//Clipboard Tablets Company manufactures three products that include X5, X6, and X7. In the following discussion, there will be an exploration of the price strategy and Research & Development strategy to enhance the performance of all the three products with the consideration of different phases of the product lifecycle. There will be an elaboration of strategies over 2012 and 2013 for the overall improvement of the company.//
The cumulative profit score in 2011 was 81,571,138 that will be improved by 2015 regarding the rational strategy for pricing and Research and Development expenses (R&D expense). The Cost Volume Analysis, with the simulation process, can provide assistance to improve the overall situation. The product X5 is in maturity phase, and it is price sensitive that means the strategy regarding pricing and R&D expense should be taken on the basis of price and performance of the product. The product X6 is in the growth phase, and it has no price sensitivity that means there is a need to consider performance without focusing on the price. The product X7 needs to be introduced in the market that means there will be a loss for a couple of years because of taking the time to establish in the market.
The strategy regarding the product X5 is to reduce the price by $10 that means the new price will be $275 with the increase in R&D expense to 40%. The price and the suitability of the product are important for improving the overall performance of the product. The strategy regarding the product X6 is to increase the R&D expense to 44% with the increase in the price to $440. The price of X7 should be reduced to $180 with an increase in the R&D expense to 37% so as to establish the product in the market (Tan, 2014).
X5 X6 X7
Price 275 440 180
R&D Expense 40.00% 40.00% 37.00%
The score in 2012 has reached 352,243,200. The overall results of 2012 show that there is an improvement in the profitability from 16% to 26% with the increase in the sales volume and sales revenue that can be viewed in respect to the above table. Per unit margin has improved in 2012 because per unit margin is $89, whereas in 2011 it was $53 that shows there is an increase in the overall profitability of the company. There is an improvement in the fixed costs of 37,500,000 because of increase in the R&D expenses.
All the three products are not at saturation point that can be observed with the increase in the sales volume in respect of all the products. The three products are still able to produce new sales. However, X5, in near future, will not be able to generate new sales because it is in maturity phase (Forio.com. Forio Simulate).
On the basis of results of 2012, in 2013, it is decided that there will be a change in the strategy of the product X5 in terms of no reduction. There will be an increase in the R&D expense to 42% in order to improve the suitability of the product to the customers. There will be a change in the strategy with no increase in the price, which is at $440, in case of X6, with an increase in the R&D expense to 44%. The impact of the increase in the price of X6 is not observed as customers have focused on the performance of the product. The product X7 will also need to increase its R&D expense to 41% with the no change in price $180.
2013 5 6 7
Price 270 440 180
R & D 42.00% 44.00% 41.00%
The overall score in 2013 is 860,241,149. The overall results of 2013 show that there is further improvement in the profitability from 26% to 31% with the increase in the sales volume and sales revenue that can be seen from the above table. Per unit margin has improved in 2013 to $102.50, whereas in 2012 it was $89. There is no improvement in the fixed costs in 2013 as compared to 2012. However, there is a change in the variable cost per unit that can be viewed in respect to the above table (Forio.com. Forio Simulate).
In 2013, all the three products were not at saturation point because of increased volume of sales and there is still a potential to increase the sales volume in respect of all the three products. The product X7 is still in the loss, but it is improving its situation in the market.
//So far, there has been a discussion on the results of 2012 and 2013, now there will be a description of results of 2014 and 2015 in terms of sale units and revenue with unit margin. The discussion will also explore the pricing and R&D expenses strategies for 2014 and 2015. //
On the basis of results of 2013, it is decided that there should be a further reduction in the price of X5 to $267 with an increase in the R&D expense to 45%. The strategy regarding X6 is to increase its R&D expense to 47% with an increase in the price by $10 that means the new price will be $450. The strategy regarding X7 is to increase the R&D expense to 48% with a decrease in the price to $175 (Tan, 2014).
2014 5 6 7
Price 267 450 175
R & D 45.00% 47.00% 48.00%
The overall score in 2014 is 1,281,927,788. The overall results of 2014 indicate that there is no further improvement in the profitability rate because in 2014 it is 30%, whereas in 2013, it was 31%. There is a reduction in the overall sales volume with the reduction in the total revenue from all the three products. The reduction is due to the decrease in the sales volume of X5 that means this product is at saturation point. There are no new sales of this product in the market and the product sale will decrease over the period. Per unit margin has increased in 2014 to $102.81, whereas in 2013 it was $102.50. There is no change in the fixed costs in 2013 and 2014.
In 2014, X5 is at its saturation point and in the next year, there will be no increase in the sales volume of this product. Other two products are still out of saturation point and will improve their performance in the market. X7 is in profitability, which is in the growth phase and there will be further improvement in the sales of this product (Forio.com. Forio Simulate).
