Comparing Results From Two Time Warps at the CTC

Business SLP 5, Last Time Warp for the Clipboard Tablet Company It is January 1st 2012 again, and the time warp has re-started. This time there is a difference, the results for the last time warp (SLP 4) have been reviewed and new strategies have been developed based on that last time warp based on the observations and the CVP calculations. The aim of this paper is to implement the predetermined strategies and compare the results with the last time warp. There were several issues highlighted in the last time warp.

The most significant were the issues associated with the X7, it was noted that in the last time warp, the performance compared to competing products was poor, and the price was high. Therefore, to make the product competitive using the CVP analysis would require a significant level of investment, along with the acceptance of a lower profit margin. Therefore, rather than continue with this product, which may also cannibalize the X5 and X6, the difficult decision was made to abandon the X7.

This will mean suffering the sunk costs, but in good financial decision making sunk costs should not bias the decision for the future (Chadwick, 2007) This leaves the firm with only two products, the X5 and X6. The X5 showed good performance in the last time warp, although it had a limited lifecycle left. The X6 was the most profitable, and was seen to perform well. The decision for these products will reflect their market potential. The pricing levels will remain the same, at $285 for the X5 and $430 for the X6.

However, as the X5 is nearing maturity, it may argued that investing more money into research and development may be unwise, as there is not a long-term potential to benefit from that investment. As the X6 is popular, and has potential in terms of market growth, this product will be given 100% of the research and development budget.

Table 1; Comparison of prices for the time warps Last time warp This time warp 2012 2013 2014 2015 2012 2013 2014 2015 X5 $385 $285 $285 $285 $285 $285 $285 $285 X6 $430 $430 $430 $430 $430 $430 $430 $430 X7 $190 $190 $190 $190 n/a n/a n/a n/a This table shows that the strategy is very similar, the pricing points for the X5 and X6 are the same, but the X7 is eliminated. Based on this scenario the time warp progress and it is possible to assess the results comparing them to the last time warp.

The first year is relativity similar to the last time warp, with a new profit of that of $367,290,924, which is only marginally higher compared to the past time warp, as it is only $15,145,951 higher. 2013 there is a further improvement. In the last time warp the accumulated profit at this point was $830,740,435, the current time warp accumulated profit is $1,191,533,299, which is now a total of $360,792,864 better than the last time warp.

The firm does appear to have increased the efficiency and the strategy is working, as it has refocused sales in the X5 and X6. The profit margin for the X5 has increased from 31% to 34% and the profit margin for the X6 has increased to 33% from 25%. Furthermore, the specialization the two models also appears to be benefiting the firm in market share, in 2013 the X5 gains 48% of the market share up from 24% in 2012. 48% market share is likely to indicate this is now the dominant brand (Kotler and Keller, 2011).

This placement can be beneficial in terms of supporting sales due to brand recognition and the gaining of consumer awareness and trust (Hooley et al., 2007). The X6 also gained market share, in 2013 it now has 34% of the market up for 16% This result in the X6 places the firm a strong position to be a market leader in the long-term. In 2014 the current time warp sees another improvement, with accumulated profit of $1,675,523,321 an increase of $356,484,099 compared to the last time warp.

The actual different in growth terms is now slowing, and it is notable that the profit margins slipped slightly for the X5 and the X6, to 31% for each of the products. The income for each is also falling; it may be here that the firm would have benefited from some sales for the X7. The sales level for both units has decreased, and the profit margins have also decreased slight, to 31% for the X5 and 31% for the X6.

However, the firm is not is a dominate position and will be able to exercise market power (Thompson, 2007) they have 72% of the X5 market and 95% of the X6 market. The final year of the last time warp was terrible for the firm as losses were made following the decline of the X5, where the accumulated profit fell to $918,.