. However just as situation was becoming close to normal, some dangerous variants of the infection are threatening to cause higher damage. 2) Quarter-on-quarter GDP growth rates for March 2020, lune 2020, September 2020, Dec 2020, March 2021, and June 2021 were 5%, -31%, +33.8%, +4.5%, +6.3%, and 46.6% respectively. The annual GDP growth YoY for 2020 was-3.5% over 2019. GDP growth for 2021 is projected at +6.2% 3) Unemployment rates for Jan Feb Mar Apr May June, and July 2021 were 6.3, 6.2, 6, 6.1, 5.8, 5.9, and 5.4 percent respectively 4) Total size of school supplies market is $2 billion, out of which wooden peacils category comprises of $300 Million in 2020. Projected growth during 2021 to 2026 is 4% CAGR 5) Current Governor of Texas owns 10 wood-processing mills in Texas, California and Virginia 6) California has banned lumberjacking due to the huge forest fires destroying millions of hectares of soft wood trees 7) Last 1-2 years, Texas and Oklahoma have showing sharp increase in incoming, le, immigrating population, mostly fleeing the high tax regime of California. Most of these new migrants are settling in Eastern Texas and Central Oklahoma B) A machine supplier company has offered the company a machine on which pencil manufacturing can happen in a single machine - you put in the large wood logs on one end and it gives out finished pencils from the other end. Only 10 people required to run it. But each of these machines costs $15 million. Also, this is a totally new invention, untested 9) Due to forest fires in the Amazon in Brazil, environmental activists all over America had aggressively campaigning in schools about the effects of climate change, especially deforestation 10) Before Covid19 crisis hitus, tariff war with China had already adversely impacted recycling business. Earlier, 80% of recyclable waste from us was sent to China. Till Dec 32-5, 2020 it was only 50% Since the COVID crisis began, there are huge noises on Capitol Hill about completely reducing the dependency on China for all kinds of trade activities 11) As on Dec 31", 2020 US has increased the import duty on all graphite, coat and lead products from 10% to 7596 of the import value as an anti-dumping measure to protect local producers. No daty change is expected in the current federstregime. Some Additional Information (Competitive Environment): 1) Currently, the only suppliers of pencil-worthy wood are School Equippers and Cray Inc., a sister company of Crayools. Black lead (actually graphite) for No. 2 pencils is supplied by only one company to everyone Tulsa Writing Materials. All other varieties including colored lead are imported from China 2) YellowNBlack and Tulsa Writing Materials, in addition to traditional sales channels of stationery supplies outlets like Staples and Office Depot, also sell through online presence (their own websites as well as Amazon). OD Supplies only sells through Amazon and Ebay. Crayools and School Equippers sell only through traditional channels - office supplies stores, grocery stores. 3) OD Supplies had initiated an aggressive campaign across few school districts in AR and Tx for promoting their environment-friendly pencils. They visited school to school and conducted events in collaboration with the local Parks & Recreation Departments until few months back 3) Perform a Resource & Capability Analysis (40 points) and SWOT Analysis (40 points) of your company in line with its vision and mission (Total - 80 points)