MGT 599 Strategic Choices, management homework help

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User Generated

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jvarznaw

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Business Finance

Description

Strategic Choices

Simulation

In Module 3, you will use CVP analysis to inform the pricing of your 3 products.

SCENARIO CONTINUATION:

You’ve now completed SLP2, and it the date is (once again) January 1, 2016.

You turn on the TV, and once again, the local television news anchor is talking about events that occurred on January 1, 2012.

Your decision-making process will be different this time, as you will be using CVP analysis, a technique with which you recently became familiar.

You analyze the results of the decisions you made in SLP2. But this time, you aim to improve your Final Total Score by using the CVP Calculator to help you determine a new and improved strategy.

You analyze your SLP2 results using CVP and develop your complete four-year strategy, again taking notes, documenting your reasoning.

You finish the report that shows your revised strategy for the next four years.

Do not run the simulation yet! Simply turn in your written report.

Session Long Project

Write a 6- to 7-page paper, not including cover and reference pages, in which you use the results from SLP2 and CVP analysis to develop a revised strategy.

Keys to the Assignment

The key aspects of this assignment that should be covered and taken into account in preparing your paper include:

The revised strategy consists of the Prices, R&D Allocation %, and any product discontinuations for the X5, X6, and X7 tablets for each of the four years: 2012, 2013, 2014, and 2015.
You must present a rational justification for this strategy. In other words, you must provide clear and logical support for your proposed strategy using financial analysis and relevant business theories.
Use the CVP Calculator and review the PowerPoint that explains CVP and provides some examples.
You need to crunch some numbers (CVP Analysis) to help you determine your prices and R&D allocations.
Make sure all of your proposed changes are firmly grounded in CVP analysis, on the financial and market data provided you, and on sound business principles.
Present your analysis professionally, making strategic use of tables, charts, and graphs.

Time Line Summary:

SLP1

2015: Hired on December 15.
Turned first report in to Sally on December 30th.

SLP2

Time Warp 1 begins: January 1, 2016 warps into January 1, 2012.
You realize you have to make decisions for 2012 – 2015, which you do.
December 31, 2015 – You have gone through all four years, and you write your report to summarize how you did.

SLP3

Despite your efforts in SLP2, you are once again taken back to January 1, 2012. You decide to use CVP analysis to revise the four-year plan you developed in SLP2. You analyze the results of your decisions from SLP2, taking detailed notes. You use the CVP Calculator to help develop your revised strategy, taking additional notes explaining the logic your decisions.

SLP Assignment Expectations

Your paper will be evaluated using the grading rubric.

Tips and Suggestions

Please note the following tips and suggestions:

You might find these downloads and readings useful:

Rehman, A. (2014). Cost-Volume-Profit relationship (CVP Analysis). Accounting for Management. Retrieved on August 27, 2014 from http://www.accountingformanagement.com/cost_volume...

Decision Matrix Table - Download this Word doc with a blank table you can use to show your proposed strategy decisions.

PowerPoint discussing CVP - Provides a good overview of Cost Volume Profit analysis, the various equations that you can use, and how to use it. Some examples are provided showing how to use the CVP Calculator.

CVP Calculator- This an Excel-based calculator that you can use to determine prices, volumes, and profits. Keep in mind that it will tell you what need, but the market determines what you actually get.

Include a cover page and reference page, in addition to the 6-7 pages of analysis described above.
Use section headings as appropriate. Use graphs, charts, or figures strategically – but not as "space fillers."
Cite and reference all sources that you use in your work, including those that you paraphrase. This means include citations and quotation marks for direct quotes, and citations for that information which you have "borrowed" or paraphrased from other sources.

