Capstone Project on "Time Normal"

Capstone Project 4 pages (1173 words) Sources: 5

[EXCERPT] . . . .

PDA SIM Time Normal

Time Warp 3 begins with the four-year plan that was devised during the last cycle. This plan is as follows:

Year by Year Decisions: Pricing & R&D Allocations

PRODUCT

DECISION

Price

R&D %

Discontinue?

Price

R&D %

Discontinue?

Price

R&D %

Discontinue?

The successes at maximizing the X7's contribution were valuable, but the impacts of other products were less the focus of earlier time warp rounds. The new four-year plan continued to downplay the importance of the X5 product, largely because of its position in the product life cycle. In addition, increasing the economic value added (EVA) of the X5 was determined to come at a cost to EVA on the other products -- the opportunity cost of sending R&D money to the X5 was too great.

CVP analysis was used to help with a number of elements of the new strategy. One of the best uses for CVP analysis is to help determine the optimal product mix. The X6 needs to be feature-rich in order to attract buyers. However, the X7 also needs features to attract buyers even though it is a low-end product. The potential EVA for the X7 is great, since the potential market is 15 million users. Because the X7 has the highest markup of the three products, the X7 can see a sharper price reduction while retaining a positive contribution margin. The optimal contribution margin will balance contribution and sales. Sales can
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be estimated using the price elasticity of demand slope.

In the first time warp round, a slope of price elasticity of demand was determined for both the X7 and the X6. This latest plan incorporates price points driven by that elasticity analysis and the CVP analysis upon which the elasticity analysis was based. The research and development figures are as yet unchanged. The performance of the products is strong, relative to potential performance (highest scores achieved in the simulation run). Therefore, there is considerable risk with respect to making dramatic changes to the R&D allocations. In addition, the positions of the X6 and X7 along the product lifecycle, combined with the one year delay between a change in the R&D allocation and the sales impact of that change, means that any negative impacts of change cannot easily be undone. Risk aversion with respect to the R&D allocation strategy continues to play a role in the strategy.

Time Warp 3 was more successful than was Time Warp 2. The last run delivered a total net economic value of $1.849 billion but Time Warp 3 delivered an economic value of $2.113 billion. The strategies that were employed were largely successful. In adjusting the price of the X6, the product sold out, which did not happen last time. The sellout delivered the maximum economic value, at least given the level of R&D allocation that the product received.

The X7 continued its stellar performance, with the product delivering $530 million of the $628 million the company made in the final year of the simulation. By the end of 2009, the X7 had reached a saturation level of 47%, commensurate with its position roughly two years behind the X6 on the product life cycle. The X7 appears headed for success as well. The X5 continued to perform well, although the assume continues to be that maximizing X5 performance will result in reductions in the performance of the other two products, lowering the total EVA for the three products over the four years.

As the high scores on the PDA simulation… READ MORE

Quoted Instructions for "Time Normal" Assignment:

SCENARIO CONTINUATION:

It*****'s still 2006: 1/2/2006, the beginning of Time Warp 3. You have completed your analysis and revised strategy for the next four years and taken a breather. Just like the last time, you enter your predetermined decisions each year and collect the data for future analysis. Time flies and it is certainly deja vu.

Now it is now New Year*****'s Eve, 2009, and you are hoping against hope that Time Warp 3 and all time warps will soon come to an end. You have the results of decisions. How did you do? What was your final score? Once again you celebrate hard, hoping you wake up in 2010.

It*****'s New Year*****'s day, 2010. You just had a great New Year*****'s Eve celebration, you finished another four years of moving Handh eld through 2006 ***** 2009, and are ready to charge ahead into the future. As you turn on the TV and try to open your eyes, you notice something strange (again?). The TV commentator is saying something about New Year*****'s Day, 2010. Wait, 2010? YES, YES. You did it. You have moved ahead into 2010!!!

You realize that this experience has been invaluable. You know it will help you make better decisions for Handheld as you move forward. But before you move ahead, you want to make sure that you have learned what you need to know.

