Review the Inquirer to determine Baldwin's current strategy. How will they seek a competitive advantage? From the following list, select the top five sources of competitive advantage that Baldwin would be most likely to pursue.

Select: 5

	Seek high automation levels
	Offer attractive credit terms
	Seek high plant utilization, even if it risks occasional small stockouts
	Add additional products
	Seek excellent product designs, high awareness, and high accessibility
	Accept lower plant utilization and higher capacities to insure sufficient capacity is available to meet demand
	Increase demand through TQM initiatives
	Reduce cost of goods through TQM initiatives
	Seek the lowest price in their target market while maintaining a competitive contribution margin
	Reduce labor costs through training and recruitment

IUP Annual Report Baldwin Dec. 3942818 Balance Sheet 2017 $32,550 $9,760 $6,407 2018 Common Size 25.9% 7.8% 5.1% $26,598 $8,814 $7,795 $48,717 38.7% $43,207 $124,400 ($47,289) 98.9% -37.6% $97,758 ($38,996) DEFINITIONS: Common Size: The common size column simply represents each item as a percentage of total assets for that year. Cash: Your end-of-year cash position. Accounts Receivable: Reflects the lag between delivery Casn and payment of your products. Inventories: The current Accounts Receivable value of your inventory across all products. A zero indicates Inventory your company stocked out. Unmet demand would, of course, fall to your competitors. Plant & Equipment: The Total Current Assets current value of your plant. Accum Deprec: The total accumulated depreciation from your plant. Accts Payable: Plant & Equipment What the company currently owes suppliers for materials Accumulated Depreciation and services. Current Debt: The debt the company is obligated to pay during the next year of operations. It Total Fixed Assets includes emergency loans used to keep your company solvent should you run out of cash during the year. Long Term Debt: The company's long term debt is in the form of Total Assets bonds, and this represents the total value of your bonds. Common Stock: The amount of capital invested by LIABILITIES & OWNERS' shareholders in the company. Retained Earnings: The EQUITY profits that the company chose to keep instead of paying to shareholders as dividends. Accounts Payable Current Debt Long Term Debt $77,111 $58,762 61.3% 100.0% $125,828 $101,970 $5,796 $25,494 $41,366 4.6% 20.3% 32.9% $5,189 $15,869 $31,647 Total Liabilities $72,656 57.7% $52,705 Common Stock Retained Earnings $14,385 $38,786 11.4% 30.8% $14,385 $34.879 Total Equity 42.3% $53,171 $125,828 $49,264 $101,970 Total Liab. & O. Equity 100.0% Cash Flow Statement 2018 $10,177 $8,293 $0 $608 $1,388 ($946) 2017 $10,624 $6,517 ($3) $782 $1,757 ($1,876) The Cash Flow Statement examines what happened in the Cash Account during Cash Flows from Operating Activities: the year. Cash injections appear as positive numbers and cash withdrawals as negative Net Income (Loss) Inumbers. The Cash Flow Statement is an excellent tool for diagnosing emergency loans. Depreciacon When negative cash flows exceed positives, you are forced to seek emergency funding. Extraordinary gains/losses/write offs For example, if sales are bad and you find yourself carrying an abundance of excess Accounts