Transcript JA Titan Notes - Warren County Public Schools

JA Titan Notes
Balancing Supply and Demand
Capital Investment
Production
Marketing
Research & Development
Demand
Supply
$
Price
• Low Price= High Volume
– Walmart has low prices and much stock. They pay
many workers and for much merchandise but make a
profit. They have expanded into Superstores.
• Medium price = Medium Volume
– Target has higher prices than Walmart but lower than
department stores like Macys. They spend an
average amount on workers and merchandise.
• High price = Low Volume
– Mercedes Benz sets prices high. The amount of cars
sold is lower than other models due to the price. The
mark up is amazingly high and that is where profits
are made.
Marketing
• To increase demand of your product
you advertise. Advertising will
increase your sales. Increased sales
= increased demand
– The questions are
• Who is the target market?
• How do I advertise to that market?
• How much do I spend on marketing to
make a profit?
• Marketing Venues
–VIM Mass Mailing
–FleXiPaper Ads-$2,000
minimum
–SkyBoard Ads- $4,000 minimum
–Hologen Ads- $6,000 minimum
Research & Demand
• R&D is used to improve your product. All
the amenities in cars were done through
R&D (moon roof, MP3 hook ups, AWD,
FWD, Antilock Brakes, Air Bags, Power
windows, etc.)
– Spending in R&D will improve the product and
will increase sales eventually. R&D will effect
sales when applied consistently and over
time. It is NOT a quick fix for demand.
Types of R& D
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Camera
Fusion Power
Z-Chip
Smell-O-Vision
Video Conferencing
Gaming Module
Salellite Antenna
Wafer-thin Case
Titanium Case
Remote Control
Production
• How many will be produced? Is high, low
or medium volume demanded?
• In JA Titan production is at its maximum
efficiency at 80% of capacity.
– Capacity = 1,490 units
– 1,490 x .80 = 1,192
– Operating below 80% capacity will cost you
more
– Operating above 80% capacity will cost you
more
Capital Investment
• Capital Investment is improving your
business. In JA Titan it specifically means
how large your company grows.
• Decisions to increase CI will not affect
your production capacity for 2 quarters.
– Example: in quarter 3 you increase CI. You
will not see an increase in Production
Capacity until quarter 5.
• Compare your CI to your pricing
strategy. They are linked. How?
–If you have a low $, high volume
strategy your CI will need to
increase.
–To keep up with demand, due to
your low $, you will need to expand
your company.
To grow: CI should be higher than
depreciation
To stay the same: CI=Dep
To shrink: CI<Dep
(hint: To grow one unit add $40 to CI.
If you want to grow by 100 units
add $4,000)