Industry 411: KPraz Sensors
Individual Simulation Analysis Report of Company 12
COURSE: SCM BA 411, SECTION 010
2011
Presented by: Ms. Kristen L. Prazenica, Public Relations Specialist
Company 12
Simulation Analysis Report of Company 12
CAPSIM STRATEGY
To Esteemed Board of Directors:
This report serves as a representation of the decisions and strategies employed by KPraz Sensors up until the
current calendar year. Through thorough documentation and research endeavors this report will provide an in-depth
scope of the company and how attempted strategies performed for individual business functions. Next a
consolidated explanation will be provided on how each function’s performances integrated to determine the current
status of the company. Following the breakdown report of each function, there will be a detailed analysis on KPraz
Sensors and how newly acquired strategies will attempt to improve future operations. There will then be an
examination into the competitive factors influencing outcomes of the company’s long term strategy. Then finally a
financial breakdown on the monetary issues that persuaded decisions and specific outcomes.
KPRAZ SENSORS STRATEGY
Research & Development Analysis: For KPraz Sensors, the strategy was to keep product performance ability and
size consistent throughout the course of the game. The company felt employing a reserved approach to product
development and design would help keep revenue and sales consistent which was the long term goal desired. Agape,
a size market product was kept at a performance level and size of 5 and 14 throughout the past three years. What
began at 15% market share in the size industry dwindled to 12%, 3%, and 2% over the course of time. Sales began
at 286 units and currently are holding firm at 82 (refer to 1). This example demonstrates keeping product
specifications at a consistent status is not an adequate strategy. Sales were not consistent as the company had
anticipated, and an extensive amount of market share was lost.
For future improvements in R&D development, the company plans to match product specifications to
consumer preferences. Taking into consideration the needs of the customer will help KPraz Sensors cater product
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design and development to match market demand. This will help to improve operations and eventually attain
consistent sales which is the long term goal ultimately desired.
Marketing Analysis:When it comes to structuring a through Marketing analysis, it’s all based on the Four P’s:
Product, Price, Place, and Promotion. The strategy employed for KPraz Sensors was to plan each promotional
1
budget individually for each product. The goal was to increase money spent on promotions for commodities that had
closer characteristics to a segment’s desired specifications. KPraz Sensors wanted the company’s public relations
efforts to enhance credibility and brand reputation for the products matched closest to market demand. Another
integral element of the strategy was to retain a lower sales budget than competitors. Even though this resulted in
lower accessibility ratings, the company hoped through increased communication efforts on the products would offer
a bit of leverage in regards to ensuring customer satisfaction.
For example, in Round 1 for the Traditional segment Able’s specifications matched perfectly to ideal
consumer preferences. Since this was one of KPraz Sensor’s higher market share products, a higher promotional
budget of $1,000 was set driving a customer awareness level of 58% (refer to 3). Sales budget was kept conservative
at $900 resulting in customer accessibility at 49% (refer to Chart 2 or 4). However in Round 3, a new strategy was
employed to keep promotional budgets consistent to competitors and increase sales budget for enhanced
accessibility. This was not an adequate decision resulting in increased expenditures that failed to compensate for
sales losses. For future marketing efforts, KPraz sensors will utilize a stronger promotional budget to drive
awareness and alter sales budgets accordingly. In regards to pricing, the company plans to establish pricing that
matches a segment’s desired value. There was not a very clear cut strategy in place for KPraz Sensors throughout
the first three rounds, and a proposal to increase market research efforts on customers’ pricing expectations will
develop an adequate strategy to be employed in the future.
Production Analysis: KPraz Sensors wanted to implement a product strategy that involved making sure capacity
never exceeded production. That way, processes would run efficiently and help the company achieve the goal of
earning consistent profits. In the first round, automation levels were set low (range of 2 to 4) to help ensure money
conservation. Capacity exceeded production 5500 to 4300 and inventory levels ranged from 0 to 182 (refer to 5).
For the next round no changes were made to inventory levels, and capacity only surpassed production by 400
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resulting in no stock-outs (refer to 5). The most recent calendar year automation levels were increased for the
traditional and size markets and the rest remained constant. This resulted in three stock outs for Acre, Adam, and
Aftand and an exceedingly high inventory for Able at 1,090 units.
2
In the future, KPraz Sensors plans to coordinate automation levels to the prescribed market. For example,
for a high-end market the company would increase automation levels to help lower production costs. In the future, a
conscientious effort will be made to raise automation levels earlier in the game to help keep the cost of production
reasonable and attempt to increase profitability.
Financial Analysis: K Praz Sensors had a very difficult time in regards to finances. The company incurred negative
percentages on ROS, ROE, and ROA in the first round (refer to 6). The following years resulted in dangerously low
rates of return as the company took out an emergency loan of $28,812,871 to prevent bankruptcy. K Praz Sensors
plans to work closer with marketing to project a more accurate sales forecast and establish a realistic pricing system
to prevent unrealistic cash flows. Another change to be implemented will be to issue more stock to fund capacity
and automation for long-term growth.
Competitive Considerations: There were a lot of competitive factors that prevented KPraz Sensors from
accomplishing the goal of earning consistent profits. KPraz Sensor’s competitors had lower prices set in the low end
segment and better product positioning in the high end. Another common pattern was sensors for the company were
often a lot older than that of competitors. In the first rounds, the company had lower promotional and sales budgets
compared to the other organizations. This hurt the company’s image and accessibility levels because communication
was lacking and delivering customer satisfaction was low. The Eric Company dominated the traditional segment in
round 2 at 30% market share, while 90% of the performance sector was in control by competing entities. In addition
to these challenges, the other organizations had double the promotional and sales budgets of KPraz Sensors ensuring
their customers better accessibility and awareness.
For two consecutive years, the company had 4.53% overall market share. In order to become more
competitive in the future, KPraz Sensors needs to focus on increasing promotional and sales spending. In addition,
their needs to be improved R&D efforts in determining product performance levels and sizes. Plans on
implementing a less product focused strategy will help the organization develop a greater presence in the sensor
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industry. Delivering superior value will become the number one priority as K Praz Sensors places its most valued
stakeholder, the customer, at the forefront of all future efforts.
3
Appendix
1. Research and Development Results
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2. Marketing Customer Awareness and Accessibility Tracking
4
3. Promotional Efforts and Awareness Coordination Graph: Able & Acre
3000
2500
2000
Acre Customer Awareness
Acre Promotional Budget
1500
Able Customer Awareness Level
1000
Able Promotional Budget
500
0
1
2
3
4. K Praz Censors Accessibility Levels
300
250
200
Agape Accessibility Level
Aft Accessibility Levels
150
Acre Accessibility Level
Able Accessibility Levels
100
Adam's Accessibility Levels
50
0
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1
5
2
3
5. Capacity and Production Analysis
6,000
5,000
4,000
Capacity
3,000
Production
2,000
1,000
0
1
2
3
6. Financial Ratio Breakdown: ROS, ROE, & ROA
0
ROS
ROE
ROA
-100
-200
-300
ROS
-400
ROE
ROA
-500
-600
-700
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-800
6