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External and Internal Environment

External and Internal Environment

Posted on Nov 2018:- By: PaperHub
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Introduction

            The chosen company for this paper is the WONDER Company. It mainly deals with the selling as well as manufacturing of various up-to-date tablets. The preferences of all the customers, around the globe are changing at a rapid pace. Hence, development of various fortified strategies is required to move a product successfully, through its lifecycle. However, different stages of marketing have to be followed by the company before rolling out anything new in the vast arena of business. Alternatively, the report aims to deduce the results of a marketing simulation game, for three selected products, W2, 1, and 3. Both the allotted R&D budget and the commodities’ prices will be decided by none other than the appointed marketing department’s VP. Even the marketing and financial results will be subject to recording so as to analyze them. As per the given scenario, Joe Thomas, the previous VP of WONDER organization was hardly creative to allocate R&D expenses and overall prices, in each year. His performance was nevertheless not as such bad. Only one product, i.e., W3 did not run well in the tablet market. On the contrary, the WONDER’s CEO Sally terminated Joe for his lack-luster techniques of marketing. It is crucial to dissect that 2017’s new tools cannot be made until and unless the previous ones’ results are not analyzed, thoroughly. The simulation results and scenarios may decipher very different situations than the ones in real-life. Interestingly, the decisions of the new VP are better than Joe or not can be understood from the cumulative results. 

Discussion

Decision as well as analysis in the context of simulation

            The section deals with the results of simulation. It is crucial to understand that the customers conceive different perceptions about the products in varying years. For example, in the very first year, the customers are worried about a product’s performance. Even they remain sensitive to the prices of various services and products. On the other hand, the second year is more about witnessing the products’ efficiency, according to the set prices. The customers are not afraid to pay a lumpsum amount for a good product. Hence, a company can prepare the price list in a similar fashion. The third year consists of careful planning for a product’s performance as they start to expect more from the same.

            It is visible in the Appendix 10 how 2013’s decision has figured out. The three products, W1, 2, and 3 were priced as 222, 403, 170 dollars, respectively, for the year 2013. Research and development cost allocation can be observed as 20, 15, 65 percentages for the three consecutive products. It can also be understood how none of them were eliminated from the market. The experimental nature of the organization is visible to a large extent, from this aspect (Østergaard & Fitchett, 2012). As a result, the decision has manifested in the cumulative profit of 503,808,517 dollars, in 2013. According to the articulation of the advisor, the product lifecycle of W2 represents the growth phase. Thus, there is still a huge potential to tap the W2’s market, holistically. Hence, some new strategies may help in resulting in the same aspect (appendix 10). The customers, who are its potential buyers, may not be aware about it or marketing techniques were not sufficient enough. On the other hand, W1’s performance is nothing less to its market competitors. Therefore, W1’s is quite similar to its substitutes. It also implies that the price of this product is more or less, appropriate.

In 2014, the marketing manager wanted to do something else and fetch a drastically varying result. Hence, he listed 250, 486, 200 dollars, consecutively for W1, W2, and W3. Previously, in the year 2012, it was observable how W3 was not performing well. Despite of such result, even in the second year of his performance, the same was not removed from the marketing simulation. As far the developmental and research expenditures are concerned, 30 percent of the total allocated amount was kept for W1. Second product, W2, received an R&D allocation of 50 percent, whereas 20 percent was only for the third one, that is, W3. A difference in allocation can be noticeable here. For example, in the previous year, maximum budget was allocated to the losing product. However, in the next year, the VP wanted to allocate less for the same. The above decisions contributed in the cumulative profit of 773,266,502 dollars for that year. Alternatively, the advisor suggested that the W1 performance remained same as the previous year’s results. Hence, it continued to give a neck breaking competition to all other new and existing competitors. Even the same strategy also helped in refraining any new player to enter the tablet market. On the contrary, the W2’s price should have been increased, at little a bit. It is because the same is not fetching much profit for the company (Baker, 2014). Thus, a loss generating product must not be kept on the list of an organization. It was necessary to increase the price or eliminate the same from the strategic business unit (Xiong, Ke, Liu, Zhao, Xing & Xu, 2013). On the other hand, the customers of W3 product were comparatively very new. Therefore, they are just coming to know regarding it. As a result, one can understand how it is just the growing stage for W3 (appendix 11). Contradictorily, the new customers may need special attention from the company’s end. Apart from all these things, the overall profit has definitely increased in 2014, when compared to 2013’s performance.

