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Developing a revised strategy

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It's New Year's Day, 2016. You just had a great New Year's Eve celebration; you finished analyzing the performance of Tablet Development and are ready to charge ahead into the future. As you turn on the TV and try to open your eyes, you notice something strange (again). The TV commentator is saying something about New Year's Day, 2012. You have a sinking feeling, and sure enough, it's back to 1/1/2012. You realize that you are in Time Warp 2.

This time you decide to do your decision making differently. You are going to use a technique that you became familiar with last year, CVP analysis. And you are going to decide all of your decisions at once. No feeling your way through it this time. You are going to make all of your decisions now, for the next four years and just cruise through it this time.

You analyze the results of your first set of decisions that you made in Time Warp 1, from 2012 to 2015. You have the data, you kept it all. But now you are going to use CVP analysis to help you determine your new strategy. And you have a tool to use, the CVP Calculator.

You analyze the results using CVP and develop your complete four year strategy. You decide to make notes about your analysis and your reasoning process; just in case you have to do this again (You are praying that you can finally move ahead this time when you get to 2016.)

You finish your report that shows your strategy that you are going to use these next four years during Time Warp 2. And stop and take a big breath before you move ahead into 2012.

(In other words, don't run the simulation, yet. Just turn in this report.)

After again reviewing and analyzing the results that you got in SLP2 (Time Warp 1 decisions), you develop a revised strategy and make a case for this new strategy using analysis and relevant theories.

The revised strategy consists of the Prices, R&D Allocation %, and any product discontinuations for the X5, X6, and X7 PDAs for each of the four years: 2012, 2013, 2014, and 2015.

You must present a rational justification for this strategy. In other words, you must Make a Case for your proposed strategy using financial analysis and relevant theories.

Use the CVP Calculator and review the PowerPoint that explains CVP and provides some examples.

You need to CRUNCH some numbers (CVP Analysis) to help you determine your prices and R&D allocations.

Make sure your proposed changes in strategy are firmly based in this analysis of financial and market data and sound business principles.

Present your analysis professionally making strategic use of tables, charts and graphs.

TIME LINE SUMMARY
SLP1

2015: 12/15 hired. 12/30 turned in first report to Sally a few days early. 12/31 - celebrated
SLP2

Time Warp 1 begins: 1/1/2016 WARPS INTO 1/1/2012
You freak out, and then realize you have to make decisions for 2012 - 2015, which you do.
12/31/2015 - you have gone through all four years, and you write your report to summarize how you did. You are hoping that you will wake up tomorrow and it will be 2016.
SLP3

Time Warp 2 begins: 1/1/2016 WARPS INTO 1/1/2012 (Again)
Now its 1/1/2012: you decide to use CVP analysis and develop a four year plan for your strategy. You analyze the results of your first decisions in Time Warp 1 and make notes. You use the CVP Calculator to help you develop your strategy and you make more notes explaining your logic and your analysis. Then you take a short breather before you start in again tomorrow.

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The solution assists with developing a revised strategy.

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Please find attached.

Cost Volume Profits Analysis
It is paramount for the future revenues, costs and profits of corporations to be estimated for clear planning and monitoring of the operations of the organization. Through the utilization of the Cost-Volume-Profit analysis, the company can be able to identify those levels of activities that should be avoided or undertaken to attain the set strategic target. The future operations of the company will hence be monitored as the operational risks are analyzed in the selection of the appropriate cost structure (Cost Volume, 2011).
Cost volume analysis is based on the analysis that organizational costs and revenues have a relationship that is linear. The volume is only cost determinant, efficiency and productivity are constant as the prices of the production units remain constant. Through this analysis, the information that is provided by the breakeven analysis ensures that the total revenues equal the total costs in both the fixed and the variables costs. Cost volume profit analysis is based on the fact that the profit is equal to the total revenues less the total costs calculated through the use of the equation profit = Px-(a+bx) where the P represents the price, X is the sales volume and a is the fixed cost and the b represents the cost incurred per unit.
2012
In order to use cost volume profit, costs have to be classified as either fixed or variable cost. All the tablets have fixed costs and variable costs include $ 145 for tablet X5, $ 260 in X6 and $ 60 in X7. Tablet X5 and X6 have been in the market for a while and financial and market analysis indicate that the products are doing well. However, X7 performance is low since the product recorded a loss. The strategy employed in this year includes maintaining research and development costs and tablet pricing in X5 and X6. The target profit for X7 is set at $ - 5,000,000 and price reduced so as to attract customers. The price is reduced to $ 186 and cost volume and desired sales revenue is set at 56 million. Cost volume profit analysis indicates that sales volume of 303,651 is required to generate target profit.
The strategy employed resulted in tablet X5 having a sales volume of 1,859,856 and sales revenue amounting to $ 492,861,819. Sales volume, sales revenue and variable costs for ...

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