Ms Simulation Reflective Report Marketing Essay

Ms Simulation Reflective Report Marketing Essay Motor vehicle industry is growing industries in the world. Demand for vehicles is so high globally which makes the industry to be innovative and creative to meet the changing needs and wants of the people. Our company was among other StratSim companies formed for the purpose of simulation within the Vehicle manufacturing industries. Our firm was firm D with the vehicles ranging from Economic (Delite), Family (Defy) and Truck (Dusty) for the value seekers, family oriented and singles within the given regions. 2.0 OUR COMPANY MISSION AND VISION STATEMENT As our initial budget, market position and cash flow was similar to other Stratsim firms and therefore our mission is to increase sales and provide the customers with the safety and quality standard vehicles to gain highest returns while at the same time remaining low cost producers in comparison to our competitors. Our vision is to make available the vehicles which our customers require in the best and affordable prices and standards. 3.0 EXTERNAL AND INTERNAL ANALYSIS Internal and external analysis is when different factors are analysed from within the firm and around the competitors and industry as a whole to give the precise position of the firm and its performance standards. 3.1 PESTEL Political: As this was a simulation and not the real world firm there were no many implications on political instabilities within the region. In the real world though there are government instabilities which can hinder the operations of the firm such as change in government, introduction of new legislations, Ethical requirements by government etc. Economical: In Period one the economy and gas prices were stable suitable for the greater sales. The industry expenditure was also flat to $1,505 million. In the period 5 the economy grew better than expected which gave rise to the vehicle sales. However crude oil prices had gone high by the end of the period 4. Initially was $3 p/gal and then forecasted to rise to $4.90 by period 6. This was a concern for the coming periods as inflation seemed to be ranging from 2% to 2.5%. Industry marketing expenditure also increased by $ 206 million to $1,977 million and GDP rose to 2.5% by period 5 while initially was 1.0%. Social: Highest class is the family segment with the sales units (000) 4,706 out of which our firm had 12.3% share by period 5 which was a decrease as initial share was 14.3%. The second value seekers who mostly go for economic vehicles to with the total sales 1,327,000 and we hold the share of 10.9% by period 5. And the singles segment was mainly aimed for the trucks and their total sales 1,233,000 out of which we hold 11.9%. Our concerned were the value seekers, families and singles and not segments like high income earners and enterprisers. Technological: In the simulation game the technology was limited to development centres, interior, styling, safety and quality. Cargo space, braking system, reliability and durability of the vehicles are the main technically concentrated areas. In todays vehicle industry aspects such as noise, speed, digital dashboards, stylish folding seats and other features are emphasized. With the simulation the maximum feasible for the development centres was 5 and ours was 2, while interior maximum was 11 and out of which our firm was having 4, styling maximum was 12 and we were rating to 6, safety was 11 and we were rated 5 and quality was maximum 12 out of which we rated 6. Environmental: This was not a major concern though lead free vehicles with minimum noise structure are preferred. Vehicles with good fuel consumption are opted by majority of the customers and therefore help in preserving our environment. Legal: Laws on labour, vehicle manufacturing, registration and many others normally affect the vehicle industries but in the case of simulation this was not a concern though it was believed that the firm is in compliance with all the necessary legal requirements such as safety, quality, ethics etc. PORTERS FIVE FORCES ANALYSIS Porter 5 forces are used to determine the intensity of the competition and evaluate the actual position that the firm is holding. Summary of the Five Forces: Bargaining power of suppliers Bargaining power of customers Threat of substitute Threat of new entrants Competition within/rivalry HIGH 7 firms competing head to head within the industry HIGH As there are 7 firms in total within the industry depending upon the same supplier MODERATE Motor bikes, Bicycles or use of public transport LOW As high investments required, customers buying power and high technological cost HIGH As there are 7 firms within the industry serving the same segments e.g. family, economic and truck Threat of New Entrants: is low due to high investments requirement, high customer buying power and high technological cost incurred to establish and maintain the firm. Though in the simulation the threat is low as the appointed firms are the only ones competing. This leads to growth as managers can concentrate on available competition therefore make more strategic decisions. Threat of Substitutes: this is moderate as due to high traffic jams, pollution and environmental awareness many of the people opt for motor bikes, bicycles or using public transport instead of owning a vehicle. But most of our sales were basing on the family vehicles which means family people would of course still prefer having a convenience means of transport for the whole family and also those who need to carry bulky goods would rather have a truck or spacious vehicle then using the alternatives. Bargaining Power of Suppliers: is high though it is not specified within the simulation but is evident as 7 firms depend on the minimum number of suppliers and therefore this gives the upper hand to the supplier to bargain a good deal out of their buyers. This restricts the managements decision to be cost effective as manufacturing cost is increased with the suppliers bargaining power. Bargaining Power of Buyers: is high as there are 7 firms producing similar vehicles with very less differentiated features if any in the same segments of economy, family and truck therefore giving the buyers more choices to select from before buying the vehicles. This is good in a way management can be innovative to bring out best vehicles to offer to buyers but also restricts on the price bases as customers have the upper hand. Rivalry/competition: is high as there are 7 firms competing head to head to gain higher market share and returns and therefore gives an intensified competition to all the firms. This is healthy to some point as it gives the challenge to managers but it is a threat as when firm fails to provide better and reasonable vehicles compared to the rivals. SWOT ANALYSIS SWOT ANALYSIS helps the firm analyse its internal as well as external