The Business Competency Stimulation for Andrews Company provided an immersive platform for students to explore and implement effective strategies to maximise profit.
Executive Summary
The Business Competency Stimulation for Andrews Company provided an immersive platform for students to explore and implement effective strategies to maximise profit. During the simulation, the student embarked on five rounds of decision-making, aiming to identify the optimal approach that would lead Andrews Company towards profitability. The initial round involved reducing prices and utilising long-term debt; however, this strategy yielded little profitability. To better understand competition within the industry, a comparison was made between Honeywell International, an honest company, and Andrews in the simulation. This analysis encompassed external factors using Porter’s Five Forces model and internal factors through SWOT analysis. By employing these tools, valuable insights were obtained regarding competitive strategy and challenges faced by Andrews (Umid, 2023). Based on the findings from this comprehensive evaluation, it is recommended that Andrews explores alternative financing options, such as retained earnings or equity, rather than relying solely on long-term debts. Adopting this approach would support financial stability while avoiding unnecessary liabilities impeding future growth prospects.
Furthermore, given the nature of their sector, price competitiveness remains crucial for establishing a solid market presence. Therefore, it is emphasised that Andrews must strive to maintain competitive pricing strategies alongside other necessary initiatives to secure a substantial share within their target market. Leveraging insights from successful marketing strategy implementation and effective research and development practices are paramount for sustained success in this dynamic business environment. These practices will enable Andrews Company to remain adaptable while continuously enhancing its products.
Table of Contents Executive Summary ….2 Introduction 4 Part One 5 Research and Development Department 9 Marketing 10 Finance 11 Specific Group Strategies and Decisions. 13 Part Two 16 Part Three 18 Part Four 25 Conclusion 29 Bibliography 31 Glossary 33
Introduction
In today’s ever-evolving and fiercely competitive sensor industry, Andrews confronts stiff competition from four other firms. These formidable opponents, each catering to one of the five distinct markets, pose an ongoing challenge to Andrews’ growth and sustainability. However, amidst this cutthroat environment, the implementation of business simulation tools emerges as a powerful aid in assisting businesses like Andrews in facing such intense rivalry. Harnessing the potential of these simulations allows companies to navigate through complex market dynamics by providing invaluable insights into various strategic decisions that impact their success. By utilising these sophisticated virtual platforms, executives can simulate real-world scenarios within specific market segments while using historical data and market trends to guide their decision-making process effectively. Business simulations offer an avenue for testing diverse strategies without risking substantial financial investments or suffering irreversible consequences in the marketplace. This empowers firms like Andrews to understand competitor behaviour comprehensively and its implications on pricing strategies, marketing campaigns, product development initiatives, and brand positioning efforts; fostering adaptability and innovation becomes imperative when striving for differentiation against rivals. Through business simulations’ immersive experiences and dynamic feedback systems, tracking company performance against competitors’ actions in multiple markets simultaneously promptly enables proactive adjustments based on emerging opportunities or threats. Thus, this ensures maximum competitiveness within every aspect of operations across all five markets Andrew inhabits.
In this exercise, business simulation aims to provide students with an engaging environment where they can compete against one another while attempting to turn around failing businesses. Students learn and practice business management by participating in a business simulation. In this performance, students are given multiple options depending on their analysis of the current situation. Capsim challenges its participants to imagine the future of a fictitious firm as it strives to satisfy its consumers and improve its financial standing. As a result, individuals improve their business acumen and capacity to make prudent choices. Andrews faces competition from four other firms in the sensor industry, spread over five distinct markets. Eight cycles were completed, with each new process commencing with a review of the previous year’s report to determine where resources should be allocated. Thus, the simulation was designed to simulate real-world business scenarios and test decision-making skills that can affect businesses positively or negatively. By analysing various aspects such as market fluctuations, resource allocation, marketing strategies, et cetera through varying simulated conditions, this report will offer valuable insights into optimising Andrews Company’s overall performance while providing practical solutions tailored specifically for them based on data-driven analytics derived from these simulations.
Part one
In this section of the report, examining and analysing the intricacies of the Strategy, Tactics, and Decisions taken by our ingenious team throughout the immersive Capstone® Business Simulation is imperative. A comprehensive understanding of their implications emerges as we delve deep into evaluating the success or failure of these crucial elements employed across various segments within our purview. The Strategy implemented was meticulously crafted, incorporating long-term objectives aligned with market dynamics while considering internal expertise and external opportunities. Through astute analysis of industry trends coupled with insightful forecasting, our team derived Tactics that allowed us to seize advantageous positions within each segment we operated in. Such tactics encompass product positioning strategies, pricing models tailored for optimal profitability and customer appeal, and effective marketing campaigns designed to increase brand visibility. Last but not insignificantly are the Decisions our dynamic team members made, who demonstrated an exceptional aptitude for critical thinking under daunting circumstances presented in this high-stakes simulation exercise. These decisions were informed by meticulous data analysis and intuition honed through experience; they effectively transformed conceptual ideas into tangible actions that propelled us towards targeted goals.