Unformatted Attachment Preview

MGT 599: SLP #2 1 MGT 599: Strategic Management Session Long Project #2 Joseph Wineman Trident University International MGT 599: SLP #2 2 Module 2: The External Environment, Internal Profile, and SWOT Given the opportunity to improve Clipboard Tablet’s performance by changing Mr. Thomas’s actions from 2012 - 2015, I identified and modified flaws in the decision making process which lead to a 291,427,954 improvement over that four year span. My selected strategy was to immediately discontinue the X7 production line as it proved to be nothing more than a financial drain on the company. I transferred those funds to the Research & Development funding of both X5 and X6. Additionally, I increased the price of the X6 to capitalize on the public’s burgeoning awareness and excitement as the new product was introduced to the market. I allowed the price of the X5 to remain unchanged, until public demand, and sales revenues, began to decline in 2013. During the years 2014 and 2015, funding for the Research & Development on the X5 was reduced to zero while we maximized the R&D expenditures on the X6 to ensure that it remained a better performer than its competitors. Joe’s Simulation (2012) Product Price R&D X5 $285 33% Total Sales 1,647,529 Total Profit Financial Advisor Remarks $139,504,962 The X5 performance compares favorably with other tablets in its category Customers pay more for the X6 than for other products in the same category. The X6 is in the growth phase of the product life cycle. The majority of X6 customers have not yet purchased the product. X6 $430 34% 1,288,999 $154,134,825 X7 $190 33% 165,586 ($23,065,952) Total Cumulative Score: 352,144,973 MGT 599: SLP #2 3 My Simulation (2012) Product Price R&D X5 $285 40% Total Total Profit Sales 1,647,592 $134,451,989 X6 $450 60% 1,129,429 $149,123,072 X7 - - - - Financial Advisor Remarks The X5 performance compares favorably with other tablets in its category The X6 is less expensive to buy than similar products. The X6 is in the growth phase of the product life cycle. The majority of X6 customers have not yet purchased the product. DISCONTINUED Total Cumulative Score: 365,146,199 During the 2012 simulation, our financial advisor remarked that the X5 tablet’s performance compared favorably with other tablets in its category. Based on this comment, and having nothing more to go off of, I kept its sale price at $285. Our advisor had different comments to make about the X6. He stated that the X6 tablet was less expensive to purchase and that the X6 was still in its growth phase of the product life cycle. Since, the majority of X6 customers had not yet purchased the product yet, I decided to raise the sale price to $450. I made the decision to discontinue the production and sale of the X7 as it was a financial drain on the company. I transferred the cost savings to our Research and Development, raising the R&D expenditures on the X5 to 40% and the expenditures on the X6 to 60%. At the end of the 2012 simulation, our respective scores were 352,144,973 to 365,146,199. My decisions resulted in a 13,001,226 increase. MGT 599: SLP #2 4 Joe’s Simulation (2013) Product Price R&D X5 X6 $285 $430 33% 34% Total Sales 2,145,622 2,134,931 X7 $190 33% 237,202 Total Profit $206,738,942 $285,254,260 ($13,397,740) Financial Advisor Remarks The performance of the X6 is better than that of competing tablets. The X7 handheld is priced higher than competing products. Total variable costs exceed revenue for the X7 handheld. We are losing money on every sale. Total Cumulative Score: 830,740,435 My Simulation (2013) Product Price R&D X5 X6 $250 $460 30% 70% X7 - - Total Total Profit Sales 2,288,765 $226,783,229 1,906,357 $298,376,072 - - Financial Advisor Remarks The X6 is less expensive than similar products. The performance of the X6 is better than that of competing tablets. DISCONTINUED Total Cumulative Score: 890,305,500 During 2013, I assumed that the X5 tablet had reached the maturity stage of its product life cycle, so I decreased the sale price to $250 and reduced the R&D investment to 30%. Our financial advisor stated the X6 was less expensive than similar products, while at the same time, its performance was better than that of its competitors. For these reasons, I increased its sale price to $460 and increased the R&D expenditure to 70%. I kept the X7 product line discontinued. At the end of the 2013 simulation, our respective scores were 830,740,435 to 890,305,500. My decisions resulted in a 59,565,065 increase. MGT 599: SLP #2 5 Joe’s Simulation (2014) Product Price R&D X5 $285 33% Total Sales 968,979 Total Profit Financial Advisor Remarks $167,258,894 The X5 handheld has reached the shakeout phase of the product lifecycle. New sales for the X5 are declining. Customers pay about the same price for your products as do for similar competing products. X6 $430 34% 562,961 $320,769,459 X7 $190 33% 0 $270,435 Total Cumulative Score: 1,319,039,222 My Simulation (2014) Product Price R&D X5 $285 X6 X7 $470 - 0% Total Sales 1,891,528 Total Profit Financial Advisor Remarks $180,356247 The X5 handheld has reached the shakeout phase of the product lifecycle. New sales for the X5 are declining. 100% 2,831,921 $490,724,535 - DISCONTINUED Total Cumulative Score: 1,561,386,282 In 2014, our financial advisor stated that the X5 handheld had reached the shakeout phase of the product lifecycle and that new sales for the X5 were declining. I maintained the sale price at $285, but reduced the R&D expenditure to 0%. The X6 continued to perform well against its competitors, so I increased the sales price to $470 and invested 100% of our Research and Development funds into improving our flagship product. The X7 product line remained out of production. At the end of the 2014 simulation, our respective scores were 1,319,039,222 to 1,561,386,282. My decisions resulted in a 242,347,000 increase. MGT 599: SLP #2 6 Joe’s Simulation (2015) Product Price R&D X5 $285 33% Total Sales 968,979 Total Profit $43,991,298 X6 $430 34% 562,961 $37,579,840 X7 $190 33% 0 $0 Financial Advisor Remarks The X5 costs more than most other products in its category. The performance of the X6 is better than that of competing tablets. Total Cumulative Score: 1,513,237,527 My Simulation (2015) Product Price R&D X5 $250 X6 X7 $480 - 0% Total Sales 832,112 Total Profit Financial Advisor Remarks $8,211,229 The X5 performs about as well as other tablets in its category. Sales for the X5 have reached maturity. You are mostly selling only replacements for the X5. 100% 1,446,673 $235,067,970 - DISCONTINUED Total Cumulative Score: 1,804,665,481 In 2015, our financial advisor remarked that the X5 tablet performed about as well as other tablets in its category, and that the X5 had reached maturity phase of its life cycle. The company was only selling replacements for the X5 at that point. As a result, I reduced the sales price of the X5 to $250. I raised the sales price of the X6 to $480 to account for the increase in R&D expenses. The X7 remained out of production. At the end of the 2015 simulation, our respective scores were 1,513,237,527to 1,804,665,481. My decisions resulted in a 291,427,954 increase. MGT 599: SLP #2 7 References: Clipboard Tablet Company simulation, Forio.com

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