Analysis of StratSim

analysis of StratSimThe StratSim is a growing and a wider spread industriousness around the global among the railcar sellers. Notwithstanding the economic and energy instabilities, that led to f on the whole vehicle carry, gross sales revenues strongly attach as Gross Domestic convergences (GDP) increase from percentage point 1- 4, and remains constant in compass point 5, and inflation rate decreased from 2.5% period 1 to 1.0% in period 3. However, in some circumstances, sales were increased and/or decreased since potents started making purposes. These 7 competitors were household A, true B, truehearted C, firm D, firm E, firm F and firm G.In StratSim, there atomic trope 18 7 vehicle classes Minivan (M), Family (F), Sports (S), Luxury (L), benefit (U) preservation (E), and Truck (T). Vehicle attributes beingness functioning, styling, quality, interior and preventive.Furthermore, advertisement plays a squ be role especially when firms striving to require brand image, awareness as well as interests to target nodes. leadships contributed in generating revenues finished sales of ranges of vehicles which in turn modifyd the firm to increase its mart function while maximise shareholders wealth.Firm B has had 3 vehicle classesBoss -TruckBoffo Familyand Buzzy Economy.2.0 Strategic AnalysisAccording to (Johnson et al, 2006, p 9), strategy is the direction and scope of an organisation oer the long term, which achieves advantage in a changing surroundings with the use of resources and competence with the aim of fulfilling shareholder expectations. prototype 1. Processes by which strategy is described and executed.Sourcehttp//www.12 tell apart.com/description-deliberate-strategy.html.In a competitive blood environment such as StratSim, analysing firms strategies is vital in entrap to enhance performance and customer satisfaction.2.1 Firm Bs Strategic IntentFirm Bs mission was to be come down the leader in elevator car industry wide ly distributed by asserting highly ripe vehicles to respective(a) customer segments that impart consistently forgather their dynamic needs.2.2 Objectives2.3 Basic StrategyOur strategy was to abide good quality vehicles at premium expense trying to compare our vehicles from incumbents while avoiding price war from our competitors. By doing so, we became the leader twice in prudence (Buzzy) car, period 2 and 5. To put together diverse customer savour and p credits, we made minor upgrades to our vehicles during decision periods, e.g. technology, promotion, advertising, etc.2.4 External Analysis examine the macro-environment is vital since there are several factors that hinder firms performance and growth. In order for managers to come up with effective and suitable strategies that ordain enable the firm exploit overt and hidden opportunities while overcoming threats, those factors need to be thoroughly tackled before decisions are made.The external analysis comprisesThe Mi chael Porters five forces.PESTEL analysis.Opportunities and brats (OT) from thrum analysis,And Critical Success Factors (CSF).2.4.1 PESTEL frame conkPESTEL framework is a useful creature that is employ by organisations to analyse the complexity of macro-environment variables. It in addition raises a photo on how these key factors may influence firms success or ill luck of its particular strategies in future, so that managers batch find ways of overcoming. PESTEL refers to political, economic, social, technology, environment and legal.Figure 2 the PESTEL FrameworkSource (Johnson et al, 2006. p 68)The formation semipolitical Taxation policy Government stability Social welfare policies orthogonal traderegulationsLegal Health and safety Competition law ingathering safety Employment lawEconomic factors Business cycle ostentation Interest rates Unemployment GNP trends M championy supply Disposableincomeenvironmental Environmentalprotection laws Waste disposal Energy customsoci ocultural factors PopulationDemographic Socio mobility Consumerism IncomeDistribution Lifestyle changes Level ofEducation Attitudes to workand leisureTechnological Government spending on investigate locomote of technology transfer sweetdiscoveries/ increments Government and industryfocus on technological effort Rates of obsolescencePolitical/LegalSince 1960, laws and government regulations impart yarn-dyeed the automotive industry ( naughtyfill et al, November, 2004). Political changes may favour or hinder the firms business since anti-pollution laws and taxes may be imposed, so, firm B should forever pay special attention to any