During the first lecture, we were given an enlightening overview of the Capsim program, a powerful tool that MBA candidates can utilise to simulate and explore real-world corporations’ intricate decision-making and strategy-formulation processes (Buil et al., 2019). Recognising its immense potential for learning and growth, our group of five individuals embarked on this captivating journey together. As each member registered for the Capsim platform, we eagerly engaged in numerous productive discussions regarding our approach. However, being novices at operating this novel program posed a significant challenge as we struggled to familiarise ourselves with its intricacies. Determined to overcome this hurdle collectively and maximise our potential for success, we ultimately committed to collaborating with Andrews within the immersive world of Capsim. By doing so, we gained insightful exposure to their research and development endeavours alongside critical insights into their marketing strategies, manufacturing processes, and financial management choices after strategically hiring them onto our team.
In preparation for a practice round, we brought our sensors up to date to meet the “ideal criteria” outlined in the Capsim guide. Andrews intended to expand its activities in both the low-tech and high-tech markets. Because of what we know, we have concluded that we need to differentiate ourselves somehow. As part of this plan, we broadened the scope of categories that were already in place. This is why we focused much on Able rather than its component pieces. Each team member hesitated to decide because they still determined which course of action would result in the most favourable outcomes. However, we experimented with every team member contributing to the activity’s success to understand the situation better.
Feelings:
The team collaboration studied various aspects of the products, including how they are utilised. It was natural for us to be nervous, given that none of us had ever worked with simulation software. We have been glued to the Capsim Videos to obtain the information we require concerning the Capsim program (Hernández-Lara et al., 2019). In addition, because each member approached the situation with a unique tactic and point of view, our group engaged in several heated discussions throughout the preliminary round.
During the initial round of the Business Simulation Capsim Exercise for MBA students, the group encountered various challenges that required a diligent and strategic approach to overcome. Firstly, they needed help comprehending and utilising all the detailed financial reports and market data provided by the simulation software. However, through meticulous analysis of these resources, they made informed decisions about product pricing, promotional strategies, and investment in research and development. Secondly, as there was limited capital available at the start of the simulation, they had to allocate funds among different departments while ensuring smooth operations carefully. This necessitated effective communication and collaboration within the team to reach a consensus on expenditure priorities. Furthermore, competing against other teams posed another challenge as it demanded constant monitoring of competitors’ actions and swift adjustments in marketing tactics or production volumes when necessary.
Despite initially experiencing setbacks due to miscalculations or incorrect forecasting assumptions, both individually made errors without confirming each other’s thoughts; the group eventually learned from their mistakes by thoroughly analysing performance metrics in subsequent rounds. By leveraging their collective knowledge gained from prior experiences as well as adapting swiftly to dynamic market conditions, such as adjusting production levels based on customer demand fluctuations or identifying untapped segments for targeted advertising campaigns, the group managed not only to surpass their projected sales goals but also achieving higher profitability than anticipated. It is worth mentioning that this exemplary performance was achieved partly due to exploiting opportunities presented by changes in consumer preferences during certain rounds combined with continuous learning through reviewing competitors’ moves. Their ability emphasised cultivating an adaptive
Evaluation:
Even though we had all done our research and watched online tutorial videos for Capsim, the first round was still difficult for all of us. So far, two successful Zoom sessions have been held to plan for a financially stable launch. Our initial step was to review the offered industry reports and the standard issue version of Capsim Courier. Then, we moved on to the following procedure. We considered the needs of all five markets, which vary in their emphasis on heritage, performance, cost, luxury, and size. Through studying books and online tutorials, we came to appreciate the relevance of drift rates, and we now take them into account whenever possible
Research and Development Department
Table 1: Research and Development Department
Customer requirements and drift rates were gleaned from the Capsim courier and industry report. It was our first order of business to ensure that all of our product lines remained in step with one another. Age, drift rate, and revision pace were all carefully considered. Able, Acre, Adam, Aft, and Agape are all different products with their niches and target audiences inside R&D. Aft, catering to the conventional market analysis, dominated the industry and outsold all others by a wide margin.
After much consideration, we settled on 9.4 and 15.5, providing Aft with a significant edge. Reliability is the most essential quality in this respect. According to the courier’s assessment, the level of trustworthiness was 22,000-27,000. The Most Time Before Failure (MTBF) of 27,000 was agreed upon. The specified MTB, size, and performance are taken into account. According to the courier report, the optimal age for a revision is 1, so the actual age at revision was 2. The price tag for this product’s R&D was a hefty $80. Adam: Adam was initially in the top performing and most significant market share. The performance and size drift rates for this sub-segment are both 0.9. We deliberated long and hard before increasing the MTBF to increase the product’s reliability.
Marketing
Table 2: Marketing
The marketing division of a company is crucial to its success because it is in charge of publicising the company and boosting product sales. Determining a marketing plan relies heavily on data gleaned from studies of product demand, market size, and buyer motivations. Each product’s price is defined in this division. To stimulate initial interest, we initially set our prices low. Price cuts effectively attracted more customers, but they may have hurt profitability. Each pricing range is decreasing by about half a dollar each year, which puts additional stress on businesses to find ways to cut costs.
