Comparison of Time Warps

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 time when a fast effective lead in a new product could have helped to increase market share and supported long-term sales. 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 increased by $85,469,400. Therefore, the lower price is beneficial in time warp 3 as it increases the net profit achieved.

The X5 was priced at $141 in time warp 2, and in time warp three it was reduced to $99. The idea of the price reduction was to increase market share, accepting a lower contribution per unit, with the aim of increasing overall profits though a higher level of unit sales. The strategy was partly successful, as the level of unit ales increased by 67% compared to time warp 2, but the profit level was much less; in both cases the X7 reached break even point in 2013, but the profit was $4,254,424 in time warp 3. The strategy to gain market share is based on the aim of increasing sales, so a single year may not always yield the results desired, so it is important to look at the second year of this market growth strategy.

Overall, time warp 3 was disappointing for 2013, as the overall result still saw CTC in profit, but time warp 3 had a profit level that was $148,152,269 less than in time warp 2.

Table 3; Units and profits time warp 2 & 3 for 2013

Time warp 2

Time warp 3

Difference

Units Sold

Profit

Units Sold

Profit

Units Sold

Profit

X5

2,534,144

229,097,245

n/a

n/a

-2,534,144

-229,097,245

X6

1,916,465

270,796,734

2,619,002

356,266,134

702,537

85,469,400

X7

708,090

7,315,761

1,184,369

2,791,337

476,279

-4,524,424

Total

5,158,699

507,209,740

3,803,371

359,057,471

-1,355,328

-148,152,269

Table 4; Market saturation and net profit margin time warp 2 & 3 for 2013

Time warp 2

Time warp 3

Market saturation

Profit Margin

Market saturation

Profit Margin

X5

54%

33%

n/a

n/a

X6

33%

32%

34%

32%

X7

4%

7%

3%

2%

Comparing results for 2014

In 2014 time warp 2 still had the X5 priced at $270, the X6 at $440 and the X7 at 141. In time warp 2 the X5 was still selling and making a profit, although the level of sales and profit indicated this was a product in decline. The strategies adopted in time warp 3 for the X6 and X7, with the lower prices appear to be paying off; the time warp 3 results in tables 5 and 6 show that both of these products are selling more in time warp 3 compared to time warp 2, resulting in a higher level of profit for the firm increasing profits by $47,999,338 for the X6 and $71,339,665 for the X7. Notability in time warp 3 the market saturation is higher for both these products, reflecting the increased market share that CTC is gaining in this product category.

Table 5; Units and profits time warp 2 & 3 for 2014

Time warp 2

Time warp 3

Difference

Units Sold

Profit

Units Sold

Profit

Units Sold

Profit

X5

1,414,941

94,792,970

n/a

n/a

-1,414,941

-94,792,970

X6

2,150,641

317,355,784

2,677,640

365,355,122

526,999

47,999,338

X7

1,564,968

73,087,278

4,403,360

144,426,943

2,838,392

71,339,665

Total

5,130,551

485,236,032

7,081,000

509,782,064

1,950,450

24,546,033

Table 6; Market saturation and net profit margin time warp 2 & 3 for 2014

Time warp 2

Time warp 3

Market saturation

Profit Margin

Market saturation

Profit Margin

X5

86%

25%

n/a

n/a

X6

59%

34%

70%

32%

X7

7%

33%

9%

33%

Comparing results for 2015

In time warp 2 it was in 2015 that the X5 was discontinued, so there are no sales for this product in time warp 2 or 3 to compare. The X6 was sold at $440 in time warp 2 and $430 for time warp 3. The lower price for this product appears to continue to yield results, with time warp 3 seeing an increase in the numbers sold and the profit level compared to time warp 2, so profits for this product are increased by $226,156,859 in time warp 3, as shown in table 7. The market saturation is also reached with these increased sales, as seen in table 8.