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iBIZSim

Strategy Paper for Team AandC (2-3)

2/16/2011

Arnab Mukherjee 9A | Charu Chopra 15A

PART1ANALYSIS OF P1 PHASE

During the P1 phase of iBizSim our company (AandC) had muiltiple objectives in mind. A few of them are listed below.

OBJECTIVES

Increasing profitability Increasing market share Improving production efficiency Improving quality Improving Image

QUARTER 1

What we did

We kept the prices same We increased production levels by introducing overtime We spent more on communications and TQM to improve product quality and demand Placed urgent orders for bekat and calot Ordered raw material keeping in mind production for next two periods Took a long term loan of 80 million euros

The Results

High level of production of both alesa and bordo happened The sales figures did not go up because transported quantity fell short of demand A lot of unfulfilled orders remained in all 4 markets The store had a lot of unused inventory and branch store inventories got exhausted Quality of products increased Production time reduced for alesa and bordo Debt/equity ratio increased to 115 Cash in hand rose to 91 million euros

What we learnt

We needed to estimate demand better Transportable quantity was something we should have increased more

QUARTER 2

What we did

We kept the prices same We used only single shift for production due to already high level of stocks Increased the transportable quantity to match demand and unfulfilled orders We spent more on communications and TQM to improve product quality and demand

Ordered less raw material as we had enough stock Took a long term loan of 50 million euros

The Results

Normal level of production kept stocks at optimum The sales figure rose marginally as the sales branches could not meet the demand because the

capacity fell short Unfulfilled orders remained in all 4 markets The store had a lot of unused inventory and branch store inventories got exhausted Quality of products increased Production time reduced for alesa and bordo Debt/equity ratio increased to 124 Cash in hand rose to 97 million euros

What we learnt

We needed to estimate demand better Sales branch capacities was overlooked which we would monitor closely from the next period

onwards We needed to reduce unused cash in hand

QUARTER 3

What we did

We increased prices by 10 percent We increased production levels by taking a second overtime overtime Increased number of stores in all markets We wanted to go into double shift for the last period so we hired 141 personnel We spent more on communications and TQM to improve product quality and demand Ordered raw material keeping in mind production for next two periods Took a long term loan of 10 million euros

The Results

High level of production of both alesa and bordo happened The sales figures went up and profits increased Unfulfilled demand was present only in the us and german markets for both Alesa and bordo The store had inventory levels fell and branch inventories went up marginally in india and china Quality of products increased Production time reduced for alesa and bordo Debt/equity ratio increased to 12 Cash in hand fell to 70 million euros

What we learnt

We needed to do something to increase market image as it had fallen Market share fell when we increased prices but the balance could be maintained Transportable quantity was something we should have increased more

QUARTER 4

What we did

We increased prices by 10 percent We increased production levels by going into overtime Increased number of stores in all markets Placed urgent orders for calot We sol 65 machines as they were no longer required for a loss of 27 million euros We spent highly on communications and TQM to improve product quality and demand Invested more on production technology Increased dividends to 4% to improve market image Ordered only minimal raw materials Redeemed long term loans worth 30 million to reduce debt/equity ratio

The Results

High level of production of both alesa and bordo happened The sales figures went up and profits increased significantly There was no unfulfilled demand The store had inventory levels and branch inventories went up in all markets Quality of products increased Deliverable part of production increased to 58% Production time reduced for alesa and bordo Debt/equity ratio reduced to 123 Cash in hand rose to 130 million euros due to sales of machines

What we learnt

We improved market image significantly We improved on the deliverable part of production by investing in production technology We performed consistently on all parameters except rejection rate Overlooked the fact that delivery of brought-in goods happens a quarter later. This lead to loss of

demand in quarter 3 and over production in quarter 4

PART 2SWOT ANALYSIS (BASED ON PAST PERFORMANCE)

NEW COMPANY FOCUS FOR P2

In this new phase we will try to lay emphasis on:-

Higher consistency Better future planning in terms of purchase and production along with financial decisions Keep market image high all throughout Anticipate competitor actions better and be more proactive in decision making

StrengthsAgile thinkingBalanced approachFuture planning accuracy in terms of financesNo downsizing of employees based on salesOptimum utilization of capacity

WeaknessesInconsistent perfomanceRemediary actions rather than preemptive decisionsWeak purchase planning decisionsHigher prices than competetion

