(Simulation Analysis Report)
BIC is a product that has been extremely successful, offering items such as a low-cost disposable razor, and pens that add value to the user at an affordable price. BIC uses a strategy similar to the Niche Cost Leader Strategy. The Niche Cost Leader Strategy puts the main focus on positioning a product at an affordable price while still presenting value to its customers. My reasoning for using this strategy is that my products will be extremely useful and beneficial to its consumers; products like BIC and McDonalds are in extreme demand with the situation of today’s economy. To maintain this strategy, I will keep the costs that go into the products low. Costs such as Research and Design, materials, and production serve as an important factor in the pricing of Erie’s products. As you continue reading, you will see my strategy unfold, the obstacles that I have faced, and the improvements that I will be developing in the near future.
Although I chose Niche Cost Leadership with reasoning, executing the strategy and making it happen was much more challenging. I did not seem to have a good understanding on the program itself, or my strategy; I did not comprehend exactly how to change my traditional product to low end, or my high end product to traditional. I was entering numbers based solely on consumer’s ideal preferences, rather than understanding these numbers. After entering what I thought were correct numbers, I was seeing no effect. After receiving some assistance, I am beginning to get back on track. I have started transitioning my high end product to a traditional (refer to figure 1); and I am now regaining profit back. Although my strategy has not yet achieved any of my company goals at this point, with gaining more understanding of my strategy and how to implement it, I will be successful.
Seeing that my Research and Design seemed to be the most far off the path of my strategy, I will focus much of my attention to redirecting those products to their appropriate segments. I will also focus more on the other sections (especially production) and get the help needed to be sure that I will be on my way to a successful company. I have noticed in production I have much room for advancement after looking at the production analysis presented in Figure 2. I will also begin to increase the automation, which will then decrease the prices of labor. There are still plenty of areas where my knowledge is vague; this is where I will focus more of attention to, in regards to gain improvements.
When it comes to competition, I was not very competitive up to this point. Seeing that I was not completely successful, I am on the low end of my competition. I am by no means in last, but again there is definitely room for improvement. In another retrospect, I am doing fairly well in my market share, shown in Figure 3. As you can see Andrews and Baldwin are in a significantly lower position than Erie. It seems that my biggest competition at this point in the game financially is between Baldwin, Ferris, and Erie. Baldwin is right behind Erie when it comes to my net profit and Ferris not far ahead (See Figure 4). To help enhance my competition, I will be focusing immensely on the Capstone Courier to gain a competitive advantage over the other companies.
Finance has been a specifically challenging section for the company; also one that I have spent the least amount of time understanding. I will begin to focus more on my long term stock issues by investing more money into stock for the company. To do this, in the next round I will begin to gradually increase my profitability, thus providing more revenue to our company’s shareholders. This will eventually help Erie raise money and become financially stable. After giving out profit to shareholders, I will use the difference to either invest, or to pay off the dividends. Once...