rules, codes and regulations regarding carbon-dioxide emissions.EconomicDuring air, firm B had experienced unstable economic growth. Its variables worry inflation, interest rates, gas prices, and genuine be were fluctuated, these have affected firm profitability.SocialDue to increased health awareness, people tend to change their lifestyles, while turning to baseborn-emission vehicles, also income statistical distribution and demographic population both affect vehicle crossingion either positively or banishly.TechnologyRapid change in technology has provided both opportunities and threats to the automotive industry. Those who employ it effectively, it facilitates them in enhancing firms efficiency by producing vehicles that assemblage to customers whilst lowers cost. So far, internet and firm websites as part of technology have been used by many buyers as a reference ray of light before making purchases decisions.2.4.2 Critical Success Factors (CSF)Johnson et al (2009) defined CSF as those product features that are particularly fosterd by a group of customers and, therefore, where the organisation must excels to outperform competition. CSF comprises threshold features and divergentiators.Source Johnson et al (2009)CRITICAL SUCCESS FACTORS (CSF)THRESHOLD FEATURESDIFFERENTIATORSThreshold featuresThese are features tha t customer determine mostly, and they are likely not to buy a product or service that drop one among them. In StratSim industry, threshold features are quality, performance, safety and size.DifferentiatorsThese are customised or added qualities some customers may/may not estimate before purchasing a service or products. During our simulation, price, styling and interior were regarded as differentiators.In reality, differentiators have had assumption a difficult moment to d sensible what they favor most, since many vehicles were similar among competitors after modifications being made during decisions.Lastly, firms should follow it seriously, creative and keep innovating in these CSF in order to outwit its competitors through customer satisfaction.2.4.3 Porters Five strengths modelThe 5 competitive forces model was highly-developed by Michael Porter in 1980 (Johnson et al, 2006). Since then, the model is used by firms as a tool to analyse the attractiveness (profit say-so) w hile determining the military strength of competition (threats) of an industry, and finally come up with the right strategies that will back off in exploiting opportunities, neutralise threats and w because grow.Figure 3 Porters Five free- draw inprise(a) Forces modelSUPPLIER POWER Switching costs of firms in the industry Presence of substitute stimuluss Threat of forward desegregation Supplier assiduousness Importance of volume to supplier Impact of inputs on cost or preeminence Differentiation of inputs Cost relative to total purchase in industryBARRIERS TO ENTRY Government Policy Capital requirements rile to distribution Economies of scale Switching costs patented learningcurve Access to inputs Expected retaliation Brand identity Absolute costadvantages Proprietary productsBUYER POWER Price sensitivity Threat of backward integration Substitutes addressable bargain leverage emptor concentration vsindustry Buyer information Buyer volume Buyers incentives Brand identity Product differentiationwww.scribd.comDEGREE OF RIVALRY Brand identity Exit barriers Switching costs Product differences Industry growth Fixed cost/ value added transmutation of rivals Industry concentration Corporate stakes Intermittent overcapacityRIVALRY little terror OF SUBSTITUTES Buyer inclination tosubstitute Switching costs Price-performancetrade-off of substitutesThreat of New EntrantsThe threat of new entrants in automobile industry is low, since barriers to enter are very high, such as high amount of start-up majuscule mandatory. Moreover, incumbents have adequate experience curve, distribution access, economies of scale, strong research and development (RD) and even brand and customer loyalty. These have difficult for new entrants to manage as Incumbents shtup produce at mass to cover authority and existing customer needs.Bargaining Power of SuppliersSuppliers designer in automobile industry is low, since producing a car/vehicle requires a range of inputs (parts) f rom diverse suppliers. If some inputs not found in one supplier, it is easy to replacement from one supplier to an new(prenominal) finding a substitute for the required input due to low switching costs.Threat of SubstitutesSubstitute threats in this industry is likely to be moderate