In our first year we initially decided to follow a cost leadership strategy. The principle behind this strategy is to reduce costs and we have done this in four ways. First we changed supplier, so the components were cheaper and we had 2 months of credit. This proved to be very beneficial to our business as it allowed us to improve our cash flow, which allowed for more investment in the early stage of advertising. Advertising has also been key to reducing our costs through economies of scale. This meant spreading our costs over an increased production rate. E. Pertusa-Ortega, J. Molina-Azorín and E. Claver-Cortés (2008) proposed that experience is a source of efficiency, so we trained in production to reduce these costs and efforts spent. Last and most important was the product design and this is where we once again changed our strategy to focus on a particular market segment. Porter argued that segment-based strategies were necessary to keep customer needs in mind for long-term success. Michael Porter advocated two fundamental means to gain competitive advantage: cost leadership and differentiation. Using a strategic clock illustrated the space between cost leadership and differentiation strategies and that's when we decided to focus on a hybrid, cost-focused strategy. This involved paying particular attention to consumer needs in a section of the market that we believed had a viable segment economy. There were many customers and their needs were close to what our product satisfied, so it was faster and cheaper to adapt our product to this market segment. We redesigned our product to meet customer needs, but we forgot the product cost to provide a high quality product......half of paper......me. Fortunately we reacted to this problem by creating a strong credit control strategy, after a month of non-payment we sent a phone call and after two months we threatened legal action. This has helped improve our cash flow and therefore enable reinvestment in the business. To conclude our first year our balance sheet was still positive and we had survived but now we had a competitive advantage. We had gained a competitive advantage through two of VRIO's four key terms, value and organizational support. Strategic capabilities are only valuable if they generate higher revenues or lower costs, or both. Our business was set up to support our valuable skills and as such simply outsourcing orders and being the coordinator continued to generate a profit and improve our cash flow. It has been the key to our success as a company over the course of three years.