Management Simulation

TEAM 8Mahesh Patel 20135033

Mruganda Shah 20135038

Namrata Ramtri 20135039

Palash Acharya 20135045

Suman Rathod 20135055

School of Petroleum Management

Pandit Deendayal Petroleum University

Raisan, Gandhinagar- 382007

Submitted to:Dr Tanushri Banerjee

Associate Professor & Chairperson- MBA(G)SPM, PDPU

Product LineGAME 1 GAME 2

Mini Mid-Size

Compact H Small E

Capacity & Competitors

GAME 1 Capacity

1. Mini- 1x

2. Mid-Size- 1x

3. Compact H- 3x

4. Small E- 1x

Competitors

1. Mini- 3

2. Mid-Size- 2

3. Compact H- 2

4. Small E- 3

GAME 2 Capacity

1. Mini E- 1x

2. Compact- 1x

3. Sub-Mid Size- 2x

4. Sub-Mid Size H- 1x

Competitors

1. Mini E- 3

2. Compact- 2

3. Sub-Mid Size- 1

4. Sub-Mid Size H- 1

Overall StrategyGAME 1

Well-defined Strategy for every car, viz. Cost Leadership in Compact H.

GAME 2

The strategy in Game 2 was neither polarized towards Cost Leadership, nor Differentiation.

Financial Analysis

Parameter Game 1 Game 2

Retained Earnings 1050 million 1175 million

Return on equity 11% 13.09%

Change in cash 231 million 270 million

Debt ratio 44.13% 38.35%

Share prices Rs. 155 139.26

Due to new issue of share thrice and buying back shares, a major impact was seen on share price by bringing it to the lower range.

However, in Game 1 due to liquidation of one of our product plant, there was a negative impact on revenue growth.

Strategic PositioningGAME 1

Efficiency Improvement Costs: 0 Staff Expenses: 0 Material Cost: 0 Demand: 0

Product Innovation Costs: 0 Material Cost: 0 Cust. Satisfaction: 0 Demand: 0

Dealer Training Costs: 0 Staff Expenses: 0 Cust. Satisfaction: 0 Demand: 0

Dealer Credit Demand: +6.40% Receivable Days: 42

GAME 2 Efficiency Improvement

Costs: 16,519KRs Staff Expenses: +1.60% Material Cost: +1.60% Demand: +3.60%

Product Innovation Costs: 8699 KRs Material Cost: +1.60% Cust. Satisfaction: +9% Demand: +2.52%

Dealer Training Costs: 19,551 KRs Staff Expenses: +4% Cust. Satisfaction: +32% Demand: +2.56%

Dealer Credit Demand: +6.40% Receivable Days: 42

Cost StructureGAME 1

Material Cost extremely high because no investment was made in Strategic Positioning and investments in the Sustainability Initiatives were not the ones which reduced material cost.

CO2 Premium High.

Cost per unit low, because of greater efficiency & higher production.

GAME 2

Material Cost relatively low because Strategic Positioning investment was made and Sustainability initiatives reduced the material costs by 10%.

CO2 premium relatively low because of small product portfolio.

Cost per unit high because of small product portfolio and competition from Java lead to smaller market share.

Internal Analysis (Game 2)

Internal Analysis (Game 2)

Product Related Strategy &

Performance

Good decisionsSelection of products

Invested in multiple sectors

Lowest marketing cost

Lower Cost per unit as compared to competitors

Good speculation

Upsized at the right time

Reduced Debt-Equity ratio by paying Long-term dept using Excess Cash.

Prospective Better Decisions

We could have increased capacity of an existing high revenue generating product rather than invest in more number of products in Game 2.

We could have refrained from liquidating Compact H off, in Game 1, in the last quarter. That led to reduction in our revenue growth.

Learning Upsizing is always a better option to increase market share

than new investments

Re-launching a product is better than Liquidating it at Decline stage

Overall business performance is judged on the basis of various parameters like share price, debt structure, employees etc.

Decisions pertaining to strategic positioning should be taken very wisely considering their impact on our product demands

Effective management of staff leads to efficient way of doing business

Lower Debt-equity ratio does not guarantee a good market position