Transcript Bo - University of Texas at Arlington

How to screw up a company
in fast growing market with
competitive rivals …
Key take-away from Baldwin
Strategic Management simulation
Name
Student ID
Chenan Zhou
1000553188
Wei Du
1000553107
Lu Hua
1000557868
Yongjun Zhang
1000557909
Joelle Jsan
1000565072
R&D
•
Industry Intelligence
•
Mission of Statement
•
Initial Overall Strategy
•
Strategy and Actions of 1-8 rounds
•
Lessons Learned
Finance
Marketing
Production
Mission Statement
Customer focused Service
– Our mission is to closely working with customers provide
service and leverage different strategies
– We focus on three major market segments- high end,
traditional and low end
– Financially we need to investment R&D to enrich the
product pipeline. The existing product can allow us to reap
sales for many years based on the product life cycle. The
products will maturely move from high end to traditional,
Low End products
Our Slogan: 高的更高，低的更低
Our customer focused strategy
• Our Target segment on customer’s top concern are:
Traditional, Low end, high end
• The differentiation strategy:
– Invest R&D strongly according to the needs of the high end
customer’s need to lead the market growth
• Cost leadership strategy:
– Extend the market share improve the production efficiency and
ensure the competitive price.
H-end: newer products, prefer products near the leading
edge of their fine cut circles.
Low
Tech Performance
Traditional
Size
High
Tech
T: products Traditional customers prefer products in the
exact center of the circle
L-end: older technology ideal spot is near the upper left
edge of the circle.
As time goes by, customers want smaller, more powerful sensors.
R&D
Round 1
• What we did:
– Reduce material cost by redesign the low end product for
lower selling price and bigger market share in L-End.
– In order to increase the production, we purchase the
capacity of the L-End product. (not realizing it will only be
utilized in the next year.)
– Increase marketing promotion on L-End market product
– Adjust sales force budgeting in to L-End product
Production
Finance
Marketing
Round 1
• Result
–
–
–
–
–
–
–
The stock price: 25.59$
We capture market share@ 20.96%
The cont. margin is 27.1%
The product capacity was under utilized.
Size market product had stock out.
We have emergency loan.
Balanced score card:
R&D
Round 2
• What we did:
– Invest R&D and 15-month development phase new product to be
launched in high end market (actually spend more than 3 yr to launch)
– Reduce price existing H-End product 1.0$ (higher than market
deprecation average) to establish image in high end marketing. In order
to get ready for the new product
– Increase sales forecast on H-end and L-end products.
– Increase marketing promotion on H-End market product. maintained
other products’ promotion
– Increase High-E product sales force budgeting
– Ensure the High end product production, we set up production line of
the coming product.
– Increase the account payable term from 30 to 45 days
Production
Finance
Marketing
Round 2
• Results
–
–
–
–
The stock price: 25.67$ from 25.59$ Y-1
We capture market share@ 17.5% from 20.96% Y-1
The cont. margin drop 27.4% from 27.1% % Y-1
The product capacity was under utilized 66% in low-End
product.
– Traditional, size, performance product had stock out.
– We hold L-end market had inventory but still capture market
share. (we did not reduced the price change)
Round 3
R&D
• What we did:
– Invest R&D to satisfied our customer in size market
(though we strategically will not focused at )
– Reduce price of L-End, Tradition, H-End product 1.0$
– Plan for big launch campaign of our new H-end
product (acutely not yet developed)
– Hire working labor for 100 heads
– Increase the production productivities (no movement
on TQM )
Production
Finance
Marketing
Round 3
• Result
–
–
–
–
The stock price: 27.66$
We capture market share@ 22%
The cont. margin drop 20.4% from % Y-1
The product capacity was under utilized 66% in low-End
product.
– New product did not launched due to mis-understanding of
the “rules”
– Traditional, size, performance product had stock out.
– We hold L-end market had inventory but still capture market
share. (we did not reduced the price change)
R&D
Round 4
•
What we did:
– Invest R&D improve Traditional product in quick win
– Reduce price existing H-End product and increase sales allocation.
