“To become the most innovative mobile phone company in the next decade”.
“We strongly believe in the power of design will influence customers in current saturated races of phone. We focus on appearance of each phone and customers experience to provide one phone for all ages at competitive price.”
ONE – The ONE phone for all, those are our vision and mission. This report is structured with two parts.
Part A will analyse the main problem, decisions making process and results for the Main Challenge, then, there will be discussion about recommendation and justification for each department of company.
Part B contains a reflection essay about my achievement and self-development gained from this module that contribute to my career path in the future.Introduction
The biggest issue in Round 3 which was the increase in oil level had now been resolved for this round. However, there has been an airplane crash in Southern China caused by freely used handsets on plane which was predicted to have significant effect on demand in three main markets. Economics predicted the market would not be quite stable with a negative demand in Asia and USA meanwhile there would be remained constant in that of Europe. In fact, it would have an impact on sales and profit, managers who are primarily responsible should take this into account before making any decisions in this period.
However, as oil had returned to normal levels, transportation costs were now reduced by around 6%. Based on the increase in outsourcing capacity and the fall in costs of outsourcing, total cost was supposed to suffer a significant reduction, for this reason, company could gain higher profit than previous rounds.
Besides, after-tax profit seemed to be affected negatively because of the increase in tax rate in Asia and the change in exchange rate. Consequently, the reasonable distribution of products in market was essential.
2. Main Analysis?
a. Company’s position at the end of Round 3
Despite the missing of Round 1, we continued maintain our five-year strategy to gain 25% market shares globally, pay-off long term loans and build more factories. At the end of round 3, our profit was 470,838k USD, 26.34% return on sales, became the second highest in our Universe. Cumulative total shareholder return (TSR) was 8.98%.
There have been some changes made, we decided to focus on Europe market as leading in market share instead of Asia as originally planned. In three markets, our company had been selling Tech 1 and Tech 2, with different number of features offered depending on each market condition and competitors’ movement. After without carrying out any activities in Round 1 due to some reasons will be mentioned in part B, we set our prices more competitive from Round 2 after paying attention on price policies of main competitors and as a result, our revenue and profit increased.
As regard of income statement (see table 1), it could be seen clearly positive signals as sales and profits are increasing and the position of the company gradually improves over time. However, our cash was significantly lower than other because we aimed to pay some amount of long-term loans every round (see table 2. Financial statement).
b. Objectives for Main Challenge
After considering market condition as well as company’s strengths and weaknesses up to this, we have decided to set objectives for this particular round.
Firstly, as regard of market shares, we aimed to compete with 3 main competitors, SynTech, EveCorp and GO-4. In particular, USA and Europe should be remained the second and first place respectively; however, in Asia, it was really a challenge for us when we planned to take over as many as possible market shares to become the third highest. By setting more competitive prices, spending more on promotion and upgrading more features on main products, we believed we would be able to archive our goal set of increasing market shares.
Secondly, it is the most important objective to maximize shareholders’ wealth, thus, we decided to continue issuing shares to gain more cash and financial support to pay-off long-term loan in 5 years as planned and keep TSR ratio around 7-8%. We would like to boost the TSR ratio to about 20-30% when the loan is done.c. Decisions making process, recommendation for each department ? Demand
For this particular step, it is all about how company forecasts the changes in demand, consumer behavior and market shares after having a scan of all market data and information. In this case of the Main Challenge, we forecasted market share in USA to remain unchanged, Asia to slightly increase and Europe to gain 25%. Forecasting plays an important role in every business. The accurate forecasts also give company a good preparation in allocation of resources, production and supply chain management to meet the need or at least to minimize the gap between supply and demand in each particular market. In addition, the result of forecasting process also contributes to R&D department to invest reasonably in new products and features while optimizing cost management.
Initially, because of demand forecasted to increase gradually each round and in order to gain more market shares by the time, we decided to invest in a large number of plants either in China and some more in USA from early stages. Although the investment in plants will be evaluated, our company did not invest in plants in this round as this would take time on building and taking into operation.
Regarding of planning production, producing in-house or outsourcing depends mainly on strategic business focus, or rather the target markets that production plants supply after estimating unit cost and transportation cost. Besides, capacity and utilization of plants should be considered to balance.
As mentioned above, the aim was to minimize the gap between supply and demand and in the case of all competitors are heading towards, we have tried to switch between two systems flexibly from time to time: lean supply chain management and agile supply chain management (we preferred the variability of agile system).
To some extent, company should pay more attention to quality management, especially with outsourcing products when there are practical lessons from Motorola Droid 2 or Samsung Galaxy Note 7 and most recently the incident happened on the plane as an example.
? Human Resources
As could be seen clearly, HR incurs costs every round which are training, salary and layoff costs. In round 3, we have achieved efficiency in the use of human resources according to the evaluation result. It was believed that the in-house development would not be necessary in this round so the HR expense need to be cut off. Therefore, training and salary would be reduced significantly despite layoff cost incurred.
