Business Policy and Implementation

Business Policy and Implementation Name Course Instructor Date Introduction The Foundation fast track takes into account the industry report and key financial information pertaining to Andrews and other competitors. To choose the best policies of the organization, pro formas are relied upon to analyze future projections, awhile annual results give results from earlier years to facilitate analysis. Strategy implementation should ideally make the team more competitive, but the actions of competitors should also be taken into account as they are crucial to the strategy plan (Hendon, 2013). This paper focuses on Capsim simulation of Andrews's team in round 0 to 5, touching on profit, margin, emergency loan, inventory, and stock price. Profit In round 0 of the simulation, all the firms are at a level playing field with each team reporting a cumulative profit of $ 2,485,186 which was the same as the reported profit as there was no previous results. Equally, the six teams reported similar Earning before Interest and Tax (EBIIT). Essentially, all financial results at the time are the same for all the firms in the reports. In round 1, there are differences in the profits reported with Andrews having the worst EBIT at $1,084,499, while Digby has the highest EBIT at $6,213,212. Even though, Andrews has higher sales than both Erie and Ferris, the two firms reported higher EBIT and profits. Andrews had a profit of $ 282,296, the only company which did not cross the 1 million dollar mark, and this resulted to the least reported cumulative profits for the group. Thus, the firm performed poorly than competitors managing costs with variable costs and period costs contributing to a lower profitability, and there is need for improvement in cost handling. In round 2, the group performed better than the previous year and reported the second best level of sales at $ 52,280,466 versus that of Digby being $ 77,844,840. Nonetheless, the EBIT (net margin) was worse as only two groups reported lower levels of the profit at $ 7,034,612. Nonetheless, one of the contributing factors could be the SG& A/ sales at 9.4%, which was the third highest. Andrews had the least contribution margin percentage at 24.7%, showing that the group’s variable cost contributed to increasing business costs. Round 3 also showed varying profitability levels for the firms, with Baldwin and Ferris reporting lower sales level, but the two had higher EBIT. Andrews had the lowest EBIT at $ 5,961,789 and this shows that the firm compared the worst among the competitors with SGA costs contributing to the growing cost in comparison to the other firms. Thus, the management needs to look into the SGA costs which have resulted to the group reporting the lowest net profit at $ 3,389,597 in round 3. The results of Andrews were gradually improving, with the team reporting sales of $50,695,000 in round 4. The team still has the least level of deprecation amount, but SGA expenses are the biggest contributors to the cost escalation. Baldwin had lower sales revenue and EBIT than Andrews, but the team had better Net Profit than both Baldwin and Erie, as Eris had higher levels of interest payments. Even though, there is improvement in the level of EBIT in comparison to round 3, the team still needs to look into the high cost and low sales affecting the profitability levels. Three competitors reported lower contribution margins, meaning that there share of variable costs were higher than that of Andrews. Andrews had a cumulative profit of $17, 605,515 the second worst after that of Baldwin in round 5. The team had a modest profit of 2,545,458 with Baldwin being the only team that reported a loss in this round. Four firms outpaced Andrews in sales revenue, with only Baldwin reporting lower sales figure. The SG & A sales was the highest at 15.8% and still present challenges to the group. Nonetheless Ace an Andrews product reported a loss of $3,500,000, while Able was profitable. Margin There were no differences in results for round 0 among all the competitors, and a look into round 1 to 5 showed that there were differences on how the teams were able to handle sales which influenced the margin. In round 1, the team was not able to handle the sales and expenses well as the Andrews reported the lowest level of contribution margin because of a higher level of variable costs. Making sales with higher net margins would improve the situation in subsequent years, with the team also focusing on competitions to utilize better strategies in increasing sales (Hendon, 2013) Similarly, in round 2, the contribution margin was the lowest, but the margins were smaller than in round 1, showing that the group was now managing variable costs better. Nonetheless, the team was better prepared to handle the total cost contribution versus the sales, given that the group had a better profit margin than Baldwin, Erie and Ferris. According to Cinnamon and Helweg-Larsen (2010), business simulation pays a vital role in understanding profitability as it is easier to understand the business cycle. The contribution margin in round 3 was the lowest at 26.5%, and the team is still performing like in the previous round, but the SG & A / sales is now the second highest after Ferris. Besides having higher sales margin, the cost implications of business operations affect the margin, and the SG & A is better managed than the previous round. On the other hand, the SG & A/ sales was the highest in round 4, while there were three teams with lower contribution margins. In round 4, the team was able to manage the variable costs and this impacted positively on the net profit margin, but the SG & A costs still pose a challenge to the team as there is cost escalation. In the last round, the team continued to post mixed results, but the team improved the contribution level of Andrews as the contribution margin increas...