Advanced International Tax Law: General Principles and Sources

ECOALF - Sustaining your Future Presenting to: Javier, Marisa, Carol and Marcos, top management of ECOALF March 2019 Presented by: Nanyang consulting

Agenda Agenda 1 2 3 4 5 6 7 8 Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 2

Problem Statement : Ecoalf faces challenges in scaling operations owing to external visibility and internal resourcing Audience resistance to sustainable products Building capabilities Brand Visibility Revisit Product offerings Vertical integration Business Model Financial viability Human resource Inadequate resourcing and capabilities Ecoalf needs to overcome internal inadequacies and questions over the business model to achieve its vision of bringing about sustainability Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 3

Recommendations : Ecoalf can reinforce its vision by focusing on market presence in internal capabilities Viral campaigns on social media Virtual reality customer engagement in stores Brand Communication Strategy Partnerships with waste management Co-branding to increase presence Revamping the Business Model Operations and HR Fund raising Expand capabilities and internal development Ecoalf can increase market share and scale operations by exploiting technology, resources and partnerships Alternative Implementation Financials Contingency Conclusion Problems Recommendations Analysis 4

External analysis : EcoAlf operates in a competitive environment that is highly susceptible to audience acceptance Opportunities Threats Evolution of responsible fashion Partnerships across value chains GRS certification for supply chain potential for increase in partnerships Increase in online sales Trend of social media and influence Resistance to sustainable fashion trust on quality Competition conventional fashion brands Dilution of vision and message Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 5

Internal analysis : Ecoalf exhibits a strong business model which needs attention to financial viability and scaling up Strengths Weaknesses Positive public image and PR socially responsible Customer engagement at concept stores Capabilities within a team of 38 Investment in Innovation and technology Diverse portfolio of recycled fabrics (98) High quality products Significant bargaining power with partners Not financially viable might consider alternative sourcing Question of profitability Expensive raw material Need to build on internal expertise Inadequate traffic on online channels Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 6

Value chain analysis : Ecoalf operates in a value chain operated by multiple players Recovery Segregation Separation Recycling Manufacturing $$$ $$ $ $$ $$ Cost Manufacturing and recovery costs are a bulk of the cost towards obtaining sustainable raw material Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 7

Value Position analysis : Ecoalf exhibits a strong business model which needs attention to financial viability and scaling up High fashion High Budget fashion Sustainability brands Relativity Low Customer Acceptance Product portfolio Brand Image Profitability Technology Ecoalf has potential for financial growth by exploiting technological capabilities and shaping to consumer interests Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 8

Brand Analysis : 3 dimensions of consumer behavior have been analyzed to arrive at a brand perception Social Functional Emotional Lack of awareness Mainstream products Sustainability perception Lack of social proof No differentiation Care for the world High cost of products Ecoalf needs to improve on the social and functional front, in order to reach the emotional appeal of consumers Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 9

Customer Persona Analysis : Ecoalf must consider consumer interests while reinforcing its mission 24 years old Hobbies : Volleyball, travel, photography, Priorities : Fashionable clothing Social Media presence : 1,480 followers Carla (Student at IE) 37 years old, product Manager at Siemens Hobbies : photography, research Priorities: social feel-good factors Social Media presence : 870 followers on Instagram, 1090 friends (Facebook) Ben (Tourist from Germany) 52 years old Hobbies : golf Priorities: high-quality fabrics Social Media presence : None Rodrigo (Financial Analyst at Telefonica) Ecoalf must understand the interests of consumer in order to shape their understanding of the visions Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 10

Strategic alternatives have been considered in our analysis Profitability Strategic Fit Feasibility Decision Branding and marketing Current Portfolio Internal capabilities development Sustainable mission and survival Business model revamp Redesign of vision and portfolio x x x Diversification x x x Acquire sharing economy company Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 11

Implementation (1/3) : Brand Communication Strategy What Gaining visibility and customer engagement Spread the vision of the company Paid, Owned and Earned Media Channels Why Exploit social media influence Use technology to engage with customers and spread the message Ecoalf has potential for financial growth by exploiting technological capabilities and shaping to consumer interests Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 12

