Strategic Management DQ 3 Response

Discussion Question Response

In this discussion, debrief your Competitive Round 1. What did you learn from your decisions and rationale for the solutions you implemented in Round 1? What do your reports tell? In particular, focus your responses using the following sections from the Foundation FastTrack: low-tech segment, high-tech segment, and perceptual map.

When responding to peers, you must do the following:

Demonstrate more depth and thought than simply stating “I agree” or “You are wrong.” Guidance is provided for you in each discussion prompt.

Kaitlyn Halmi - The results I received for our first competitive round weren’t so great. I only received one star and it was for my lack of emergency loan. This is great, but alone it is not enough to make a successful company. I found the Foundation FastTrack report extremely helpful in seeing what I could do better. I like that it laid out my performance in comparison to my competitors.

 

I stuck with only one product for the first round just so that I could get a feel for the simulation. I positioned it in the low-tech segment in what I thought was optimal performance and size coordinates, but compared to the competition, my performance was too low, and my size was too high. Also, the age of my product was an issue for the segment. I had the lowest age of all the companies even though age is of high important to low tech customers. I knew this was important to them last week when making decisions, but I didn’t think I would be too far off from competitors. Repositioning my low-tech product this week is going to be a priority. Another issue I faced in the first round was that my forecast was too modest, and I missed out on many potential sales due to lack of inventory. I produced 929 units while the top competitors produced, and sold, 1523 units. This means that I was not able to satisfy 95% of demand costing me a star. This is something I plan to tackle this week as well.

 

My lack of profits and low contribution margin were also issuing this week. I came out with -$108,120 in profits, but I think that I found where I was going wrong. First, I set my promo and sales budgets way too high in comparison to my competition. I was thinking that because these are both important for my strategy, I should keep them high to ensure customers know about my product and have easy accessibility to it, but I missed the mark by quite a bit. This will be lowered this week to be more comparable to the competition to save some money. Also, I retired some of my common stock which took money away from my profits. I’m not sure where I was looking to think that I had enough money to spare to do this during the first round, but it is something I am going to look harder at this week during the next two rounds. As for my contribution margin, it was low, but not too much lower than the 30% goal. I was able to get it to 25.5%, but I am struggling to find ways to increase this.  With the position of the product, I was able to decrease the materials needed for production quite a bit. I also kept production low enough that I only used a small amount of my second shift keeping overtime costs down. I’m thinking the only thing I can do is increase the price of my product, but my pricing was pretty close to those set by the competition. Any advice anyone can offer is greatly appreciated!

Respond -

Steven Littlefield - Class,

This is very difficult! However, it is also fun at the same time. While I did turn a profit, I was below the target contribution margin of 30%. I was also recommended to perhaps increase my marketing to make sure the product is visible to the public. 

For me, it was a matter of making some changes and then flipping through some of the reports to see how those decisions were going to be reflected in the numbers. For the high-tech and low-tech areas of the fast-track newsletter, Andrews was around the middle of the pack. We had approximately a 17% market share on the low-tech side and around 13% for high-tech, which is something we are working on with the development of a new sensor in the beginning stages. We sold 934k low-tech sensors and 343k high-tech. 

We definitely have some work to do and hopefully I can make some adjustments this week and put us back near the top! 

Response -