Organizational Diagnosis, the Tablet X5 - Essay Example

Organizational Diagnosis Introduction Today business is a challenging operation to perform, when there is a globalized spectrum of competition falling all sides long with the business. An organization has to be intelligent in terms of its long term strategies, especially in the areas of finance and marketing. This is how an organization can develop on the long term basis and can compete on global business order of the competition (Lilien & Rangaswamy, 2004). Clipboard Tablet Co is a service and manufacturing organization working in the area of computers. The company manufactures different models of tablet computers and markets them with different marketing schemes. Presently the company offers three types of models X5, X6 and X7 respectively. This study would bring the analysis on all the respective three models in order to attain the right marketing mix strategy and to provide the company a solution to work for 5 years time warps in all their respective means (Duffie & Singleton, 2003). In the present market, the company’s models are categorized in three different categories from customers’ point of view. X5 is the tablet computer preferred by customers who are price conscious. X6 is required by those who give priority to quality, and X7 is one which works out for customers who consider both price and quality at the same time. In this study, all the three categories will be part of the analysis to make right decisions on financial and marketing areas, with respect to improvement on decisions made by Joe Schmoe the vice president of the company. This report will express the alternate strategies applied by the marketing manager of the company to check and compare the improvements brought into the decisions (Pandey, 2007). Strategic Decisions With respect to the decisions made by Joe Schmoe, certain brand values were set to devise a financial strategy (Pandey, 2007). According to Schmoe the preset brand value for X5 was $265, for X6 $420 and for X7 $195 respectively. In such preset values, brands X5 and X6 came out profitable in the entire period from 2010 to 2012, but the brands started showing losses from 2013 to 2015. For improvements the marketing manager devised a strategy which covered all the three brands effectively for the period of 2013-2015 (Parry, 2004). Here is the table below expressing the decisions made on the working strategies: 2013   Price R&D   X5 270 25% Not Discontinued X6 450 40% Not Discontinued X7 180 35% Not Discontinued Your cumulative profit score through 2013 is 865,491,270         2014   Price R&D   X5 270 10% Not Discontinued X6 450 40% Not Discontinued X7 180 50% Not Discontinued Your cumulative profit score through 2014 is 1,317,541,955         2015   Price R&D   X5 270 0% Discontinued X6 450 40% Not Discontinued X7 180 60% Not Discontinued Your FINAL cumulative profit score is 1,544,929,139 On the first occasion, the marketing manager decided to set brand values of all the three respective brands in such a way that they are able to raise their market shares in the three fiscal years. According to market conditions, $270 was the price set for brand X5, $450 for brand X6 and $180 for brand X7 respectively. The price was set in a precise manner to check the parallel response from customers in demand. The prices set are respectively less as compare to the prices set by Joe Schmoe, which brought a decline of products in the year 2013. In the above tables, there is a variation in R&D Expenditure which shows that for changing market, there is a need to modify the working strategy (Parry, 2004). There is no way possible that only one strategy is enough to capture market in different times of the product demand. In the year 2013, the R&D expenditure on X5 brand was 25% which got reduced to 10 % in the year 2014. The R&D expenditure on X6 was 40% which remained the same in the next two years. The R&D expenditure on X7 was 35, 50 and 60% in the three respective years. As the brand X5 started showing less demand in the progressing years, so the expenditure on it also got reduced in the strategy year after year. The brand X5 disappeared in the year 2015, which was part of the strategic decision, still achieved high profit targets in the years 2013 and 14 which were not expected from Joe Schmoe’s financial decisions (Parry, 2004). Financial Review The Tablet X5 In Joe Schmoe’s financial decision the brand X5 stimulated only up till 2012. In Joe’s strategy the brand started to show a decline in the periods 2013-2015. On alternate node, the updated decisions brought improvement for the brand X5. The price was set $270 less compare to the price which was set before $285. Investment on R&D for the brand X5 has also gotten cut down to 25% which was 33% in Schmoe’s strategy. In the context of updated strategy, the sales of X5 were 2,776,303 in the year 2013, which