Hey good to hear @colonel_truman. It's really changed the way I approach the game. I love reading companies 10k's so your reports really hit a note. I attach data for competitor Moonharp below.
23 JANUARY 2019
The current standing of GP versus it's major competitor Moonharp is as shown:
7 OCTOBER 2020
Dominating position in leather goods market
GP has entered into the leather bag industry and is currently dominating.
To achieve this we've built 2 factories (Seoul and Paris) and 13 retail stores (4 in Seoul, 3 in Paris, 3 in Warsaw and 3 in Miami). We have created 13 advertising units, 1 at each retail store, with a budget of $500k making our total advertising budget $6.5m.
Engaging in price wars has increased market share, sacrificing our profitability for the year
With our infrastructure setup ready we allowed our COO to sell products below the cost of production to counter the negative effect of our low brand compared to our competitors. This allowed us to gain market share quickly and place ourselves in very strong position.
As expected and described in our initial market entry strategy, our bottom line and profitability has been impacted, but we’re getting the upper hand in this price war.
Our income statement last month was a loss of 1m.
Our balance sheet still shows a strong cash position:
At this point of control, we’ve now decided to instruct our COO to start selling products above the cost of production in order to increase our profitability for the next 6 months, before moving unto the next leather industry product.
Purchasing of Newspaper, The Galactic, to accelerate branding
GP needed to increase our brand related to all leather products, and seeing that Seoul was currently spending 5.5m with an average rating of 40% rating points, we decided to make our first investment into the Media business. We had no experience in this sector, but our strong cash position at that point (+300m) and needs for expansion now and in the future madeit an ideal time for testing thosewaters.
We took a loan for about 300m and purchased a Newspaper for 420m with 30% rating points. This most likely proved to be better than building a new newspaper for 90m that starts with 1.2% rating points. But we should carry out more analysis to understand the time needed to acquire that ROI.
We transferred all our advertising accounts to our new Newspaper, The Galactic. Even in its starting state, we have been achieving more impressions per our budget, but our goal is to increase our rating past 34%. To achieve this we've increased by 30% the monthly budget for new content development. With this move we hope to be able to have continued cheap advertising in Seoul that will drastically increase the brand of our leather products.
Brand loyalty for leather goods is too low
A standing challenge at this point is our brand loyalty. It’s our understanding that the drivers for brand loyalty are building brand awareness (done, have 63), have high quality product ( currently 75 and 81, around 15% higher than competition), have significant market share (currently 34% and 59%) and use corporate branding (we use range branding).
We believe that because we currently only have 2 products across our range brand for leather products, the missing 2 products in the line must count as a 0. Thus the average over our 4 products is low as compared to our competitors. To test this, we will now enter the 3rd market and see the impact.
Other notable topics
Other notable things that have happened are the increase in salary of our COO, our debacle in the R&D departments.
Firstly, we’ve increased the salary of our COO 2 more times and is currently earning 31m. The thought of denying his next raise comes to mind, but he has done an exceptional job with us. Furthermore his faith in GP is shown by his investment in the company’s stock. He’s currently the 2nd largest stock owner after myself (42%) with 21%. We currently don’t have enough experience in hiring management to know if we resigns, how well will another manager perform this duties. When looking at his expertise though, he’s quite geared towards Technology, which isn’t a core competency of ours. We have scouted a possible replacement, Fabian Jung, if the case presents itself.
Secondly, we suffered a major R&D debacle. After seeing the quality of our apparel products lose competitiveness, we realized our CTO had redirected the focus of our R&D departments towards new technological products. After instructing our CTO never to do that again we refocused our research efforts towards apparel and leather.
Next
Our plans for the next year is to gain profitability for 6 months before making an aggressive play for the remaining 2 products of the leather goods market. Our goal is to fully dominate both apparel and leather goods market by the end of 2025.