Capsim Final Report

3900 words 16 pages
1. Initial Strategy
The initial strategy was to maintain a competitive presence in each segment by keeping our prices aligned with the average for each target market, while maintaining costs low. Specifically, it was our goal to become the leader in Traditional and low-end segments of the sensor business by allocating significant resources to R&D, marketing and promotions for these products. Our differentiator would be the result of a high investment in R&D to ensure our products were the best available.
The board decided that the company should be judged on its ability to make a profit, gain market share, provide positive ROA and make money for our shareholders with an increasing stock price. Our target was a stock price of $38
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However, after the first year the products were not placed properly and we lost all competitiveness in High End, Size, and Performance. We made the decision as a team to transition the products to Low End and Traditional to reduce R&D costs while keeping a High End product. We wanted a presence in a sector outside of Low End and Traditional but the strongest presence in those two sectors.

Perhaps our biggest mistake was not evolving our strategy in other areas when we should have. Even when we were struggling to turn a profit we maintained investments in TQM, R&D, and marketing while still decreasing our prices to lead the market as a low cost provider. The strategy seemed like it would work, however, our investments outweighed profits and we kept falling deeper and deeper into debt. Looking back, our strategy should have evolved in one or all of those areas to give our company a shot a succeeding. Our company overcommitted on investments and with our product repositioning we didn’t have the sales to bail us out. As the company took on more and more debt the rates increased and the financial hole got deeper and more difficult to overcome. 4. Discussion of the market segments emphasized and how they were managed.

Our team emphasized Low End and Traditional product segments. These two segments were the largest segments and were forecasted to

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