New Shoes Simulation Analysis

NewShoes Simulation Analysis Work Log Reflection Journal For period 1, I increased product development to $1 million to ensure the shoes are a higher quality. In the home market, the increased price of the shoes in period 0 still caused the company to lose money although it wasn’t as much as period -1. Therefore, I decided to meet the prices in the middle at $100. I decreased the amount spent on advertising and consumer promotions mainly to cut back spending a little so we could make a profit but also because the case said people in the domestic market pay more attention to these things. I decreased the number of salespeople to 6 because the case stated it’s better to have more salespeople in the domestic market than the home market. Dealer promos stayed the same. In the domestic market, I ended up decreasing the price to $85 to maintain the gap from the price decrease between home and domestic pricing since people in the domestic market are not as willing to pay the higher home market prices. I kept the amounts spent on advertising and consumer promo the same. I also kept the same number of salespeople. I didn’t want to increase the number yet in either markets because the case said it’s not productive to have over 10 salespeople in each market. Dealer promos increased to $1.3 million because the case stated domestic pays more attention to dealer promos than home. I think the decisions I made definitely went as planned and had a desired result. I achieved my first goal which was to at least break-even by the end of period 1 and part of my second goal which was to make a net profit of at least $1 million. I actually ended up making more money than I thought I would although I did try to bring the net profit down from over $4 million in the practice because it seemed kind of unreasonable since the company had just lost $1.2 million in period 0. Adjusting my spending a little more from there, resulted in my company coming in at 2nd in the industry overall with a net profit of almost $2.6 million, unit sales of 237,000, a return on sales of 12%, and a customer satisfaction rating of 65.5%. In the case it tells you that people in the domestic market pay more attention to consumer and dealer promotions. Knowing this, I should’ve decreased the amount spent on consumer promos so it was less than the amount in the home market and increased dealer promos so it was more in the home market. The case also states that you shouldn’t exceed spending in all categories over a certain amount. For the practice round, I decreased my spending a lot to try to keep it near those amounts, which is why my net profit was unreasonable high. I noticed on the simulations results page that it said sales in the domestic market decreased by 11.6%. Therefore, I will try to work on increasing sales in the domestic market. I will start by increasing spending of consumer promotions and I will also increase the number of salespeople to 8. To compensate for increasing these things, I will decrease spending on advertising and consumer promos in the home market as well as advertising in the domestic. Some of these decreases will also help me in affording market research. Period 2 In period 2, I increased product development by 100,000 which I will most likely be doing every period to improve the quality. The case said it's best not to increase higher than $2 million. I kept the prices in both markets the same as period 1. I increased consumer promotions in the domestic market because the case said that people in the domestic market pay more attention to consumer promotions. Since the company's consumer promo spending was higher in the home market than the recommended $2 million, I decreased it slightly to come closer to the domestic market and I eventually plan to increase consumer promo in domestic. I added one more salesperson in each market but since I decreased 1 in the home market in period 1, the domestic market still has 1 more salesperson than the home market. I decreased advertising slightly in both markets and kept dealer promos the same mainly because I was trying to conserve some funds for market research. This period, the decisions I made definitely went as planned and had a desired result like period 1. Sales grew in the home market by 4.3% and in the domestic market by 3.1%. I have also reached level 1 of my product development. I achieved the next part of my second goal which was to make a net profit of at least $3 million by period 3. Like period 1, I ended up making more money than I thought I would, resulting in my company coming in at 2nd, once again, in the industry overall with a net profit of $5.2 million (+$2.6M, double the amount of last period), unit sales of 257,000 (20,000U increase), a return on sales of 22.5% (+10.5%), and a customer satisfaction rating of 68.5% (3% increase). Currently my company is truly thriving. Therefore, there’s not much that I feel I should’ve done differently. However, I think my company’s profit is increasing extremely fast which will make it difficult to continue to beat in order to stay in the higher end of my industry. Next period, I will increase product development as I stated I would before, only this time I will most likely increase it by a larger amount since my company had such a high net profit. I probably won’t purchase as much market research next period because my company is doing very well. I will increase the number of salespeople in domestic by 1 since more people are needed to help with distribution but I will keep home the same. Dealer promo will also increase slightly in domestic but remain the same in home. To reach my 3rd goal, I hope to expand into the foreign market in period 3. Period 3 In period 3, I increased product development