Implementation (1/3) : Brand Communication Strategy 1. Paid Media Viral Campaign on social media #IActNow Initial seeding Instagram, Youtube Brand Ambassador Sofia Ellar Initiate Social selling on platforms Ecoalf can increase brand presence and spread its vision with the help of influencers, and shape consumer interests Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 13

Implementation (1/3) : Brand Communication Strategy 2. Owned Media Integrate website with social media channels eg: Adobe Experience Manager) Virtual reality concept Madrid and Berlin stores partner with Oculus Increase website traffic by driving customers from alternate channels Convert website to PWA low cost, fast, reliable Ecoalf can engage with consumers and increase website traffic and conversion rates, with the help of technology and social media Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 14

Implementation (1/3) : Brand Communication Strategy 3. Earned Media Social proof build trust and pride 9% of your consumers are promoters Fridays for Future campaign Utilise Consumers become brand ambassadors- promoters Ecoalf can use 3 types of media channels to increase customer satisfaction and engagement rates Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 15

Implementation (1/3) : Brand Communication Strategy Magazines and Newspapers Website Brand Social media Campaigns and Events Co-branding Offline stores Activity Streams involved in the implementation of a communication strategy Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 16

Implementation (2/3) : Revamping the Business model What Address product portfolio, value chain and materials Ensure sustainability in operations and mission Material Product Value Chain Sustainability Business model efficiencies need to be optimised with the help of partnerships and refocusing the product portfolio Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 17

Implementation (2/3) : Revamping the Business model 1. Products Partnerships young fashion retailers (Eg: Sfera, Stradivarius) Partnerships sustainable popular brands (Eg: Freitag) Cobranding increases customer acquisition and engagement increase in visibility and revenue Develop Customer Service capabilities Improve functionality and customization (eg: Uniqlo) Ecoalf can use the partnership to increase revenues and build a vision that consumers can resonate with Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 18

Implementation (2/3) : Revamping the Business model Brick and Mortar stores Online Partners - online Direct to Customers Partners brick and Mortar Social Selling Distribution channels involved in the implementation of a business model partnership strategy Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 19

Implementation (2/3) : Revamping the Business model 2. Value Chain Partner with a Waste management company Obtain waste from the source, reduce costs across value chain from suppliers Marketing on Waste Management trucks Effective contribution to reduce pricing Ecoalf can use the partnership to address costs of recovery and separation of waste, and increase branding Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 20

Implementation (2/3) : Revamping the Business model Business development Research and development Marketing Business model Sourcing Finance Ecoalf can use the partnership to address costs of recovery and separation of waste, and increase branding Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 21

Implementation (3/3): Internal capabilities development What Acquire more talents and build strong corporate culture Multiple channels of financing Why Scaling up requires resources and internal capabilities of ECOALF ECOALF currently only has 38 employees Lack of sources of funding Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 22

Implementation (3/3): Internal capabilities development strategy 1. Operations & HR Hire a HR executive and increase workforce through recruitments Partnership with material science labs with universities, e.g. IESE Create People & Culture KPIs and constantly monitor the KPIs Organize monthly culture event, e.g. Park cleanups in Retiro Increase in talent pool and a strong corporate culture will enable ECOALF to equip itself with stronger internal capabilities Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 23

Implementation (3/3): Internal capabilities development strategy 2. Fund raising Establish a investor relationship team, charged by Marcos Prepare business plan and financial projections Apply for funding from NGOs Pitch to VC/ PE firms simultaneously, e.g. Rocket Internet Multiple channels of fund-raising will enable ECOALF to obtain sufficient capital to scale up. Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 24

Timeline for implementation of strategies Strategy H1 2020 H2 2020 H1 2021 H2 2021 H1 2022 H2 2022 H1 2023 H2 2023 1. Brand Communication Viral campaign on social media Social selling Channel integration VR at Concept stores Website improvement and rollout Campaigns and Events 2. Business Model revamp Partnership with WMS Value chain improvisation and rollout Identify product partnership Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 25

Timeline for implementation of strategies Strategy H1 2020 H2 2020 H1 2021 H2 2021 H1 2022 H2 2022 H1 2023 H2 2023 2. Business Model revamp Identify functionality improvement Rollout 3. Internal capabilities development Hiring drive and partnerships Developing KPIs Investor relationship team set up Funding Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 26