Payable inventory, the report would show the increase in inventory as a huge negative cash flow. Inventory Too much unexpected inventory could outstrip your inflows, exhaust your starting cash Accounts Receivable and force you to beg for money to keep your company afloat. Net cash from operations Cash Flows from Investing Activities! Cash Flow Summary Plant Improvements Cash Flows from Financing Activities: Baldwin Dividends Paid Sales of Common Stock Purchase of Common Stock Cash from long term debt Retirement of long term debt 10,000 Change in current debt (net) $19,521 ($26,642) ($6,270) $17,802 ($2,800) ($4.264 $0 SO $0 20,000 $0 SO $15,601 ($5,882) $9,625 ($1,648) ($5,992 Net cash from financing activities Net change in cash position Closing cash position $13,073 $5,952 $32,550 ($11,904) $3,098 $26,598 - 10,000 -20,000 Operations Operations Chg. Cash Finance Chg. Cash Investment Finance Annual Report Page 1 Annual Report Round 18 Dec. 31. 2018 Baldwin 2018 Income Statement Bolt $21,154 (Product Name:) Buzz Bell $34,528 Bit $41,382 2018 Common Total Size $118,744 100.0% Sales $21,680 Variable Costs: Direct Labor Direct Material Inventory Carry Total Variable $4,864 $12,077 $26 $16,967 $10,585 $18,054 $25 $28,664 $4,405 $9,173 $377 $13,954 $4,323 $8,431 $341 $13,094 $24,177 $47,734 $769 $72,680 20.4% 40.2% 0.6% 61.2% Contribution Margin $17,561 $12,717 $7,726 $8,060 $46,064 38.8% $8.293 $3.772 Period Costs: Depreciation SG&A R&D Promotions Sales Admin Total Period $2,800 $1,000 $950 $1,000 $521 $6,271 $2,607 $928 $950 $1,000 $625 $6,109 $1,500 $988 $950 $600 $327 $4,365 $1,387 $857 $950 $1,300 $319 $4,813 $3,800 $3,900 $1,793 $21,558 7.0% 3.2% 3.2% 3.3% 1.5% 18.2% Net Margin $11,290 $6,608 $3,361 $3,247 $0 $24,506 20.6% Definitions: Sales: Unit sales times list price. Direct Labor: Labor costs incurred to produce the product that was sold. Inventory Carry Cost: the cost to carry unsold goods in inventory. Depreciation: Calculated on straight-line 15-year depreciation of plant value. R&D Costs: R&D department expenditures for each product. Admin: Administration overhead is estimated at 1.5% of sales. Promotions: The promotion budget for each product. Sales: The sales force budget for each product. Other: Charges not included in other categories such as Fees, Write Offs, and TQM. The fees include money paid to investment bankers and brokerage firms to issue new stocks or bonds plus consulting fees your instructor might assess. Write-offs include the loss you might experience when you sell capacity or liquidate inventory as the result of eliminating a production line. If the amount appears as a negative amount, then you actually made money on the liquidation of capacity or inventory. EBIT: Earnings Before Interest and Taxes. Short Term Interest: Interest expense based on last year's current debt, including short term debt, long term notes that have become due, and emergency loans. Long Term Interest: Interest paid on outstanding bonds. Taxes: Income tax based upon a 35% tax rate. Profit Sharing: Profits shared with employees under the labor contract. Net Profit: EBIT minus interest, taxes, and profit sharing. Other EBIT Short Term Interest Long Term Interest Taxes Profit Sharing Net Profit $780 $23,726 $2,677 $5,072 $5,592 $208 $10.177 0.7% 20.0% 2.3% 