and depends much on customer geographic location, early(a) customers like walking, taking train or equitation bike. But in Dar es Salaam city for example, people prefer public transport, motorcycles (BAJAJ known as rickshaw in India) as secondary path to automobile due to increased congestion.Bargaining Power of BuyersIn this industry, buyers power is a bit high. Low switching costs from one firm to another seeking for substitutes since most of the customers are price sensitive. For the end of the simulation game we played, most of the products were undifferentiated, so that, buyers fire easily shifts to an alternative producer as well as products.Competitive RivalryThe frenzy of competition in a utomobile industry is high due to lack of differentiation strategy and innovation among incumbents especially to the three vehicle classes, i.e. family, miserliness and truck because most of the firm use similar strategies like price, this reduces market growth as well as profitability.2.4.4 Opportunities and ThreatsOpportunitiesAdvanced technologyFirms can use it more efficiently in enhancing product features that can appeal to the eyes of customers.Also use e-commerce to advertise and sell globally.Bargaining power of suppliers.Low supplier power is an advantages to an automobile firms since they can set input prices, and hence be able to enjoy cost advantages while offer good quality products that will satisfy customers.European Union (EU) motorcar manufacturers can use the EU to sell their products.DiversificationDiversification can be done to widen the market to other untapped segments like high income earners or internationally and also locate the firms near raw materials whe re they can enjoy location economies.Differentiation strategyIn order to sustain customers, after satisfaction is being met, differentiation strategy can be used as a weapon in delivering a range of added values that surpass those of competitors, since most of the firms use similar strategies.ThreatsBargaining power of buyersStrong bargaining power buyers associated with low switching costs to alternative products, force suppliers to an increased competition in order to provide the best that will satisfy their customers.Increased gas pricesGas being one of the operating energy, increased price will also affect firms output signal as well as profitability e.g. in simulation that we played, period 1 $/gal was 3.15 rise to 3.50 in period 5.New lawsNew rules and regulations on carbon-dioxide emissions in environmental protection hinder production of cars that use petrol engines.World economic recessionRecession discourages consumption of luxury goods, and streamlines production while p eople turn to public transports.High competitionInitially, all firms in the StratSim industry were in similar stake e.g. financially and other resources these prove difficult in making decisions on how to seduce demand in order to enhance market shares as well as profits. Each firm was competing.InflationInflation has started to increase in period 4 from 2.0% to 2.5%, this will affect consumer prices.Fuel price instability.Rapid change in technologyThis threatens vehicle production since other substitutes to vehicles may be produced.2.5 Internal Analysis2.5.1 Resources and CapabilitiesThese are those which will create a strategic fit in order for the firm to stretch forth and prosper even in a competitive business environment.Lucino Noto, (2007, p 125)Analyzing resources and capabilitiesThe interface between strategy and the firmTHE FIRMResources and CapabilitiesGoals and Values building and SystemSTRATEGYTHE INDUSTRY ENVIRONMENTCustomersCompetitorssuppliersThe firm-Strategy Inte rfaceThe Environment-Strategy InterfaceOrganisation resources are divided into two categories (Johnson et al (2009)Tangible ResourcesThese are firms fleshly assets. Firm B physical assets wereThree vehicle classes, each of these represents a unique configuration while targeting different customer segments like value seekers, families, singles, high income and enterprisers (the StratSim case, 2010).Financial resources, at period 0, each firm were given sales amounted to $ 15.5 billions (the StratSim case, 2010), which enabled firm B to diversify into different segments.Manpower, firm B had 4 competent human resources who made diverse valuable decisions and hence became twice the leader of economy car (Buzzy).Intangible ResourcesThese are non-physical resources such as information, reputation and knowledge i.e. intellectual capital. (Johnson et al, 2008). Firm B holds a number of