The scope of the market was also taken into account here. Decisions on pricing and projections were made with the target price range and market share in mind. For instance, we decided to charge $21 for our standard product, $39.5 for the luxury market, and $34.50 for the economy market.
Finance
Table 3: Liabilities and Owner’s Equity
The chart above shows that in the first round of the simulation, the company had a large segment of retained earnings and a more significant long-term debt.
Table 4: Finance
Andrews Business issued $18,994 in long-term debt at an interest rate of 11.3 per cent to secure quick cash for operating expenses. We opted for long-term debt as a source of funding rather than current short-term debt because of the lower borrowing costs associated with the former. Since we did not know our opponents’ financial standing at the outset, we held off on making any first investments (Barker & Davy, 2019). We were still trying to come up with a firm plan. We decided not to invest in the initial round because of this possibility.
Financial Statement Analysis
Table 5: Financial Statement Analysis
The outcomes of the first round were unexpectedly different from what we had anticipated. We had thought that Adam and Aft could help us generate a profit margin for our business. There was more than one way to look at the situation, including the observation that our ROA and ROS were far lower than anticipated. According to the income statement presented earlier, the total sales revenue in 2023 was $ 101,073 million; of this figure, 64% came from the low-end sector (Acre and Able product), and the remaining 36% came from the high-end segment. These two goods are responsible for 73% of the overall contribution margin of $11,996 ($8,766,000,000), totalling $11,996. According to their break-even point calculations, Acre produced less money than the other four items, except Acre produced enough money by the end of the year to achieve financial stability.
The results of the experiment were analysed and visualised in a comprehensive chart. The findings indicated that in the initial round of the simulation, the company had a considerable amount of retained earnings along with significant long-term debt. With hopes pinned on Adam and Aft to help generate profitable margins for our business, we eagerly awaited positive outcomes. However, upon closer inspection, it became apparent that our return on assets (ROA) and return on sales (ROS) fell well below our expectations. This realisation prompted multiple perspectives on the situation at hand. One angle acknowledged that despite having high retained earnings and substantial debt investments initially, we could have capitalised more effectively on these resources. This led to unsatisfactory returns on both assets and sales. Despite this setback, another noteworthy observation emerged from the analysis. Within this complex landscape came an encouraging discovery – Able and Acre products captured a significant profit share among all offerings presented during the exercise. Though our overall performance fell short of desired levels due to lower ROA and ROS figures than anticipated; however, within this realm lay potential opportunities worth exploring further for future iterations or strategies. With an official tone befitting professional discourse surrounding such exercises in MBA programs like ours’, these insights shed light onto essential aspects regarding profitability management within simulated business environments scenarios.
Specific Group Strategies and Decisions.
In the Business Simulation Capsim exercise for MBA students, our group carefully deliberated on the decisions and strategies we made in order to achieve optimal results. Recognising the importance of pricing strategies, we strategically set our prices low to gain a competitive edge in the market. By doing so, we aimed to attract a more extensive customer base and ultimately increase our overall revenue. Although price cuts effectively garnered more customers, we needed to consider their potential impact on profitability. Nonetheless, we believed such measures would enhance our position within the industry. We meticulously analysed all available options when pondering debt versus equity as a funding source. Considering the lower borrowing costs associated with long-term debt compared to current short-term debt, it became evident that opting for this alternative would be financially advantageous for us. Hence, mitigating unnecessary expenses while seeking avenues for growth through financial prudence became one of our primary objectives. Understanding that research and development are cardinal components in sustaining competitiveness in today’s dynamic business landscape, establishing an efficient research and development department was paramount for us right from the start. We recognised that aligning all product lines with each other was pivotal in maintaining consistency throughout our operations within all segments of our simulated company. As such, nurturing innovation and keeping abreast of emerging technologies were integral to ensuring sustained success during this remarkable experience.
The first and most important choice I made for the research division was assembling a group of highly qualified experts who could conduct customer analysis, product development, and market research. This team would remain current with market trends, monitor client needs and wants, and create new items valuable to our customers. Before products are made available on the market, this group would also ensure they comply with legal criteria.
Regarding production decisions, I focused on creating an efficient system that allowed us to produce high-quality goods at lower costs. To do this, I invested in state-of-the-art equipment and technology to streamline our processes while maintaining high standards for quality control. Additionally, I worked closely with suppliers to ensure the timely delivery of raw materials needed for production runs. Finally, I put into place systems designed to reduce waste by tracking inventory levels accurately and reducing unnecessary labour costs wherever possible.
For marketing strategies, my goal was to increase brand awareness and generate more sales leads through effective campaigns across multiple channels such as print media ads or digital advertising platforms like Google Ads or social media networks like Facebook or Instagram. To achieve this goal effectively without spending too much money upfront on traditional advertising strategies such as TV commercials or radio spots. I leveraged influencer marketing tactics which involved working with famous bloggers who already had established fan bases within our target demographic groups so their influence could help spread the word about our brand quickly among potential buyers online. Furthermore, I also implemented SEO techniques into website design & content creation activities to create organic search engine traffic toward the company’s website, thus generating more qualified leads from targeted audiences.