capabilities. Whereby strengths and weaknesses are internal, opportunity and threats are external. A firm is required to identify its strengths to overcome its weaknesses and capture opportunities and minimise threat. INTERNAL EXTERNAL Strength Weakness Opportunity Threat Ability to manage debts -cash flow management -positive income -Poor cost management -Low capabilities in terms of development centers Growing economy Emerging market 4M Increase Fuel prices Increased inflation Intensive competition Strength: The ability to manage debts and have a slight increase from period 1 to period 5 by $1,125. Our cash flow management was good as we had enough money in circulation and in the firm to carry out operations smoothly unlike other firms who had gone negative in the cash flow. (Appendix 1 2). We are among the 2nd firm that managed to keep their income levels positive unlike others who went negative. (See appendix 3) Weakness: Our main weakness was our cost management. Our sales were increasing by period 5 they reached $15, 54.8 an increase of $550.5 since period 2 but our costs were also increasing and therefore reducing our net income which came to $38.7 in period 5 while it was $ 587.1 in period 2. (Appendix 4) Opportunity: the growing economy and emerging new market 4m as per the research was the opportunity towards the firm. (Appendix 5) All we needed to do was utilize our strength to minimize our weakness and capture this appealing opportunity before our competitors do. Threat: Increasing prices of crude oil and increase in inflation percent is the main concern for the firm. Competition is also fierce from the financial summary of the overall industry we are placed at 2nd last position in terms of value market share which we hold 11.4% of the total market. (Appendix 3) STRATEGIC DECISIONS A strategy is the action plan for of the organisation to achieve organisation goals and gain competitive advantage over the rivals and achieve maximum returns for the stakeholders. BASIC STRATEGY APPLIED: The firm was in a similar situation as its competitors when the simulation started and therefore our first strategy was to increase our technological capabilities in order to differentiate our vehicles from those of the competitors. We also aimed at increasing sales as our mission explains and therefore we increased our budget for product marketing by $2 million initially. As we were not familiar with the outcome, yet we had achieved greatly by increased return on sales from 3.4% to 3.9% and increased return on assets by 6.4% to 8.2%. Later we increased on promotions and advertising as we believed that its the only way to position our product in the mind of the customers in order to increase sales. Later on we decided to upgrade our vehicles according to quality and safety requirements to all of our vehicles but that did not give the kind of returns we were hoping for. We also increased our plant capacity by 300(000s) in order to facilitate better manufacturing. We also increased our inventory as we were running short to the demand; we had also increased awareness in south and west regions where we saw we were lacking back in terms of sales units. We had also increased our relationship with underperforming dealers by increasing their discount from 8% to 9% so that they are motivated to sale more of our vehicles in their perspective regions. We had also increased the budget for the training and developing our dealers to be able to understand our vehicles better so that they can believe in our product and sale more. FUTURE STRATEGY: We still continue to emphasise our future strategies to such that will enable us to increase our sales volume and give us the highest returns. We intend to take advantage of the new market that is identified by the market research (Appendix 5). This will be achieved by being more innovative and customer oriented so that we serve our customers with what they require. We also intend to increase our technological capabilities as technology is dynamic and therefore all efforts will be made to keep up with the changing technology to give our customers the most stylish, safe, spacious and most of all quality vehicles. This would be value for their money. 5.0 EXPERIENCES AND LEARNING The simulation was a great learning experience. It increased my knowledge obtained from academic teachings and gave me ability to use them to the real world scenario. We had planed our team in such a way that one member logs in with his user name and password and feeds the decisions for the period, though the decisions were discussed and come to conclusion by all of the team members this enabled us to divide our work and come up with final decision which boosted our knowledge base to the great extent. The following are among the few of what I had experienced during the simulation exercise: The ability to make decision on various aspects of the business such as marketing, manufacturing, technological etc. How to grow as a firm and sustain the growth with the resources available Learnt how to analyse different internal and external factors affecting the firm and know where our firm stands in the industry (Bench Marking) Monitor inventory turnover period and re-stock when necessary. Experienced the competition and discover ways to overcome. Learned how to forecast future sales, identify opportunities and establish good relationship with dealers. Learned how important marketing and promotion is for the growth of the sales and overall business and also to position our products in the minds of targeted customers. Learnt to be customer oriented and understand their needs and produce according to their requirements. (Segmenting and targeting) Learnt how to manage costs and overall cash flow. Last but not the least the major learning and experience was the team work was essential in any business and decision making. Organising team work and group discussions were among the major experiences of simulation. CONCLUSION In conclusion I can say firm D has performed reasonably well compared to the situation and experience team members had. Though our sales didnt increase to our expectations but yet we had maintained the positive income unlike other firms who had gone negative on cash flows as well as incomes. We could have done better with better decision making in aspects such as new product development to give our customers customised vehicle, more emphasis could have been made to our product upgrade and manufacturing in order to meet the growing demand especially for the family segment as it is the growing in demand vehicle in the industry. All in all it was a good attempt in my view and even better learning experience for all our group members which not only increased our academic knowledge and gave us good real life decision making experience but it also increased our social interactions within the group which in itself is a learning achievement.