strategy for the Time Warp 3 was formulated based on careful analysis of the results of Time Warp 2, which provided insight into buyer behavior at different price points for the three tablets. The strategy was set to optimize the profits for all three products at pre-set levels of R&D allocation. There may be better R&D levels, but for Time Warp 3 these were not explored. The strategy for this Time Warp was as follows:
Discontinued
The results were as follows. In the first year, the X5 sold 1.859 million units and delivered a total profit of 151.182 million. The X6 sold 1.237 million units and delivered a total profit of 217.837 million. The X7 sold 0.740 million units and delivered a loss of around $4.8 million. The total income was 364.210 million for the year. The market saturation of the X5 is 54%, for the X6 it is 37% and…...
2012: 1/2/2012, beginning Time Warp 3. You completed analysis revised strategy years a breather. Just time, enter predetermined decisions year collect data future analysis.
The time wrap experience comes to an end and makes way to resume the normal activities. Still, before doing so, it is necessary to review the decisions made in each of the two scenarios, and draw the adjacent lessons. The table below was created to offer a more integrated look at the two scenarios, with the two sets of decisions and the two sets of results. The lines following the table explain the differences and use the CPV analysis to shed more light.
Scenario
Scenario
Decisions
Decisions
Decrease in &D allocations from 33% to 20%, coupled with price stagnation
Stagnation of the market; the product enters the decline phase
X5 -- &D costs capped at 20 per cent and prices slightly decreased to attract more customers
Loss of profitability, discontinuation in the near future
X6…...
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References:
Blocher, E., 2005, Cost management: a strategic emphasis, 3td edition, McGraw-Hill. Irwin Hansen, D.R., Mowen, M.M., Guan, L., 2007, Cost management: accounting and control, 6th edition, Cengage Learning
Jalan, P.K., 2005, Encyclopedia of economic development, Volume 3, Sarup & Sons
Time warp 2 provided for increased knowledge regarding the market and the way in which CVP could be used to improve decision regarding prices. Time has reset and the CVP along with the results may be used to develop a more effective strategy. Adjustments to the strategy will be made learning from time warp 2.
Underlying Theory
The assessment from the past time warp indicated that the X5 has only a limited life, it is well into the product lifecycle, and it may be argued that the reluctance to discontinue this item until 2015 may not have been an optimal result; while the X5 was available there was less likelihood that the customers buying the firms tablets would move to the more profitable models of the X6 or the X7. The X5 may be producing some revenue, but with most sales being replacement due to the high level of…...
Diagnosis, SLP: Time Warp
The analysis below is of the recorded results as achieved in Time Warp 2 decisions. We will derive a separate strategy after evaluating the results which will give an explanation of what the fresh strategy ought to be. Different theories will be evaluated so as to arrive at the eventual strategy as concerns the implementation and operationalization of the idea just arrived at.
Here is a scenario: the day is the first day of January 2016. After the New Year's Eve celebration and the conclusion of the analysis exercise of the performance of the Clipboard Tablet Company, there is no other plan but to welcome the New Year (Module 4 - SLP Guidelines). On turning the television on, a strange thing is noticed. You hear the newscaster say that it is actually 2012 New Year's Day all over again and you are surprised that you got trapped…...
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References"
1)
Sun, Q. (n.d.). Tablet Development Sim - View Summary. Retrieved December 30, 2014 from forio.com Web site:
warp, Clipboard Tablet Company had the ability to look back and use data based on previous known financial performance in their decision making. The company made decisions regarding pricing strategies along with the allocation research and development resources following the analysis of past performance. During the second warp period, the company used CVP to make critical financial decisions not only based on the past performance but also the present and future perfomances (Baye, 2007). Though the use of these strategies during the first and second warp were beneficial to the company, the decisions they helped in making led to the decline of sales of both the X5 and X6. In addition, these strategies concentrated only on the pricing and increasing the contribution of the computers. The company also resorted to maximizing the profit without further investment and setting the price of the X7 higher to make it competitive, including…...
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References
Baye, M. (2007). Managerial Economics and Business Strategy. McGraw-Hill/Irwin.
Bodie, Z., Kane, A., & Marcus, A.J. (2004). Essentials of Investments. McGraw Hill Irwin.
Groppelli, A.A., & Ehsan, N. (2000). Finance. Barron's Educational Series Inc.
CVP Analysis
The best way to approach this situation is to understand some basic concepts. First, each product has fixed costs. Thus, the fixed costs are going to exist in every year a product is sold. This has ramifications for the X5 in the final year.
