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Business Management
Comparison of Time Warp 2 and Time Warp
Time warp 3 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 3 increased the profit for CTC by a total of $217,439,881. 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 at 33%, and the X7 was priced at $141, with R&D of 67%. In time warp 3 a different approach was adopted; the price for the X5 was reduced to $220, the price for the X6 was kept at $430, and the price for the X7 was kept at $170. The results for 2012 are shown in table 1. The decision to reduce the price for the X5 appears to have been a good decision the sales increased with the lower price, and while the profit margin decreased from 31% to 25% as seen in table 2, the firm benefits with much higher sales, and saw the profit generated by this product increase by $103,723,745.
The results for the X6 in time warp 3 were disappointing, the sales level increased slightly, with an additional 83,326 units sold, but the overall profit level decreased by $48,400,370 in 2012 in time warp 3 compared to time warp 2. However, the strategy was also to increase market share.
The X7 had very similar results, in both time warps the product resulted in a loss to t CTC. In time warp one the loss had been accompanied by a price reduction, so in time warp 3 the price was kept high to increase the contrition of each item with the aim of reducing the lead period. This strategy did not work, the unit sales reduced by 161,070, and the losses incurred increased by $1,479,255, to $26,966,847. As this was a new product it may be argued that this was a mistake, as it has also mean the firm has a much smaller share of the market at a...
However, the year was an overall success, as the profit for 2012 in time warp 3 was $53,844,069 greater than in time warp 2.
Table 1; Units and sales profits warp 2 & 3 for 2012
Time warp 2
Time warp 3
Difference
Units Sold
Profit
Units Sold
Profit
Units Sold
Profit
X5
2,064,017
172,682,008
5,020,082
276,405,753
2,956,065
103,723,745
X6
1,205,673
153,516,090
1,288,999
105,115,720
83,326
-48,400,370
X7
326,656
-25,487,622
165,586
-26,966,847
-161,070
-1,479,225
Total
3,596,346
300,710,557
6,474,667
399,554,626
2,878,321
53,844,069
Table 2; Market saturation and net profit margin time warp 2 & 3 for 2012
Time warp 2
Time warp 3
Market saturation
Profit Margin
Market saturation
Profit Margin
X5
27%
31%
27%
25%
X6
16%
29%
16%
27%
X7
2%
-55%
2%
-86%
Comparing results for 2013
The results for time warp 3 for 2013 were not as good as 2012. Time warp 3 saw the decision to discontinue the X5. This may have been a mistake, as in time warp 2 it was still profitable, and in time warp 3 this profit was lost. It was hoped that the buyers would shift to the X7, and while the sales of the X7 did increase, it did not make up for the loss of sales and revenue from the X5, which can be seen in tables 3 and 4.
The X6 price was $430 in time warp 3 compared to $440 in time warp 2. This strategy appears to have yielded positive results, as the sales increased b7 702,537 units, and the profit…
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.
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