Regarding finance-related decisions & strategies, my focus has been on cost-cutting initiatives while maintaining overall business growth objectives. To ensure financial discipline & efficiency, internal controls were established over expenditures & investments along with implementing automated accounting software solutions, which can provide real-time visibility into financial data, allowing us to make better-informed decisions when managing cash flows efficiently. Furthermore, I have set up periodic meetings between senior management members to review the company’s performance metrics against budgeted goals, helping us identify areas where corrective actions must be taken immediately.
In conclusion, we should have thoroughly reviewed the market conditions at the end of the first round, and our situational analysis needed to be revised. We looked at the Capsim Courier market research report but quickly recognised that we had not given it the thorough investigation it deserved. Our expectations were highly lofty, especially in light of our estimates, which were much too optimistic. Despite this, we were eager to try something new and taste this experience because it was our first time using the simulation software.
Part Two
The student discovers many significant differences between the competitive ecosystems of the Capstone simulation and the Comp-XM simulation, all of which have the potential to impact the success of their ideas. By familiarising themselves with these distinctions and drawing on the knowledge they gained from the Capstone simulation, the student can bring their company’s performance in the Comp-XM simulation to its full potential.
The student makes some observations and comparisons regarding the industry structures of the two different models. They take into account a variety of criteria, including competition, product distinctiveness, and market concentration. Students analyse the influence that recent structural shifts in their chosen industry may have had, if any, on the effectiveness of the strategies they have employed in the past as part of their Capstone project.
The student can explain how the Comp-XM and Capstone simulations each uniquely approach the question of market demand and segmentation. The investigation is conducted into particular facets of the Comp-XM simulation, such as consumer preferences, purchasing patterns, and general market tendencies. The learner considers how the changes might influence the effectiveness of their previous strategies and then modifies their approach to those considerations.
In the Capstone simulation, the student evaluates the significance of the student’s competitive advantages and investigates their applicability in the Comp-XM simulation. They consider the one-of-a-kind competitive environment that the Comp-XM simulation presents and assess whether or not the same sources of competitive advantage can be utilised or whether or not new ways need to be discovered.
The student thinks about how the two scenarios have drastically different resources. The following aspects are considered: general labour, production capability, and accessible capital. For the student to achieve the best possible results in the Comp-XM simulation, they need to carefully analyse how the modifications might impact the feasibility and efficiency of the techniques they have used in the past.
The student subsequently develops a set of objectives and strategies for their organisation to use in the Comp-XM simulation by using the completed analysis and the information they learned from the Capstone simulation. The following are some instances of such methods:
During the Comp-XM simulation, students learn how to define and segment their target market, and they are then tasked with developing successful methods for satisfying the requirements of those segments. They consider the clients’ demographics, psychographics, and purchasing behaviours while deciding whom to sell to maximise their effectiveness.
Product differentiation is the process through which a student strives to develop a good or service that is distinguishable from similar offerings on the market to achieve a competitive advantage in the Comp-XM simulation. They concentrate on the most significant aspects of the audience they are aiming for and work diligently to provide more value overall than their rivals. Students pay particular attention to cost management strategies to maximise the effectiveness of their organisation and the revenues it generates. They investigate the processes of manufacturing, the management of supply chains, and the pricing structures to look for ways to reduce costs and increase productivity.
Positioning Your Business Wisely in the Market Before selecting where to place their company, the student investigates the competitive landscape presented by the Comp-XM simulation. They do this by assessing pricing, brand image, and market placement to differentiate themselves from competitors. The student knows that devoting resources to research and development is required to maintain an industry competitive advantage. They invest in innovative concepts, improved products, and cutting-edge technology to advance their business.
Because the competition in the Comp-XM simulation is fluid and unpredictable, students must regularly assess their development and adapt their strategy in response to new circumstances. It will be helpful for them to optimise their business if they maintain a close watch on things like trends in the market, actions made by competitors, and customer feedback.
Part Three
The success and growth of any company can be attributed mainly to their willingness to diversify their operations. We want to evaluate potential new lines of business the company can enter to increase sales by conducting in-depth studies in the appropriate department. In addition, it becomes clear that a focus on quality is essential to maintaining a company’s competitive edge over the long term. Moreover, since the business world constantly changes, we discussed the Capsim simulation and offered high prices in the first round based on our practice rounds’ foundational knowledge. Instead of allocating individual departments, the team chose to work on each one together to benefit from all members’ combined expertise and perspectives. The drills shed light on our relative skills and limitations. We discussed what steps we should take next to fix the problems we encountered in the dry runs and what opportunities and dangers we face as we move toward making judgments in the actual races.
During the second practice session, we concentrated on the high end and maintained inventory to raise the production schedule and sell more to acquire market share. The group settled on a strategy prioritising high stability and steady growth in the High-End market share. In the first round of practice, we erred by making hasty judgments on most segments that required more time for production. Working together during warm-ups helped us get a feel for the arena, formulate a game plan, and correct our earlier errors to perform at our best in the first match. We were first nervous because we had never used the software before. Before we felt comfortable moving forward, we had to do much research online and view many videos. Even though we had already taken part in two practice rounds, we were nervous about how our final scores would turn out. Despite being nervous, we accepted how we felt and were prepared to take part in the actual rounds.