The second factor that needs to be considered is cost-volume-profit analysis. This technique is used to determine the contribution to fixed costs that each product makes. Thus, CVP is used to find the price point at which the profit is maximized. The key point to remember is that as the price falls, volume increases. The company cut sell all the product by cutting the price to the variable cost level, but that will not deliver any profit. But there is a point at which profit is going to be maximized, and that is the point at which the company should price each product. Then, the only…...
While the contribution margins of the X6 and X7 appear to be maximized, that only holds for the levels of R&D investment. A shift in the R&D investments levels, therefore, is critical to maximizing profit over the four years. his requires a greater understanding of how R&D affects demand for the two products. he X6 clearly benefits from a high level of R&D, but this impact may wane as it reaches total saturation. he X7 sales still have potential as well, and they benefit from R&D investment. Consumers love getting a great product for cheap.
here will not be a next step, but if there was, a shift in the R&D strategy would need to be conducted in order to deliver even greater success. However, the current strategy was a strong one. he use of the contribution margin analysis provided the basis for this assessment because it allowed for more…...
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The company's initial performance was terrible. At first, simply cleaning up the glaring mistakes of the Joe Schmoe regime was enough to succeed. The company stabilized, and made money in 2009. The price points set for the X6 and X7 were a better match for the positioning in the market that the company was trying to achieve. Leaving so many millions of potential X7 sales on the table because of the $200 price point was a key issue that needed to be addressed right away.
But from there the real work of maximizing contribution began. Cost-volume-profit analysis helps the CEO to understand how much money is made per unit of sale. Profit derives from both this figure and the number of sales. The optimal profit point is not the same as the point at which sales are highest -- a selling price of $1 would have sold all 15 million X7s right away, but the company would have been bankrupt. Thus, the CVP analysis strikes the balance between price and sales. In finding this balance for the two key products that drive profit, the company's performance improved with each time warp.
Given a different starting point of R&D allocations, the results could have been better, but the strategy developed was strong and can be applied in the future as well to continue to deliver strong results to the company even as it moved into the X8 and X9 products in the next couple of years.
Business Management
Comparison of Time Warp 2 and Time Warp
Time warp has begun and the plan to make changes to the prices with the aim of optimizing the performance of Clipboard Table Co (CTC). The planned changes that were made at the end of time warp 2 will not be implemented, and the results of time warp three can be compared directly with time warp 2. The third time warp appears to have been more successful, with an accumulative profit of $1,970,217,066 compared to time warp 2 where there was an accumulative profit of $1,752,777,185, so the changes made during time warp increased the profit for CTC by a total of $217,49,881. To compare the changes each year will be compared.
Comparing results for 2012
In time warp 2 the price for the X5 was $270, with R&D cut to zero, the X6 was priced at $440, and R&D was set…...
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39%
Conclusion
Time warp 3 was more successful, the strategy of keeping prices low to sell more products and make a higher overall profit appears to work. The exception to the better performance of time warp 3 was 2013, when time warp 2 had a better performance. It is possible that the X5 was discontinued to early, and the lowering of the X7 price at an earlier point may also provide some benefits, however, the overall performance wit the firm gaining more market share on a lower profit per unit, but a higher overall profit has been a good strategy.
Business Studies
Clipboard Tablet Company - Comparing the Time Warps
Finally 2016 has arrived and after moving through the period 2012-2015 twice due to Groundhog Day, the results of the different strategies can be compared.
Time warp
In time warp 1, the first consideration was the X5. As the price was noted as being higher than competing products the price was lowered to $220. As the product was already established in the first time warp it was decided that the research and development (&D) budget should be reduced to 10%, as a higher level of investment may not gain sufficient returns in a maturing product. The X6 was different; this was a product that was being sold to a market which was not price sensitive. The initial strategy was to increase the price to take advantage of this lack of prose sensitivity and increase the revenue per unit, with the price increased to $450.…...
Figure 1 provides a graphical representation of the effects of consistently high levels of &D investments spread evenly across all product lines.
Figure 1: Outcome of Initial &D and Pricing Analysis
For the implications to Total Income based on these decision points, see Table 2. Note that consistently high &D spending, not price declines, are what is fueling the overall sales growth. At the end of the second iteration, Sales Volume is up 36% and evenue Volume is up 40%. The lesson learned is that when there is a rapidly expanding market, investments in &D and more powerful than price in driving sales (Chwelos, Berndt, Cockburn, 2008)
Table 2:
Total Income Based on Second Iteration Assumptions
Throughout the simulation, market data is periodically provided in addition to market lifecycle stage of each of the products in the company. By the third iteration it is apparent that the X5 is maturing rapidly and as a…...
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References
Bayus, Barry L, Jain, Sanjay, & Rao, Ambar G. (1997). Too little, too early: Introduction timing and new product performance in the personal digital assistant industry. JMR, Journal of Marketing Research, 34(1), 50-63.