KPIs: Following KPIs will enable ECOALF to monitor the success of implementation process. KPI Target Brand communication strategy Brand communication strategy 1. 40% 1. Customer engagement rate, e.g. I Act Now 2. 70% 2. Net promoter score Revamping business model strategy Revamping business model strategy 1. 10 p.a. 1. Number of partnerships with waste management companies 2. 50% (progressively achieved in Y5) 2. Increase in partnerships with fashion retailers Internal capabilities development strategy Internal capabilities development strategy 1. 90% 1. Employee satisfaction rate 2. 5 p.a. 2. Number of pitched investors, e.g. VC/PE Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 27

Financial analysis: Proposed strategies will enable ECOALF to drive revenue growth to 4.17x by 2023! In EUR'miilion Brand communication strategy Increase in existing customer base Increase in e-store and social media selling 2019 2020 2021 2022 2023 Trend 5.60 0.27 8.96 0.48 12.54 0.77 17.56 1.07 21.07 1.50 Revamping business model strategy Increase in new retail channels Increase in customization service revenue 2.80 0.28 3.64 0.36 4.37 0.44 5.24 0.52 6.03 0.60 Total incremental revenue 8.95 13.44 18.11 24.40 29.21 CAGR 127% Revenue increase to 4.17x in 5 years Key highlight Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 28

Financial analysis: Proposed strategies will enable ECOALF to achieve profitability! In EUR'miilion Brand communication strategy COGS and operation cost Marketing expense Software development expense 2019 2020 2021 2022 2023 Trend Key highlight 1.48 1.92 2.03 2.46 2.46 1 1 1 1 1 1 0.2 0.2 0.2 0.2 Implementation cost Revamping business model strategy COGS and operation cost Partnership development expense R&D expense 1.23 0.5 1.60 0.5 1.69 0.5 2.05 0.5 2.05 0.5 1 1 1 1 1 Internal capabilities development strategy Payroll expense Investor relationship development expense Make profit since 2020 3.68 0.5 6.17 0.5 8.27 0.5 11.81 14.09 0.5 0.5 Total incremental cost 10.40 12.89 15.20 19.52 21.79 Net profit (1.45) 0.55 2.92 4.88 7.41 Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 29

Contingency plan: Following risks are anticipated and needed to be mitigated in a timely manner. Risk Mitigation Probability 1. Brand communication 1. Unsuccessful spread of viral campaign 2. Low engagement rates 1. Brand communication 1. Unsuccessful spread of viral campaign 2. Low engagement rates Medium 2. Business model 1. Inefficient partnership with WMS 2. Unsuccessful partnerships 2. Business model 1. Inefficient partnership with WMS 2. Unsuccessful partnerships Medium 3. Internal capabilities 1. Realign KPIs, efficient communication strategy 2. Business plan competition 3. Internal capabilities 1. Resistance to adapt company vision 2. Delay in obtaining funding Low Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 30

Key Success Factors to overcoming challenges on to way to achieving your mission Sustainable fashion Effective brand projection Exceptional product offerings Harbinger of a responsible future via sustainable fashion Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 31

Conclusion : Ecoalf can reinforce its vision by focusing on market presence in internal capabilities Viral campaigns on social media Virtual reality customer engagement in stores Brand Communication Strategy Partnerships with waste management Co-branding to increase presence Revamping the Business Model Operations and HR Fund raising Expand capabilities and internal development Ecoalf can increase market share and scale operations by exploiting technology, resourcing and partnerships Alternative Implementation Financials Contingency Problems Recommendations Analysis Conclusion 32

THANK YOU FOR YOUR ATTENTION We now welcome any questions you may have. March 2019 33

APPENDIX We now welcome any questions you may have. March 2019

Financial analysis: Proposed strategies will enable ECOALF to achieve profitability! In EUR'miilion Brand communication strategy Increase in existing customer base Increase in e-store and social media selling % of e-commerce revenue over total revenue Revamping business model strategy Increase in new retail channels Increase in customization service revenue % of customization service revenue over total revenue Assumptions 2019 2020 2021 2022 2023 Trend CAGR CAGR 100% 100% 20% 60% 80% 40% 60% 40% 40% 20% 40% CAGR CAGR 50% 30% 5% 30% 30% 20% 20% 20% 20% 15% 15% Problems Recommendations Analysis Alternative Implementation Financials Contingency Conclusion 35