Capsim Core Simulation Strategy
Introduction: objectives
This implementation plan is designed for Andrews Company
for the year ending December 31st 2023. The main purpose of
developing this implementation plan is to develop comprehensive and
multifaceted strategic action plans to help address issues that are critical to
the success or failure of the company.
Objectives of different departments in the company:
Research and development
Some of the goals and objectives of this department
include the following;
- To
improve technical and analytical skills of personnel; with the increasing
advancement in technology, this is the main objective of this department.
- To
improve employee retention.
- To
develop leadership abilities and potential of the team hired.
Finance department
- To
increase revenue; since the company’s current revenue ($40,800) is less than
the potential expenses leading to a net loss and an increase in operating
income of $4,839, the company plans to increase its revenue to reduce the
increased operating income.
- To
manage costs; this objective goes hand in hand with the objective to increase
revenue. The company pan to manage costs as it grows.
- To
maintain appropriate finance leverage; the company plans on increasing debt
from $58,433 to some higher value since debt financing is cheaper as compared
to equity financing.
- Diversify
and increase revenue streams; the company plans on increasing sales of
different products to increase its general revenue since the company only
receives revenue from the sale of Able.
- To
maintain profitability; the company plans on not only increasing its revenue
and reducing thus increasing its profits but also to make it somehow constantly
growing. Profitability of a company should not fluctuate much.
- To
ensure financial sustainability; since the external environment is uncertain
and out of control of the management, the company need to remain financially
stable and this may sometimes encompass seeking outside sources of finance.
- To
maximize shareholder’s wealth; the company since is a business unit plans to
satisfy the business units’ common economic objective.
Marketing department
- To
offer the best products; the department aims at providing the best products in
the market to allure customers to the company’s products. This will happen
especially when high tech is used to produce products. Some of the products
that may be used include;
Name
price
Bold $41.90
Dabble $44.50
Fast $42.50
Feast $42.50
- To
increase market share; the company’s market share when high tech is used is
0.7% and 6.5% when low tech is used, therefore the company may decide to use
low tech to produce products to increase its market share.
- To
improve customer retention by using customer database like customer
relationship management (CRM).
Production department
- To
increase mass production; the company aims at increasing its production level
since this will help in reducing costs.
- To
produce innovative products that help increase customer base
- Differentiation
of products; the company aims at producing unique products to help customers
differentiate the company with others in the market.
- To
minimize production time; the company aims at ensuring production is done at
the minimum time possible. This will help to free up some corporate resources
to help in additional production lines or production of other products.
- To
use resources efficiently; another objective of production department is to
maximize efficient use of company’s resources and this can be accomplished
through capacity requirements planning.
Strategic initiatives and timeframe for these initiatives
The company plans at completing the following high
level activities to accomplish some of its prioritized goals and objectives;
Ø Increase
participative leadership style – this is a continuous process in the company
throughout its life or so long as the company is not dissolved.
Ø To
carry out comprehensive and strategic environmental scanning to find required
information in the research and development department. The company can conduct
a SWOT analysis to get data – environmental scanning is a continuous process
and shall be carried out so long as the company exists.
Ø To
conduct cash budgeting- financial planning will be carried out quarterly for
efficiency.
Ø Effective
communication in the organization - this will happen as a daily system of the
company.
Ø To
be market oriented to increase the sales revenue – daily market research to be
familiar with the market information.
Ø To retain the best personnel – best personnel shall be retained for a period of 10-20 years or till retirement.
Balanced scorecard
Andrews is a manufacturing company and just like other
manufacturing companies, its main concern is operational efficiency, that is,
increasing output and decreasing production cost. The company can achieve these
objectives by pricing products correctly, ensuring consumers can access
products easily.
Andrew’s balanced scorecard
Profit
and revenue
|
Low
cost production
|
Product
and revenue mix
|
Lower
costs of production operations
|
Additional
production lines to maximize revenue
|
Head
count management
|
Optimal
value for price
|
Ensure
product accessibility
|
Appropriate
product assortment
|
Ensure
consumer preference
|
Timely
distribution
|
Management
of finance
|
Comprehensive
environmental scanning
|
Efficient
purchasing process
|
Safety
at all production levels
|
Effective
communication of information and internal transparency
|
Retain
the best personnel
|
Critical success factors
Ø Relationship
between customers and the company; the company need to develop strong positive
relationship with its customers to achieve its revenue goal.
Ø Cost
reduction; in order for the company to meet its cost reduction goal, it should
constantly embrace product designs and efficiency.
Ø Employee
turnover; the company should reduce employee turnover to increase employee
retention.
Ø Product
quality
Ø Market
share
Ø Customer
satisfaction
Ø Productivity
Key performance indicators
High level key
performance indicators will measure the overall performance of the company
while low level key performance indicators will focus on the processes at
departmental level such as research and development, production, marketing and
finance.
High level key performance indicators: Financial
metrics
Ø Profit;
the company’s potential of generating high net profit is relatively low since
its projected income statement shows a net loss of $12,523.
Ø Cost;
the company is assessing efficient ways of reducing costs through additional
production lines.
Ø Cash
flow financing activities; the company has a low financial strength because it
has negative net cash flow of $27,325.