We issued long-term debt at the outset, invested heavily in research and development to ensure high-quality products, increased our marketing and sales spending, and embraced automation; nonetheless, we ultimately needed to take out an emergency loan. As part of our plan to repay the loan, we reduced production to reduce the amount of stock on hand and the associated carrying costs. Our market shares and profit margin grew due to the choices made to address the emergency loan. As a result of the choices made, there initially needed to be more supply in the market. The team will be better able to adapt to today’s ever-evolving business world with the knowledge they gain from studying corporate and company strategy. Using the differentiator life cycle approach, we dug further into our successes and failures. We discovered that our performance was favourable but that there were challenges to sustaining that performance as the processes became more complex, much like in the commercial world. We took stock of how our choices would play out and how each division would interact with the others. For the first round, our team had a great plan in mind, and we were relieved to reach a consensus on our expectations. As a result, we could make choices much more quickly than in the previous practice rounds. Market share-wise, we came out on top in this week’s Capsim round and fared reasonably well overall. There were good points and bad ones to this go around. Nonetheless, we were relieved that our performance in the competition did not mirror the preparation sessions.
ANALYSIS 1. RESEARCH AND DEVELOPMENT
According to the courier report from ground zero, the values for round one’s Performance and size categories were, respectively, 5.0 and 15.0. We made adjustments to the performance as well as the size of the system based on the +0.5 and -0.5 drift rates. According to our calculations, the ideal position would be 0.5 AU from the perfect location in the courier report. A size of 9.4 was achieved, and our performance was 3.0. The MTBFs for these products could range from 17,000 to 27,000 hours in this market. We concluded that the MTBF was the least essential parameter in this industry, so we decided against going all out on it and instead landed on a value somewhere between 1000 and 10% below the theoretical maximum. In this section, we decided that 19000 would work best. After entering Performance, size, and MTBF, it took two years until the age at revision reached 5.0.
All R&D is $1245 and was spent on research and development (21% of total section costs). We chose this market position despite the high R&D costs. However, we should have evaluated the age of the product adequately and wound up with 624 units in stock instead of the intended 815 units out of a total production run of 815. Budget Market: Acre The optimal scores for the low-end product in round 0 of the courier report were 1.7 for performance and 18.3 for size. Performance and size drift rates were +0.5 and -0.5 per cent, respectively. We settled on the numbers 3.0 for Performance and 17.0 for size. The product has a dependability scale from 12000 to 17000. We did not set its maximum from the get-go because it played a minor role in finalising our buy. Since its inception, the product’s MTBF has been 17,000. At around 24%, age is the second most crucial factor in this demographics’ purchasing decisions. The product’s age has advanced to 4.7 at this time. It took $120 in R&D to bring this product to market.
Classy Market: Aft’s optimal position for a premium product was 9.4 on the Performance scale and 15.5 on the Size scale. Performance and size drift rates in this category are +0.9 and -0.9 per cent per year. We have also resolved to adopt the same approach with this new product. A position between 8.9 and 11.1 would be best for the product. Therefore we went with those numbers. The product’s dependability is the third most crucial feature. In this market, the reliability rating is between 20000 and 27000. We did not select the highest level of reliability possible because it was not the most significant factor in choosing this product. Although it was not the most critical factor, we settled on a reliability value only a few hundred below the MTBF’s limit. We decided on an MTBF of 27,000 for this item. 2.6 would be the revised age. The retail price of the article is set at $80.
The Agape performance. This product’s performance and size in round 0 of the courier report were 3.7 and 11.0, respectively. Performance drifted +0.3%, while size drifted -0.5%. We opted to put the product between 9.7 and 15.5 on the market, which puts it in a highly competitive position. In this field, dependability is paramount. The courier report stated that the reliability fell between 19000 and 21000. The MTBF of 21,000 was chosen as the absolute limit. According to the specs (Performance, size, and MTBF), the next scheduled update would be in April 2023. Age at revision was 1.4, close to the courier report’s suggested period of 1.0. This item has a $259 research and development budget.
Size class – Able The courier report for round 0 states that this product’s performance and size were 5.8 and 14.3, respectively. Performance and size drift rates were +0.5 and -0.5 per cent, respectively. The product’s reliability is the third most vital feature. In this market, reliability scores might be anywhere from 16000 to 21000. We did not select the highest level of reliability possible because it was not the most significant factor in choosing this product. We decided to set the reliability relatively close to the limit, even though it was not the most critical criterion. 19000 was a good number for the MTBF of this product. Customers’ ages are the second most influential aspect of their buying decisions. The product’s ideal age is 1.8 years; its actual age at revision was 1.7. Research and development expenses for this item totalled $297.
