Capsim Strategy Paper
All segments are critical for the implementation of our company’s strategy because we chose to be broad cost leaders. Cost leaders maintain a presence in all market segments by focusing on low production costs and competitive pricing. With that in mind, one segment is considered to be slightly more important than the others: the low end segment. We will compete in every market segment, but this is one of the most important due to the fact that price is the main consideration of the buying criteria at 53% importance. Our costs will be much lower than our competitors which translates into a lower market price for this product, which is ideal for our customers.
We based our sales predictions off of Steve’s …show more content…
7. Our team is focusing on the strategy with the segment being a low end product. After completing the capacity analysis in the low-end segment using the numbers of Acre from Andrews, it appears the guaranteed sales are only slightly more than the first shift capacity (about $44000). According to the result of this analysis, we find that this company does not need to increase capacity anymore, since they will be utilizing almost 100% of their plant capacity. without using secondshift Also, our strategy is focusing on lowering the cost, this move is also consider as a costs reduction by reducing the amount of second shift/overtime.
8. Since Andrews is operating right around 100% capacity and still filling most of the market demand, small but steady increases in capacity must still be made to capture additional market share in the future. As the market demand will be increasing year by year, this will allow us to fill the remainder of the demand that must still be accounted for. Additionally, in financing plan, we would like to borrow long-term debt for our cash need, because this could allow us some leverage based on the effective and efficient plant utilization through increasing automation to lower the labor cost. Issuing additional stock may also become a good choice if we need more stock to boost our performance, since we can handle the outcomes associated with issuing or