On the basis of results of 2014, the strategy regarding the product X5 is to further reduce the price by $3 and the new price will be $260 with an increase in the R&D expense to 48%. The strategy regarding X6 is to increase the R&D expense to 52% with no change in the price that will be maintained at $450. The strategy regarding X7 is to decrease the price to $170 with an increase in the R&D expense to 53% (Tan, 2014).
2015 5 6 7
Price 260 450 170
R & D 48.00% 52.00% 53.00%
The overall score in 2015 is 1,490,715,195. The overall results of 2015 indicate that there is further decrease in the profitability rate because in 2015 it is 24%, whereas in 2013, it was 30%. The products X5 and X6 caused such reduction as X6 has attained its saturation point and X5 is in the decline phase. The growth phase is only in respect of X7 that means this product has new sales in the market (Forio.com. Forio Simulate).
In 2015, X5 and X6 have not experienced further growth in the market as they are in the decline phase, and there is no scope of increasing sales with these products. X7 is in the growth phase and will provide higher profitability and sales volume in a couple of years.
Forio.com. Forio Simulate. Retrieved July 15, 2015, from https://forio.com/simulate/michael.garmon/tablet-development-sim/simulation/#p=page1
Tan, H. (2014). Simulation and Modelling Methodologies, Technologies and Applications. UK: WIT Press.
The problem requires that you continue with the scenario and simulation you began in the previous problem.
It is New Year's Day, 2016. You have finished analyzing the performance of Clipboard Tablet Co., and you have submitted the report requested by your CEO, Sally Smothers. You are ready to move forward to 2016, but.....
....as you turn on the TV, you notice something very strange. You recognize that the date is January 1, 2012, and that you get to make the decisions for the Clipboard Tablet Co. for the 4-year period beginning with 2012. Your challenge is to do better than Joe Thomas.
At the beginning of each year (2012-2015), you will determine your pricing, your R&D allocations, and whether or not to discontinue any products. You are required to make your decisions for each year, and to report your results to see what happened. You must keep track of your decisions, making specific notes supporting each of your decisions.
Run the Clipboard Tablet Co. simulation through the end of 2015. When you are finished, the date will be December 31, 2015. What is your total Score? Did you do better than Joe Thomas?
You organize your notes about your decisions, your analysis, and your reasoning into a well-written report.
Run the Clipboard Tablet Co. simulation https://forio.com/simulate/michael.garmon/tablet-development-sim/simulation/#p=page0https://forio.com/simulate/michael.garmon/tablet-development-sim/simulation/#p=page0 with your strategy, making decisions year by year for prices and R&D allocations. Write a 6-7 page paper, not including cover and reference pages, in which you discuss the decisions and the results for each year. Discuss why you did better (or worse) than Joe Thomas.
KEYS TO THE ASSIGNMENT
The key aspects of this assignment that should be covered and taken into account in preparing your paper include:
• As you run the simulation, keep track of your decisions and the results - both financial and marketing. Copy and paste the results into Excel or into a Word document. You will also want to record the information that you get from the Advisor. Make a note of your Final Total Score.
• Include your Final Total Score, some tables, and/or graphs showing key results. Using sound logic, be sure to clearly explain the differences from the previous problem.
• Remember that the key here is quality of analysis.
• Time Line Summary:
• You find yourself in a Time Warp that takes you back to January 1, 2012.
• You recognize that you can now revise the decisions made from the previous problem for 2012 - 2015.
• January 2, 2012 - input decisions for 2012.
• January 2, 2013 - input decisions for 2013.
• January 2, 2014 - input decisions for 2014.
• January 2, 2015 - input decisions for 2015.
• December 31, 2015 - You have gone through all four years, and you write your report to summarize how you did.
The response addresses the query posted in 1714 words with APA references
//Clipboard Tablets Company has three products, namely X5, X6 and X7 that are in different phases of the product lifecycle. In the following paragraphs, there will be an exploration of price strategy and R&D budget strategy for 2012 to improve the profitability and revenue performance of the company. There will also be a comparison of results with Joe Thomas simulation results.//
The company has three tablets, namely X5, X6, and X7. All the three products are in the different phase of the product lifecycle. X5 is in maturity phase, X6 is in a growth phase, and X7 is in introductory phase. The company needs different strategies regarding pricing and Research and Development budget (R&D budget) in order to attain maximum possible profitability with the generation of new sales in the market.
Joe Thomas had a score of 81,571,138 in 2011 that has to be considered for the comparison with results in next four years starting from 2012 to 2015 to depict the rationality in decision-making regarding pricing and research and development budget for the products X5, X6, and X7. There will be a use of advisors' comments and the simulation result of previous year to make a decision regarding pricing and R&D budget. It will help to improve the existing scenario of profitability of the company by improving its sales volume in the market.
