Overall (Generic ) Strategy(Decision-8 &9)
Focus more on production , re-tooling costs and capacity decisions by comparing to the previous sales(results) on individual class vehicles
Make minor changes in all class vehicles under product development by collecting and comparing the data of competitors vehicle attributes.
Decided to increase the plant capacity and, invest in technology incrementally
Invest on test markets , focus groups for all the vehicles to see where we stand in the competition
Invest on corporate advertising , social media, and direct marketing for all the vehicles
Finances- Increase the dividends pay and purchase 1 year CD @ 4% (million USD)
Strategic Action Plan
As we have launched Cutility vehicle with an advertising campaign of 50 million, the action plan was to focus more on production and capacity decisions because the existing vehicles inventory was a little higher than expected with the previous decision results and we have not increased the plant capacity as well with four vehicles already in the firm. The re-tooling costs were also high for the previous decision results as well. So, considering all the factors the strategy is to limit the scheduled production for family, mini-van and luxury vehicles and compensate the scheduled production for AEV and Utility vehicles. The strategy worked for the firm, the current results for decision had left with zero inventories and very less re-tooling costs compared to previous periods.
Product Development & Marketing
Before upgrading(minor/major) all the development centers and marketing numbers , the most important action plan is to run the tools like test market , focus groups so that we can differentiate base line and test result, for example the awareness, value market share , unit market share , net contribution, and its impact.
· AEV – As per the industry news Green Vehicle Incentives, the new tax credit for AEVs has passed. Firm decided to invest more on promotion, direct marketing and invest on minor changes for the AEV. Increased the MSRP of the AEV because the firm was confident about the increase in number of sales hugely compared to other existing vehicles in the firm. As the firm expected, the results were positive, and the sales were higher than the competitor AEV.
Test report for AEV
Test
Price
$37,000
$37,000
Advertising (mill.)
$55
$55
Promotion (mill.)
$80
$80
Awareness
46.2%
46.2%
Unit Market Share
5.8%
5.8%
Value Market Share
8.5%
8.5%
Net Contribution (mill.)
$4,646
$4,646
Net Contribution Impact (mill.)
305$
$305
Manufacturing
The firm results from the previous decisions ended up with excess inventory. So, for this week firm decided to not increase the number of the scheduled production alot but increase the estimated plant capacity. For cafav, camini , and climax firm decided to increase a bit for the scheduled production and increase in good amount of number for AEV and Cutility because the AEV has demand in the market and for cutility because its new in the market.
Result for inventory analysis
Begin.
Inv.
(000s)
Sched.
Prod.
(000s)
Flex
Prod.
(000s)
Proj.
Sales
(000s)
Proj.
Inv.
(000s)
Proj.
Days
Inv.
Comment
Cafav
0
403
0
403
0
0
Camini
0
288
0
288
0
0
Cesla
0
437
0
437
0
0
Climax
0
172
0
171
1
1
Cutility
0
276
0
276
0
0
Total
0
1,574
0
1,574
1
0
Plan Ahead
As we are almost coming to an end on making decision, for this week firm ahead plan, the focus on each vehicle unit sales and the percentage of each vehicle contribution , cash flow from operations, investment activities, financing activities and on cash balance, re-tooling costs, stock market, review all the financial decisions and results from past couple of weeks.
Lessons learnt and Relation to coursework
Work Log and when and how you and your teammate reviewed and discussed the simulation system data and decided on your moves to make.
June 8 th 3:15pm pst
June 12 th 1:30 pm pst
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