Business Simulation Solutions - Chelsea - Case Study Example

Table of Contents Introduction 2 Outline about the company 2 Round 0 2 Round 1 3 Round 2 4 Round 3 4 Round 4 5 Round 5 6 Round 6 7 Round 7 7 Round 8 8 Changes for the future 8 Introduction This paper examines a strategic game where we competed against different group by developing different strategies so that the overall business performance improves. The competition is regarding the production and selling of mobile phones where continuous technological up gradation takes place and competitors look to change strategy based on other players. This paper will look at evaluating the strategy that we as team Chelsea used in comparison to other players. It also examines the different factors and process which led towards determining a particular strategy and the aspect which if would have been worked better would have improved the overall performance. This will thereby help to understand the strategy which was implemented in the different business phases and will help to bring a change in the process through which business decisions were made. The overall analysis will thereby help to reflect on our strategy in comparison with others and will provide a framework to determine the manner in which competition impacts business. Outline about the company Chelsea as a group focused on being consistent and didn’t look towards changes in technology. This was a risk averse strategy and was done with the purpose of limiting the low side movements. Further, Chelsea looked at attracting the higher end of the society so that a niche market could be created there and thereby priced its product high. The group also relied on similar strategies and was working and pursuing with the objectives of being safe and providing their stakeholders with consistent returns and little risk. Round 0 This is the initial round where the different teams named Green, Chelsea, Blue, Orange & Arsenal were given the same platform and decisions had to be taken from this juncture. The purpose of ensuring that all the teams were given a similar platform was to ensure that there was no differences between the different players and the strategy adopted by each group would determine the path which would be taken in the next round and would determine the strategy which was pursued by the different groups. Round 1 At the end of round one it was seen that Chelsea and Arsenal had the same profits and further analyzing it was identified that the strategy followed by them was actually the same. Chelsea looked towards working on Tech 1 and didn’t develop technology which would help them to move further and develop the product. On the other hand group Green has moved towards technological innovation and had started to develop Tech 2 as well. To deal with the rising consumer demand Chelsea aimed towards producing in USA itself which helped them to save on the cost of logistics and the group was operating at 81% of its production capacity in round 1. Compared to the other groups the market forecast was proper which ensured limited piling of inventories and helped to keep the inventory cost to the minimum at round 1. The concern at this juncture was that Chelsea sold fewer number of products in USA as compared to Europe and Asia raising doubts whether the pricing or quality or marketing approach which the group used was correct or not and required to bring a change in the manner decisions were taken. One of the reasons which were identified for lower sales in USA and high selling price was the high cost of production. This round signified that Chelsea didn’t look towards technological development and had a high cost of production with all the production taking place in USA and having low inventories. Round 2 This round signified that Chelsea had the lower profits when compared to other groups and showed that the company was not looking towards profits but had some other motive. One of the reasons was lower revenues and high cost of production. The prime reason for it was that the group continued to charge a higher price for the product and spent money on areas which were not required. Further, the group didn’t aim towards technological up gradation whereas the other players had moved towards technological improvement which was thereby able to provide better products and attract customers. All the other groups apart from Chelsea and Arsenal had looked towards technological improvements and moved towards Tech 1. In this round Chelsea had looked at both own production and contractual production where slight improvements could have been made in own production because the plant was operating at 81% capacity and had a chance of improving production in house as well. Since, most of the products were sold in Asia but most products were produced in USA it increased the logistics cost thereby having an impact on the total cost. Further, the contract manufacturing cost was very high in Asia compared to USA which had an impact on the overall profits and share prices. This round showed that Chelsea aimed at using the same technology with no technological changes but had started to produce goods both in their own production and contractual basis as well but had a very high cost of producing the goods. Round 3 This round signified that the profits of Chelsea was continuously decreasing because the group was not able to generate the adequate revenues and was due to the fact that the group didn’t look towards moving to Tech 2 and had a very high price for the product. The prime reason for it was that the group continued to charge a higher price for the product and spent money on areas which were not required. The round signified that Chelsea was continuously on the market share it had and was also not looking towards lowering the price for a larger market share. All the other groups apart from Chelsea and Arsenal had looked towards technological improvements and moved towards Tech 2. In this round Chelsea had looked at both own production and contractual production where slight improvements could have been made in own production because the plant was operating at 81% capacity and had a chance of improving production in house as well. It was also analyzed that Chelsea had the same production which it had in previous round and was producing very little quantity. Since, most of the products were sold in Asia but most products were produced in USA it increased the logistics