analysis of digby

Topics: Marketing, Stock, Stock market Pages: 5 (1907 words) Published: April 15, 2014
Analysis of Digby’s strategy
In the 8 rounds of Capstone simulation, our team placed second among the five teams, our stock price was $255.52 at the end of the simulation. We did some right decisions but also made some mistakes, our analysis is as follows: Round 1:

Five teams all started with the same situation, we didn’t know other team’s strategy, so we simply forecasted that our market share will be 20%, our strategy is a little conserved. R&D: We made a mistake in R&D because we used the ideal spots in the industry conditions report instead of using the ideal position in the report for round 0 plus the industry trend, We didn’t change the performance and size of the low end products because the No.1 factor customers considering was the age of the product. The ideal age was 7, but the age of our product was just 4.6. Price and sale forecast: For the traditional and low end products, customers were more sensitive to price, so we lower our price to occupy more market share. But for the rest three segments, customers were not sensitive to the price, they will buy the product as long as the product was what they want, no matter what the price was. We used 20% as our market share in the first round, it turned out that we under estimate the need for our traditional, low end and performance products. Promotion and sales budget: we understood that the promotion and sales budget ware very important because it would influence the awareness and accessibility not only for this round but also for the next 7 rounds, so we spent $14,400,000 on promotion and sales. Production: Our production schedule was based on the forecast of our sales, the capacity was more than enough, so we didn’t spend any money on buying capacity this year, but we spent $18,800,000 on automation rating, because it could help to reduce the labor cost. Human resources and TQM: We didn’t notice the important role about training and recruiting spend and TOM were playing in reducing the cost and the R&D cycle time, so we didn’t spend any money on these things. Finance: We borrowed $7,000,000 long term debt to avoid emergency debt. Result: Our high end and size products didn’t sell very well because our products’ performance and size wasn’t at the ideal spot and this was the No.1 factor customers considered, and also we under estimate the need for our traditional, low end, and performance products. Our stock price was $29.17 at the end of the round 1, fall by $5.07. Round 2:

R&D: Still using the ideal spot in the industry conditions report, and didn’t change any performance and size of low end products. Built the new high end product DG, because the ideal age of high end products is 0, so we want to build new product with younger age to attract customers. Price and sale forecast: Increased the price of traditional products to $26.50 because from the report of round 1, our price is much lower than the other competitors. Kept the price of low end products low and kept the price of high end, performance and size products as high as possible. In the round 1, our traditional, low end and performance products were stock out, so we increased our sale forecast of these three products to 25%-27% of the demand, kept the forecast of the high end and size products 20%. Promotion and sales budget: We spent $14,500,000 on promotion and sales this round. Production: Spent $11,400,000 on plant improvement including buying capacity to low end and new products, and increasing automation rating. Human resources and TQM: Spent $1,000,000 on recruiting and set 40 training hours. And we also spent $4,500,000 on TQM. Finance: Didn’t borrow any money this round.

Result: Because our sells increased this year, so our stock price increased $9.53 to $38.69 at the end of the round 2. Round 3:
R&D: started to use the ideal position in the report from round 2 plus the industry trend to get the ideal spot for round 3, and still didn’t change any performance and size of low end products. Price...
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