Monday, September 30, 2019
Report on Course: the Business Simulation Essay
This report provides the Chairman of the board an analysis of the decisions and the results of the Company 1 in Period 2. The focus is given on how our company organized the process of planning in the Period 2 and I tried to critically analyze the results compared to our plans. In period 2 our company was seemed to do better than the previous period (period 1), but in my opinion period 2 was the beginning of our companyÃ¢â¬â¢s crisis. We didnÃ¢â¬â¢t adhere to our differentiation strategy and we ignored our objectives. I strongly believe that if we have acted much differently and have the chance to redo the planning of the decision making of period 2 we would perform much better in all next periods. Introduction This report is an attempt of informing the chairman of the board of the CompanyÃ¢â¬â¢s 1 plans, actions and mistakes during the period 2. It starts with the analysis of the process of planning and continues with the analysis of the results compared to our companyÃ¢â¬â¢s plans. 2) Body 2.1) Planning of the Period 2. To begin with the Price, we planned to have the same price as Period 1 ( 3,090 eur), because we knew that customers dislike changes in the price and we didnÃ¢â¬â¢t want to have dissatisfied customers especially when we hadnÃ¢â¬â¢t yet persuaded them that our product was the best in quality so we couldnÃ¢â¬â¢t risk losing many of them. As for our investment in Advertisement we thought that if we kept investing the same amount (7.0mEur ) as Period 1 we would own the same or bigger market share. Then about Sales force we were thinking of having 110 in that period because as the Ã¢â¬Å"TopsimÃ¢â¬ mentions a sales force of 110 could increase sales up to 45000 units. We decided to set the price of 2,640 for the bid that was higher than our CGM in the period 1 (; 2,270eur). We were thinking of purchasing 46,000 units of input materials and producing 50,000 units of Copy I as we were thinking that we have to be able to respond to the increase of market 1 demand (8%-10%) and to serve the bids in case we won that. After that we started thinking of cutting down the cost of the rest investments we had to do. So we thought that investing few or no money to the rest of our potential investments would be enough. So here are our thoughts of investments: 1,0mEur in CI, putting 10 people at the Copy I-old technology, 0,50mEur in Ecology of Copy I-old and 0,1mEur in Value Analysis of Copy I-old, 0 people in technology and 0,0 mEur in ecology and 0,0 in value analysis of Copy I-new, 1,0mEur in Maintenance of our Type A production lines and 0,0mEur in Rationalization of them, no new investment or disinvestment of the production lines and no new types of lines, 0,0 mEur process optimization, 0,0 mEur in training production workers, 0,0 mEur in investment in environmental plants, 0 number of recruiting or dismissal of production workers, non-salary staff costs 37%, short-term loan 15,0 mEur, long-term loans 0,0 mEur, dividends 40%, purchase of securities 0,0 mEur. 2) Body 2.2) Critically analyze the results compared to our plans. I have to mention that generally, in the most periods, as we were planning our steps we were trying to focus on the companyÃ¢â¬â¢s objectives (; increase our employees productivity; decrease the negative ecological footprint; retain the market share>17% ) and how we would achieve those through our actions. However, in period 2 we didnÃ¢â¬â¢t act like our decisions and results would have a long term effect on the potential achievement of our goals, we tried a different tactic, which was cutting all investments costs extremely and maybe as we see from the results of that period and the next that was a fatal mistake for our company. Even if it seemed from the improved Net Income (compared to period 1) that we chose a good tactic it wasnÃ¢â¬â¢t because that move got us behind in comparison to the other companies that had chosen the differentiation strategy as well. They built a quality product unlike us that we thought only the temporary survivor of our company. Of course as we were at the beginning we were afraid not to get out of the market so we didnÃ¢â¬â¢t think thoroughly of our long term results. In that point of time our only concern should have been to create a product with a strong quality that would appeal most of the consumers and the price wouldnÃ¢â¬â¢t be for them an obstacle. Our results werenÃ¢â¬â¢t those we wanted in all periods, and I am quite sure that this started from the results of period 2. We pretty much failed creating a quality based (eco-friendly and flexible/tend to respond immediately at technological