The cumulative profit for the year ending 2015 was 457358144 dollars. It also shows how a dip in the profit margin is vividly observable. Alternatively, the prices of commodity 1W, 2W, and 3W were 300, 200, 300 dollars, sequentially. In order to satisfy the customers, the price of W2 had been lowered to a large extent, thereby leading to a drastic loss. On the other hand, the variable cost was higher than that of revenue. At times, the experts proclaim that excessively compromising in terms of profit can be expensive for a company against the consumers’ wish (Faria & Wellington, 2014). If the product’s demand was less and the customers were not receiving value for money then it was necessary to eliminate W2, entirely. The competitive firms have pushed the product in the shakeout zone, which also means that the other competitors’ strategies are far much better than this one. A major limitation in terms of business strategy is visible here. On the other hand, 35, 45, 30 percentages were decided for the research purpose of those chosen products (appendix 12). Excessive cost was incurring for the W2’s development. Contradictorily, it was another reason for the product’s phaseout from the market. The advisor had nothing much to say about this aspect. However, an aggressive strategy can be watched for this product.

            The results of 2016 proclaim a profit, which is cumulative in nature. It is 444,567,598 dollars. Apart from these, the advisor merely expounded about the first product. Even for the same, prices are quite low. Once more, it can be deduced that customers were prioritized, during the strategy-making episode (appendix 13). The costing allocated for the products were primarily, 450, 430, 250 dollars. On the other hand, the budgets for development were marked as 23, 37, 40 percentages, in the case of W3, W2, and W1 commodities. 

Review for the Joe’s time scale

            In appendix 1, the revenue during the Joe’s time can be seen. Here, the revenue for W3 was not at all steady. However, W1 held a significant place in the market. Alternatively, the profit gained for W1 was also good enough (appendix 2). The appendix 4, 6 and 5 represent the three product’s income statement, individually, for 2012. On the contrary, consolidated profit in appendix 3 is for all three of them, which amounts to almost 86,637,786 dollars. The profitability was near about 17 percent. Income statement for W3 denotes 0 percent profitability, which means that the same was not at all rolling amongst the customers, smoothly. On the contrary, appendix 7, 8, and 9 portray the market reports of different tablets. W1 was shifting towards its phaseout section due to the market saturation rate, which was 15 percent. Contradictorily, the market saturations rates for W3 and W2 were 2 and 8 percent. In fact, W3 hardly had any sale during that time, i.e., 2012. Most importantly, the number of customers who did not purchase the tablet was 17500000. Even though the first tablet extracted a huge amount of net profit from the sales volume yet it was not enough. The reason being less of customers were tapped for the same (Frasca, 2013). Alternatively, W1’s cost was more than that of the other competing products, which dampened the expectations of the customers.

The appendix 14 has been included to give an idea regarding the varying stages of development of any commodity. When Joe or any other marketer is deciding various aspects of promotions and other mixes, it is substantial to interpret how the product life-cycle manifests. There are four main stages of a product’s development in its respective market; they are introduction, maturity, decline, and growth phases. The rate of customers remains less during the growth phase because of inadequate efforts of the marketers (Vos, 2015). Conversely, the decline phase also shows a similarity with the growth phase, where customers are lost in the hands of competitors. Thus, decision has to be taken judiciously, in each PLC stage.

Conclusion

            It is conclusive from the above-report that Joe’s decisions may not be very creative but some of them were definitely decent enough. On the other hand, the recent VP’s market strategies emit the fumes of experimentation. Hence, it is better to blend both creativity and conservatism in several market-based decisions for the upcoming period of 2017. The simulation results of 2014 imply the maximum profit range, even though the decisions were not very perfect as per the appointed advisor.