Description
Unformatted Attachment Preview
Purchase answer to see full attachment
Explanation & Answer
View attached explanation and answer. Let me know if you have any questions.
1
Capstone Simulation
Name
Institution
Course
Instructor
Date
2
Capstone Simulation
Plausible Possible Courses of Action Moving Forward
According to the simulation results, a plausible possible course of action moving forward
would be to focus on maximizing profits. Profit maximization calls for strict cost controls and
wide profit margins (Miller & De Matta, 2008). In turn, cost control requires the company to
implement several measures aimed at keeping costs low. For instance, it may involve negotiating
with supplies for better deals on supplies. It might also mean cutting reducing bonuses and wages
for temporary employees. A wide profit margin includes raising prices until the resulting drop in
customer loyalty is significant enough to affect sales revenues. It might also involve producing
substandard products. Profit maximization would benefit the owners because the share price will
go up, and dividends will increase. On the other hand, employees might suffer because of
compulsory overtime and overworking to reduce costs. Customers will also suffer because of
high prices and reduced quality.
Increasing the size segment share is also a natural course of action given the simulation
results. Over the six rounds, the size segment share has ranged between 12 and 30, meaning that
there is a high potential for increasing the market share with the right strategies. Increasing the
market share means more sales and revenue. From the owner’s perspective, a higher size
segment share will mean more money for them. Employees might also benefit from increased
bonuses, but they might also need to increase their productivity to meet higher demand.
Customers will likely benefit from increased product reach, and possible price reduction as the
company registers economies of scale.
The last possible cause of action is optimizing plant utilization. According to the
simulation results, plant utilization has remained conspicuously above 100%, meaning that the
3
plant capacity is overstretched. From the employee’s perspective, the companies placed a lot of
pressure on the production department. With no overtime, it meant that employees were
overworked. Working in shifts could increase variable costs and make products more expensive
for customers. While owners enjoyed more profits from plant overutilization, any further
stretching of resources, including employees and the plant facilities, could cause operational and
production problems that will eventually reduce any gains. Optimizing the plant capacity means
achieving a sustainable rate below 100%. Plant utilization of 85% is often considered efficient,
and operating at this level will allow the company to increase the capacity according to demand
without increasing overheads (Kenton, 2020).
Potential Implications of Each the Proposed Possible Alternative Courses of Action
Profit maximization will have different implications, some of which will be undesirable.
On the...