Capsim Report

Topics: Shift work, Balance sheet, Total cost Pages: 17 (4526 words) Published: January 5, 2012
I. Executive Summary
Erie Corporation has been founded in 2011 with the mission is to provide both reliable products for low-technology customers including Traditional and Low End segments; and premium- technology oriented customers including High End, Performance and Size segments. This business plan is written so as to provide the board of directors a detailed picture about the company’s strategies as well as the direction how we can implement these strategies. The plan consists of three parts. The first part is about the corporate objectives and strategy. In detail, at the end of year three, Erie aims to be one of the two leading companies in the market with a net profit of $10,000,000 and 25% of market shares of the whole industry. In addition, the company’s management expects to gain at least 30% of contribution margin for each product, to reduce 60% to 70% of total labor costs and 11.8% of total material costs. Erie’s strategies are niche cost leadership and niche differentiation. In particular, while products in Traditional and Low End are oriented to operate under the niche cost leader, products in three remaining segments including High End, Performance and Size are aimed to follow the niche differentiator strategy. This is because while price is the most considerable criterion of customers in Traditional and Low End segments, this does not matter to the other three segments’ consumers as long as the products offered are premium-technology. To implement this strategy effectively, Erie should operate under the direction like this, besides revising products to meet customers’ expectation; the company set up a relatively low price for products in Traditional and Low End segments and vice versa for products in the three remaining segments. Simultaneously, the company will invest on capacity and automation gradually for all segments. This will bring to Erie a competitive advantage over other competitors in terms of long-term cost savings. In addition, maximum second shift capacity may be run as much as possible and a significant amount of money will also be spent on promotion and sales budgets so as to capture the highest possible percentage of market shares. Furthermore, Erie is willing to make losses at least in the first two years because in the remaining years of the simulation, when higher capacity and automation are ready as well as Human Resources and Total Quality Management functions are applied, Erie will become more competitive in the market and hence can make profit as the production costs will be minimized. Secondly, specific objectives, key performance indicators and strategy which are followed strictly the corporate objectives of all departments including R&D, Marketing, Production, Human Resources and Total Quality Management will be also set out. Finally, a back-up plan which might be utilized when there is trouble in the operation of the company’s products is also prepared. Under this plan, the failed product will be remained for two years instead of stopping its operation immediately so as to sell its remaining inventory and wait for the new product to be finished and could be sold to the market.

Table of Contents
Executive Summary 1
Introduction 4
Corporation Objectives & Strategies 4
1. Corporation Objectives 4
2. Corporation Strategies. 4
R&D Department 5
1. Objectives 5
2. KPIs. 5
3. Strategies. 5
Marketing Department 6
1. Objectives 6
2. KPIs. 6
3. Strategies. 7
Production Department 8
1. Objectives 8
2. KPIs & Strategies. 8
3. Strategies. 9
Human Resource Department 10
1. Objectives 10
2. KPIs & Strategies. 10
TQM Department 11
1. Objectives 11
2. KPIs & Strategies. 11
Finance Department 12
1. Objectives 12
2. KPIs & Strategies. 12
3. Strategies. 12
Back-up Plan 13
Conclusion 14
Reference 14
Appendix 15

II. Introduction
Sensor industry is more likely an oligopoly...
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