– Improve the automation rate and Increase the L-end product
production
– Move existing H-end product into traditional market with lower price
– Maintain the production of size and performance product
– Plan for big launch campaign of our new H-end product (acutely not
yet developed)
– Provide for employee training
– Invest in TQM to improve production
Production
Finance
Marketing
Round 4
• Results
–
–
–
–
–
The stock price: 12.47$
We capture market share@ 19% from 22% Y-1
The cont. margin 19%
Traditional, size, performance product had stock out.
The production utility is less than 50% of size and
performance product lines.
– Whole size and performance markets also short of supply
– We hold L-end market had inventory
R&D
Round 5
• What we did:
– Invest R&D on performance and size products (improvement
launched in the same year)
– Start selling on new H-End product (due to mis-operation of the
tool, it’s already aged=2yr)
– Increase the sales forecast on performance and size products
– Plan for a conservative sales forecast on our new H-end product
– Increase High-E product sales force budgeting
– Increase working labor
Production
Finance
Marketing
Round 5
• Result
–
–
–
–
–
The stock price: 11.97$
We capture market share@ 19% from % Y-1
The cont. margin drop 18.5% from 19% Y-1
New for H-end, size, performance products had stock out.
By studying the perceptual map, found our quickly
improved products in size and performance is about to drop
out the rough cut.
R&D
Round 6
• What we did:
– Invest R&D on all products
– Decrease the price of 2 traditional products (after quick R&D
improvement )
– Increase the sales forecast for 2 traditional products
– Purchase production captivity for other 3 products (will be ready
after 1 yr from the R&D lab)
– Maintain marketing and sales spending
– Invest on TQM and JIT as well as training
– Give divend
Production
Finance
Marketing
Round 6
• Result
–
–
–
–
The stock price: 7.95$, from 11$ Y-1
We capture market share@ 18% from % Y-1
The cont. margin drop 13.1% from % Y-1
We hold huge inventory of L-end market and traditional
products (due to product feature is close to drop out the
rough cut of perceptual map)
R&D
Round 7
• What we did:
– Invest R&D for traditional product and H-End
– Increased the price of H-end product after review the
competition and marketing promotion as well
– Lower the price of Low end and tradition product (dropped out of
rough cut)
– Sell production line of 2 L-end and traditional products.
– Increase H-end production and production capacity
– Increase working labor to 1200
Production
Finance
Marketing
Round 7
• Result
–
–
–
–
–
The stock price: 4.2$
We capture market share@ 12.23% from % Y-1
The cont. margin drop% from 9.6% Y-1
We clear up the inventory and sell 2 production lines.
Our traditional product meet the needs of customer, sold
very good and out of inventory
– size, performance product needs existing
– H-end product start to have inventory
R&D
Round 8
• What we did:
– Invest R&D for size and performance products
– Low the price of H-end product after review the competition
– Spend limited marketing spending on H-end price (due to short
of cash flow)
Production
Finance
Marketing
Results after round 8
Lessons Learned and take-away
•
•
•
•
•
•
R&D
Be familiarized with rule of games and technology.
Stick to the mission and vision
Keep R&D wheel running to fill up the product pipeline
R&D investment not sufficient (1%)
R&D not focus in our key propriety products
Be sensitive to customer needs (perceptual map) and
adjust R&D direction according.
Production
Finance
Marketing
Lessons Learned and take-away
• The production capacity shall be fully initialized.
• Foresee the capacity increase and sequenced investment
R&D
aligning marketing forecasting and R&D timing.
• TQM and training is not only sufficient enough.
• Finance control shall be strong. Cash flow is king
Production
Finance
Marketing
R&D
Lessons Learned and take-away
• Marketing forecasting shall be accurate and close to
market trend.
• Marketing forecasting not aggressive on new product.
• Price strategy shall consider the market trend and product
nature.
• Marketing promotion shall be highly aligned with our
scheduled plan.
• Sales allocation
Production
Finance
Marketing
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Baker
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Bold
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Price in $
Price Trends - Segments
Boy