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Mgmt 4830 Business plans and Strategies
1. Using the homework on Margin Potential, your experience in the Team Practice rounds, and your best judgment, write out as a
team on this handout your logic and ranking for each of the market segments.
Dimensions
we
considered in
the ranking
Low End
Rank
Traditional
Rank
If you need more space for calculations use this space below.
High End
Rank
Performance
Rank
Size
Rank
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2. Go to handout – the Six Basic Strategies (you can also go to the “Six Basic Strategies” chapter of the online Manager Guide or
the tutorial “Strategies and Mission Statements” on CapSim’s website under Help). Choose the strategy that best matches who
you want to serve (segments by order of ranking) & your team’s strengths & abilities. Since all teams start the competition
with the similar products, sales outcomes, and production abilities, the difference lies in you and your team – what you’re
capable of and what you honestly think your team can accomplish.
Strategy
Cost leader w/ Product
life-cycle focus
Differentiation strategy
w/ product life-cycle
focus
Broad Cost Leader
Broad Differentiation
Niche Cost Leader
Niche Differentiation
What we believe it will demand from us…
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3. Given your choice of strategy, what would your firm INTEND to do in terms of goals, positions taken, or outcomes over the
next 8 years of the simulation? What is it that, if accomplished, will bring in the profits, the market share, and the success that
will result in your winning?
In marketing
areas?
In production?
What would be
needed from
finance to
support these
intentions?
Now, on the next few sheets, try planning out the functional area tactics, at least in general. Some examples are on p. 10.
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Tactical package for product: ______________ in segment: _________
R&D Steps
What?
When?
Marketing Steps
What?
When?
How?
Production Steps
What?
When?
How?
Finance Steps
What?
When?
How?
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Tactical package for product: ______________ in segment: _________
R&D Steps
What?
When?
Marketing Steps
What?
When?
How?
Production Steps
What?
When?
How?
Finance Steps
What?
When?
How?
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Tactical package for product: ______________ in segment: _________
R&D Steps
What?
When?
Marketing Steps
What?
When?
How?
Production Steps
What?
When?
How?
Finance Steps
What?
When?
How?
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Tactical package for product: ______________ in segment: _________
R&D Steps
What?
When?
Marketing Steps
What?
When?
How?
Production Steps
What?
When?
How?
Finance Steps
What?
When?
How?
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Tactical package for product: ______________ in segment: _________
R&D Steps
What?
When?
Marketing Steps
What?
When?
How?
Production Steps
What?
When?
How?
Finance Steps
What?
When?
How?
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Tactical package for product: ______________ in segment: _________
R&D Steps
What?
When?
Marketing Steps
What?
When?
How?
Production Steps
What?
When?
How?
Finance Steps
What?
When?
How?
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One example of a very general tactical package might be:
RESEARCH AND DEVELOPMENT STEPS
We will introduce a new High End product every 2 years and retire our Low End product when it
becomes obsolete (falls outside the Low End segment circle). We will gradually phase-out our
Performance and Size segment products (Aft and Agape). We will ultimately have a steady stream of
products lined up along the High End, Traditional, and Low End segments.
MARKETING STEPS
The Andrews team will spend modestly on promotion and sales budgets in our targeted segments
(High, Traditional, and Low). Our prices will be lower than average for those segments. For Aft and
Agape: we will price at the top of the expected range and discontinue advertising & sales budgets as
we retire these products.
After we establish our cost leadership position, we will revisit our situation to explore options to
improve awareness and accessibility.
PRODUCTION STEPS
We will significantly increase automation levels on products we intend to keep for more than three
years (Adam and Able) and spend the money necessary to set-up highly automated plants for our new
products as they are launched. We will sell off the plants for Aft and Agape over the next few years.
FINANCE STEPS
We will finance our investments primarily through long-term bond issues, supplementing with stock
offerings on an as needed basis. When our cash position allows, we will establish a dividend policy
and begin to retire stock. We are not adverse to leverage, and expect to keep debt/equity between 2.0
and 3.0. We measure performance in terms of stock price, ROE, and ROS.
An example of a much more specific tactical package might be:
Tactical Package: Add a new High End product “Addled”
R&D STEPS
What
Introduce new product. Size coordinate will be 10. Performance coordinate will be 11.
TBF will be 25,000 hours.
When
Due out in 2007.
MARKETING STEPS
What
Price will be $35. Marketing budget will be $1,100,000, promotion budget $1,200,000.
When
2007.
PRODUCTION STEPS
What
Produce 75,000 units at automation level of 3.
When
Ready by second month of 2007.
How
Purchase capacity in 2006.
FINANCE STEPS
What
Finance $11,000,000.
When
Today.
How
Issue long term debt.