The price points for Able, Acre, Adam, Aft, and Agape are $29.5, $21, $39.5, $34.5, and $33. Andrews used to charge the highest price for every product, which allowed us to capture the most significant percentage of the market (20%). There is a $1,000 sales quota for Able, $900 for Acre, $800 for Adam, $700 for Aft, and $600 for Agape. The marketing budgets for Able, Acre, Adam, Aft, and Agape were, in order: $1,100; $ 950; $ 900; $ 800; $ 800. It helps gauge how well-informed consumers are about the product. The company must continue spending money on advertising until 100% of customers remember the brand. The sales budget helps make the sector accessible by facilitating simple customer interactions with the organisation (Zulfiqar et al., 2019). Additionally, the corporation must gain around a third of its annual availability. In contrast to familiarity, which is product-centric, accessibility is market-centric. Therefore, achieving full effectiveness takes time.
More stockpiles than in the prior cycle indicate that our prediction was off. Our competitors’ varied techniques may have contributed to their success in the current round, explaining why we did not expect such contrasting outcomes. We learned from our mistakes and must adjust our plans for the next cycle to keep or increase our market share.
The income statement above details Andrews Business’s first-round costs and the company’s negative net margin. Andrews’ “unsatisfactory level” of performance in 2023 stems from the company’s inability to optimise sales units and reach profitability. Profitable results can be restored by expanding current sales and market share. Based on the company’s projected financial and market performance through 2023, we estimate an 8.7% return on sales and return on equity. Long-term debt used to purchase assets like buildings and machinery keeps the leverage ratio at a manageable 5.0. A significant drop in earnings per share and the price-to-earnings ratio caused the stock to close at $34.25 on Friday, below the industry average of $35. Overall, “Andrews” does not have a powerful presence in its market.
Finally, we will prioritise ensuring that the company’s products are sold at competitive prices without compromising quality. The results of this initial round are significant, as they will determine whether subsequent rounds can successfully seize the market and attain the targeted profit margin. Before making decisions for the next iteration, we have concluded that we must jot down our mission and vision statements on paper. If it does not work, we must adjust our plan for the subsequent rounds and collaborate to ensure customer satisfaction. Our decisions will be influenced by our ambition to secure a stronger position in the market.
In conclusion, the evaluation process in the Comp-XM Basix® business simulation exercise for MBA students is continuous, encompassing all four simulation rounds. However, it focuses specifically on the situation after the first two rounds and at the end of the exercise. As part of this evaluation, the student diligently dedicates more time to analysing the available data about each product’s specific needs before making any related investment decisions. This includes thoroughly examining customer demand trends by segment, enabling investments to be better targeted towards areas that require attention based on real-time necessity rather than unthinkingly allocating resources across all products uniformly, as was done previously.
Moreover, given limited capital availability per round concerning crucial aspects such as Research & Development (R&D) and advertising budget allocation, setting clear priorities among different products becomes essential. Doing so ensures that these funds are judiciously utilised and allocated where they can yield maximum impact. Furthermore, pricing strategies also play a crucial role in achieving success within this competitive environment.
Henceforth, while assessing their strategy’s efficacy throughout this demanding simulation exercise, students must carefully evaluate whether adjustments were made according to market conditions and evolving consumer needs at any given moment, which can rapidly change due to external economic forces beyond one’s control. Adapting swiftly and aligning strategies with prevailing circumstances is pivotal to not miss out on potential opportunities during various stages of Comp-XM Basix®, a critical factor determining overall success in enacting an effective business strategy within this industry
Part Four
Honeywell International, a global leader in engineering and technology solutions, is faced with the essential task of analysing the competitive environment within the sensor industry. As a knowledgeable student taking on this challenging endeavour, a comprehensive examination of relevant theoretical frameworks becomes imperative to gain valuable insights and understanding. The first framework that comes into play is Porter’s Five Forces analysis, which delves into five fundamental forces shaping competition: supplier power, buyer power, competitive rivalry, the threat of substitution, and the threat of new entrants. Through this lens provided by Porter’s model for strategic analysis, Honeywell can carefully evaluate its position within the sensor industry and discern potential areas for advantage or vulnerability relative to these forces.
Firstly, supplier power is moderate for Honeywell as the firm has cultivated resilient relationships with multiple suppliers worldwide, allowing them to mitigate potential disruptions effectively. Moreover, the threat of new entrants remains moderate due to high barriers to entry, such as substantial economies of scale attained by established competitors and strict regulatory requirements governing their product lines. Additionally, customer bargaining power is relatively high since buyers possess numerous alternatives and greater access to information which induces pricing pressure on Honeywell products. Furthermore, competitive rivalry within the industry is intense, given the presence of formidable players like General Electric and Siemens AG, who vie for market share using similar technological innovations or solutions. Lastly, the threat of substitutes poses a considerable challenge for Honeywell as competitors continually develop alternative solutions that may render its existing offerings less desirable or obsolete. Understanding these forces enables Honeywell International to strategise proactively amidst an ever-evolving business landscape while maintaining its position as an industry leader in innovative industrial technologies.
Another influential framework worth considering is the SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis, which identifies internal strengths and weaknesses and external opportunities and threats to competition in the market. By employing these theoretical frameworks meticulously while assessing Honeywell International’s competitive ecosystem within the sensor industry, both from an external perspective through Porter’s Five Forces analysis and internally through SWOT analysis (Benzaghta et al., 2021). Thus, one can expect to derive deeper insights that foster informed decision-making at every level within this esteemed organisation.