OpportunitiesGrowth prospects in terms of unfulfilled ordersIncreasing production efficiancyMore focus on the growth markets of India and ChinaMore focus on the newer product Bordo

ThreatsLower pricing by competitorsExchange rate fixing problemsLow image as compared to competitorsAnd perfect planning of two computer controlled companies in the industry

Increase the production efficiency and try to move to double shift faster as it gives high degree of flexibility

Lay more focus on the newer products Bordo and Carti and try to drive sales through these products

PART 3VISION

To improve the market position of the company while achieving a satisfactory level of profitability and ensuring the long-term viability of the company

MISSION

1. FOR CUSTOMERS:

1.1. To improve the Image of the company to have a better perception among customers1.2. Product quality improvement for image enhancement

2. FOR EMPLOYEES:

2.1. Better Image of the company to reduce personnel turnover rate2.2. Profit maximization so as to be in position to give better dividends and be able to provide consistent

training to employees2.3. Consistency of cash-in-hand so as to avoid workforce downsizing based on sales in a particular period

3. FOR SHAREHOLDERS

3.1. Consistent increase in Market share3.2. Better company Image3.3. Lowest possible Debt/equity ratio

4. FOR BANKERS

4.1. High Profitability4.2. No short term debts and timely interest repayment

5. FOR BOARD

5.1. Consistent Image Correction and enhancement5.2. Consistent increase in Profitability5.3. Consistent and evenly spread growth in Market share in all geographies

OBJECTIVES

IN PRODUCTION:

High degree of utilization of capacity: for optimum spending on rent and transportation

Minimization of cost An even utilization of capacity in terms of machinery and human resource Total quality management Investment in production technology and lean management to reduce production

time and fixed costs Continued training of personnel for better image and reduced personnel churn

IN FINANCE:

Long-term profit maximization Distribution of high profits towards higher dividends and timely interest

repayments

IN MARKETING:

Overall satisfaction of customer demand Favorable image Steady growth High quality of products and delivery

IN THE SOCIAL SPHERE:

Continuity of employment even when there are fluctuations in sales,

PART 4TENTATIVE PLAN FOR NEXT PHASE

Increase investments in production technology and lean management to reduce fixed costs and increase production efficiency

Increase prices by up to 12 percent by quarter 4 to increase profitability Increase image and quality by increasing dividends and investing in total quality management Increase communication and sales branches to cater to a wider market Increase capacity by introducing double shift faster Increase personnel training to reduce personnel turnover rates Try and buy raw material in bulk orders to allow for rebates Use storage capacities optimally to avoid losses Try and reduce exchange rate losses

PLANNING MODEL

As the market is very dynamic and based on the decisions of other companies in the industry as well as on the economy dynamics, we plan to follow the spiral model of development

WHAT IS THE SPIRAL MODEL?

In this model of agile development, Activities are organized in a spiral having many cycles with each cycle having four quadrants. The process has been explained with the help of a diagram below.

HOW WILL WE USE THIS MODEL

Stage 1: Objectives for the quarter will be decided to benefit the stakeholders.

Stage2: Then the risks will be identified and alternatives will be probed for the initially decided strategy.

Stage 3: Then the next quarter strategy will be anticipated and pre-emptive and pro-active planning will be done for decisions to be taken in the next quarter or for overall decisions to be taken in this period for effect in the next period.

Stage 4: Then based on all the discussions above, excel templates will be filled and validation of decisions will be done based on excel calculations

Stage 5: Decisions and corrected values will be entered

Stage6: Based on market research report and results for the next period, the original objectives will be reviewed keeping in mind the stake-holders.

Stage 7: Step 2 onwards will be repeated till end-objectives are met.

BENEFITS OF THIS MODEL

The key is continual development; it is intended to help manage risks. It does not force for the defining of the entire system in detail at first. In the beginning there is a need to only define the highest- priority features. Every quarter, based on feedback, the next prototype is created. With this knowledge, it gives the flexibility to define and implement more features in smaller chunks, until an acceptable system is delivered.

The advantages of using the spiral model are varied:

Its design flexibility allows changes to be implemented at several stages of the project; The process of building up the larger objectives in small segments makes it easier to do cost

calculations; It will be easier to retain control over the direction and implementation of the project. In this model prototyping, simulations, benchmarking can be done at the start of each quarter to

resolve uncertainties/risks. As it is risk driven, it allows us a mix of specification-oriented, prototype-oriented, simulation based or

any other approach.