Ultimate Technologies Group Inc. is a fast growing private technology company that focuses on Audio-Visual, Automation and Information Technology services in commercial settings. The founders saw that other companies were either small with few capabilities, or large and lacking true customer service. The company was founded to provide hyper-service of a small company and thecapabilities of a large company. They do this by hiring the best talent possible by creating aunique, high-performing culture, and providing ownership to every employee. UTG produced $3 million in revenue in 2019 (their year 3) with pre-pandemic revenues forecast of $8 million in 2020 (actual numbers are different).

UTG sells direct to end users. Their typical client is a large company corporate office. It does not have to be the company HQ, but large manufacturing sites do not represent good opportunity unless they also have a large office staff which is hard to assess from secondary data. Large office buildings, such as Salesforce in Indianapolis or State Farm in West Lafayette (just for a local example) represent the best opportunity. This is because in a larger office setting, one conference room contract leads to another contract which decreases their cost of sales (This cost often appears as SG&A in the expense section of the income statement). Because of this, smaller office locations do produce sales, but they have a slightly higher SG&A. They believe that technology startups may represent the best opportunity. The reason for this is normally a new startup will need to build out their space. Most office space starts out as "plain vanilla" open space. The second reason is they believe that tech startups would have the highest technical requirements and purchase the best available technology as having rudimentary technology would not project the rightimage. Buying the best technology usually ends up being the highest margin When one conference room is sold, people in the office see the new technology. This creates a network organization. As a result, less effort needs to be put in by UTG to make the sales for the next conference room remodel.

UTG provides functions which can be grouped into several broad buckets. They provide labor whichdoes the installation of AV components. Because labor comes in a variety of skills sets in one location you may need a carpenter one day, and an electrician the next, and a local programmer the day after. Some trades are needed through the duration of the project and othersare needed for smaller portions. You would not want your electrician standing around doing nothing, so the best utilization happens when you have several projects at a time in the samearea. The project manager will use the electrician on "North Street" Monday to Wednesday and schedule them on "South Street" on Thursday to Friday. A local or regional projectmanager is critical for managing all these projects so that the skilled trades are used efficiently. Skilled trades are very expensive, so efficient utilization is what contributes higher profitability.

There are a variety of skilled trades necessary for any installation. The current model is that several of the trades such as those involved in setting up wireless and pulling Ethernet cable are electricians and have added specialized training. Some start out as network engineers and assist the electricians when needed. Because of these specialized skills, people aremade employees of the company when they can be utilized sufficiently. The company also has someother skills like millwork (woodworking) that are generalists which can do things like drywall orcarpeting that they can keep busy. Even though these skills are general, when these people are good and demand is strong enough to keep them busy, they are made employees and areprovided benefits. As other trades needed, such as plumbing, where there is only spotty demand.

These situations are fairly common and they end up outsourcing locally.

UTG also does some software development. Part of their value added service is making sure different components such as your camera, ceiling microphone, display, etc., all talk to each other. This is similar to some of the Rawls classrooms where you can seamlessly switch between classroom camera, lectern camera, or any other display, storage, or input devices. These devices do not use a common protocol and because of this they are not "plug and play". These technical devices have software development kits (SDKs) which allow their integration into larger systems. The function of software development has some economies of scale, but even that is limited.

The skills of software development are highly specialized and are most efficiently done at the regional level. These developers may need to make site visits to better understand the space which is being remodeled or to better understand client needs. This is not a daily occurrence, but if a client selects different configurations, functionality, or components, the software developer will most likely need to test in that environment or do some debugging. This debugging needs to be done on site though there may be exceptions, such as software updates, which can be pushed remotely.

As in any organization growing across products or geographies, central coordination of management is needed. This is to ensure the standards set by the corporate staffare adhered to in the new satellite location as well as coordinate marketing campaigns. In addition, this is still a small business and often larger clients like to meet the management in order for them to have confidence the company can fulfill its commitments. This is especially true if the customer wishes to enter into a service contract since part of the service agreement is billed up front.

The company is looking for advice on where to grow.

Project Objective

Plan for operational expansion into new markets within the United States. Subject to data limitations that may exist, students should provide the top 3 city candidates to the client in the order of preference. Consideration should be given to how the company would grow from the 2,to 3, to 4 markets. Growth into the 2 market should be based on a systems approach thinkingabout UTG in the long run and what it looks like in multiple markets. In discussions with thefounder it is mentioned that a couple viable ideas have surfaced; one would be to simply replicatemost functions in attractive markets, the other to continue to grow into adjacent markets andreplicate functions regionally as they experience inefficiency. They are unsure which model wouldbe best. The client has asked that you provide an expansion plan which accommodates UTG management'sinterests. Beyond this, the client has expressed that you should assist in determine the appropriate criteria.

Location with fewer than 5 local competitors to ensure low competition (Austin, Dallas, and Houston) Over 600 million USD in backing for technology startup firms. Verbally the client has stated that this is 5x the size of Indianapolis.

The client has also asked you to project sales in the new location. Because they will need to invest in the new location, they would like to get a rough idea of what to expect.

The Assignment

e. Hypothesis Development: What are the thresholds to beused? For example, if you were screening locations on total population, you need to have a cutoff for inclusion (i.e.. You will consider cities with populations over 1 million in population). It is typically important to consider the KPI's of that particular industry. However, this industry may not have specific KPI's. If this were a case in retail, you would consider measures such as 'sales/ft2' of retail space. Most industries have specific KPI's. In situations where there are no specific KPI's or there is a wide range KPI's, you would typically discuss with the client the appropriate measures and the relative importance of each measure.