TheExternal Environment, Internal Profile and SWOT
Followingthe realization of the date from the television in January 1, 2012 Iam the one entrusted with making decisions for the company thensubmit the resolution to the CEO. I have to make serious decisionsthat will be better than the ones made before by Joe Thomas on behalfof the company to make the business grow substantially and facilitateits self-dependence. I make the decisions at the end of each yearbasing on the market structures and the position of the company onproduction and sales of its three main products. SWOT analysis willbe the basis for making our decisions. By the term SWOT, we mean thestrengths, weakness, opportunities, and threats, which may affect thebusiness. The first two which are strengths and weaknesses are moreof internal issues that can be solved internally by making crucialdecisions while the last two are external and can only face reductionthough the business has less influence on it (Zokaei, et al. 2013).At the end of each year, we will be trying to make some decisionsabout our products in the market, which may include pricing, and Rand D allocations (research and developments)
Thecompany as seen before produces three main tabs in the market as atJanuary 1, 2012. Being a leading producer of tabs, they create themwith level entries X5, X6, and X7. As seen in the previous simulationX5 model is the longest serving tablets of the three in the market.The tablet has had high sales over the time, but there reached apoint where the consumers complained about the tablet being expensiveas compared to the competitor product in the market. X5 as seen fromthe previous simulation had only installed a customer base of1,035,000, and the remaining clients were about 6,000,000. Thenumbers shows that there was a high gap by the end of 2011 of thisparticular product. Through the SWOT analysis of this particularproduct, we find that despite it being far from getting to our targetmarket, it was our leading product.
X6tab has been on the market for around six years as seen before and ithas been retailing at a much higher price of $430. Despite the modelgoing for that high price, the customers did not care much about theprice since its performance was relatively higher as compared to theother tabs. It too had an excellent performance index of 1.02 as itwere in X5 tablet. When looking at the sales figures as at the end of2011, X6 tab sold fewer numbers as compared to X5 tab. As at thisperiod, it established a market base of around 550,000 and theremaining market was about 6,000,000. That summarizes that theproduct is yet to reach out to most targeted consumers.
Whenwe take a look at tab X7, it’s the latest of the three products inthe market. By the end of 2011, it was only a year old in the market.It was retailing at $190 because of its specifications (Friedman,2007). It did not sell much and established a performance index of0.97.
Lookingat these features, we prove that at the end of 2011, the company didnot make much profit as expected. In that regard, we had to make somedecisions that, should improve the performance of the company andrelatively bring more profit to the business. Our aim as we made thisnew policy is to try and achieve more benefits than experiencedbefore while taking into consideration the financial review of theproduct single headedly.
Whenwe look at tab X5 we see that the initial uptakes of 882,729 andrepeated customers of 882,729, indicating that the product did not dovery well in the market. We had to check the input matters. Of allthe sales, it was able to generate gross revenue of $ 276,159,075,and the total cost was $ 145,346,882. From this, we learn that thecompany only made a profit of $ 43,991,298. Therefore, we decidedthat we are going to adjust the price of the product in a bid toincrease its sales. We slightly cut its selling price from $285 to$270 in an attempt to make more sales. The price adjustment wasprofessional considering the cost of producing it. The amountreserved for fixed costs had a slight addition to $200,000, and thatof R and D increased to make researchers come up with efficientgadgets at lower prices. The increase will enable the companyincrease in its production of the tablets since people are familiarwith it. As projected from the decision, this will lead to a greatersale of the product. The expected market base of the product willstand at about 2,500,000, which would have increased the profitmargin. The achievement, however, will take effect in the first year.As also expected, some money will be set aside and channeled tomarketing processes to help the consumer understand more about thetab including teaching the customers on how to use the new designtablet. The marketing processes will raise the cost of production butin the end, the product will have more distribution to the consumersthan before.
Sincethe reduction of the cost will attract more sales, it reduces themarket base of the other tabs, the tabs X6 and X7. Consequently, wehave to have a counter effect to increase the total profit margin ofthe two products. The implementation will be in the first year togauge the performance of the business. To the product, tab X7, willbe put in the hold as its fixed cost and its assigned R and D cashwill be channeled there in a bid to better them so as to eliminateproduct X5 slowly from the market so that the firm will only producethe latest models. The move will be a risk-taking move but inbusiness, you can only survive or be above your competitors by havingthe courage and will to take such significant risks.
Thekey point is that the business should always be conversant with thetrends and changes in the customer preferences to stay competitive inthe market. Therefore, you should always be ready to embrace newshifts in the market even if it means incurring some more costs as ithas been evident in the decisions we take. I order to create asustainable environment for all the products, the R and D allocationswill face slashing in the subsequent year meaning the beginning of2014 from its value of around 33% to 15%. It declines since we willbe slowly getting rid of the product so there will need to spend lessin the marketing of the same product. The slashed amount should thenmove in the R and D of the other tabs X6 and X7 since they are thelatest in the market, and there is the need to shift the base fromthe traditional X5 to the modern tablets. Consequently, it thenimplies that at the end of 2013, the production of tab X5 will slowlyreduce, as the manufacture of the other tabs X6 and X7 will increase.Since most people will be familiar with the tablet X5, its reducedproduction will imply that they will start getting interested inknowing or acquiring tabs X6 or X7. After a small period, let us putit at the end of 2014, the tablet X5 will no longer be in the market.
Removalof the X5 from the market leads to a need for a price increase forthe X6 model. The consumers will now worry about the performancerather than the price. This will be the case since their mostfavourite product, X5 will be out of the market, and they will haveno option other than buying the available ones since they are testedand proven. The reduction of the price of the X5 before eliminationfrom the market forces a price increase of the other models tomaintain the high levels of profits in the business (Laguna, et al.2013). The price of X6 increases to $470 from $430 while that of newproduct X7 will have to rise slowly compared to X6 that rose from$190 to $200 as we pave the way for further increase depending on themarket performance.
Inthe beginning of 2015, there will be no more production of product X5in the market since X6 and X7 will completely take over the market.As by this period, the profits of the company from the sale of tabletX5 have projections to have risen from the previous value of$43,991,298 to approximately $126,000,000 before the entireelimination from the market. The sales of product X6 have projectionsto increase in 2015 immensely since the model is the second longestproduct in the market, which is familiar to the consumers.
Inconclusion, when the company implements the strategies above, it islikely to make an increase in the profits. Running businesses alwaysrequire more ideas to stay active and way above others in the marketto compete favourably with competitors in the particular field. Therefore, it will be a new and increased profit record for thecompany with previously fewer profits. Since this is business and weare in a competition, success is not always a guarantee (Hill, 1997).You could implement the above decisions but still fail to makeprofits as the ever-changing technology may hinder you. Many newideas come up in the market and may render your plans futile. It is,therefore, advisable to stay ahead always of the rest in the businessenvironment to avoid unnecessary upsets in the changes of the waysthings run due to technology.
Friedman,M. (2007). The social responsibility of business is to increase itsprofits (pp. 173-178). springer berlin heidelberg.
Hill,T., & Westbrook, R. (1997). SWOT analysis: it`s time for aproduct recall. Long range planning, 30(1), 46-52.
Laguna,M., & Marklund, J. (2013). Business process modeling, simulationand design. CRC Press.
Zokaei,K., Lovins, H., Wood, A., & Hines, P. (2013). Creating a lean andgreen business system: techniques for improving profits andsustainability. CRC Press.