MGT599 Mod 2: The External Environment, Internal Profile, and SWOT

MGT599-MOD2
SLP-THE EXTERNAL ENVIRONMENT, INTERNAL PROFILE, AND SWOT
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Institutional Affiliation:
The External Environment, Internal Profile, and SWOT
Introduction
The technological industry remains unique and competitive especially in consideration of the constant growing demand for some of the new innovative products in the market. As a result of this, intense rivalry is bound to rise between competitors, an aspect that may result in losses within an organization, especially in an instance where an organization engages in a price war. It is notable to establish that product competition specifically in regard to the development of Tablets that meet the preferences of consumers is evident in the market.
When rivalry and competition turn out to be healthy, the production process is promoted, thus resulting in the development of quality products that are beneficial to consumers (Henry, 2007). On the other hand, it is important to ascertain that this industry remains quite profitable in as much as it necessitates the need for huge capital expenditures and specialized skills and knowledge in starting, developing and maintaining.
Technology is primary utilized in many organizations in order to reduce the costs incurred in production, an element that maintains higher rates of consistency, accuracy and the reduction of manpower and errors in an organization (Henry, 2007). Organizations that are in a position to sustain constancy in the production of quality gadgets are in a position to maintain a considerable growth in sales they make and clients that are retained in a market.
Additionally, through effective marketing approaches, organizations remain in a position of making clear visions in the outcomes that are desired, an aspect that integrates a systematic planning process, and the application of formulated strategies (Henry, 2007). In this case, it is important to ascertain that the process of pricing is relevant in arriving at marketing mix decisions, where a product’s price is considered to one of the variables in the marketing mix in the generation of revenues.
The decisions on pricing are significant since they affect the revues of a company, as well as the behaviors and preferences of consumers. This paper seeks to establish the manner in which pricing decisions and adjustments have the capacity to affect the behaviors of consumers in consideration of the Clipboard Tablet Company’s proceeds. In addition to this, R&D funding also play an integral role in determining the organization’s productivity (Chapman, 2012). Considering that the company has minimal finances available in funding the proposed project, it is essential to incorporate a radical decision with the motive of establishing the organizations project that will be funded over a specified time framework with the lifespan of a product.
Through the use of the Clipboard Tablet Co. Simulation, the R&D and pricing allocations will be made within a period that spans from January 2012 to December 2015, with the marketing and financial results critically analyzed. Tabulated in Table 1.1 are the marketing and financial results for the year 2012 that will be used in starting off the analytical process in guiding the consequent pricing guide and the organization’s research and development funding process for the company’s products.
January 2: 2012 Financial Summary

X5

X6

X7

TOTAL

Sales

968, 979

562,962

0

1,531,940

Revenues

276,159,057

247,075,200

0

518,232,280

Cost





Variable Costs

145,346,882

154,815,256

0

300,161,138

Fixed Costs

75,000,000

37,500,000

0

112,500,000

R&D Costs

11,820,896

12,179,104

0

24,000,000

Total Costs

232,167,777

204,493,360

0

436,661,138

Profits

43,991,298

37,579,840

0

81,571,138

Profitability

16%

16%

0%

16%

Performance

1.00

1.02

0.97


Table 1.1: Financial Summary
For the year ended 2012, the cost of the X5 tablet was considerably more that the cost of the other products within this market. The comment from the adviser accentuated that this gadget was facing its growth stage within the product’s life cycle over the previous year 2011(Chapman, 2012). In this case, the product was in position to gain a market saturation of about 15.5% with an installed base of close to “1,035,000”, against its consumer base of 6,000,000.
On the other hand, the X6 tablet was in a position of gaining a constant market saturation rate of 8% while the X7 enjoyed 2% market saturation rate. For the fiscal year ending in 2012, the total cumulative score may have been accumulated to “81,571,138”, a figure that translates to a profitability of 16%. In consideration of the fact that the market results depict that X5 costs more as compared to its competitive product, it is significant to ensure that the pricing of the X5 gadget is reduced to ensure that its sales is boosted (Chapman, 2012). On the other hand, the reduction of the price of X7 would consequently result to more revenues and sales, an aspect that necessitates the need to increase the financing for R&D for X7 with the aim of improving its performance in the market. In this case, it is essential to note that:
The Pricing and R&D Financial Decisions for 2013 will ensure:
1 The prices of the X5 is reduced from 285 to 275
2 The X7 price is also reduced from 190 to 140
3 The R&D costs for the X7 tablet is increased by up to 36%, an aspect that implies that the allocations in the production of X5 and X6 would reduce down to 31% and 33% respectively.
January 2: 2013 Financial Summary

X5

X6

X7

TOTAL

Sales

1.910,966

1,288,999

332,193

3,532,158

Revenues

525,515,750

554,269,513

46,506,982

1,126,292,246

Cost





Variable Costs

145,346,882

354,474,689

18,270,600

659,390,244

Fixed Costs

75,000,000

37,500,000

37,500,000

150,000,000

R&D Costs

7.440,000

7,920,000

8,640,000

24,000,000

Total Costs

369,084,955

399,894,689

64,410,600

833,390,244

Profits

156,430,795

154,374,825

-17,903,618

292,902,002

Profitability

30%

28%

-38%

26%

Performance

1.06

1.13

0.85


Table 1.2: Financial Summary
Suppose the above elements are established and implemented, then the total score for this year-2013 is likely to ride to “374.473,140”, in contrast with 352,144,973, that would have been achieved in a case where pricing decisions were not arrived at (Chapman, 2012). It is additionally essential to consider the fact that consumers paid more in purchasing the X6 tablet as compared to the manner in which they made payments in the previous year. This therefore establishes that the X6 tablet is in its growth phase in the product cycle, an aspect that tabulates the fact that its sales increased rapidly.
In consideration of the performance index of the X5 tablet that stands at 1.06. The X6 gadget noted a performance index of 1.31, while the X7 stood at 0.93, an aspect that determines the need to increase R&D for the cost of the X7 tablet with the aim of boosting its performance in the market. In addition to this, since the cost of the X7 tablet is competitive in the market, diminution of its market price would increase the products sales (Chapman, 2012).As detailed, the market saturation of the X7 tablet is consequently lower as 2%, thus necessitating the need to allocate more funds towards R&D and a reduction of its price, an aspect that would purposefully increase its sales. In this case, the X5 tablet and the X6 were in a position to achieve market saturation of 27% and 16% respectively. In this case, the pricing and R&D financial decision for 2014 would ensure:
1 The prices of the X5 tablet are reduced from 275 to 270
2 The market price of X7 is also reduced from 140 to 120
3 A reduction of the price of the X6 tablet from 430 to 410 is considered
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