FM6

Executive Summary

Team Andrews is a small company birth since the severance from the administration of a monopoly sensor organization. The plan of this industry is to have 100% consumer satisfaction by means of creating consequential customer care in an effort to listen to their viewpoints and vision. It will put into practice low and high technology merchandise that will be utilized in numerous electronic products along with improving electronics devices already in existence to meet targeted population demands.

Andrew’s will not engage itself as well as its operations on trade marking and retailing products of other corporations. In an effort to allow this business to process and do extremely well in its operation it will pursue the set forth company plan and employ competitive advantages. This is entails manufacturing together low- and high-tech sensors at the same time as reducing overheads while staying competitive within the market whilst staying in the region of the industry averages. Manufacturing will be less automated and make use of the workforce to its benefit in addition to keeping as many overheads down as feasible.

Financing will entail a combination of resources and debt acquirements along with a residual dividend strategy. The execution of this plan has had varied outcomes. During the first year of operations, Andrew’s did not have a clear strategic business plan and therefore was unsuccessful in composing all decisions proposed for the business plan. The outcome was that the company was unable to totally take advantage of capitalizing on profit and investments. Furthermore, the company incurs a Big AL/ Emergence loan. Plant capacity and automation was not added to sustain the making of product Astro, Air S and Air X. Additionally, no investment prospects were made which did not permit total success in the preamble of novel products along with the expenses connected. Year two resulted in the company having to invest more in production with the intention of making up from the decisions of the previous years and more shares being dispersed than was superlative. Andrews was able to rebound, consequently the debt to equity ratio was capable of staying low and met the organization’s objectives; however, the contribution margin took a hit and our Balance Score Card (BSC) was affected.

Adhering to the business plan once decided has allowed more success in Andrew’s future. The organization has managed to stay with the objective of lower costs with competitive pricing, and in so doing has allowed Andrew’s to thrive throughout the competition as well as in the years to come.

Company Organization

Team Andrews was assigned to be a CEO of the company to compete against team Baldwin and it was a knowledgeable experience. Each week the team allocated a different team leader who would ensure everything is done by the due date. Unambiguously, for each decision within CAPSIM, team Andrews played around with the numbers and checked our scorecard each time. The team also researched what certain terms meant and what it can do to our company. It was a learning curve at first to understand how to use CAPSIM, but we got it and then it became a breeze. Overall, the team members would all agree that we worked equally hard, but we wouldn’t be able to do it without the professor’s support. Each team member put their weight in when needed and communicated well via our group chat.

The consensus is that if all the team members had a better understanding of the concepts with CAPSIM, and had more senior experience financially, it would be beneficial. However, the team put what we have learnt within our careers and made it work. Despite their hectic personal schedules, all CEOs were able to work hard in order to complete the CAPSIM rounds and proper reports. Performance wise within CAPSIM, the team could have managed out inventory and costs better in order to maximize sale. By using our guidebook provided, the team adopted one of the six product strategies in order to be more competitive. Perhaps, Andrews could have used more in order to gain a better competitive/strategic advantage over the competition.

Initial Strategy

After the first round, team Andrews has learned from the simulation and the guidebook about strategies that our company needed to adopt to keep being competitive. While the team’s competitor chose the Broad Cost Leader (low cost) strategy, team Andrews decided to choose the different approach, which is the Broad Differentiator, by prioritizing High Tech segments to grab the market opportunity. With this strategy, our company would gain a competitive advantage by distinguishing our products with an excellent design, high awareness and easy accessibility; at the same time, our products would also be able to be charged at higher prices. Since then, Andrews’ sales, profits, and market share each round had improved with this strategy. The team would rank the effectiveness of this strategy with a scale of 8/10.

Strategy Evolution

In order to stay competitive in the long term, considering only one factor/strategy would be not enough. While the Broad Differentiator strategy was already improving our sales, our team additionally considered and managed other factors such as inventory, ratio, utilization, and costs each round. Andrews’ goal is not only to increase our sales by the products themselves, but also to have the company with financially healthy performance in the long term. When the business’ leverage ratio was low, for example, the team solved this problem by either raising liability or lowering equity while managing good credit scores, stock prices and profits. Increasing liability would increase interest expenses, so the team paid an attention to lower labor costs by investing on automation as quick as possible to reduce the expenses. Inventory is also another factor to be focused on. When the result showed a lot of stock-outs or inventory on hand, team Andrews looked for its cause (i.e., price, design, marketing awareness, etc.) and the production based on our available capacities.

Impact of Competition

Unfortunately, the company was not a monopoly as the team was assigned to compete with other teams/competitors with the same product segments. Therefore, it is very important to consider not only our internal factors (strengths and weaknesses) but also our external factors (threats and opportunities). What actions the competitors are doing each round could be a threat and/or an opportunity to us, and by well analyzing it would help Andrews make the better decision. For example, each round the results of our actual & potential market share in each segment were compared with the competitor’s in order to properly manage our inventories and sales. When their potential market share of a product was better than Andrews’, the team possibly solved this by lowering the product price and/or improving our marketing (sales & promotions). In addition, Andrews also checked their production capacity how many products they would be able to produce in the next round. When their production capacity was too low to meet the potential demands, the company took this opportunity by producing more and raising their price.

Presentation of Results

· Sub-divisions

· R&D: new merchandise design, manufactured goods life cycle organization

· Marketing: cost assessment, demand prediction, advertising financial plan

· Production: expenditure supervision as well as control, inventory administration, along with management

· Human Resources: employees training as well as recruitment

· Finance: debt along with stock organization

Round 1 was tough; team Andrews had to get used to the simulation platform and learn how every number affected the other within and every department.

By Round 4 every department was doing much better and our team was on the right path. The stock price and profits were a perfect score. The Customer perspective side of the simulation reflected our focus on what the customer experiences within the industry. Team Andrews achieved a perfect store in the Learning and Growth side of the scorecard.

Round 8 was one of the team’s highest scored. The Stock Price and profits remained at a perfect score, as well as the Contribution Margin, Plant Utilization and Days of Working Capital. The Customer perspective side of the simulation was also at a high score, as well as the Learning and Growth aspect.

Team Andrews was able to maintain a perfect score in the Internal Business Process, and Customer sections of the Scorecard. The Financial section of the Scorecard reflects a score of 0 for the Emergency Loan as a proportion of total assets; however, we reached a perfect score in the Market Cap and Sales sections. The Learning and Growth section was short by half a point in the Assets/Employee line.

Future Approach

If team Andrews were running the company for the next five years, the team would continue working on improving the sales forecasting and units to be produced as those are two really important parts of the business’ base. Andrews would continue to spend a good amount on the production capacity and marketing in order to increase customer awareness, which will result in higher sales; therefore, higher profit. There aren’t a lot of changes to be made as team Andrews has evolved from Round 1 to Round 8 and has improved tremendously. This means the team members are making the right decisions and focusing on the right departments.

Team Effectiveness

Team Andrews has grown to be a great set of CEOs during the simulation on CAPSIM. Members have learned to always educate themselves about the competitors’ activities and the customers’ buying behavior. Also, the team has learned how to utilize the Balanced Scorecard to our advantage and as a guide to keep track of the business’ performance. It has helped to increase profits as well as with managing to keep the business in good standing in the long-term. For example, the Balanced Scorecard has taught Andrews to keep a good ratio in leverage, manage the day working capital better, be careful with the S&GA expenses, etc.