Strategy Simulation Essay Sample
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Strategy Simulation Essay Sample
This report illustrates an analysis of the strategy our team is about to follow, and the success measures we had chosen to reflect our strategy, with exhaustive explanation of the reasons to choose such a strategy and success measures. We will then give an implementation planning concerning four basic domains within the simulation to get a better idea of how the strategy functions.
Our team will adopt a Niche Differentiation strategy that focuses upon the upmarket segments, including the High End, Performance, and Size (Member Guide 2013). We strive to lead the cutting edge of sensor market by providing products with premium quality and higher standard and target those technology-oriented customers. Background of the Market
The rapidly boosting development of scientific technology has accelerated the frequency of demand change and making the lifecycle of a certain product shrinking (Key Trends for 2014). With the burgeoning expansion of enterprises that provide a full range of products and services to customers, buyers are the dominating role among the market, which pushes the enterprises to update their products in time to meet customers’ demands. The sensor is being utilized broadly, especially in those high-tech industries such as telecommunication, aviation, biomedicine, etc. (Member Guide 2013), thus the future trend of customer demands may develop toward smaller size and better performance, so we need to target those high-end market in order to capture the opportunity of leading the cutting edge of trend and gradually get rid of those low-end products. Advantages of the Strategy
Focus on certain niche markets can avoid the risks attributing from the fluctuation of consumer demands in the mass market. In addition, based on the Team Member Guide of Capsim (2013), we aware that our experience and capacity are limited to compete with other big companies, so Niche Differentiator strategy facilitates our company to occupy the entire upmarket by our value proposition——premium products in high-end market.
After analyzing success measures given from the Capsim (Capsim 2015), we determine to pick four of them to reflect our strategy. Cumulative Profits
Cumulative profits relate to the profitability of a company. Since we will use Niche Differentiator strategy, R&D expense should be constantly invested, making cumulative profits a necessity. Besides, due to value maximum is always a company’s ultimate goal, cumulative profits can directly reflect the value of our company, so it is critical to maintain cumulative profits at a relatively high level. Share Price
The performance of share price is highly related to external investors. Reasonably high stock price indicates customers’ positive evaluation on a company. Consequently, an increasing number of investors and customers would be attracted, solving the problem of fund requirement of our company. Besides, good performance of share price supports the long-term development of a company, especially in the high-end market where customers are brand switchers who would purchase more advance products from our competitors. So we can estimate customers’ expectation and make adjustments to our planning by analyzing share price performance. ROA
As an important element of the financial performance, Return on Asset (ROA) relates to the profitability of the corporation. ROA shows how the company generates profit by using its assets (Capsim 2015). The higher net profit with the relative lower asset, the higher return on assets. A higher ROA implies the better financial performance of a company, especially high-tech companies like us, so the asset, such as qualified employees and advanced equipment, can facilitate production process. To get the high ROA high-tech productions must have high price with low cost, and the net profit should be much higher. ROE
Similar to the ROA, Return on Equity (ROE) relates to the net profit and shareholder’s equity, but ROE is more accurate in evaluating the performance of the company and the utilization of shareholder’s equity. After dividend the profit per share could be decreased, which makes the net profit decreased, thus the profitability of the corporation was perceived decrease as well. Essentially, the profitability of the corporation is invariant (Nguyen 2001). So ROE should be increased in length as time goes by.
Customers appreciate for products that would satisfy their expectations (Cooper and Kleinschmidt 2007, p.58). Our goal is to bring high-end products to clients that meet their ideal criteria for positioning, age and reliability. Therefore, we will consistently update our products, develop new products in segments of High End, Performance and Size and reject Low End and Traditional at the same time. Marketing
Our marketing goal is to keep customers’ awareness and accessibility of our products at a relatively high level. Therefore on one hand, we will focus on massive spending in promotion and placement in these three segments. On the other hand, we will exit low-end and traditional market gradually. Production
We prospect that our product line can produce goods that meet market demand. In consequence, we will increase our capacity and avoid overtime. Afterwards, we will develop modest increases for automation level to improve margins (Herrmann 2003). Finance
Our final part is aiming at providing sufficient cash flow and funds for both daily running and investments. We will issue long-term debt to help finance start-up production and also stocks to raise capital. We try to avoid short-term debt because interest rate is higher than others. Labor Negotiations
We hope we can strike a balance between employee satisfaction and efficiency of work, so we will negotiate all wages and benefits slightly above their ideal requests.
The Niche Differentiator strategy focuses on upmarket segments where our target customers are technology-oriented, so we will keep updating our products and coordinates different departments in order to gain the competitive advantage by offering premium products at cutting edge, thus at a leading position of the niche market.
Capsim 2015, Capsim, viewed 25 March 2015, Capstone Team Member Guide 2013, Capsim Management Simulations, 2013. Cooper, R.G. and Kleinschmidt, E.J. 2007, ‘Winning businesses in product development: the critical success factors’, Research Technology Management, vol.50, no.2, pp. 52-66. Herrmann, J. W. 2003, ‘Improving production scheduling: integrating oganizational, decision-making and problem-solving perspective’, University of Maryland College Park, viewed 24 March 2015, Key Trends for 2014: New Demands Accelerate Marketing 2013, E-markeing, viewed 24 March 2015， Nguyen K.M. 2001, ‘Financial management and profitability of small and medium enterprises’, Southern Cross University, viewed 25 March 2015,