Cost reduction has contributed in operation improvement, besides, Kaizen theory where all resources should be involved and used effectively.
Our strategy in marketing is focus strategy on a segment with a mixture between cost leader and differentiation. We were trying to keep a low-cost level whereas still working hard to deliver products with the most advanced features to customers. In some particular rounds, we had prices competitive, especially in our target market we sometimes offered lower price than other competitors with products that have the same features (see figure).
Promotion always plays a significant part influencing the decision-making process of customers. Low product prices are very easy to make a shortage of supplies. Even though we did not have the lowest price, we will still achieve the desired revenue if we have the right promotion plan with appropriate expense.
Moreover, we have already invested in in-house development of Tech 3 and 4 with basic features and they were expected to be released in the near future. It is believed this action would change growth strategy from market penetration to product development in order to overcome other teams in new Tech after considering opportunity cost when giving up one old Tech.
We have observed the advantages of issuing shares to raise equity capital, reduce debt and contribute to the company’s position. However, attracting many stock investors would cause difficulties and risks in management.
In term of long-term loan, we need to focus on cash flow to adjust appropriately for loan payment, hence,it was essential to issue shares up this round and operated some internal loan between parent company and subsidiaries. Meanwhile, company has followed initial plan to pay shareholders’ dividends, as once again this is management’s main objective.
a. Analysis of the results of the Main Challenge
The results of the Main Challenge show we have failed in increasing market share as well as reaching target revenue and profit. Besides, our costs and expenses have been risen considerably compared to round 3, therefore, profit generated have fallen dramatically. (see table 3,4. Figure 1,2).
Everything seems to happen as we expected, except for the fact that there was a significant decline in prices from competitors and our prices became quite high on average. Hence, the fall in sales and profit is inevitable.
b. Justification for recommendations
Recommendation has been discussed in each department to support improving company. Although the Round 4 witnessed an unsuccessful period of ONE, we still believe that the initial strategies and phased adjustments are reasonable and will be effective in the long term.
To briefly justify those recommendation if implemented, there are three main points to concentrate on. Firstly, forecasting, resources planning and supply chain management should be paid attention and become foundation in production period. Secondly, total quality management (TQM) should be considered as an important factor of the success of business. Finally, the implementation of some tools , such as DMAIC Six-Sigma, Lean or Kaizen-continuous improvement tool helps in improving operating processes in the near future.
This second part of the report will be reflecting and evaluating what I have learned through this module particularly and through other modules in general. It is structured as a reflection essay which contains the summary and value of what I have learned as well as how my foundation has become solid. Therefore, it will be also a good experience and reflection on my professional goals and my career path in the future.
A wide study in first year gives all students a wide and general view of every single department in a typical business, how it is operated and also show them how to apply these knowledge and theory in practical circumstances. In my opinion, Business Game module is like a mini insight day program where students can play around with a simulated company, competes with each other and learn how to make all related decisions as a manager. As a business-school student, it will be a great first step in shaping business perspective.
As a team member, I have also played a role as team leader in some rounds, a listener in teamwork and an assessor of business results. After a lot of decisions that have been made, I believe that there was a huge difference for company through many changes. For example, we had to pay for the lack of connectivity and communication by missing Round 1; however, we had a spectacular return in Round 2 and 3 and though the result in the Round 4 was not really good, we all learned a lot. We know that we can do it if we concentrate and try our best.
For myself, I have a chance to apply theories, knowledge from Operation Management, Marketing Management, Financial Management and Business Policy, modules I have learned in two years. I have experienced the fierce in business between teams within our universe and I honestly felt pressure on making decisions, forecasting competitors’ movement, how to have a best anticipation. At the end of each round, I have realized more and more value of a business entity though it is just a stimulation.
Another value gained from this module is skill development. My teamwork skill has been improved obviously, our mission was to support each other and contribute to the development of the team. We have taken advantage from the strengths of each member and overcome weaknesses as well as difficulties in communication in a multicultural team. I have also improved leadership, negotiation and organisation skills during the time working in group. Moreover, my analysing skill has been utilized and developed through continuous improvement after variety of analysing work. I believe that would support to my professional career when working as a typical manager in business. Via this module, I realise I am able to be good at not only in financial department (my main course at University) but also in operation management and it would help me save time in determining career path and at some extent, forming the basic concepts so that I need to build my own business model in the future.
In conclusion, I would strongly recommend Business Game module to be a must-have module in all business school as it is practical and necessary for all economics students to access specific areas of their future work. Team-work and leadership are the most precious skills that I have gained with new relationship that bring plenty of experiences in working cooperation.
“Coming together is a beginning, staying together is progress, and working together is success.” – Henry Ford