unique competences over its rivals.Firm B capabilities were persona. condom. executing.Style.Interior.2.5 .2 V.R.I.OAre criteria that are used to assess the sustainability of an organisation resources and capability that will enable the firm achieve durable competitive advantages. V.R.I.O stands for Value, Rarity, Inimitability and Organisation. (Johnson et al, 2008).ValueAs the game started, firm B had enough resources and capabilities i.e. unique brand break that facilitated it in formulating and implementing different strategies to meet customer needs. But due to increased market demand, demand exceeded production in the periods around since the firm lacked efficiency.RarenessAt the beginning, all firms had similar starting point which led them to have a low degree of rarity. This positioning by StratSim made firm B to create more appealing strategies like vehicle enhancements and improvements in terms of its attributes which allowed it to come with things which turned out to be less common among the firms.InimitabilityDuring simulation game, product imitation was very high since pr evious results and almost all modifications and other statistics were openly published for other firms to see. This kernel that competitors can possibly reproduction other firms techniques.OrganisationIn StratSim industry, there were 7 firms producing identical vehicles, because they used similar strategies, lacking differentiation. Due to these, it became easily for customers to switch from one firm to another if satisfactions have not met.2.5.3 SWOT- SWSW is a tool that is used in identifying or analysing firms internal strengths and weaknesses and enables it to use the available strengths to background or turned those weaknesses to strengths. SW means Strengths and weaknesses.StrengthsUnique brand name Best Motor Works.Unique product names like Buzzy, Boffo, and Boss. in two ways leader of Buzzy-Economy car, period 2 and 5.Reliable dealerships.Innovation, almost every decision period, firm B upgraded its vehicle attributes to meet emerging customer needs. adynamicnessesWeak fi nancial position.Unstable growth of market shares.Limited product lines, this means that firm B did not exploit the available opportunities of unsatisfied and potential new customers to launch any new vehicle that will satisfy their needs.3.0 Decisions3.1 TechnologyFirm B upgraded its technology capabilities during decision periods considering dynamic business environment and customer tastes and preferences, while special attention given to economy (Buzzy) and family (Boffo) cars. Investment in technology facilitated firm B in enhancing its production capacity as well as vehicle attributes that appealed to target customers and hence satisfy their emerging needs.3.2 MarketingFirm Bs merchandise shuffle was to create leverage with customers and build strong brand loyalty which will enable customers purchase our products even in intense competition as in StratSim industry. Firm B unique selling price USP was quality. Quality being the key in our products while charging premium price enable Buzzy (economy) car to become the leader in period 2 and 5. disdain this success, it was hard for firm B survive in just a success of one car and become the market leader. Though the selling mix was thoroughly applied by adding or reducing the number of dealers in each area, increasing dealer discounts and product promotions attracting customers, firm B marketing share was increased and decreased during decisions due to overspending. (For more marketing and distribution details for period 5, see appendix 1 2)3.3 payDuring simulation, firm B financial performance was somehow poor in spite of a slightly increase in sales ($), net income was negative during period 2 and 5 results. We discovered that one of the problems could possibly be overspending, however, (Firm B performance summary period 5, see appendix 3).3.4 returnIn the year around, production was increased as well as vehicle attributes to meet customer demand. Though Boss (truck) and Buzzy (economy) vehicles were upgraded in period 4, there were some shortages on Boss this means that if we were given a chance to continue making decisions, we could probably increase production to meet the demand (see appendix 4).4.0 ConclusionFirm Bs mission was to become the leader in automotive industry offering highly innovative vehicles to different customer segments that will satisfy their emerging needs. Unfortunately, firm B did not meet its expectations. Though it became the leader twice in Buzzy (economy) car, this