to $1,500,000 to improve the quality even more and to try to reach a higher level version of product. I kept the home market price the same and decided to decrease the price in domestic to $80 to match the $20 difference in period 0 between the home and domestic markets. I decreased advertising slightly in domestic because it’s not as of heavy importance as in the home market which I ended up increasing. I increased consumer promotions in the domestic market to meet the same amount in the home since consumer promo is of equal importance in both markets. I kept dealer promos and the number of salespeople the same in the home market and increased dealer promos slightly and added 1 salesperson in domestic because distribution is harder in domestic and requires more people. This period, the decisions I made went as planned and had a desired result, however, I couldn’t complete my 3rd goal this period which was to expand into the foreign market. Sales grew in the home market by 7.3% (+3%) and in the domestic market by 2.3% (-0.8%). I still ended up maki ng more money than I thought I would, resulting in my company coming in 1st in the industry overall with a net profit of almost $5.9 million (+$0.7M), unit sales of 2 84,000 (+27,000U), a return on sales of 23.6% (+1.1%), and a customer satisfaction rating of 70.7% (+ 2.2%). Although my company didn’t double in profits this round, I still think it’s thriving, but I can tell it is reaching the height of its performance and will require some extreme analyzation in order to continue to remain on top. Something I think I should’ve done differently is not increased my expenses so drastically. My period 2 total expenses were $11,100,000 and then this period increased to $12,280,000, which is an over $1 million increase. Next period, I will continue to increase product development and I will also purchase some market research. I noticed I can now enter the foreign market, therefore I will proceed to do this in the next period. Since people in this market are more concerned with quality over price, I will most likely set the price higher in this market than home and domestic. Although sales in both home and domestic increased, sales in domestic only increased very slightly and it was actually 0.8% less of an increase from last period. Therefore, next period I would like to focus more on sales in the domestic and foreign markets to help keep my company in the top of my industry. Period 4 In period 4, I increased product development to $1,700,000 to improve the quality even more and to try to reach product level 2. This period I was able to enter the foreign market so I ended up setting the price at $110. I kept the home and domestic market prices the same. I decided to focus most on expanding into the foreign market so I left everything in the home and domestic markets the same. In the foreign market I set the advertising at $500,000, consumer promo at $700,000, salespeople at 10, and dealer promo at $1,800,000. Since distribution is harder in this market, I decided to start big on the number of salespeople and pay more for dealer promos. This period, the decisions I made went somewhat as planned and the end result was still positive. I finally completed my 3rd goal to expand into the foreign market. I also reached level 2 of my product. Sales decreased in the home market by 5.2% which is not that bad since I planned on focusing more on the foreign market. However, sales in the domestic market decreased by 13%. Initial sales in the foreign market were about 181,000 which is almost half of my overall sales. I still ended up making more money than I thought I would, resulting in my company coming in 1st again in the industry overall with a net profit of almost $10.7 million (+$4.8M), unit sales of 395,000 (+111,000U), a return on sales of 29.6% (+6%), and a customer satisfaction rating of 76.3% (+5.6%). Although domestic market sales decreased by alot, my company still doubled in profits and is still doing extremely well. Last period I thought my company was reaching the height of its performance and wouldn’t do this well but now that I have done so well, I feel that next period will be even harder to remain on top. Something I think I should’ve done differently is invested slightly more in the domestic market which may have not decreased sales so much. Next period, I will continue to increase product development yet again and I will also purchase market research mainly in the foreign market. I noticed I can now sell directly to customers so I will definitely be taking advantage of that. I will most likely start direct pricing at $90 to meet the home and domestic markets in the middle. I will also focus on increasing sales in the foreign market and bringing sales back up in domestic. Final Assessment Review Overall, I think my company did very well. In the beginning of the simulation, I came in second place in terms of net profit and remained there until period 3 when my company rose to the top and stayed for the remainder of the simulation. I think my company’s best period was period 4 because my profits almost doubled from about $5.8 million to $10.7 million. My Customer Satisfaction was also at its highest at 76.3 which was second highest in the overall industry. Although, in period 5 I still came out on top, my profits actually decreased by about $3 million and so did my Customer Satisfaction rating as well as my Return on Sales, Unit Sales, and Return on Marketing. I think the main reason for this was because the price I chose for selling direct was too high. Although the last period wasn’t that great, my company has been doing so well in the previous periods that I think it could still make a good comeback in the future with the proper business decisions.