MISSION STATEMENT

SATISFY AND PROVIDE OUR CUSTOMERS WITH HIGH VALUE BY DEVELOPING, PRODUCING AND SELLING

GEARBOXES AND DELIVERING HIGH QUALITY TECHNICAL PERFORMANCE AND RELIABILITY, WORLDWIDE

VISION STATEMENT

IN THE FUTURE THREE YEARS WE WILL GROW BRINGING OUR GEARBOXES ON THE INTERNATIONAL MARKET AND

ESTABLIGH LONG TERM RELATIONSHIPS WITH OUR CUSTOMERS AND DISTRIBUTORS MEETING THEIR HIGH

EXPECTATIONS

2007 2008 2009Sales 120.000.000 135.000.000 118.000.000Quantity 2.400.000 2.700.000 2.500.000Price 50 51.9 47.2EBIT 12% 12% 10.5%

2007 2008 2009Sales 125.000.000 122.000.000 105.000.000Quantity 2.500.000 2.850.000 2.700.000Price 50 42.8 38.8EBIT 11.5% 9.8% 9.2%

2007 2008 2009Sales 5.000.000 -13.000.000 -13.000.000Quantity 100.000 150.000 200.000EBIT -0,005 -2,20% -1,30%

2010Sales 108.000.000Quantity 2.400.000Price 45EBIT 10%

2010Sales 73.000.000Quantity 1.960.000Price 37.2EBIT 9%

2010Sales 99.500.000Quantity 2.670.000Price 37.2EBIT 8.8%

2007 2008 2009 2010 -

20,000,000.00

40,000,000.00

60,000,000.00

80,000,000.00

100,000,000.00

120,000,000.00

140,000,000.00

SALES REVENUE

2007 2008 2009 2010 2,300,000

2,400,000

2,500,000

2,600,000

2,700,000

2,800,000

2,900,000

QUANTITY SOLD

2007 2008 2009 20100.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

EBIT

The downtrend in margin from 2007 to 2010 can be explained by the fact that the company encounters problems in the effectiveness of the processes and is not a cost leader.

Its resources are in line with other competitors; this means that available resources do not permit the company to reach a competitive advantage over competitors.

Rinaldi is not able to lower the costs in order to increase margin plus the prices decreased over time.

THEY ARE NOT TAKING GOOD CARE OF THE ITALIAN MARKET

THEY ARE TRYING TO APPROACH OTHER MARKETS

THEY ARE NOT COMMUNICATING WELL THE FUTURE VISION OF THE COMPANY

THE EFFICIENCY IS HIGH

THE EFECTIVENESS IN THE PROCESS IS LOW

THEY ARE NOT COST LEADER

THEY DON’T HAVE A CLEAR COMPETITIVE ADVANTAGE

THEY ARE IN POSSESION OF ONLY ONE MANUFACTURING SITE

A HIGHER Market share means:

Greater sales

Less effort to sell more

Strong barrier to entry of new competitors

When the MARKET expands, the leader gains more than the others

2007 2010

Italy Europe North America R.O.W0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

20072010

ITALY France Germany Spain U.K EUROPE N.A R.O.W World Wide0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

20072010

- 4,2%

-0,8%

-0,2%+0,7%

+ 0,5%-0,1%

+0,4%+1,2%

- 0,2%

5.30%

39.10%

2.10%

3.00%

1.00%

1.50%

5.00%

1.60% 1.10%

W.WITALYEUROPE (Italy excluded)FRANCEGERMANYU.KSPAINN.AR.O.W

5.10%

34.90%

2.00%

2.20%

0.80% 2.00%

5.70%

2.00%2.30%

W.WITALYEUROPE (Italy excluded)FRANCEGERMANYU.KSPAINN.AR.O.W

Big customers and big in size Specialized segmentation

INDIRECT DISTRIBUTION CHANNELNON DIFFERENTIATED DISTRIBUTOR NETWORK

R.O.W

U.K

SPAIN

ITALY

FRANCE

GERMANY

U.S.A

All kind of customers, many in numbers Traditional Segmentation

COUNTRY SMALL COMPANIES BIG COMPANIES

Italy 75% 5-10%Spain, U.K., R.O.W. 60% 5-15%

N.A., France, Germany 5-15%

2007 2008 2009 20100

10

20

30

40

50

60

70

8072

75

68

63

1512

1715

85

108

58

5

14

ITALYEUROPEN.AR.O.W

BIGGESTCOMPETITOR

LOCATION: GERMANYREVENUES: 292.000.000

QUANTITY: 6.664.000

TECHNICAL PERFORMANCEQUALITY

RELIABILITY

RANKED FIFTHIN THE WORLD

MARKET 100 COMPETITORSALL PRODUCE WORLDWIDE

LOWER TECH LEVEL IN GENERAL

2011 2012 2013

Italy +1% +1,2% +1,5%

EU +1,5% +1,7% +1,9%

USA 2,5%-3% 2,7-3,2% 2,9-3,5%

R.O.W +5%-9% 5,2-9,2% 5,4-9,4%

• Has a higher level of technology than the majority of the competitors

• 5th position in the rank for Technical Performance/Quality/Reliability

• Unclear strategic direction• Weak image• Lack of managerial depth and talent• Missing essential skills and competences• Poor track record• High internal operating problems• Vulnerable to competitive pressures• Competitive disadvantages• Obsolete facilities• Frail workforce management

