Strategic Review
Mr. Schmoe's performance over the past four years has been quite poor. Essentially, Mr. Schmoe made no changes to the strategy, and while that worked initially, the company's performance has deteriorated, and is at present in a bad state, where our best products are entering decline and we have no new products in the pipeline, as we still have older models on the market that are making no money. This report will go over each year to investigate the company's performance under the Schmoe regime.
Overview of Key Concepts
The first key concept that should drive decision-making is cost-volume-profit analysis. Each product we make has a fixed cost, and therefore it needs to sell a certain volume in order to be profitable. This will help us to make decisions with respect to what products to keep in the lineup, and when to drop them. Another key concept is the product life cycle. All products begin with an introductory period, before moving through growth, maturity and decline. Growth and maturity are the most profitable. When the product matures, sales volumes decrease as the newer technologies are winning most of the sales, and because the older products have a large installed base already -- there are fewer opportunities for new customers.
2011
In 2011, the company had two products, the X5 and the X6. At 15% saturation, the X5 was entering the growth stage, while the X6 was in the introductory stage. Both products were already profitable, and the company had two emerging hits on its hands. The clear strategy here was to continue pumping money into both marketing and R&D, because there was high potential sales for both of these products. Schmoe's strategy was to do just this.
2012
In this year, we introduced the X7. This product was in the introductory stage and lost money. With the two other products in the growth stage, however, the company performance well overall, with a significant increase in profitability. Both the X5 and X6 were highly profitable. The X5 reached 27% saturation and the X6 reached 16%, indicating that both were now in the growth stage of the product life cycle. It was at this point that Schmoe made his first real error. He minimized the role of the X7, on the basis of it losing money, but the reality is that losing money was expected. The X7 was our product with the greatest potential. While each of the X5 and X6 had a total expected market of 6 million units, the X7 has...
warp! Having examined the performance of Joe Schmoe, it is believed that some attention to the fundamental principles of cost-volume profit analysis and to the product life cycle will immediately allow Clipboard Tablet Co. To perform better, since it is getting the chance to re-do history. This paper will outline the basic strategies, along with their outcomes, and an analysis of why these strategies delivered better (or worse, as the
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Tablet SIM There are a number of different things that need to be taken into consideration when formulating a strategy for the next four years. The first thing is the product life cycle. Based on how long each of these products has been on the market, and the sales trajectory for the products, each is in a different stage of the product life cycle. Arguably, the X5 is headed towards the
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