means that its strategies fits in economy market, having success in one vehicle does not guarantee survival, thus why firm B income and market share fluctuated. We were not pretty sure of what contributed in unstable financial performance, though we speculated that overspending was one of the problems.4.1 What I Have LearnedI learned that, in the business, taking risks is the way of success. In StratSim industry, almost each period, market research has identified some potential new custom ers whose needs were not hitherto satisfied by current vehicle (the StratSim case, 2010). But firm B overlooked to take advantage of launching new vehicle in order to exploit these opportunities and hence increase our turnover and margins due to being risk averse.5. Reference and BibliographyJohnson G, Scholes K, and Whittington R, (2006), Exploring Corporate Strategy,7th Edition, apprentice Hall.Johnson G, Scholes K, and Whittington R, (2009), Exploring Corporate Strategy,Prentice Hall.Highfill D, Baki M, Copus S, Green M, Smith J and Whineland M, (November, 2004). Automotive Industry Analysis-GM, DaimlerChrysler, Toyota, Ford, Honda, overview of industry analysis, available at http//www.academicmind.com/unpublishedpapers/business/management/2004-11-000aaa-automotive-industry-analysis.html. Accessed on 19/11/1010.The StratSim slipperiness (2010), Automobile industry.Lucino Noto, (2007), Analysing resources and capabilities the interface between strategy and the firm, available a t. http//www.blackwellpublishing.com/grant/files/CSAC05.pdf .Figure , Porters Five ForcesAvailable at www.scribd.com/doc/16998313/Diagram-of-Porters. Accessed on 20/11/2010.6. APPENDIXES1. Technology Capabilities limit 5Firm Ratings (1=low capability)Dev. CentersInteriorStylingSafetyQualityMax. Feasible511121112Firm A34647Firm B34657Firm C24766Firm D24656Firm E26868Firm F24646Firm G35879Tech DimConsiderationsInteriorflexibility of cargo spaceStyling prevalent curb appeal, styling, handling, finishSafetystructural design, braking system, safety featuresQuality general reliability, durability, consistency of productsStratSim Indind1 FirmbPeriod 52. Marketing situation Period 5Firm BConsumerBudget(mill.)Company own/FleetBudget(mill.)Regional Corp. Adv.$48Direct gross sales Force$0Direct Mail$6Direct Mail$0Public Relations$12 wide$66Total$0VehicleVal Mkt piece of landMSRPdealerDisc.Avg SellPriceAdv.(mill.)Adv. floorPromo.(mill.) ageInv.Buzzy2.4%$11,55012.0%$10,572$33Quality$2018Bof fo9.4%$20,40015.0%$18,749$34Safety$290Boss3.2%$20,49913.0%$19,859$28Perform$150Total$95$64StratSim Indind1 FirmbPeriod 52.1 Product marketing period 4VehiclePlatformMSRP DealerDisc. Adv. (mill.)Adv.ThemePromo.(mill.) BoffoNo Change$20,40015.0%$34Safety$29BossUpgraded$20,49913.0%$28Perform$15BuzzyUpgraded$11,55012.0%$33Quality$20Total$95$642.3 Distribution Detail Period 5Firm BNorthSouthEastWestTotalFull reportage200250150200800Established Dealers137137133133540Coverage69%55%89%67%68%Planned Openings109111242Support/Dealer (000s)$150.6$150.6$153.2$153.2$151.9Units/Dealer2,1872,2842,3892,7562,401 sales/Dealer (mill.)$36.9$38.9$40.2$46.3$40.5Service/Dealer (mill.)$1.4$1.5$1.6$1.7$1.5Gross/Dealer (mill.)$3.3$3.6$3.6$4.1$3.7Dealer Rating5960606160StratSim Indind1 FirmbPeriod 52.4 Product Contribution Period 5Firm B Product ContributionVehicleUnits (000s)DealerSales (mill.) DirectSales (mill.) COGS(mill.)Gross Margin(mill.) Adv Promo(mills.)After Mkting(mill.) Boffo734$12721$0$9797$2924 $63$2861Boss234$4179$0$3262$916$43$873Buzzy329$3342$0$3319$24$53$-29Total1,297$20242$0$16378$3864$159$3705 bank note Dollar amounts are in millions.StratSim Indind1 FirmbPeriod 52.5 Vehicle Classes Period 5ClassMfr SalesRetailSalesUnit Sales%Chg (units)Num.Veh.LeaderEconomy$17,296$17,9041,726+5%7BuzzyFamily$84,734$91,1284,816+4%7EfizzLuxury$0$00NA0Sports$0$00NA0AEV$0$00NA0Minivan$4,950$5,421220NA1GoofyUtility$0$00NA0Truck$29,506$32,2781,669-1%7AceTotal$136,486$146,7328,431+6%22EfizzNote Dollar amounts are in millions, units in thousands.StratSim Indind1 FirmbPeriod 53. Performance Summary Period2- 5Firm BPer. 2 Per. 3 Per. 4 Per. 5 Sales ($)$14,800.9$17,418.6$18,244.8$20,242.1Sales (000s units)9121,0881,1441,297Market Share ($)13.5%14.9%14.2%14.8%Market Share (units)13.6%15.0%14.4%15.4%Net Income$-897.1$249.1$494.4$-239.3Cum. Net Income$-373.6$-124.5$369.9$130.6Stock Price$18.95$22.74$26.42$26.46Market Value$9,472.5$11,370.3$13,208.4$13,232.1 fall down on Sales-6.1%1.4%2.7%-1.2%Re turn on Assets-10.0%2.6%5.1%-3.3%Firm Preference15.2%14.9%13.5%15.0%Dealer Rating57586060COGS74.4%76.2%77.7%