• Enter new markets (China, Brazil, India and Japan)

• Expand services to meet broader range of customer needs

• Diversify into related products or services

• Add complementary products of services

• Risk of entrance of new competitors

• Growing competitive pressures

• Growing bargaining power of customers and suppliers

• Economic uncertainty

STRENGTHS WEAKNESSES

OPPORTUNITIES THREATS

1. WE ANALYZED THE INFORMATION AND FOUND PROBLEMS2. WE FOUND MULTIPLE REASONS THAT PROVOKED THEM3. NOW WE WILL FIND THE SOLUTIONS

WE ARE GOING TO SET THE MISSION AND GOALS FOR THE YEARS 2011, 2012 & 2013

1. FIX THE PROBLEMS IN TWO YEARS (2011, 2012)2. TRY TO GROW A BIT IN THE THIRD (2013)3. OPTIONAL: ADD 2 YEARS MORE AND KEEP A GROWING STRATEGY

WE CHOSE THIS KEY POINTS TO FOCUS ON:• MARKET SHARE• BUDGET (EXPECTED UNITS TO SELL, UNITARY PRICE, EBIT & UNITARY COSTS)

2011 2012 2013

World Wide +1% +2.5% +2.5%

Italy +2.5%(Regain old MS)

+2.5%(Regain old MS)

+5%(Gain new MS)

Europe +1% + 4% +5%

France +0.4%(Regain old MS)

+0.4%(Regain old MS)

+0.4%(Gain new MS)

Germany +0.1%(Regain old MS)

+0.1%(Regain old MS)

+0.1%(Gain new MS)

UK +0.25%(Regain old MS)

+0.25%(Regain old MS)

+1%(Gain new MS)

Spain +0%(maintain MS)

+3%(Gain new MS)

+3%(Gain new MS)

North America +0%(maintain MS)

+0.5%(Gain new MS)

+0.5%(Gain new MS)

Rest of the World +0%(maintain MS)

+0.5%(Gain new MS)

+0.5%(Gain new MS)

2011 2012 2013EXPECTED N. OF UNIT SOLD 2,670,000 2,800,000 2,860,000

AVERAGE EXPECTED UNIT PRICE 38 40 42

TOTAL EXPECTED REVENUES 101.460.000 112.000.000 120.120.000

EXPECTED COSTS 92.531.520 101.920.000 100.708.600

EBIT 8.928.480 10.080.000 11.411.400

EBIT % 8,80 9 9,5

EXPECTED COSTS PER UNIT 34,66 36,40 38,01

STOP UNDERSELLINGINCREASE THE PRICE PER UNIT

IN ORDER TO BETTER REFLECT THE VALUE OF THE PRODUCTS AND COVER THE INCREASED INVESTMENT COSTS

CONSIDERED THE FACT THAT THE NUMBER OF UNIT SOLD IS EXPECTED TO INCREASE, THE COMPANY IS NOT FORCED TO SET A VERY HIGH PRICE FOR THE PRODUCT

THIS WILL FACILITATE THE PENETRATION OF THE ITALIAN MARKET AND THE INCREASE IN MARKET SHARE IN R.O.W. THE INCREASE IN MARGIN IS DUE TO THE FACT THAT THE COMPANY EXPECT TO SELL MORE UNITS AT A HIGHER PRICE SINCE ITS STRATEGY IS SUSTAINED BY A HIGHER DEMAND OF GOODS AND PRICES.

WE HAVE TO STIMULATE THE SALES FORCE BY OFFERING THEMA SMALL PERCENTAGE INCREASE IN THEIR COMISSION AFTER THEY

HAVE REACHED A CERTAIN AMOUNT OF SALES WHICH WILL BESPECIFIED IN THEIR CONTRACTS

DEPENDING OF THE RESULTS AT THE END OF THE YEAR, THE EMPLOYEESWILL BE GIVEN EXTRA NON WORKING DAYS, THAT WILL BE CHOOSEN

BETWEEN EACH LOW SALES SEASON

THE COMPANY SHOULD DEFINE THE MAIN PRODUCT FEATURES

1. Near zero backlash2. Added right angle3. Indexer design

STRENGHTS OF THE COMPANY

• HIGHER LEVEL OF TECHNOLOGY THAN THE MAJORITY OF COMPETITORS• RANKS 5 IN TECHNICAL PERFORMANCE, QUALITY AND RELIABILITY

POSITIONING STATEMENT

• SIGNIFICANT• SHARED• OUTWARDLY COMMUNICABLE• ABLE TO CLEARLY TRANSFER THE BRAND VALUE

WE WANT TO POSITION THE COMPANY AS MARKET LEADER, BUT IN 3 YEARS WE CAN’T DO THAT, INSTEAD, WE ARE GOING TO

TRY TO FIX THE PROBLEMS AND TRY TO CLEAN ITS IMAGE

ADOPT THE BRAND STRATEGY CREATING A SUITABLE HIERARCHY

CREATE SYMBOLS NOT TIED TO THE PRODUCT

USE MARKETING COMMUNICATION TOOLSPROMOTE THE USE OF FACEBOOK AND LINKEDINMAKE EVENTS,FAIRS AND COMPANY VISITS, TO EXPLAIN HOW THE PRODUCT WORKS,AND SHOW THE REAL VALUE TO THE CUSTOMERS