Low level
key performance indicators
(i)
Research and development
Low
tech
· Price
range: $15 - $35
· Performance:
7.3
· Reliability:
14000 – 20000 hours
High tech
· Price
range: $25 - $45
· Performance:
10.9
· Reliability:
17000 – 23000 hours
(ii)
Marketing
Low tech
Market share: 6.5%
High tech
Market share: 0.7%
(iii)
Production
Low
tech
Name
|
Automation
|
capacity
|
Utilization
|
Able
|
3.0
|
800
|
163%
|
Baker
|
6.5
|
1350
|
133%
|
Cake
|
7.5
|
1150
|
136%
|
Cent
|
4.5
|
700
|
200%
|
Daze
|
6.0
|
1300
|
119%
|
Eat
|
6.0
|
1000
|
140%
|
East
|
6.0
|
750
|
200%
|
High
tech
Name
|
Automation
|
Capacity
|
Utilization
|
Bold
|
4.0
|
800
|
127%
|
Dabble
|
4.0
|
850
|
157%
|
Fast
|
4.9
|
1000
|
130%
|
Feast
|
4.9
|
800
|
200%
|
(iv)
Finance
The
company plans on selling more products to offset the loss it is experiencing.
Guiding policies
The company will not only develop internal policies
but it will also develop external policies that will help in guiding the
company in trying to control the external environment factors that may affect
the performance of the company.
· Financial
management policies to help in cash budgeting
· Confidentiality
policies to help the company in keeping its information to gain a competitive
edge.
· Equal
opportunities policies that help guide the development of participative
leadership style.
· Complaints
policies that help guide achievement of effective communication in the
organization
· Recruitment
policies that guide the human resource department in employing the best
personnel.
Enforcement policies
Normally leaders often blame subordinates when the
company performance is not appealing and they take credit when the company
performs well. This can be reduced by the following policies;
· Work
allocation policies; these help in knowing who exactly lead to the failure of
the company or which department specifically did not perform as required that
lead to the company experiencing net losses.
· Communication
policies; leaders or management personnel of the company should use effective
communication mediums to help in laying information quite effectively in the
company.
· Team
development policies; the company’s management should embrace team work since
each team member will be responsible to their teammates to be accountable to a
clear plan of action.
· Another
thing that can enforce accountability in the company is when the management
knows the guiding policies of the company. Knowing what policies to follow in
every situation help one in taking the initiative and being able to own their
own mistakes and not to blame them on others.
Systems to support strategic initiatives
· Financial
systems; these include computerization of accounting, cash budgeting and
finance operations of a company. This system also include personnel system
because headcount control and payroll of a company is an important concern for
the company.
· Operational
systems; these systems help operational managers to run the company in a daily
routine. These systems affect the company’s profitability and they include
computer capacity planning, technology forecasting and personnel performance
planning.
· Strategic
systems; these are information systems that help the company gain sustainable
competitive advantage (SCA) which can be gained if the company possesses and
employs resources and capabilities that are rare, non-substitutable, expensive
and those that cannot be merely duplicated by competitors.
Processes to facilitate strategic initiatives
Some of the processes that can fasten the strategic activities
planned include;
i.
Determining the company’s readiness to be
involved in taking the strategic initiatives.
ii.
Developing departmental teams and schedule
for taking the planned activities.
iii.
Conducting a comprehensive and continuous
environmental scanning.
iv.
Reviewing the data collected from the
conduct of environmental scanning and making the necessary decisions.
Standard operating procedures
They help the company in taking the strategic
operations correctly and in the same manner. Some of these procedures include:
i.
Safety precautions; they include
procedures taken to improve safety in every production level of the company.
ii.
Quality assurance; they include procedures
the company can take to assure customers that their products are of high
quality. The company use the issue of samples prior to release of new products.
iii.
Complaints management; these help the
company to deal with the customer complaints.
iv.
Fundamental operational procedures; these
help the company to develop other procedures.
v.
Standard procedures for operating plant
and equipment; these help the organization in operating the production levels.
Resources needed
Allocation of resources is one of the basic activities
in strategy implementation. This include both financial and non-financial
resources that are available to the company and those that are not available
but are needed in the implementation process therefore the company need to find
a way to get them at the required time.
These resources include financial resources, time,
human and intellectual resources,
technological resources and physical resources.
Accountability
The results and outcome of the strategic initiatives
are made possible by everyone in the company since every employee had a role to
play in the process and they all had their roles played so well.
Core competency diagram
This diagram connects the company’s objectives, key
performance indicators and core strategic competencies. Objectives are what the
company need to achieve at the end of the year or its existence, key
performance indicators help the company to what know what it has achieved after
some time and core strategic competencies are the unique resources or systems
the company has that can make it more competitive in the market to easily
achieve its objectives.
References
Podeswa, H. (2009). The
business analyst's handbook.
Harvard Business Review
Press. (2011). HBR’s 10 must reads on strategy.
Walter III, K. (2010).
The lords of strategy: the secret intellectual history of the new corporate
world.
The Blackwell
Encyclopedia of Management. (2005). J. McGee (Ed.), 2nd ed., Vol. 12. Malden,
MA: Blackwell.
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