To gain a comprehensive understanding of this global pioneer’s position in the market, employing a SWOT analysis is imperative. Beginning with strengths, Honeywell boasts an extensive portfolio that spans aerospace systems, building technologies, and performance materials. This diversification enables the company to leverage synergies within its divisions and establish a solid foundation for innovation-led growth. In addition, the brand’s vital research and development capabilities ensure constant advancement in technology-driven solutions, enhancing its competitive edge significantly. Moreover, Honeywell International enjoys robust financial stability due to strategic investments and successful acquisitions.
On the other hand, specific weaknesses present areas of improvement for Honeywell International. While maintaining diverse business segments is advantageous overall, it also poses challenges regarding focusing on each division individually and efficiently allocating resources among them. Additionally, being heavily dependent on international operations exposes the organisation to geopolitical risks such as trade disputes or currency fluctuations – factors beyond their control but capable of impeding progress.
Regarding opportunities ahead for Honeywell International, characterised by emerging markets, demand for cutting-edge technologies will likely increase substantially across industries with significant presence, such as aerospace or energy efficiency solutions. Leveraging their technological expertise alongside expanding partnerships with local players within these markets through joint ventures or collaborations could reinforce their leadership position while simultaneously exploring new growth avenues. Finally, yet important are threats that impose potential obstacles to overcome; intensified competition. Last but not least come threats Honeywell must carefully navigate to sustain long-term success. Intense competition from well-established companies and startups poses challenges while requiring continued investments in research and development activities.
In examining the competitive environment Andrews faces in the business simulation exercise, it is prudent to draw a parallel with Honeywell International, a renowned conglomerate recognised for its pioneering innovations and global presence. Honeywell International thrives in an intensely competitive landscape as an industry leader operating across diversified segments like aerospace, performance materials, and building technologies. Similarly, within the simulated business exercise undertaken by Andrews, one can discern several vital resemblances that mirror Honeywell’s formidable challenges. Both entities face fierce competition from well-established rivals eager to claim market dominance through cutting-edge products and solutions. The pursuit of gaining customer loyalty and trust becomes intrinsic to both as they navigate dynamic markets characterised by evolving consumer demands and emerging technological disruptions. Furthermore, as Honeywell must continually adapt its strategies amidst unpredictable economic conditions worldwide, Andrews also faces external pressures, such as fluctuations in demand patterns which necessitate agile decision-making processes for sustained success. Overall, this comparison underscores the rigorous nature of strategic management required in encountering intense rivalries while striving for growth and profitability within their respective realms.
Honeywell International faces the intriguing challenge of reconciling the disparities between the natural competitive environment and the business simulation environment. As this astute student contemplates this juxtaposition, it becomes evident that Honeywell must adopt carefully tailored strategies to thrive in both domains. In reality, external pressures such as market uncertainties, shifting customer demands, and regulatory hurdles demand an agile approach from Honeywell. The company must constantly innovate and adapt to stay ahead of competitors while efficiently managing resources across its global network. However, when immersed in a business simulation environment where market dynamics are often simplified or exaggerated for pedagogical purposes, strategic decisions may be unrestricted by practical realities, allowing for more audacious ventures even if they come with higher risks. Thus emerges a delicate balancing act, standing firm in their core competencies within the competitive landscape; on the other hand, embracing more experimental approaches within simulated realms that might uncover lucrative opportunities otherwise overlooked amidst real-life constraints. Only through insightful analysis can Honeywell effectively leverage both environments to maintain its industry leadership positions across multiple sectors and accelerate technological advancements worldwide.
Andrews Company is the company in the business simulation that seeks to revolutionise the sensor industry by identifying new markets to explore. Recognising an opportunity for expansion, they have analysed various segments within the sensor industry and identified a promising niche where their expertise can be leveraged. By capitalising on technological advancements and market trends, Andrews Company has decided to enter the wearable sensors market. This burgeoning sector holds immense potential due to its rapid growth and increasing demand for innovative solutions across diverse industries, including healthcare and sports performance monitoring. With their extensive knowledge of sensor development coupled with agile production capabilities, Andrews Company aims not only to meet but also to exceed customer expectations by providing high-quality wearable sensors that offer accuracy, real-time data tracking, durability, and comfort, all at competitive prices. Through this strategic move into a new market segment in the sensor industry, Andrews Company envisions solidifying its position as an industry leader while diversifying its product portfolio and capturing untapped revenue streams along the way.
In the business simulation, Andrews Company takes an authoritative approach towards understanding and defining the key characteristics of the sensor industry. The students explore external and internal analysis in this endeavour, employing appropriate theoretical frameworks. The students strive to gain an in-depth comprehension of their industry by scrutinising factors outside their organisation’s control, such as market trends, competition dynamics, and regulatory challenges, through tools like PESTEL analysis. Simultaneously, they delve into intrinsic aspects concerning Andrews Company; its resources, capabilities, strengths, and weaknesses are all evaluated using internal audits like SWOT analysis or VRIO framework. By adopting these methodologies with rigorous dedication and meticulousness combined with critical thinking skills honed throughout the course curriculum, they aim to establish a solid foundation for strategic decision-making within the ever-evolving sensor industry landscape.