Input decision regarding pricing and R&D budget is based on a simulation result of 2011. The simulation result of 2011 indicates that the increase in the performance of X5 can be possible with the decrease in the price. X5 also needs to increase its R&D budget to improve its suitability for the customers. X6 is in a growth phase and requires increasing its R&D budget. The price of X6 can be improved because of customers focus on the performance of the product. X7 is in the introductory phase that needs an increase in R&D budget and decrease in the price to enter the market. The given below table shows the pricing and R&D budget figures used in 2012.
Inputs: January 2, 2012
Simulation Results: 2012
The simulation results show that the strategy used for all three products is beneficial because of improvement in the final score that is 366,689,034, ...
The expert examines a clipboard tablet company three products. The response addresses the query posted in 1714 words with APA references.
Clipboard Tablets Company - X5, X6, and X7
Armand J. Tetreault
Module 1 SLP
MGT 599: Strategic Review
Dr. Rhonda Polak
April 24, 2015
We will analyze the default decisions made by Joe, in which he did not make any changes on R&D, pricing, etc. throughout the period. Let us review this from the start of the simulation.
At the end of 2011, the profit was 81, 571,138. At this point of time, X5 was in the growth phase and costlier than most products in the category. Further, X6 was better than competing tablets. The market for each of the three devices was far from saturation. X5 and X6 had a profit margin of 16% and X7 was yet to make a contribution to the profit. X5 had a good installed base but X7's market potential or target market size was high as compared to the other two.
Now, we run the simulation for 2012 by keeping the decisions intact, i.e., default decisions. This decision will be intact throughout the simulation.
After running the simulation, the profit at the end of 2012 was 352,144, 973. Customers were willing to pay more for X6 than other products in the category. X6 was in the growth phase with strong market potential. X5's performance was comparable with other players in the category. There was a strong growth in the sales of X5 and X6. The sales of X7 also started to kick in. The profit margin for X5 and X6 increased strongly.
If we analyze these decisions, I can say that Joe missed the opportunity to earn higher profits by keeping the price higher for X5, which was in the growth phase. If he had reduced the price little bit, he would have captured higher market for X5. Further, X6's price could have been higher because it was superior to other products in the category. Joe should have reduced price for X5 and increased for X6 in order to capture higher sales, as well as should have diverted higher percentage of R&D to X6 and X7.
Now, let us make the decisions for 2013 by keeping the pricing and R&D percentages intact.
After running the simulation, the profit at the end of 2013 was 830, 740, 435. The advisor said that X7 was priced higher than peers but lacked in performance and the market for this one was in growth phase. We observe that the market for X5 is moving towards saturation. The potential for X7 is huge and X6 is also showing good promise. X5's profitability has improved but X6 has stolen the show in terms of overall revenues. X7 is yet to breakeven.
If we analyze the decisions, Joe should have put more money in R&D in order to maintain the premium positioning and superior performance of X6 that had the capability to command premium pricing. Further, Joe should have reduced the R&D expenditure on X5's R&D as it was approaching saturation and the performance as comparable with other peers. Joe should have started to divert more resources to X7, which needs attention.
Now, let us move towards 2014. Ideally, based on the advisor's report, Joe should have diverted higher percentage of R&D to X7 as it is a market with great potential and highly unsaturated. Further, the product is lacking performance. Pricing should be reduced as well. The resources spent on R&D of X5 should be diverted to X7 and X6 and X5's market is reaching saturation and the product does not require innovation. However, Joe kept the decisions intact, just like above, and the results were as follows at the end of 2014.
Total profit was 1,319,039,222. Advisor said that the pricing of the products was competitive with other products. X5 had reached a shakeout phase and new sales are declining. X5's market was moving towards full saturation and thus, the decision of Joe to keep the R&D intact for this one was not right. X6's market was also approaching saturation. X7's market was still virgin and yet to be fully exploited. X6's sales and profitability was still growing and thus, Joe should have diverted R&D resources to X6 and X7, as it was not useful to keep on spending on X5, which has reached a saturation stage. X7 needed lot of attention in terms of R&D in order to tap the full potential of the market.
Based on the above situation, Joe should have scrapped R&D spending on X5 and should have diverted entire set of resources between X7 and X6, which were promising markets for the company. However, Joe kept the decision intact. Let us see the results in 2015. At the end of 2015, the profit was 1513, 237, 527. X5's sales have reached maturity and thus, Joe should not have put so much money in R&D of this product as it is only generating replacement sales and thus, R&D is not required. X7 is the new star of the company and thus, entire focus should be on this product. R&D should be diverted to this product in order to capture the market potential. X6 is the cash cow and still generating majority of the profits, but market for both X5 and X6 have reached saturation. The company does not need to spend on R&D of X5 and X6 as majority of the sales is replacement sales.
The strategy going forward should be to exploit the X7 market whose saturation level is just 5% and thus, the company should focus on improving the performance of this product in order to capture higher market share.
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April 2015 from http://www.strategos.com/aligning-rd-with-the-companys-business- strategy/
3. Pisano, G. (2012). Working Knowledge. Creating a R&D Strategy. Retrieved April 2015 from