When we first started Capsim game, our team sets an objective which is to balance between profitability and being a marketing leader on products that has the highest growth potential. However, we had a major setback because we didnt finalize our decision on time. The result for round one was quite disappointing. Our sales revenue was only $90.4 million with $15.2 million of excess inventories, and declined a stock price ($34.25 to $30.50). Because we didnt have enough cash reserve to covered all of our outflow, this has forced our company to take out $1.6m of emergency loan that had the highest interest rate. Based on the ratiocomparison with Round 0, it may seem that our current ratio is much better than previous round but actually show more content
We can clearly see that from looking at quick ratio. In fact, 3.2% of expenses were directly cause by overstock on 4 out of 5 products. Our main problem with round one was not generated enough sales to covered our obligations. The result was bad, but not the worse!!!!
Round 2: Although the result for round one was disappointed, but round two was the main reason that put us even further from our original objective. We make the wrong strategic move by thinking that lowering the price on all products would give us a better chance of making a comeback. However, it was the opposite. Not realizing that we have other variables that need to be considered before making such a dramatic price adjustment. The first disadvantage for us was the fact that our products position was not align with customer expectation, to catch up with the competitors we had to invest on R&D (Reposition) and automation at the same time. This is a substantial capital expenditure
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