In each instance, the adjustments made increased the total profit over the four years and it is believed that continuing along that same path of making slight adjustments would consistently increase the profits earned. It is for this reason that the strategy changed little -- there was no insight that was believed to lead to a better strategy and in lieu of such major insight there was no reason to pursue a radically different strategy.
The most useful concepts in this exercise were contribution margin (CVP analysis) and elasticity of demand. Understanding the cost structure of each product allowed for more intelligent pricing decisions. For example, the price cut in the X7 was significant at 25% from the base price in the base case run to 31.5% of that price in the later runs. It was understood from the outset, however, that such drastic price cuts were possible. The same theory was used to determine that an increase in the price of the X6 would increase its total profit.
I also learned about the value of understanding strategy and sticking to a sound strategy. This lesson was learned not through my policy of making slight adjustments to an initial strategy, but from the wrong turn that I believe I took with respect to the R&D expense at the X6. The X6 was positioned as a premium product, with demand driven by features. A premium price was charged for a product that ultimately was not sufficiently differentiated to justify that price. This runs counter to what we learn from Porter's generic strategies (Quick MBA/Porter, 2007). The tactics undertaken -- in particular the holding of R&D levels low on the X6 and then cutting them altogether in 2008 -- are not congruent with the differentiated strategy and therefore were not at their optimal effectiveness. Even in the third simulation, this error in interpretation was not corrected to a sufficient degree. By contrast the X7 product was focused on a cost leadership strategy. Therefore, the high levels of R&D money pumped into this product were probably not justified as they are not congruent with a cost leadership strategy....
System Feedback Loops Reinforcing Loop Reinforcing Loop reflects the ability of one action to produce an outcome that influences more of the similar action thus resulting into eventual growth or decline (Bellinger, 2004). Reinforcing loop represents one of the foundational structures in relation to systems of thinking. Virtuous Cycle is the ability of reinforcing loop structure to produce desirable result in the process of its application. In the incidence of desired result,
System Feedback Loops of Whole Foods Systems model use two basic feedback loops, so-called Balancing and Reinforcing loops, to illustrate the relationships between growth and goals. This paper identifies one Balancing Loop and one Reinforcing Loop that are critical to Whole Foods Market's performance and success. An explanation of each of these feedback loops, including the causal factors and how they affect each other, is followed by a discussion concerning an
In these cases, Whole Foods will encourage executives and staff members to work together in helping to enhance the quality of life for everyone inside the communities where various stores are located. This increases favorable perceptions and it allows the organization to build upon the image it has established. This shapes their global behavior, by showing the way Whole Foods is taking into account the needs of the environment,
These learning opportunities will ensure that the University maintains and indeed improves its reputation for excellence among existing and future students. Hence, the growth of the University will be ensured. Organizational learning opportunities also exist within the balancing feedback loop. The geographic expansion of the University means the appointment of additional personnel, as indeed indicated by Robert Silberman (2009). As representatives of Strayer University, these personnel will need to be trained
Nutrisystems and Feedback Loops Company Background -- NutriSystems, Inc. was founded in 1972 and is headquartered in Pennsylvania. It is a commercial provider of weight-loss products and services, until 1999 offering brick-and-mortar weight-loss counseling and products and then moving to a direct to the consumer model through the Internet, mail order, and phone. Since 2001, the products have been featured on the QVC shopping network and most recently (2009) in Costco
Business Feedback Loops and Organizational Learning at Whole Foods Market To remain competitive and responsive to internal and external pressures, firm need to observe and monitor the outcomes of their activities (Mintzberg et al., 2011). Feedback loops explain the way in which processes may be maintained, or change takes place. In line with other businesses, Whole Food Markets cannot avoid the presence of feedback loops. When the feedback loops are recognized, they
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