EXPLOIT THE NAME & VALUE OF OTHER CUSTOMER COMPANIESUSE THE GOOD NAME OR VALUE OF THE BIG CUSTOMERS AS A BRIDGEBETWEEN THE COMPANY AND POTENCIAL CUSTOMERS

DEVELOP BRANDING PER SEGMENTANALYZE AND UNDERSTAND WELL THE NEEDS OF THE SEGMENTS TO BE ABLETO OFFER THEM A BETTER AND MORE “CUSTOMIZED” VALUE

WE SHOULD KEEP THIS STRATEGY,NOT ONLY STOPPING AFTER

FIXING THE PROBLEM, BUT IMPROVING SLOWLYAND CONTINUOUSLY

NEW PRODUCTSSTAY TUNED; INNOVATING

ADVERTISINGPROMOTE OUR PRODUCTS, SPECIALLY NEW ONES

CUSTOMER SHARE INCREASETHE SALES FORCE COMMUNICATES WELL THE VALUE TO THE CUSTOMERSNOT STOPPING AFTER HAVING A GOOD RELATIONSHIP WITH A CUSTOMER, BUT MAINTAINING IT AND IMPROVING IT DAY BY DAY

DEFINE VERY WELL WHO EXECUTE THE PLAN, THE TIMING & THE BUDGET

FEEDBACKCOLLECT DURING THE PROCESS AND AFTER, TO BE SURE OF ACHIEVING THE GOALS, AND KNOW HOW TO IMPROVE IN THE FUTURE

30/12/2010 30/12/2011 30/12/2012 30/12/2013

1,71$= 1€ 1,54$= 1€ 1,54$= 1€ 1,54$= 1€

DOLLAR DEVALUATION

+1% IT+1,5% EU

2,5-3% USA5-9% ROW

+1,2% IT+1,7% EU

2,7-3,2% USA5,2-9,2% ROW

+1,5% IT+1,9% EU

2,9-3,5% USA5,4-9,4% ROW

GROSS NATIONAL PRODUCT EVOLUTION

USA EU EU

CHINESE COMPETITOR ENTRANCE

INNOVATION

• MUCH OF THE DIFFERENTIATION IS AT THE MARGIN RATHER THAN ANYTHING TRANSFORMATIONAL

• THERE’S A PROBLEM WITH A PRODUCT-CENTRIC VIEW OF DIFFERENTIATIONFOCUSED TOO MUCH ON THE ACTUAL PHYSICAL FORM OF THE PRODUCT

• THE PRODUCT IS COMMODIZATEDBY MISSING THE TOTALITY OF THE VALUE AND ITS’ RELATED AUGMENTED BENEFITS AND SERVICES PROVIDED

DIFFERENTIATION

• INCREASING CHALLENGES WITH DIFFERENTIATION

• GROWING EASE WITH WHICH PRODUCTS CAN BE COPIED AND LESS EXPENSIVELY MANUFACTURED IN ASIA

• PRODUCT PROLIFERATION

ONCE REALIZED HOW TO DIFFERENCIATE THE PRODUCT AND RELATED SERVICES, WE CAN ADD ANOTHER BIG DIFFERENCIATIOR: COMMUNICATION

OUT-COMMUNICATING THE COMPETITORS, WE CAN SOLVE THE

MISTERY OF HOW TO DIFFERENTIATE A PARITY PRODUCT. AND GET THE 3 CORNERSTONE BENEFITS OF EFFECTIVE B2B MARKETING:

• LOWER OVERALL COST OF SALES• IMPROVED GROSS MARGINS• EASIER SELLING PROCESS

THIS CAN BE ACHIEVED THROUGH ALL THE AVAILABLE DIGITAL PLATFORMS BY

BUILDING AN INNOVATIVE COMMUNICATION PROGRAM THAT CAN SERVE AS AN INTEGRATED PART OF THE AUGMENTED PRODUCT

It will help to gain insights more quickly into changing customer needs and

become more competitive by taking advantage of the real time research that

exists on the Web regarding attitudes, awareness and usage of products by their customers as well their competitors’ customers

UNDERSTAND THE SOCIAL MEDIA AS A PART OF THE AUGMENTED PRODUCT

THIS MEANS: ADDED VALUE

BENEFITS FOR THE COMPANY & THE CUSTOMER COMPANIES