Strategic Review Both the X5 and X6 were highly profitable. The X5 reached 27% saturation and the X6 reached 16%, indicating that both were now in the growth stage of the product life cycle. It was at this point that Schmoe made his first real error. He minimized the role of the X7, on the basis of it losing money, but the reality is that losing money was expected. The X7 was our product with the greatest potential. While each of the X5 and X6 had a total expected market of 6 million units, the X7 has a total expected market of 17.5 million units, which means that it had the greatest profit potential overall, and therefore should have been where more resources were deployed, yet it only received an even third of the R&D allocation.
Mr. Schmoe's performance over the past four years has been quite poor. Essentially, Mr. Schmoe made no changes to the strategy, and while that worked initially, the company's performance has deteriorated, and is at present in a bad state, where our best products are entering decline and we have no new products in the pipeline, as we still have older models on the market that are making no money. This report will go over each year to investigate the company's performance under the Schmoe regime.
Overview of Key Concepts
The first key concept that should drive decision-making is cost-volume-profit analysis. Each product we make has a fixed cost, and therefore it needs to sell a certain volume in order to be profitable. This will help us to make decisions with respect to what products to keep in the lineup, and when to drop them. Another key concept is the product life cycle. All products begin with an introductory period, before moving through growth, maturity and decline. Growth and maturity are the most profitable. When the product matures, sales volumes decrease as the newer technologies are winning most of the sales, and because the older products have a large installed base already -- there are fewer opportunities for new customers.
In 2011, the company had two products, the X5 and the X6. At 15% saturation, the X5 was entering the growth stage, while the X6 was in the introductory stage. Both products were already profitable, and the company had two emerging hits on its hands. The clear strategy here was to continue pumping money into both marketing and R&D, because there was high potential sales for both of these products. Schmoe's strategy was to do just this.
In this year, we introduced the X7. This product was in the introductory stage and lost money. With the two other products in the growth stage, however, the company performance well overall, with a significant increase in ...
In this year, the company nearly doubled its profits. The X5 and X6 both increased their sales and dramatically increased their profits. As a result, the company enjoyed tremendous success. The problem in strategy at this point was the lack of attention paid to the X7. By this point, the X5 had achieved 48% saturation, meaning it was in the maturity phase. The X6, at 34% saturation, still had some growth. But combined, they accounted for around 8 million remaining customers. The X7 lost money in the year and struggled to get out of the introductory phase, achieving only 3% market saturation. The fact that this product, which still had 17.3 million potential remaining customers, was stalled at 3% saturation and still losing money, should have been Schmoe's primary concern, but his strategy does not reflect that. He was living for the moment with the two growth products, and not thinking enough about the future, which the numbers indicate was with the X7.
The company's performance flatlined in this year. While the X7 was marginally profitable, the X5 was clearly in the maturity stage, with diminishing sales and profits. The X6 was finishing its growth phase, barely increasing profits from the year before. The net result was that the total profit barely increased for the company, and most of that increase as on the basis of the x7 not losing money anymore, rather than any growing strength in the X5 and X6. By this point the X5 was at 75% saturation and headed for decline, and the same can be said for the X6 (63%). The X7 was at 4% saturation, and was clearly going to be the engine of growth for the company going forward. However, this was its third year on the market, and it was still in the introductory phase of the product life cycle and for a profit driver, had no momentum.
This year saw the inevitable declines in the X5 and X6. The X7 still only reached 5% saturation, but now has four years on the market. The company's profit declined significantly as a result. Schmoe had ridden two hot products to profits and growth, but by the end of 2015 the X5 is going to have to be discontinued, the X6…
Both the X5 and X6 were highly profitable. The X5 reached 27% saturation and the X6 reached 16%, indicating that both were now in the growth stage of the product life cycle. It was at this point that Schmoe made his first real error. He minimized the role of the X7, on the basis of it losing money, but the reality is that losing money was expected. The X7 was our product with the greatest potential. While each of the X5 and X6 had a total expected market of 6 million units, the X7 has a total expected market of 17.5 million units, which means that it had the greatest profit potential overall, and therefore should have been where more resources were deployed, yet it only received an even third of the R&D allocation.
warp! Having examined the performance of Joe Schmoe, it is believed that some attention to the fundamental principles of cost-volume profit analysis and to the product life cycle will immediately allow Clipboard Tablet Co. To perform better, since it is getting the chance to re-do history. This paper will outline the basic strategies, along with their outcomes, and an analysis of why these strategies delivered better (or worse, as the
SLP IntroductionThe SLP 3 scenario saw relatively poor performance, using a strategy that did not waver much from the original scenario. There were a few interesting findings from the cost volume profit analysis that can be applied to the strategy utilized in SLP 4. Each product will be covered in detail.X5The X5 in 2012 has already been on the market and is probably at the top of the product life
Tablet SIM There are a number of different things that need to be taken into consideration when formulating a strategy for the next four years. The first thing is the product life cycle. Based on how long each of these products has been on the market, and the sales trajectory for the products, each is in a different stage of the product life cycle. Arguably, the X5 is headed towards the
Tablet SIM Joe Schmoe's performance was not optimal, and there are a few different changes that can be made. In order to understand the flaws in Joe's performance, it is necessary to understand some key business concepts. The first of these is profitability, in particular the concept of contribution. This is important to the analysis for a couple of reasons. The first is that the X5 product lost money in its final
Tablet SIM II The analysis that was conducted revealed a few recommendations for Clipboard Tablet Company that were different from the company's choices under the Joe Schmoe regime. With the opportunity having presented itself to take the company in a different path, the following strategy was enacted: Discontinued The results of this strategy were as follows. For the X5: X5 Profit 151,182,710 83,101,400 X5 Saturation X6 Profit 240,511,901 307,464,930 137,132,198 103,417,497 X6 Saturation X7 Profit -10,298,475 24,820,249 93,863,284 X7 Saturation Cumulative Profit 672,971,018 1,088,357,597 1,325,384,992 1,641,496,441 These figures indicate that the performance was better
Tablets The Market Lifecycle 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