4.3% 4.7% 0.2% 8.6% ss you amount as Befort, long axes: Variable Margins 2008 Baldwin 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Bit Bolt Buzz Na Profit History Market Share History $10,000 25% 20% 15% 55,000 10% 0% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 ROE History Asset Turnover History 20% 15% 10% 5% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 ROS History ROA History 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2015 2016 2017 2018 2014 2015 2016 2017 2014 Annual Report 2018 Page 21 Market Share Report INQUIRER Round: 0 December 31, 2018 Units Sold vs Demand Chart Market Share 50% 6,000 5,000 40% 30% 20% 4.000 3,000 2,000 10% 0% 1,000 Andrews Baldwin Chester Digby Thrift Core Nano Elite Industry Unit Sales Total Unit Demand Thrift Core O Nano Elite Industry Unit Sales % of Market Actual Market Share in units Thrift Core Nano Elite 5,104 6,681 3,651 3,479 27.0% 35.3% 19.3% 18.4% Units Demanded % of Market Total 18,914 100.0% Ace 17.3% 4.4% 8.4% 17.6% Ace Awe 4.9% Total 18,914 100.0% 4.9% 4.1% 7.3% 9.7% 25.9% 9.1% 9.9% Awe Art 16.5% 7.9% 18.4% 26.3% Potential Market Share in units Thrift Core Nano Elite 5,104 6,681 3,651 3,479 27.0% 35.3% 19.3% 18.4% 17.3% 8.4% 4.4% 17.6% 16.3% 7.8% 17.9% 8.8% 16.3% 25.7% 29.8% 34.8% 20.3% 10.2% 11.0% 22.2% 0.8% 12.7% 5.2% 0.1% 6.5% 10.4% 31.3% 33.2% 19.2% 15.6% Art Ant 8.1% 29.8% in 8.8% 34.8% 8.1% 16.5% Total Ant Total Bell Bit Bolt Buzz Total 20.3% 10.1% 10.3% 20.4% 0.8% 0.1% 31.7% 12.7% 6.5% 19.2% 5.2% 10.4% 15.6% 3.2% Bell Bit Bolt Buzz Total DOMMO 30.4% Cell 6.2% 6.1% City 11.8% 2.5% 18.1% 7.1% 39.5% 26.0% 6.0% 2.3% 5.1% 4.6% 17.9% 8.1% 9.9% 8.6% 17.4% 44.1% Cozy Cute Total Cell City Cute Total Cozy 11.8% 2.5% 18.1% 7.1% 39.5% 8.1% 9.9% 8.6% 17.4% 44.1% Volowo 6.2% 6.0% 2.3% 4.0% Deal 23.2% Dino 27.5% Don 1.4% 0.9% Total 53.1% COMP-XM INQUIRER 2.3% 4.0% 14.7% 14.8% 35.8% 5.0% 6.6% 11.6% 7.1% 8.8% 6.8% 7.5% 30.2% 1.6% 4.0% 5.6% Deal Dino Don Dug Total 23.0% 27.2% 1.4% 0.9% 52.4% Dug 14.3% 14.4% 35.0% 5.0% 6.6% 11.6% NOON 1.6% 4.0% 5.6% 7.4% 29.8% Page 9 IUP Annual Report Baldwin Dec. 3942818 Balance Sheet 2017 $32,550 $9,760 $6,407 2018 Common Size 25.9% 7.8% 5.1% $26,598 $8,814 $7,795 $48,717 38.7% $43,207 $124,400 ($47,289) 98.9% -37.6% $97,758 ($38,996) DEFINITIONS: Common Size: The common size column simply represents each item as a percentage of total assets for that year. Cash: Your end-of-year cash position. Accounts Receivable: Reflects the lag between delivery Casn and payment of your products. Inventories: The current Accounts Receivable value of your inventory across all products. A zero indicates Inventory your company stocked out. Unmet demand would, of course, fall to your competitors. Plant & Equipment: The Total Current Assets current value of your plant. Accum Deprec: The total accumulated depreciation from your plant. Accts Payable: Plant & Equipment What the company currently owes suppliers for materials Accumulated Depreciation and services. Current Debt: The debt the company is obligated to pay during the next year of operations. It Total Fixed Assets includes emergency loans used to keep your company solvent should you run out of cash during the year. Long Term Debt: The company's long term debt is in the form of Total Assets bonds, and this represents