Tablet Development Company Strategy: Time Warp
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It is now 1/2/2012 (again), still at the beginning of Time Warp 2. You have just completed your revised strategy using CVP analysis, and you are ready to charge ahead. You implement your decisions for 2012 and time flows by quickly. You see the results at the end of the year and you collect these results to use later. Again, you implement your decisions that you have already made for 2013 and collect the results at the end of the year. You do the same for 2014 and 2015, hoping this time that you can finally move ahead into 2016.
It is now New Year's Eve, 2015, what you hope is the end of Time Warp2 and more than that, what you hope is the end of the time warps altogether. You have the results of your decisions. How did you do? What was your final score? You are ready to celebrate. You want to celebrate hard and forget this crazy time warp stuff. Will it finally be 2016 when you wake up?
It's New Year's day, 2016. You just had a great New Year's Eve celebration, you finished another four years of moving Handheld through 2012 - 2015, 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 groan and curse. When will this time warp end? You are now in Time Warp 3.
Maybe you need to keep improving Handheld's performance so that you can finally move ahead. You avow to do better this time. And you think your best approach is to develop your four year strategy like you did the last time.
You analyze the results of your last set of decisions from 2012 to 2015. You have the data, you kept it all. And you are going to use CVP analysis again to help you determine your new strategy. And you have a tool to use, the CVP Calculator. You are going to get better at it.
You analyze the results from Time Warp2 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 the strategy that you are going to use these next four years, Time Warp 3. And you stop and take a big breath before you move ahead into 2012. (In other words, don't run this strategy in the simulation, yet. Just turn in this report.)
ASSIGNMENT
Run the simulation with the Strategy that you developed in SLP3 for Time Warp2. Access the simulation site Click here. Review and analyze these results (Time Warp 2 decisions) and develop a revised strategy for Time Warp 3. Make a case for this new strategy using analysis and relevant theories.
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Solution Summary
This solution illustrates cost, volume, profit analysis, price elasticity, and market saturation concepts using an online simulation of a Tablet Computer development company. This solution is 6 pages, APA format, with references.
Solution Preview
Attachment includes charts and figures.
1 INTRODUCTION & CORPORATE STRATEGY
Tablet Development Corporation (TDC) offers three different products - the budget conscious X5, the performance focused X6, and the balanced X7. In order to be successful, TDC has aggressively segmented the target market, while retaining enough product flexibility to respond to rapid changes in the aggregate tablet market. The levers used to respond to said
changes are product price, and research & development investment. Considering R&D investment as part of a product's fixed cost - the simplest tool to apply to the pricing question becomes the application of contribution margin to a cost, volume, profit analysis, (Accounting for Management, n.d.). The following will report on initial CVP decisions as well as suggest refinements of these decisions should another time warp occur.
TIME WARP RESULTS SUMMARIZED
Despite this being the fourth iteration of managing TDC strategy between 2011-2015, the final go around was among the least profitable. Significant miscalculation regarding the price elasticity of the X6 and X7 resulted in diminished sales volume of 29.5% and 22.1% respectively from the previous time warp. While an increase in price resulted in the loss of profitability to be slightly lower than the loss in sales volume, said increase could not begin to make up for the loss in sales. Aggressive price point leadership and early discontinuation of the X5 is the sole success story for the final TDC strategy. The most effective results would come from combining the Time Warp 3 strategy for the X6 and X7 with the Time Warp 4 strategy for the X5. These price points, and research and development strategies would yield the most profit over 2012-2015 for
TDC.
2 TIME WARP RESULTS COMPARED
Time Warp 3 Year by Year Results
X5 X6 X7 TOTAL
2012
Sales 1,411,392 1,584,906 222,622 3,218,921
Revenue $392,719,954 $698,943,460 $43,411,367 $1,135,074,782
Profit $116,068,046 $242,067,951 (-$19,145,976) $338,990,021
2013
Sales 778,702 1,436,599 389,746 2,605,048
Revenue $227,380,920 $665,145,466 $72,103,099 $964,629,485
Profit $42,469,162 $246,829,654 (-$481,690) $288,817,125
2014
Sales 774,340 814,745 631,145 2,220,230
Revenue $215,266,576 $395,965,839 $116,761,842 $727,994,257
Profit $30,987,247 $139,332,263 $29,693,136 $200,012,646
2015
Sales 0 546,098 895,241 1,441,339
Revenue 0 $265,403,832 $174,571,928 $439,975,759
Profit 0 $87,418,243 $62,857,488 $150,275,731
Time
Warp3
Sales 2,964,434 4,382,348 2,138,754 9,485,538
Revenue $835,367,450 $2,025,458,597 $406,848,236 $3,267,674,283
Profit $189,524,455 $715,648,111 $72,922,958 $1,269,670,404
Time Warp 4 Year by Year Results
X5 X6 X7 TOTAL
2012
Sales ...
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