How Industry, Competition, and Market Environment Have Changed Capstone Project

Pages: 5 (1865 words)  ·  Bibliography Sources: 0  ·  File: .docx  ·  Topic: Business

¶ … Simulation

A discussion of how the industry/competition and market environment changed over time.

(One and half page)

The business environment of the modern world is based on a web of interlinking complexities. Not only are these relationships often hard to interpret in real time, but they are also dynamic and constantly evolving. Modern day leaders, if they want achieve sustainable success in there endeavors, must always adapt their strategies to the market conditions. Gone are the days in which an organization can produce a product and simply push it onto the market. Now business leaders must base their product mix on increasingly specific perceptions of value from consumer with are also evolving at a faster and faster speeds. it's almost like trying to hit a bulls-eye on a dart board that is motion; osculating up and down almost like it was on a ride at the amusement park while companies are fighting for the best position in which to hit the target.

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The capstone simulation provided an incredible glimpse of this very aspect of the business world. Each round required some adjustment in strategy to attempt to our company in the best position to hit our target. Though much effort was made to keep our market position aligned to our targets, our group learned a tough lesson in the third round. Our team viewed this round as a critical period for our company's growth and consequently accepted a great amount of risk. The finance business function acted as the catalyst that controlled the directions our business traveled through the investments it made in different aspects of quality, promotion, and operations. Though this risk did not pay off monetarily in the simulation, it did teach us a lesson and cost us some points.

Capstone Project on How Industry, Competition, & Market Environment Have Changed Assignment

In the beginning of the simulation, our team decided that the best strategy for tackling the simulation would be to start with broad differentiation and then to progress into a niche market. However, after much debate and collaboration, it seemed most reasonable just to stick with broad differentiation and take a conservative approach and hope our competitors would drop the ball. Our aspirations included achieving dominance with each one of our product lines. Though this goal may have been ambitious we faired fairly well during the transition from round one to round two. Overall, the market began very competitive in the first round. Most teams stocked out due to the fact they forecasted very conservatively due primarily to the perceptions of uncertainty initially involved in the exercise. Consequently, the resistance to finance the improvements needed for operations to match market demand in the face of this uncertainty was strong. Therefore, the finance department played an overly conservative role initially.

In response to our initial performance we decided that it would be prudent to increase accessibility in our low end and standard market segments. Also, the finance function decided that increasing investments in quality management was deemed to be advantageous. The combination of these strategic moves worked to strengthen our marketing mix; product, placement, price and promotion. Marketing serves as a keystone to any successful business plan and therefore was made a priority early in the game. However, our decision to focus on one product line may have hindered our position in the long run. Teams that added additional products were able to capture more market share as the simulation progressed.

After our team built this foundation, we reached a threshold point in which we were finally fairly confident about our strategy and our positioning. Thus we reached the point, mentioned before, in which we deemed it appropriate to accept more risk and finance some improvements. However, the market responded unkindly to our overconfident ambitions, and our team was forced to regroup and accept some humility. Our team was initially in the forefront of this simulation; however groups such as Baldwin and Ferris acted to surpass our market leader position. Our response to the temporary crisis was to focus on getting our heads above water again (paying back our bonds and emergency loan). After the initial shock, our team focused on quality and its relationship in the marketplace. Realizing that our quality marks are high, we returned to marketing as the avenue to reach the consumers with this realization.

2. A discussion of the specific decisions you made to implement your strategy (or strategies) over time.

Our strategy went through major evolutions in the simulation. On one hand, it could be considered a proactive strategy after the first few rounds as we established our business plan. Quality was always one primary concern. After the first round we were left with about twenty percent cash so we made a hefty TQM investment. This lands us squarely in the realm of product focus in terms of the 4P's. A company that offers a quality product can gain a solid foundation to support other business functions. Quality alone doesn't win the hearts and mind of the consumer however. Therefore in round two we focus on our sales and promotional budget in hopes of making the accessibility of our product mix readily available to our consumers.

In the next phase, our market share goals were fairly ambitious. For example, in our performance product we were hoping to achieve a twenty-five percent market share. We felt we had a solid product; the best of breed. Therefore we felt that if we invested heavily in promotion we could achieve our ambitious market share goals. Though we didn't achieve the market share we were aiming for it wasn't a total lose. However, we probably underestimated the financial aspects of such an endeavor. More specifically, keeping our setting our cash level at twelve percent was probably a bit optimistic with the advantage of hindsight. It is imperative that finance, marketing, and the supply chain all act in some sort of equilibrium.

After the results provided by the conclusion of the previous strategy, the new focus was to be more conservative and repair the balance in the interconnected business functions. We tried to re-establish decent market share by setting goals that address market share gains in the range of fourteen to twenty-four percent; much lower than previous targets. Also, we decided not to invest in the newly introduced business functions; Concurrent Engineering, CCE, CPI. We did choose to invest in quality although we capped this investment at this point realizing that our quality was industry leader. Finance deemed that the opportunity cost of other investments was higher than the return received from investing in quality functions. Therefore, investments made in other improvements would bring us a great return on investment than to continuing to finance quality. As a result of this realization, our team began to transition our investments into channels such as automation and increased capacity while as addressing quality through TQM improvements.

At this point in the simulation we also made the realization that it would have been beneficial to have taken on more long-term debt to fund automation and production capacity. This could of possibly hedged are position sufficiently enough that our strategic mistake mention before did not cause us to have to acquire an emergency loan. Efficiencies in supply chain management can sometimes work to hide mistakes in Marketing and Finance. This phenomenon can be explained by the supply chain being more responsive and adaptable to meet various demand requirements on the fly. This became important as incredibly important later in the game when we battled the other two top competitors. As the rounds progressed, our team became entrenched in an intense struggle to increase market share by lower prices. Without the improvements in the operational mechanisms (automation, capacity, and TQM) our business could not have competed at this level.

What you learned about management decision-making from the experience, particularly the interdependencies of the functional areas. (2 pages)

The lessons learned from this exercise include the how the fundamental cohesiveness between marketing, finance, and operations must be aligned in order to capture significant market share gains. If any one of the three is out of balance it is nearly impossible to hit any target. For example, you could have the best quality product being produced in the most highly technologically efficient manner with full automation and everything, but if the consumers don't know about this or have accessibility to your product line then all is lost.

If operations are not up to par when marketing and finance are running smoothly, this creates a constraint in the supply chain. This could result in not being able to meet the market demands for your product. Furthermore, this could lead to running out of stock altogether which represents a detrimental business position as well. Though it is generally considered better to stock out than to not sell enough, this position still has pitfalls. Customers will be left with no choice other than to choose a product from a different vendor. This is consistent with the old business adage that states it takes seven times more… [END OF PREVIEW] . . . READ MORE

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