indicated a 70 % increase from the year 2011. By reduction of the price for the brands X5, revenues in the year 2013 were recorded as 749,601,846, which were unexpectedly raised as compare to the year 2012. The profits increased to 34 %, which were 30 % in the year 2012 (Cross, 1997). In the year 2014, the price for the brand X5 was kept the same as $270, but its R&D expenditure reduced to 10%. Overall, this did not work out well as sales and revenue slightly went down to 40% while profitability reduced to 27% from 34% in the year 2014 (Cross, 1997). It drafted a point of view that X5 started to lose its position so it was not right to continue the brand in the year 2015. If the brand is continued, there would be a chance to raise financial threat for the company. Due all such logic, the updated strategy discontinued tablets X5 for the year 2015, which ultimately save the company from big financial dislocation (Pandey, 2007). The financial performance of X5 tablet model is depicted in the following graph: The Tablet X6 With compatibility features of X6 and high expectations from customers on its quality, the new pricing decision was to raise the price to a certain level which suits its quality characteristic. With new pricing decision, the price got raised to $450 from $430. The R&D expenditure was increased from 34% to 40%. This was to improvise the quality of the tablet and to improve it for high customer satisfaction. By applying new pricing decisions, the year 2013 recorded 1,832,972 units sold. The sales got increased by 42% while revenue increased by 49%, giving a total number of 824,837,309 in the year 2013. Profitability achieved was 5% comparatively more than the year 2012 (Cross, 1997). The glimpse of the new pricing strategy was that it attracted a substantial proportion of new buyers from the market. 39% of the new buyers were attracted which were 90% of the total sales volume. For the years 2014 and 2015, the price for the brand X6 remained the same giving 1% increase in profits for the year 2014 but a probable loss in the year 2015. In the year 2015, sales and revenue got down by 34%, which showed that the strategy required a probable discount to sustain the position of the product among the new buyers market. In the year 2015, the profits got down by 2% while profits decreased by 39% in the year 2015 (Pandey, 2007). The financial performance of X6 tablet model from 2011 to 2015 is depicted in the following graph: The Tablet X7 In the new pricing decision, the price set for X7 was $180 which was $190 in the previous setting. The R&D expenditures were kept 35, 50 and 60% for the years 2013, 2014 and 2015, which showed a slight increase on investment in X7’s R&D as compare to other brands. The outcome of the decision was that sales and revenue eventually got increased. The year 2013 brought sales of 267,359 units which were increased by 61% from the year 2012. The revenue also went up by 53% comparatively more than 2012. This all showed that the demand from the buyers came up which started to contribute in both sales and revenue sections. More investments were brought in the R&D section in the years 2014 and 2015 respectively, which was to cover both the attributes of performance and price at the same time. In the year 2015, the profits increased by 23% covering up the loss of X5 units. The profit ratio of X7 in the year 2015 entirely covered the section of X5, which actually got discontinued in the year 2015 (Cross, 1997). The financial performance of X7 tablet model from 2011 to 2015 is depicted in the following graph: Plan, Do, Check & Act According to simulation test results, the upgraded decisions went off well for all the three brands of Clipboard Tablet Co. An alternate strategy for X6 would be to invest on R&D section, which showed low profits in the years 2014 and 2015 respectively. With improvements in its quality, it could develop more and bring chance to attract new customers (Duffie & Singleton, 2003). A sum up alternate strategy would be the one in which there is a balance maintained in price decisions, discounts and investments. To raise a demand, it is essential that all the three factors are covered up in a slight manner and not just instantly, which is significant for brand value and brand recognition. This is what modern marketing strategists suggest in R&D and price functions (Parry, 2004). Reference List Cross, R. (1997). Revenue Management. Hyderabad: Universities Press. Duffie, D., & Singleton, K. (2003). Credit Risk: Pricing, Measurement, and Management. Princeton : Princeton University Press. Lilien, G., & Rangaswamy, A. (2004). Marketing Engineering: Computer-assisted Marketing Analysis and Planning. Victoria: DecisionPro. Pandey, A. (2007). Pricing Management. New Delhi: Global Vision Publishing Ho. Parry, M. (2004). Strategic Marketing Management. New York: McGraw-Hill Professional. Read More