Andrews Company is the company in the business simulation that has sparked great interest for the student who contemplates the potential of adopting successful strategies utilised by Andrews. One such strategy involves pricing and leveraging long-term debt. Recognising the impact of pricing on profit margins and consumer perception, the student mulls over deploying a similar approach within their recommended strategy. Additionally, inspired by Andrews’ prudent use of long-term debt to finance investments and operational activities prompts careful consideration about incorporating this financial instrument into their proposed strategic plan.
Intriguingly, while pondering various strategic options beyond those employed by Andrews, the student ponders whether alternative avenues could yield more significant benefits. Conspicuously intrigued by using equity instead of debt as a financing mechanism to augment capital structure flexibility and reduce financial risk exposure, this notion captivates their deliberations. Furthermore, contemplating entry into unexplored markets is another crucial aspect under examination within their strategic evaluation process. After meticulous contemplation and critical analysis, guided mainly through reflection upon Andrew’s strategies but also with an open mind towards novel alternatives like equity financing and market expansion, eventually, a well-defined course becomes evident, which warrants recommendation from this discerning individual.
Conclusion
In the Andrews Company business simulation exercise, it is vital to finalise the report by offering strategic recommendations to enable the company to penetrate the sensor industry’s new market successfully. These recommendations must be derived from thorough findings gathered during the simulation and consider the company’s competitive landscape. To excel in business simulations, a comprehensive understanding of how marketing, research and development, and finance impact operations becomes paramount. Additionally, pricing products competitively can significantly influence success within this industry. After critically analysing all aspects of Andrews Company’s performance in this simulation exercise, I propose utilising retained earnings or equity instead of long-term debts for financing activities. This approach fosters financial stability while avoiding unnecessary liabilities that may hinder future growth opportunities. By harnessing internally accumulated resources through retained earnings or equity investments, Andrews Company can strategically navigate market volatility and remain adaptable amidst dynamic customer demands.
Furthermore, an emphasis on price competitiveness remains essential for securing a strong market presence within this sector. Ensuring that Andrew Company’s products are reasonably priced compared to competitors’ offerings will attract potential customers and increase demand in an ever-evolving marketplace. To summarise, for Andrews Company to thrive within their target market of the sensor industry, as reflected in this business simulation exercise report finalisation phase, leveraging insights gained from marketing strategies implementation alongside effective research and development practices becomes crucial. Moreover, sustainable financial approaches such as using retained earnings or equity should be explored while meticulously considering competitive pricing adjustments vis-à-vis rival firms operating in the same industry.
Bibliography
· Barker, S. & Davy, M. (2019). Learning business through digital simulation: An analysis of student reflections. ASCILITE Publications, pp.29-38.
· Benzaghta, M.A., Elwalda, A., Mousa, M.M., Erkan, I. and Rahman, M., 2021. SWOT analysis applications: An integrative literature review. Journal of Global Business Insights, 6(1), pp.55-73.
· Buil, I., Catalán, S. and Martínez, E., 2019. Encouraging intrinsic motivation in management training: The use of business simulation games. The International Journal of Management Education, 17(2), pp.162-171.
· Hernández-Lara, A. B., Perera-Lluna, A., & Serradell-López, E. 2019. They are applying learning analytics to students’ interaction in business simulation games. The usefulness of learning analytics is to know what students learn. Computers in Human Behavior, 92, pp. 600-612.
· López-Pintado, O., & Dumas, M.. 2022, September. Business Process Simulation with Differentiated Resources: Does it Make a Difference? In Business Process Management: 20th International Conference, BPM 2022, Münster, Germany, September 11–16, 2022, Proceedings (pp. 361-378). Cham: Springer International Publishing.
· Umid, K., (2023). Methodological Analysis of Research on Increasing the Competitive Environment in Enterprises. Web of Synergy: International Interdisciplinary Research Journal, 2(2), 408–410.
· Zulfiqar, S., Sarwar, B., Aziz, S., Ejaz Chandia, K. and Khan, M.K., 2019. An analysis of the influence of business simulation games on business school students’ attitude and intention toward entrepreneurial activities. Journal of Educational Computing Research, 57(1), pp.106-130.
Glossary
Business simulation: is a powerful tool that allows individuals and teams to gain practical business experience without real-world risks. It provides a safe environment where decisions can be made, strategies can be tested, and outcomes can be analysed.
Market analysis: is an integral part of business simulation. Understanding market trends, customer preferences, and competitor behaviour is essential for making effective decisions.
Competitive strategy: is another crucial aspect of business simulation. Participants must devise strategies that give them a competitive edge in the simulated marketplace.
Team collaboration: plays a vital role in business simulation as well. It mimics real-life teamwork scenarios where participants work together towards common goals while leveraging individual strengths.
Decision-making: is a critical aspect of running any business. It involves choosing between alternative courses of action based on careful analysis and evaluation.
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