Chwelos, P., Berndt, E., & Cockburn, I.. (2008). Faster, smaller, cheaper: an hedonic price analysis of PDAs. Applied Economics, 40(22), 2839.
Peter Denno, & Thomas Thurman. (2005). Requirements on information technology for product lifecycle management. International Journal of Product Development, 2(1,2), 109-122.
Mike Edwards. (2008, January). PDA design a collaborative effort. DPN: Design Product News, 36(1), 1,7.
In this case, we have a base logic for R&D allocations -- the X6 needs to be feature-rich in order to attract buyers. The X7 needs only to be current in its features. The X5 is more or less locked into a particular sales, revenue and profit trajectory. Adjustments made at this point in the product life cycle may impact total company profitability by a few million in either direction, but the real profit potential lies in the X6 and X7. Under Joe Schmoe the X6 had a contribution margin of $400 -- 250 = $150. I hypothesized that if the features were improved I could raise the price and therefore the contribution margin. I delivered a margin of $450 - $250 = $200 or $50 more contribution margin than the Schmoe strategy. This came at a cost of a $6.6 million increase to the R&D cost. In 2007…...
profit analysis was introduced, but the execution was lacking. One of the important factors is that CVP analysis requires a number of data points so that the elasticities of demand for the product can be determined. There is still going to be the wild card of R&D investment, but setting prices is an important determinant of demand. Working on theory rather than data last time, the results were perhaps less than stellar. The key, however, is to learn from the mistakes that we make and build a better company next time.
Underlying Theory
Last time out, the prevailing theory was that the X5 should be cheaper, the X6 more expensive and the X7 should be much cheaper. The X5 is going to sell out anyway, so whatever we do with that product is only going to make a few million in difference. Nevertheless, we know that the X5 has to be…...
The best way to see into the future is precisely the one that we have been allowed to experiment with for this exercise: A time machine that takes us to an assigned point, lets us look around at the things that are the most relevant to us, and then returns us safely to our chronological point of departure without having undermined the entire space-time continuum. The analysis that we have performed for this assignment has provided us a model for the ways in which a product can realistically be assessed, even when our time machine is in for repairs.
This analysis is specific to the data that we have been given for this exercise; however, the overall dynamics of the market explored here are relevant to the sale of electronics in general and to a not-insignificant degree to all markets that are keyed to novelty, which is to say…...
Karniel, A. & Reich, Y. (2011). Managing the dynamic of new product development processes. A new product lifecycle management paradigm. New York: Springer.
performance of Joe Schmoe was improved upon significantly. However, in some ways this was easy because Mr. Schmoe made a number of glaring errors in his analysis. Much of the success of the past four years is attributed to simply rectifying those mistakes. The next four years will be more challenging. There is still room for improvement, however. To analyze the performance of the past four years and decide on a strategy for the next four years, the same basic tools will be used as before.
The X5 is the safest performer. It is in the maturity stage of the product life cycle at the beginning of 2006 and will head into maturity for 2008. This product does make a few million in 2008, so as long as that slim margin of success is maintained, there is no reason to discontinue the X5 prematurely. Indeed, because the R&D allocation is…...
First, when he becomes depressed because ita rejects him, he becomes depressed and even tries to commit suicide numerous times. He isolates himself, and thinks only about his own problems. Later, he reacts to what is happening and uses reaction formation to recreate his life and thereby change the outcome of each Groundhog Day. He goes through several stages, and uses defense mechanisms to cope with each stage as he makes it through to the next stage.
One of the coping mechanisms Phil used was suicide as a way out of his problem. That did not work so he had to find another way to deal with his dilemma and his stress. He also uses manipulation as he tries to get to know ita and make her fall in love with him. He manipulates her day after day to learn everything about her and become the "perfect" man for her.…...
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References
Blaney, Paul H. "Stress and Depression: A Personality-Situation Interaction Approach." Stress, Coping, and Depression. Eds. Sheri L. Johnson, Adele M. Hayes, Tiffany M. Field, Neil Schneiderman, and Philip M. McCabe. Mahwah, NJ: Lawrence Erlbaum Associates, 2000.
Groundhog Day. Dir. Harold Ramis. Perf. Bill Murray, Andie MacDowell, Chris Elliott. Columbia Pictures, 1993.
Kupfer, Joseph H. Visions of Virtue in Popular Film. Boulder, CO: Westview Press, 1999.
Stress, Coping, and Depression. Eds. Sheri L. Johnson, Adele M. Hayes, Tiffany M. Field, Neil Schneiderman, and Philip M. McCabe. Mahwah, NJ: Lawrence Erlbaum Associates, 2000.
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