You decide to analyze and compare the last two Time Warp results. You want to see how this last Time Warp results compare to the previous Time Warp results [the results from this run in SLP5 to the results of the run in SLP4.] So you put the results side by side and you put the decisions side by side. And you analyze what happened ***** how the results were different. And you use CVP analysis to help you understand why the results were different.

You think this is very important and you write it all down so you can refer back to it later if you need to as move forward into 2010 and beyond.

You hope this never happens to you again, even though you realize how valuable this experience has been.

SLP5 ASSIGNMENT: Run the simulation with the Strategy that you developed in SLP4 for Time Warp3. Access the simulation site Click here. Collect the results for all three products over all four years. Compare the results from Time Warp 3 with those of Time Warp 2. Show the results side by side and show the decisions side by side. Explain how they are different. Use CVP analysis to explain why they are different.

SLP5 Expectations: You need to be detailed, clear, and complete. Using CVP analysis, explain how the different prices and R&D allocations have generated different results. Celebrate the end of the Time Warps!!!

Time Line Summary:

SLP1

2009: 12/15 hired. 12/30 turned in first report to Sally a few days early. 12/31 ***** celebrated

SLP2

Time Warp 1 begins: 1/1/2010 WARPS INTO 1/1/2006

You freak out, then realize you have to make decisions for 2006 ***** 2009, which you do.

12/31/2009 ***** you have gone through all four years, and you write your report to summarize how you did. You are hoping that you will wake up tomorrow and it will be 2010.

SLP3

Time Warp 2 begins: 1/1/2010 WARPS INTO 1/1/2006 (Again)

1/1/2006: you decide to use CVP analysis and develop a four year plan for your strategy.

SLP4

1/2/2006: you begin to implement your four year plan. You follow it and use the pre-determined decisions for each year, through 2009. You keep track of the results, year by year, both financial and marketing.

12/31/2009 - Celebrate and hope Time Warp is over.

Time Warp 3 begins: 1/1/2010 WARPS INTO 1/1/2006 (Again).

1/1/2006 (for the third time.) You decide to do the same thing you did the last time and develop a four year plan.

SLP5

1/2/2006: you begin to implement your four year plan. You follow it and use the pre-determined decisions for each year, through 2009. You keep track of the results, year by year, both financial and marketing.

12/31/2009 - Celebrate and hope for the best

1/1/2010 - You made it through the Time Warp - you analyze the results, compare this last run with the previous run and write your final report.

1/2/2010 CELEBRATE, AND RESUME A NORMAL LIFE!!

How to Reference "Time Normal" Capstone Project in a Bibliography

Time Normal.” A1-TermPaper.com, 2010, https://www.a1-termpaper.com/topics/essay/pda-sim-time-normal/3555555. Accessed 4 Oct 2024.

Time Normal (2010). Retrieved from https://www.a1-termpaper.com/topics/essay/pda-sim-time-normal/3555555
A1-TermPaper.com. (2010). Time Normal. [online] Available at: https://www.a1-termpaper.com/topics/essay/pda-sim-time-normal/3555555 [Accessed 4 Oct, 2024].
”Time Normal” 2010. A1-TermPaper.com. https://www.a1-termpaper.com/topics/essay/pda-sim-time-normal/3555555.
”Time Normal” A1-TermPaper.com, Last modified 2024. https://www.a1-termpaper.com/topics/essay/pda-sim-time-normal/3555555.
[1] ”Time Normal”, A1-TermPaper.com, 2010. [Online]. Available: https://www.a1-termpaper.com/topics/essay/pda-sim-time-normal/3555555. [Accessed: 4-Oct-2024].
1. Time Normal [Internet]. A1-TermPaper.com. 2010 [cited 4 October 2024]. Available from: https://www.a1-termpaper.com/topics/essay/pda-sim-time-normal/3555555
1. Time Normal. A1-TermPaper.com. https://www.a1-termpaper.com/topics/essay/pda-sim-time-normal/3555555. Published 2010. Accessed October 4, 2024.

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