Case Analysis Of Capsim Simulation

Decent Essays
As of December 2019 in the CapSim simulation, Team Chester controls 31.7% of the low tech market and 21.0% of the high tech market, accounting for 27.7% of the total market share. We’ve outperformed our competitors in terms of sales, earning a revenue of more than $108 million last round, which was 16 million more than that of our next highest competitor. Even though we have surpassed our original goal of controlling 25% of the market share, our return on assets and return on sales were at -9.77% and -74.19% respectively in round 4. Our stock price has decreased to $1.00 as a result. We have produced four products, with one product exclusively in the low tech segment and two limited to the high tech segment. Since we adopted …show more content…
Due to the ideal placement of our high tech product, we believed that we would be able to sell 1100 units of this product. We also did not take into account the fact that the high tech segment only accounts for approximately 30% of the total market. Therefore, we over-produced and incurred $19 million in emergency loans because of inventory costs. Team Chester must re-evaluate the scope of our current strategy, which we have determined to be too broad in some regards and too narrow in others. Our focus of marketing and production has crippled our cash flow so that we are financially unable to invest further in TQM which could have lowered our material costs and increased our demand. Our liquidity and solvency at the end of 2019 are 0.96 and –0.06 respectively, making our company unattractive to potential investors. As a result, our methods of obtaining capital has been severely undermined, since our stock price is extremely low and we cannot risk diluting it further by distributing …show more content…
Our main objective is, at this point, to generate enough net profit to repay our loans. We will be reducing our spending on TQM and human resources. Since we have already achieved close to 100% awareness and accessibility in three of our products, we will also be able to decrease some of our marketing expenses as well. Following this strategy, we have forecasted that we will achieve a net margin of over $20 million, which will eliminate our emergency loans and therefore increase our stock price. We will aim to increase our final contribution margin to at least 30%. Our original goal for a stock price of $30 per share appears to be beyond our scope, so we have lowered our expectations to $20 per share, while raising our goal for market share to 35%. Team Chester has been making decisions cohesively and with supporting reason, although the effectiveness of these decisions have not necessarily been well reflected in our financial statements and scorecard thus far. By focusing on integrating our ideas and evidence-based opinions, we have achieved a collaborative effort that capitalizes on the individual talents of every member. Moving forward, we intend to continue with this approach rather than dividing up responsibilities. In summary, Team Chester aims to persevere despite our current disadvantages in terms of stock

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