FSYS Strategic AnalysisEnviroCorp

Who Are We?

• EnviroCorp is an environmentally focused business consulting firm

• We utilize over 4 years of relevant experience to:• Understand the needs of a company,• Determine how to meet these needs,• And provide a detailed plan that will

guide the company from implementation to end result

What We’ve Learned About Fuel Systems Solutions• There are Strengths:• Participation in a lucrative industry• Clearly defined niche market with

fruitful government incentivisation• Vertically integrated dominance over

supply chain and customer base

• These Strengths lead to Opportunities:• $124.78M in Cash Assets• $141.81 in Net Working Capital• Liquidity leads to opportunity

What We’ve Learned About Fuel Systems Solutions• There are Weaknesses:• Marketspace and industryspace trending

to more competitive• Constant green-tech R&D• Increasing incentives from governments• Growing nations looking to compete

• Lack of product diversification

• These Weaknesses lead to Threat:• Product replacement• Why is natural gas so profitable?

A Look at Competing Technologies

At A First Glance

• Substantial gap in cost-benefit between Natural Gas and all other non-petrolium technologies.

• This means that FSYS has a powerful advantage over all competing technolgies.

• Great news for the short term market:• Future looks bright• Large cash base

Thinking About the Long Term• Consider Petrolium:• Supply is decreasing, demand is

increasing. • As a result, the world is adapting to

decrease petrolium dependence.• Governments mandate green

standards, and offer lucrative incentives for green investment.

• Natural Gas represents the lowest cost way to capitalize on the World’s ‘open-arms’ policy regarding green technology

Thinking About the Long Term

Thinking About the Long Term

• After taking another look at the SGM:• Natural Gas is the least green alternative• Best cost-benefit no longer feels as

secure as it once did.

• Possible long-term situations:• Ethanol in Europe• Hybrid production cost decreasing, range

increasing• Hydrogen Fuel Cell break-through

• Represents competing technologies becoming more viable

Thinking About the Long Term

• As cost-effectiveness of greener alternatives approach the cost-effectiveness of Natural Gas:• More stringent environmental standards

become viable• Government incentives go to greener

technologies• Market share will eventually decrease

until the only Natural Gas consumers:• Are captive customers• Are living in countries which will still consider

natural gas as a green technology

Summary and Grim Conclusion• Natural Gas dominates currently • Competing, greener technology R&D• Greener technologies begin to steal

market share• Tipping point: one or more of these

technologies becomes• As cost effective, or• More cost effective to implement than

NG

• Natural Gas experiences product obsolescence

The Problem

• Some Time Scales: • Product obsolescence >50years• Loss of market share Now!

• Natural Gas Obsolescence- not an immediate threat

• Greener technologies are:• Stealing market share• Preparing to steal more

The Solution

• Focus R&D• Greener technologies• Make NG sit higher on the strategic

group map.

• Increase R&D• Liquidity leads to opportunity• Large war chest- USE IT!

The Solution

• Environmental Focus VS Cost Focus• Dulls competitor edge • Safe

• Cash liquidity• NG inherently cost-effective

• Two-fold use of liquidity:• Anticipates threat

• Current• Future

• Invests in future• Technology monopolization• Green ‘points’

Implementation

• Begin with small portions of cash base:• 5% in the first year ($6.24M)• Focus on consumer use

• Continue 3 to 5 years• Foundation should be taking form

• One technology• Reduces consumer emissions• Buyers will be satisfied• NG green reputation

Implementation

• Year 5• Foundation built• Funding to R&D: as needed

• Begin advertising • Company reputation• Consumer knowledge• Industry standard

• Anticipate competitive manuvers• Reactive R&D• ‘The usual’

Year 5 Benchmark

• New technology• Developed• Tested

• FSYS• Gaining consumer reputation• Increasing:

• Environmental aspect of NG• Therefore, trust of NG longetivity

• Begin securing contracts• Government incentives• Look to Europe, America, China, Latin

America

Beyond Year 5

• Introduction to Market• Contracts – IMPORTANT!• Success ensured

• Money in R&D• Advertising

• Watch for competitors• Reverse engineering• Improvement and repackage• Natural Gas slander

Beyond Year 5

• Success will build!• Do not stop R&D• NG will always be ‘dirty’• Fossil fuel• Extraction

• FSYS will always be ‘cleaning’• Capitalize on reputation• Capitalize on profits from new

technology

• New tecnology, same plan

Summary

• FSYS has:• New technology• Excellent reputation• Lucrative government contracts• Increased profit• Increased investment potential

• The ball is rolling-• How far can Fuel Systems Solutions take

it?

To Conclude

• Strong cash base• Dirtiest, cheapest product• Clean industry• Invest cash • Cleaner, cheapest product• More money• More opportunity• Even Cleaner, cheapest product!

Thank You, Fuel Systems Solutions.

For granting EnviroCorp access to an industry leading firm,

For allowing EnviroCorp to research and understand what makes FSYS so great,

And for helping EnviroCorp feel like a member of the bigger team.

EnviroCorp

We’ll worry about tomorrowWhile you fight for today.