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Stratsim Performance Analysis

Essay by   •  May 11, 2012  •  Case Study  •  432 Words (2 Pages)  •  1,422 Views

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Firms performance objectives and actual performance

Typically, our firms performance objectives was to be sustainable and profitable as a business while at the same time achieving customer satisfaction for our main consumer segments; singles, family, and enterprisers and value seekers. Our generic marketing strategy was focused around a balance of cost leadership, and product differentiation. Cost leadership was employed strategically for our economy and family car, executed with emphasis on efficiency and safety. In period one, our firm was positioned positively and strong; sales were at a profitable level of $20,516.

Due to poor management skills, and a decentralized functionality of departments periods 3 and 4 demonstrated our inability to coordinate our business operations and we suffered financially. By period 4, our net income had dropped to a negative value of $-1,978(millions) for the first time. Return on sales was at - 11.7%, also negative for the first time. Debt from period 3 to period 4 increased dramatically from $4,769 to $14,411. Capacity utilization had increased from a feasible 94%, to 138.2%. Our market value declined from $13,740 in period 3 to $7,889.6 in period 4. The lack of centralized decision making created an impossible environment for our business to take the most appropriate decisions. By not investing in technology, our cost of goods sold did not lead us towards profitability as we were not able to gain experience curve effects. This was the most critical point in our business life cycle; from a lack of right decisions at such an important period our firm was not only not able to recover, but a snowball effect was started. With such poor standing, and our competition growing, we were simply headed downhill.

Sales between period 4 and 5 rose from $16,933 to $18,553, however due to an increasing, significant over capacity charge our net income was at a low of -$2151.3. Production and capacity were not considered in parallel. Periods 8 and 9 also showed over capacity problems, and negatively impacted our firm financially.

Initial business position

Initially, our firm's business position was at a healthy position. In the beginning of the simulation, our overall market share for the automobile industry was 28.2%; the highest in the market. We realized that our primary strength from product contribution came from our economy car Alec with 63.5% market share for economy cars, and from our utility car, awesome with a 48.5% market share for its vehicle class. Thus, it was evident what we needed to do; maintain high market share of our leading cars while conforming our least profitable vehicle class sustainably to coordinate to customer demand. However,

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