Capsim Foundation Strategy
A unique and interesting problem arose when one company, a monopoly within the business-to-business (B2B) sensor market, split into six companies with identical products and equal footing within the market. As Director of Finance for Chester Company, one of the newly formed entities, it is important for me to identify a strategy that will enable the company to remain viable and be successful in the future. An in-depth analysis of the industry situation report provided good metrics to project future customer desires and total market potential. In order to be successful, the strategy that the management team develops must work within the identified parameters while attempting to predict how the other five companies in the B2B sensor market will proceed.
There are only two segments of the B2B sensor market: low technology and high technology. The only product Chester Company offers currently fulfills the needs of both markets but this will change as the newly formed entities revise and develop products to meet customer needs. The high tech segment is appealing but will require continual investment in research and development to maintain the standards that customers expect. It will be easier to meet the needs of the customers within the low tech segment but there will likely be more competition for market share.
1. The strategy that I would like to see the management of Chester Company adopt over the next five years is that of “niche cost leader” (Capsim Management Simulations, 2012) for the low technology segment of the B2B sensor market and to obtain thirty-five percent of that market. This will be achieved by appealing to customers’ sense of thrift. To cut prices below the competition, management should retain the current product and not invest much in research and development. Production costs must also be greatly reduced. To do this, an early investment in automation is necessary as it will reduce labor expenses in future years which will increase the
There are only two segments of the B2B sensor market: low technology and high technology. The only product Chester Company offers currently fulfills the needs of both markets but this will change as the newly formed entities revise and develop products to meet customer needs. The high tech segment is appealing but will require continual investment in research and development to maintain the standards that customers expect. It will be easier to meet the needs of the customers within the low tech segment but there will likely be more competition for market share.
1. The strategy that I would like to see the management of Chester Company adopt over the next five years is that of “niche cost leader” (Capsim Management Simulations, 2012) for the low technology segment of the B2B sensor market and to obtain thirty-five percent of that market. This will be achieved by appealing to customers’ sense of thrift. To cut prices below the competition, management should retain the current product and not invest much in research and development. Production costs must also be greatly reduced. To do this, an early investment in automation is necessary as it will reduce labor expenses in future years which will increase the