cost thereby having an impact on the total cost. Further, the contract manufacturing cost was very high in Asia compared to USA which had an impact on the overall profits and share prices. This round signified that Chelsea was slowly losing its presence in the market as its market share was continuously decreasing, profits was moving down, improvements in technology was not seen and the share prices were been impacted deeply. Round 4 This round signified that Chelsea profits had turned negative as the sales was decreasing and no research and development was being made by the group to move towards upper technology. One of the reasons was lower revenues and high cost of production. The group also didn’t look towards raising money from issuing more equity so that better production and improvements could have been done. Further, the group didn’t aim towards technological up gradation whereas the other players had moved towards technological improvement which was thereby able to provide better products and attract customers. All the other groups apart from Chelsea and Arsenal had looked towards technological improvements and moved towards Tech 2. This resulted in a continuous decrease in the market share and was the lowest which was further seen through the sales revenue and profits that they were able to earn. In this round Chelsea had looked at both own production and contractual production where slight improvements could have been made in own production because the plant was operating at 81% capacity and had a chance of improving production in house as well. Since, most of the products were sold in Asia but most products were produced in USA it increased the logistics cost thereby having an impact on the total cost. Further, the contract manufacturing cost was very high in Asia compared to USA which had an impact on the overall profits and share prices. This round showed that Chelsea was loosing its control over the market with continuous decrease in market share, lower profits, increasing inventories, high cost of production and selling price and a continuously falling market price of shares. Round 5 In this round Chelsea had ensured a turn around and ensured that the negative profits turned into positive figures showing that improvements were made as sales revenue increased and cost of production reduced. This has improved their market share slightly and brought a change in the manner decisions were taken. The prime reason for it was that the group spent money on marketing which resulted in an increase in short term loan. Still the group didn’t aim towards technological up gradation whereas the other players had moved towards technological improvement which was thereby able to provide better products and attract customers and was working on Tech 1. In this round Chelsea had looked at both own production and contractual production where slight improvements could have been made in own production because the plant was operating at 81% capacity and had a chance of improving production in house as well. Further the price charged by contractual production house was very high and the group needs to think in line of having own production. Since, most of the products were sold in Asia but most products were produced in USA it increased the logistics cost thereby having an impact on the total cost. Further, the contract manufacturing cost was very high in Asia compared to USA which had an impact on the overall profits and share prices. The round signified improvements compared to the previous one as the profits improves, market share improved, improvements were seen in the market price and the overall manner in which Chelsea worked improved. Round 6 This round was similar to the last round where Chelsea had improved their profits through aggressive marketing and better functioning. Little improvements didn’t help Chelsea to improve their market share as no technology shift was witnessed which impacted their market share. Chelsea continues to operate at 81% capacity and produced both through their own production and contractual production process. Further the price charged by contractual production house was very high and the group needs to think in line of having own production. The cost of logistics continued to be high and had an impact on the overall strategy. The round signified improvements compared to the previous one as the profits improves, similar market share, no change in technology. Round 7 This round was similar to the last round where Chelsea had improved their profits and was looking towards being consistent in the decisions and strategies they had taken from round 1. The group didn’t look at improving technology and were persistent with the same technology. Chelsea continues to operate at 81% capacity and produced both through their own production and contractual production process. Further the price charged by contractual production house was very high and the group needs to think in line of having own production. The cost of logistics continued to be high and had an impact on the overall strategy. The round signified improvements compared to the previous one as the profits improves, similar market share, no change in technology. Round 8 In the last round Chelsea worked with the same mechanism and didn’t look to bring changes in their strategies showing that they were the most consistent from the start and allowed the competitors to understand their style of taking decisions clearly. The group didn’t look at improving technology and were persistent with the same technology. The result was that the group ended fourth as the market share price was 282.9 and didn’t look towards bringing a change in the manner decisions were taken by them. Changes for the future Chelsea to ensure better results need to take more risk and will have to move and aim towards a change in technology where they have to move from Tech 1 to Tech 2 or Tech 3. The change in technology has to be gradual process where building new technology results in a continuous decrease in the price of Tech 1 so that the mass consumers can be attracted and high profile customers can be attracted through Tech 2 and Tech 3. More aggressive marketing strategies need to be taken so that more and more people are attracted. Along with it the production capacity needs to be improved and changes need to be made so that the competitors are unable to understand the strategy which they have taken. Read More