Industry and Competitor Analysis
SIMULATION REPORT TEAM-Erie
INDUSTRY ID-CP118701_4
Name
Roll Number
Nitin Mohanty
2210184
Rohit Saxena
2210193
Piyush Taneja
Arpita Sonawane
Suyog Darde
Mahendra Jai Sudheer Ponnaghanti
2210186
2210156
2210207
2210174
Industry Overview
•Industry Overview:
• Sensors manufacturing industry (OEMs)
• 5 companies
• Each company starts with $100 million in sales
•Market Characteristics:
• 5 market segments
• Closed marketplace
•Product Lines:
• Each company operates with 5 product lines
• Market Segments
• 5 market Segments
• Traditional
• Low End
• Size
• Performance
• High End
Company OverviewERIE
VISION
Become market leader by providing highquality,
efficient service and technology to clients.
MISSION
Be a top and profitable sensor producer by
gaining knowledge and serving target
markets.
COMPETITOR ANALYSIS
R&D Strategy
• Low: We conducted R&D only once, since we were selling at low price to
maintain contribution margin and subsequently relied on competitor
price analysis to inform our own pricing decisions.
• High: We implemented a regular R&D program to develop innovative
solutions that enhance customer satisfaction and justify premium
pricing.
• Performance: Alternative R&D strategy. Since there was a drift exiting
circle we sold the product.
• Size: Alternative R&D strategy to save on costs
• Traditional: We didn't do any R&D in the beginning and merely changed
the pricing, but the product wandered outside of the circle, so we sold
it.
Marketing Strategy
• Low: Pricing was mostly on the lower end of the client segment because
we were not undertaking much R&D and hence intended to sell off
readily with a price advantage.
• High: Pricing was mostly on the higher end of what customers expected.
Because we intended to concentrate on contribution margins.
• Performance: We were charging a premium since we were performing
research and development and wanted our products to be updated.
• Size: We kept the price constant.
• Traditional: We did competitive pricing.
• We kept the sales and promotional budget low in the beginning
and gradually expanded it.
Production Strategy
• Low: We employed the plant in the second shift, which raised plant
utilization up to 200% in the final rounds.
• High: Because we were performing R&D to satisfy consumer expectations,
it was originally lower but gradually climbed to 126% plant utilization.
• Performance: Plant utilisation ranged from 60% to 100%, depending on
inventory remaining to save money.
• Size: The majority of the time, plant utilisation ranged between 80%
and 135%.
• Traditional: Due of low sales, we have increased manufacturing to 100%.
We also restricted capacity when we had too much inventory to save
money.
•
We also sold some capacity because we were unable to fully utilise it in the
middle stages.
Market Share Analysis Across Products
10,00%
9,00%
8,00%
7,00%
Eat
Ebb
Echo
Edge
Egg
6,00%
5,00%
4,00%
3,00%
2,00%
1,00%
0,00%
0
1
2
3
4
5
6
7
8
Segment Share Analysis
25,00%
20,00%
15,00%
10,00%
5,00%
0,00%
0
1
2
Traditional
3
Low End
4
High End
5
Performance
6
Size
7
8
Financial analysis
Sales values are constantly decreasing which was the greatest reason for our losses. We
have also suspended our product in Y4 which causes great drop in sales while R&D and
manufacturing expenditures were constant
Financial Projections
Year 8
F- Year 9
F-Year 10
F-Year 11
Sales
$7,872
$6,537.82
$5,429.76
$4,509.50
Total Variable Costs
$6,881
$5,053.16
$4,196.73
$3,485.45
Depreciation
$1,017
$1,017
$1,017
$1,017
SG&A
$1,828
$1,287.40
$906.68
$638.55
Other
0
0
0
0
EBIT
($1,855)
$467.65
$216.03
$7.05
Interest
$3,825
$3,825
$3,825
$3,825
taxes
($1,988)
($1,988)
($1,988)
($1,988)
Profit sharing
0
0
0
0
Net profit
($3,692)
($1,369.35)
($1,620.97)
($1,829.95)
Financial Projection Analysis
• Here we have taken sales growth rate to project for future years. Average sales
growth rate is –17%. Similarly, average SG&A expenses growth rate is –30%.
• We are not able to get profits till date and sales is decreasing over projected
period where as net profit is decreasing slowly.
Product Segment Transition Matrix
Round 4
Round 5
Round 6
Round 7 Round 8
Low End
Low End
Low End
Low End
Low End Low End
High End
High End
High End
High End
High End
High End
Performance
Performance
Performance
Performance
Performance
Size
Size
Size
Size
Size
Size
Size
Product Name Round 0
Round 1
Round 2
Round 3
Eat
Traditional
Traditional
Traditional
Traditional
Ebb
Low End
Low End
Low End
Echo
High End
High End
Edge
Performance
Egg
Size
Future Strategy

Be a Niche Player: Sell products in low end and High End Consumer Segment only

Optimizing Inventory Management:





Implementing strategic inventory planning to mitigate unnecessary costs.

Better forecasting market demand
Rationalizing Accounts Payable & Receivables:

Reassessing the durations of accounts payable and receivables.

Ensuring an optimal balance in working capital cash reserves.
Targeted Market Strategy:

Directing efforts towards specific market segments.

Tailoring marketing strategies to cater to the distinct needs of chosen segments.
Incremental R&D
Strategic Long-Term Borrowing:


Acknowledging the necessity for long-term financing to support expansion.
Precision in Funds Allocation for Marketing:

Conducting a thorough analysis for the precise allocation of marketing funds.

Allocating resources based on the proven effectiveness of marketing activities.
VALUE NET MODEL
CUSTOMERS:
Players from power
generation, satellites,
technology Industry
COMPETITORS:
Existing market players:
Andrews, Baldwin, Chester,
Digby & Ferris
COMPLEMENTORS:
Erie
SUPPLIER
Manufacturers of cameras,
bio metric devices, labs on
a chip
Key Learnings
• Strategic Forecasting: Recognize the pivotal role of initial forecasting in effective planning.
• Labor Optimization: Prioritize equitable distribution of labor to enhance cost-effectiveness and efficiency.
• Segmented Approach: Acknowledge the challenge of catering to diverse market segments simultaneously.
• Beyond Pricing: Understand that factors beyond pricing can significantly influence product demand.
• Continuous R&D: Embrace continuous research and development as a crucial and feasible option for product
improvement.
• Customization for Success: Identify customization as a key factor contributing to success in the market.
• Inventory Management: Be mindful of the adverse effects of excess inventory on manufacturing and plant
procurement planning.
Future Strategy

Be a Niche Player: Sell products in low end and High End Consumer Segment only

Optimizing Inventory Management:





Implementing strategic inventory planning to mitigate unnecessary costs.

Better forecasting market demand
Rationalizing Accounts Payable & Receivables:

Reassessing the durations of accounts payable and receivables.

Ensuring an optimal balance in working capital cash reserves.
Targeted Market Strategy:

Directing efforts towards specific market segments.

Tailoring marketing strategies to cater to the distinct needs of chosen segments.
Incremental R&D
Strategic Long-Term Borrowing:


Acknowledging the necessity for long-term financing to support expansion.
Precision in Funds Allocation for Marketing:

Conducting a thorough analysis for the precise allocation of marketing funds.

Allocating resources based on the proven effectiveness of marketing activities.
Appendix
Financial forecasting data