changes) production, our customers werenÃ¢â¬â¢t satisfied generally, our staff was neither and our market share was declining. I can now find many corrections to our decisions that maybe could ensure us in a long term view. First of all, I agree with the price, I think that first we had to gain some loyal customers who would appreciate our productÃ¢â¬â¢s quality and after that increase the price. So our results wouldnÃ¢â¬â¢t have changed with another price in a good way. I donÃ¢â¬â¢t agree now with the amount we invested in the Advertisement. I now believe that we should have put at least 1,o more mEur so that our market share would be wider. The number of sales staff was a good move and I think was enough. As i see it right now IÃ¢â¬â¢m not sure that we needed to sell to bids because if we had focused on our differentiation strategy then probably we wouldnÃ¢â¬â¢t need them and maybe we could sell all of our production to the market 1 so that our revenue would be bigger. As for CI we for sure made a severe mistake by reducing the amount of investment because CI expenditures affect Corporate Image which has an important double effect, on Customer Satisfaction (which is one of our companies objectives) and on Production Staff Motivation (which increase our employees productivity). As the business report on the industry shows our company had in Period 2 the smallest index of Corporate Image of all companies, I for sure believe that we should have put 2,0 or even 3,0mEur. Of course 10 people in technology is a really small number when thinking that a quality product donÃ¢â¬â¢t invest that much in R&D. They should be at least 30-34 so that we could be flexible to technological changes. By investing in technology we could reduce the overall amount of the environmental damage indicator caused by company which beside avoiding the penalty (we had to pay unless it turned 100 or more) it has a direct influence on Sales, Absenteeism of product employees, Corporate Image, Share price and Motivation of staff in production. Also, 0,5mEur in ecology isnÃ¢â¬â¢t enough for a quality centered Copy machine. Consumers care about the environment and ecology generally. Eco-friendliness affect their satisfaction so if we were more eco-friendly we would gain consumers appreciation and loyalty. So the more eco-friendly would be our product the merrier market share we would gain. Moreover, I believe we had had to invest in new production lines (Type C for example) because we could improve ecology index of the production lines themselves easily by replacing certain lines. And for sure 0,0mEur investment in ecological plants is totally unacceptable for the same reasons. I donÃ¢â¬â¢t have many objections for not investing yet in the technology, ecology and value analysis of the Copy I-new in period 2. At first we should have gained a loyal market share and then when having some kind of certainty for our productÃ¢â¬â¢s continuation/progress and of course enough capital to step to the next level to invest in the Copy I-new. I donÃ¢â¬â¢t agree with the amount of production because we werenÃ¢â¬â¢t well prepaered for selling that. On the other hand I would quite agree with the amount of production we had in period 2 in case we had planned more thoroughly our decisions bearing on mind our differentiation strategy maybe we could sell it. As I see our decisions now I canÃ¢â¬â¢t understand how we didnÃ¢â¬â¢t invest in training the production workers. Of course that resulted to the staff generally, shown with the attrition. Training has a positive influence on Production Staff Motivation and that would facilitate our 1st objective which is the increase of employeesÃ¢â¬â¢ productivity. So for sure I believe we had to invest in training at least 1,5mEur. For the same reason I believe that non-salary costs should be a little higher (e.g 40%). Finally, I donÃ¢â¬â¢t think that the number of production workers was in that period enough (especially if we had done everything I have mentioned above), so bearing in mind all of the above neither the number of production stuff would be enough nor of course the Short-term loan. Conclusion For the Company 1 the organizing of the planning process and the decision making process in each period was a unique experience. Almost all of us were inexperienced in such an activity, even in a group work, so we were trying for the best result every time.. Even if that never came! Most of us found the whole procedure and the business game a great opportunity to realize how to use some of our already acquired knowledge and a great chance to learn many more from our colleagues and our professor. Thank you for that opportunity!