the total value of your bonds. Common Stock: The amount of capital invested by LIABILITIES & OWNERS' shareholders in the company. Retained Earnings: The EQUITY profits that the company chose to keep instead of paying to shareholders as dividends. Accounts Payable Current Debt Long Term Debt $77,111 $58,762 61.3% 100.0% $125,828 $101,970 $5,796 $25,494 $41,366 4.6% 20.3% 32.9% $5,189 $15,869 $31,647 Total Liabilities $72,656 57.7% $52,705 Common Stock Retained Earnings $14,385 $38,786 11.4% 30.8% $14,385 $34.879 Total Equity 42.3% $53,171 $125,828 $49,264 $101,970 Total Liab. & O. Equity 100.0% Cash Flow Statement 2018 $10,177 $8,293 $0 $608 $1,388 ($946) 2017 $10,624 $6,517 ($3) $782 $1,757 ($1,876) The Cash Flow Statement examines what happened in the Cash Account during Cash Flows from Operating Activities: the year. Cash injections appear as positive numbers and cash withdrawals as negative Net Income (Loss) Inumbers. The Cash Flow Statement is an excellent tool for diagnosing emergency loans. Depreciacon When negative cash flows exceed positives, you are forced to seek emergency funding. Extraordinary gains/losses/write offs For example, if sales are bad and you find yourself carrying an abundance of excess Accounts Payable inventory, the report would show the increase in inventory as a huge negative cash flow. Inventory Too much unexpected inventory could outstrip your inflows, exhaust your starting cash Accounts Receivable and force you to beg for money to keep your company afloat. Net cash from operations Cash Flows from Investing Activities! Cash Flow Summary Plant Improvements Cash Flows from Financing Activities: Baldwin Dividends Paid Sales of Common Stock Purchase of Common Stock Cash from long term debt Retirement of long term debt 10,000 Change in current debt (net) $19,521 ($26,642) ($6,270) $17,802 ($2,800) ($4.264 $0 SO $0 20,000 $0 SO $15,601 ($5,882) $9,625 ($1,648) ($5,992 Net cash from financing activities Net change in cash position Closing cash position $13,073 $5,952 $32,550 ($11,904) $3,098 $26,598 - 10,000 -20,000 Operations Operations Chg. Cash Finance Chg. Cash Investment Finance Annual Report Page 1 Annual Report Round 18 Dec. 31. 2018 Baldwin 2018 Income Statement Bolt $21,154 (Product Name:) Buzz Bell $34,528 Bit $41,382 2018 Common Total Size $118,744 100.0% Sales $21,680 Variable Costs: Direct Labor Direct Material Inventory Carry Total Variable $4,864 $12,077 $26 $16,967 $10,585 $18,054 $25 $28,664 $4,405 $9,173 $377 $13,954 $4,323 $8,431 $341 $13,094 $24,177 $47,734 $769 $72,680 20.4% 40.2% 0.6% 61.2% Contribution Margin $17,561 $12,717 $7,726 $8,060 $46,064 38.8% $8.293 $3.772 Period Costs: Depreciation SG&A R&D Promotions Sales Admin Total Period $2,800 $1,000 $950 $1,000 $521 $6,271 $2,607 $928 $950 $1,000 $625 $6,109 $1,500 $988 $950 $600 $327 $4,365 $1,387 $857 $950 $1,300 $319 $4,813 $3,800 $3,900 $1,793 $21,558 7.0% 3.2% 3.2% 3.3% 1.5% 18.2% Net Margin $11,290 $6,608 $3,361 $3,247 $0 $24,506 20.6% Definitions: Sales: Unit sales times list price. Direct Labor: Labor costs incurred to produce the product that was sold. Inventory Carry Cost: the cost to carry unsold goods in inventory. Depreciation: Calculated on straight-line 15-year depreciation of plant value. R&D Costs: R&D department expenditures for each