System Feedback Loops, SLP: Time Normal - Coursework Example

System Feedback Loops, SLP: Time Normal CEO, Clipboard Tablet Co VP Marketing, Clipboard Tablet Co Date: January 20, 2013 Subject: System Feedback Loops, SLP: Time Normal This brief report provides details of the marketing decisions undertaken by the VP Marketing of Clipboard Tablet Co. in the year 2016 and these decisions are reported on the basis of their effects on sales volume and profitability of the company’ tablet models that are X5, X6, and X7. In year 2015, the model X5 of tablets was discontinued for which reasons there was no incurred cost upon research and development for the model. However, it is essential to highlight here that the report contains the CVP analysis in order to compare and discuss significant trends that occurred in 2016 because of the marketing strategies deduced for marketing the company’s tablet models. The new and final cumulative profit based on the recent decisions is 1,693,539,768 in comparison to the previous profit, which were 1,544,929,139. Therefore, this substantial change in the sum of profits revealed that incorporation of new decisions has allowed better results in comparison to previously decisions undertaken. Nevertheless, it is important to reveal that the new decisions pedestals upon the CVP analysis and data generated and presented in the market report. Hence, indicating that CVP analysis has been of great help in fetching larger profits. Strategic Matrix Below is the strategic matrix that provides details of the new and improvised decisions which can be prolific for the business in terms of larger profits: Year by Year New Decisions: Price Determination & R&D Allocation   2012 2013 2014 2015 X5 275 275 275 275 0% 0% 0% 0% Continue Continue Continue Continue X6 450 440 440 440 60% 60% 60% 60% Continue Continue Continue Continue X7 180 180 180 180 40% 40% 40% 40% Continue Continue Continue Continue It can be noted from the above grid that the Research and Development expenditure on the tablet model X5 has been cut down to 0% throughout four year period from 2012 to 2015. The reduction in R&D is justified on the basis of the model losing its appeal in the market which was considered unlikely to create any new sales for this model. Moreover, it is also indicates that the price of the same model is maintained at the same level of $275 per unit in these years. Furthermore, during 2012-2015 the expenditure on research and development of X6 has been set at 60% in comparison to previous decisions for the model, which were 34% and 40%. The greater acceptance level of this model amongst customers and greater margins are bases for the decision to increase the R&D expenditure on this model. This would allow the model to maintain its position and offer better technology to customers. The price of X6 was increased in 2012 to $450 from $430; however, during the next three years 2013-2015 the price was reduced to $440. In addition, the research and development expenditure has increased on X7 from 33% to 40% during 2012 and this increment on X7 was maintained till 2015. This was done to give this model a good platform for greater consumer acceptability and purchase of the model in its yearly years. However, based on the previous the R&D expenditure there was a gradual progress in the in the increase in 33% to 60% during the tenure of 2012-2015. The price for X7 was maintained at the same level at $180 in all four years from 2012 to 2015. Comparative Financial Analysis The following new findings stand upon the foundation of newly formed decisions deduced in order to improve the business. The results indicate revenue and profits of three tablet models resulting from the decisions revised. This table indicates that the revised decisions have been able to generate higher revenues and profits for the company. Revenue Time X5 X6 X7 2011 276,159,075 242,073,200 - 2012 469,563,809 554,269,513 31,461,253 2013 749,601,846 824,837,309 48,124,594 2014 448,369,829 968,547,586 72,169,648 2015 - 638,508,293 112,432,901         Profit Time X5 X6 X7 2011 43,991,298 37,579,840 - 2012 139,504,962 154,134,825 (23,065,952) 2013 206,738,942 273,670,065 (12,480,143) 2014 121,875,479 329,557,394 617,811 2015 - 201,208,781 26,178,403 Revenue Time X5 X6 X7 2011 276,159,075 242,073,200 - 2012 525,515,750 508,243,112 33,567,855 2013 749,601,846 1,146,803,724 51,522,019 2014 448,369,829 1,261,268,128 78,904,014 2015 168,559,962 556,043,184 120,125,574         Profit Time X5 X6 X7 2011 43,991,298 37,579,840 - 2012 163,870,795 145,750,099 (23,788,990) 2013 213,257,425 378,151,396 (11,320,820) 2014 122,723,825 421,075,548 7,694,454 2015 1,618,164 36,320,538 36,320,538 As per the table provided above, it can be deduced that in year 2012, revenues and profits of the model X5 increased significantly. Therefore, it will not be wrong in saying that the decision of reducing the cost of research and development expenditure to 0% was a prolific decision as it has helped in generating larger profits as compared to the previous decisions. In accord to the new decisions that were made, it can be noted that X% model did not discontinue at the end of the year 2015 and it has contributed a profit of $1,618,164 in 2015 as compared to zero contribution as before. This implies that the recent decisions have been of immense significance as it has increased the profits of a product that has started to lose its significance as a tablet product available in the market. However, the model X6 has shown a dip in the profits due to the newly formed decisions. After a reduction in the Research and Development expenditure to 60%, along with an increase in the price by $20 indicates a poor decision. This clearly emphasizes that the new decisions derived for the model X6 has been of less value and profit. Nevertheless, when the price was reduced to $440 of model X6 in the year 2012 it can be observed that revenues and profits showed a substantial increase in 2013 and 2014. A sharp reduction in the profits in the year 2015 based on a new decision was observed. The nosedive in profits was observed from $201,208,781 to $ 36,320,538 which has pushed down the . This sudden change in the profits was a result of shrinkage in demand for the model. The reasons for fall in demand remain unclear the area requires research. However, the tablet holding model number X7 showed an increase in the profits and revenues. This is a result of a decrease in the expenditure of Research and Development, which has caused an increase in the profits. There has been a sharp increase in profits and revenues in the year 2014 in comparison to the previous profit of 617,811. However, based on the new decisions a profit of $7,694,454 has been reaped. Nevertheless, the information available revealed the same trends in the year 2015. Break Even Analysis Like previously mentioned in the report that CVP has helped in bringing a change in the decisions and profits, the following table reveals the CVP analysis results:   X5 X6 X7 2012 609,333 600,000 532,129 289,714 331,556 370,400 2013 670,833 600,000 264,571 307,273 361,600 370,400 2014 643,333 600,000 264,571 307,273 388,000 370,400 2015 0 600,000 478,857 307,273 405,600 370,400 As per the above provided table it can be deduced that the break even for X5 has significantly reduced due to the reduction in the Research and Development expenditure by the company in regard to this model. For the model X6 the break-even level reduced by half in 2012, nevertheless, in 2013, the level of break-even showed a rise from 307,273 units which was consistent till 2015. However, it is important to highlight that based on the previous decisions the break-even was 478,857 units. Moreover, the break-even of X7 was 370,400 units from 2013 to 2015, which could be indicated as higher than the levels observed in the year 2012 and 2013 based on previous decision and was lower than the levels of years 2014 and 2015. Read More