Written Project Intro
Page 1 Pick a Strategy Your company decisions will reflect your strategy and tactics. For example, Cost Leaders will increase demand by lowering the prices; Differentiators will increase demand with aggressive sales and promotion budgets. Be sure to read "Six Basic Strategies," Chapter 12 of the Team Member Guide. Page 1 of 7 These six basic strategies can be the starting point for your own custom strategy. Page 2 of 7 12.1 Broad Cost Leader A Broad Cost Leader strategy maintains a presence in all segments of the market. The company will gain a competitive advantage by keeping R&D, production and material costs to a minimum, enabling the company to compete on the basis of price, which will be below average. Automation levels will be increased to improve margins and to offset second shift/overtime costs. Mission Statement Low-priced products for the industry: Our brands offer solid value. Our stakeholders are bondholders, customers, stockholders and management. Tactics Research & Development: We will keep our existing product line, maintain a presence in every segment, and work to keep our products up to date in each segment despite high automation levels. Marketing: Our company will spend modestly on promoting and selling products in our industry. Our prices will be lower than average. After we establish our cost leadership position, we will revisit our situation to explore options to improve awareness and accessibility. Production: We will significantly increase automation levels on all products. However, because automation sets limits upon our ability to reposition products with R&D, we automate more in the slower moving Traditional and Low End segments than in the fast moving High End, Performance, and Size segments. We will prefer second shift/overtime to capacity expansions. Finance: We will Finance our investments primarily through long-term bond issues, supplementing with stock offerings on an as needed basis. When our cash position allows, we will establish a dividend policy and begin to retire stock. We are not adverse to leverage, and expect to keep assets/equity between 2.0 and 3.0. Page 2 List and briefly explain the my primary decisionmaking policy. List my secondary decisionmaking policy should the first decisionmaking policy fail for any reason. (In reference to the capstone businees simulation i.e. R&D, marketing, production, and finance). Page 3 Discuss conflict resolution strategies that will be used to resolve any conflicts I may have. Note: This differs from the my decision-making policy. Refer to the link below for a discussion on conflict resolution strategies: http://smallbusiness(dot)chron(dot)com/5-conflict-management-strategies-1 6131.html
"Six Basic Strategies," Chapter 12 of the Team Member Guide.
Page 1 of 7
These six basic strategies can be the starting point for your own custom strategy.
Page 2 of 7
12.1 Broad Cost Leader
A Broad Cost Leader strategy maintains a presence in all segments of the market. The company will gain a competitive advantage by keeping R&D, production and material costs to a minimum, enabling the company to compete on the basis of price, which will be below average. Automation levels will be increased to improve margins and to offset second shift/overtime costs.
Mission Statement
Low-priced products for the industry: Our brands offer solid value. Our stakeholders are bondholders, customers, stockholders and management.
Tactics
Research & Development: We will keep our existing product line, maintain a presence in every segment, and work to keep our products up to date in each segment despite high automation levels.
Marketing: Our company will spend modestly on promoting and selling products in our industry. Our prices will be lower than average. After we establish our cost leadership position, we will revisit our situation to explore options to improve awareness and accessibility.
Name
Institution Affiliation
Course
Date of Submission
Primary Decision Making Policy
Low Cost Strategy
The affordable price strategy as a company policy has the potential of boosting the company to the next level. This is because in general, there are many clients who would prefer low cost services or products because they may not afford expensive ones (Kotler, 2010). Although our products are generally unique, we will not set very high prices at first, as this will scare away potential customers. We will therefore, set prices at relatively low in order to encourage potential buyers.
The cost leadership strategy will enable the company to generate higher profit margins. If the business will be able to sell services and products with a cost basis that is lower and prices that are competitive, the company’s margins will be greater in comparison to those entities that invest more in producing similar products. In essence, the low cost leadership has the potential of achieving more earnings from their products or services in comparison to rivals with high prices (Kotler, 2010).
The prices will however, be increased once the market share expands. To be able to make some profit even from the low pricing, we will have to make sure that the cost of production, promotion and marketing are minimized. This however does not translate that the prices for our commodities will be the lowest than similar brands in this region. We do understand that setting prices at very low prices could be very disastrous to the business operation. More so, some people would perceive that under priced products as being of low quality. Our initial prices will be set in such a way that it enables the company to penetrate through the regional market and expand its market share and at the same time be able to offset its costs. Our concern at this moment is not to make huge profits but to establish a market base.
Alternative Strategy
Product Differentiation
As earlier mentioned we do understand that setting prices at very low prices could be very disastrous to the business operation if not carefully thought out and managed. Should this strategy fail to work for any particular reason, then we will employ product differentiation as an alternative strategy for penetrating and acquiring the market share. In a crowded market, customers are eager for product differentiation to assist them in their buying decisions. Through provision of greater values, convenience options and customized features, the company will be able to attract and influence clients to buy our products. It is hoped that effective differentiation strategies if effectively implemented will be able to improve the company’s brand image, cater to client’...