product. Admin: Administration overhead is estimated at 1.5% of sales. Promotions: The promotion budget for each product. Sales: The sales force budget for each product. Other: Charges not included in other categories such as Fees, Write Offs, and TQM. The fees include money paid to investment bankers and brokerage firms to issue new stocks or bonds plus consulting fees your instructor might assess. Write-offs include the loss you might experience when you sell capacity or liquidate inventory as the result of eliminating a production line. If the amount appears as a negative amount, then you actually made money on the liquidation of capacity or inventory. EBIT: Earnings Before Interest and Taxes. Short Term Interest: Interest expense based on last year's current debt, including short term debt, long term notes that have become due, and emergency loans. Long Term Interest: Interest paid on outstanding bonds. Taxes: Income tax based upon a 35% tax rate. Profit Sharing: Profits shared with employees under the labor contract. Net Profit: EBIT minus interest, taxes, and profit sharing. Other EBIT Short Term Interest Long Term Interest Taxes Profit Sharing Net Profit $780 $23,726 $2,677 $5,072 $5,592 $208 $10.177 0.7% 20.0% 2.3% 4.3% 4.7% 0.2% 8.6% ss you amount as Befort, long axes: Variable Margins 2008 Baldwin 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Bit Bolt Buzz Na Profit History Market Share History $10,000 25% 20% 15% 55,000 10% 0% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 ROE History Asset Turnover History 20% 15% 10% 5% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 ROS History ROA History 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2015 2016 2017 2018 2014 2015 2016 2017 2014 Annual Report 2018 Page 21 Market Share Report INQUIRER Round: 0 December 31, 2018 Units Sold vs Demand Chart Market Share 50% 6,000 5,000 40% 30% 20% 4.000 3,000 2,000 10% 0% 1,000 Andrews Baldwin Chester Digby Thrift Core Nano Elite Industry Unit Sales Total Unit Demand Thrift Core O Nano Elite Industry Unit Sales % of Market Actual Market Share in units Thrift Core Nano Elite 5,104 6,681 3,651 3,479 27.0% 35.3% 19.3% 18.4% Units Demanded % of Market Total 18,914 100.0% Ace 17.3% 4.4% 8.4% 17.6% Ace Awe 4.9% Total 18,914 100.0% 4.9% 4.1% 7.3% 9.7% 25.9% 9.1% 9.9% Awe Art 16.5% 7.9% 18.4% 26.3% Potential Market Share in units Thrift Core Nano Elite 5,104 6,681 3,651 3,479 27.0% 35.3% 19.3% 18.4% 17.3% 8.4% 4.4% 17.6% 16.3% 7.8% 17.9% 8.8% 16.3% 25.7% 29.8% 34.8% 20.3% 10.2% 11.0% 22.2% 0.8% 12.7% 5.2% 0.1% 6.5% 10.4% 31.3% 33.2% 19.2% 15.6% Art Ant 8.1% 29.8% in 8.8% 34.8% 8.1% 16.5% Total Ant Total Bell Bit Bolt Buzz Total 20.3% 10.1% 10.3% 20.4% 0.8% 0.1% 31.7% 12.7% 6.5% 19.2% 5.2% 10.4% 15.6% 3.2% Bell Bit Bolt Buzz Total DOMMO 30.4% Cell 6.2% 6.1% City 11.8% 2.5% 18.1% 7.1% 39.5% 26.0% 6.0% 2.3% 5.1% 4.6% 17.9% 8.1% 9.9% 8.6% 17.4% 44.1% Cozy Cute Total Cell City Cute Total Cozy 11.8% 2.5% 18.1% 7.1% 39.5% 8.1% 9.9% 8.6% 17.4% 44.1% Volowo 6.2% 6.0% 2.3% 4.0% Deal 23.2% Dino 27.5% Don 1.4% 0.9% Total 53.1% COMP-XM INQUIRER 2.3% 4.0% 14.7% 14.8% 35.8% 5.0% 6.6% 11.6% 7.1% 8.8% 6.8% 7.5% 30.2% 1.6% 4.0% 5.6% Deal Dino Don Dug Total 23.0% 27.2% 1.4% 0.9% 52.4% Dug 14.3% 14.4% 35.0% 5.0% 6.6% 11.6% NOON 1.6% 4.0% 5.6% 7.4% 29.8% Page 9