Trident MGT 599 Module 4 Strategic Implementations and Controls Assignment 7 Page paper requiring 8 references APA. SLP 1, 2, 3 attached for reference. Mod

Trident MGT 599 Module 4 Strategic Implementations and Controls Assignment 7 Page paper requiring 8 references APA. SLP 1, 2, 3 attached for reference.
Module 4 – SLP
STRATEGY IMPLEMENTATION AND STRATEGIC CONTROLS
Simulation

In Module 4, you will continue with the CVP analysis you completed in the Module 3 SLP.

Scenario Continuation:

It is still January 2, 2013. You have just completed your revised SLP3 strategy using CVP analysis, and you are eager to implement your decisions for 2013 through 2016.

Using the CVP analysis from SLP3, run the simulation for a final time. Again, be sure to take notes about your analysis and document the reasoning behind your decisions.

Finalize your report showing the strategy you have used.

Assignment Overview

Using the strategy that you developed in SLP3, run the simulation. Document your results as you did previously. Review and analyze these results, and develop a final strategy.

Please turn in a 7 paper, not including cover and reference pages.

Keys to the Assignment

The key aspects of this assignment that should be covered and taken into account in preparing your paper include:

The revised strategy consists of the Prices, R&D Allocation %, and any product discontinuations for the W1, W2, and W3 tablets for each of the four years: 2013, 2014, 2015, and 2016.
You must present a rational justification for this strategy. In other words, you must provide support for your proposed strategy using financial analysis and relevant theories.
Use the CVP Calculator and review the PowerPoint that explains CVP and provides some examples.
You will need to crunch some numbers (CVP Analysis) to help you determine your prices and R&D allocations.
Make sure your proposed changes in strategy are firmly based in this analysis of financial and market data and sound business principles. Your goal is to practice using CVP and get better at it.
Present your analysis professionally, making strategic use of tables, charts, and graphs.

Time Line Summary:

SLP1

2016: Hired on December 31, 2016.
Turned in first report to CEO Smothers.

SLP2

You are returned – via Time Warp – to January 1, 2013.
You make decisions for 2013 – 2016.
December 31, 2016 – You have revised all four years, and you write up your summary report.

SLP3

Apparently, your SLP2 decisions were not “good enough,” as you have again been returned to January 1, 2013.
It is once again January 1, 2013: You decide to use CVP analysis to develop a revised four-year plan for your strategy. You analyze the results of your first decisions from SLP2, taking notes, and documenting your decision-making process. You use the CVP Calculator to help you develop your strategy. Your notes explaining the logic behind your decisions.

SLP4

It is still January 1, 2013. Using your CVP analysis from SLP3, you run the simulation, implementing your revised four-year plan. You keep track of your financial and marketing results year over year.
You submit your final 6- to 8-page report, which includes your Final Total Score.
You compare – and report – your results with previous results.
SLP Assignment Expectations

Your paper will be evaluated using the grading rubric.

Tips and Suggestions

Note the following tips and suggestions:

You might find these downloads useful:

Decision Matrix Table – Download this Word doc with a blank table you can use to show your proposed strategy decisions.

PowerPoint discussing CVP – Provides a good overview of Cost Volume Profit analysis, the various equations that you can use, and how to use it. Some examples are provided showing how to use the CVP Calculator.

CVP Calculator – This an Excel-based calculator that you can use to determine prices, volumes, and profits. Keep in mind that it will tell you what need, but the market determines what you actually get.

Include a cover page and a reference page, in addition to the 6-8 pages of analysis described above.
Include appropriate section headings.
Use charts and graphics strategically, but do not use these as “space fillers.” Include lengthy tables, etc., in an Appendix instead.
Cite and reference all sources that you use in your work, including those that you paraphrase. This means include citations and quotation marks for direct quotes, and citations for that information which you have “borrowed” or paraphrased from other sources.
Follow Trident Guidelines for Well-Written Papers. Running head: STRATEGIC CHOICES
1
Trident University International
Kevin Ward
Module 3 SLP
MGT 599: Strategic Management
Dr. Michael Laverty
18 March 2019
Running head: STRATEGIC CHOICES
2
Introduction
The main objective of the Wonder Company is aimed at boosting its yearly output,
dominating the market by competing favorably and generally increasing their income. To keep the
dynamics of the market, the company must be mandated to increase the market research and
development of the products they produce. In addition, the company must make consistent
strategic changes regularly to suit market trends. To meet the customer’s taste, preferences, and
needs, the Wonder Company needs to make consolidated and critically assessed technique to
analyze the market requirements. Despite the stiff competition on the market, the Wonder
Company emphases on making their product the center of interest in the market. The Wonder
Company centers at making its product more appealing even though there is tight competition in
the market. It wants to get maximum profit margin for their products (W1, W3, and W3) while
changing the cost of their products, innovative work designation and changing the objective
volumes. The cost at which the company’s products must be sold to get an improved income is
determined by changing the SLP 2 key operational methodologies using the CVP (Irfanullah,
2013). The CVP calculation is also used to determine the total volume of sales.
The cost and pricing strategy at Wonder Company
The strategy adjustments for 2013
As indicated by SLP 2, the cost for the table in the year 2013 will be as per the following,
W1 will be sold at $285 whereas the research and development value of the cost will be 33% and
the W2 will be $430, while it consequent and development cost will be 34%, and W3 will be $190,
while it research work will be 33%. At the point the company will have settles at the uniform cost
of W1 at $285, the company’s sales volume will be 537, 379. The total income of the company at
this cost will be $251.31 and the company is needed to lower its cost to $251.31. The target sales
STRATEGIC CHOICES
3
at this price are $700,000 and will prompt the company’s income of $179,920 at the financial year
ending December 2013.
Thus, the company can also try to make some modification for the W2 and W3, these
adjustments can be; W2from $430 to $334 while W3 from $190 to $188.85. Such adjustments will
go hand in hand with the law of demand and supply which states that the little change in the costs
of items will results to a relative change for product demanded, therefore, the quantity demanded
product W2 and W3 will increase with a significant value in the market. The larger the quantity
demanded the larger the quantity supplied and therefore the larger the sales of product and hence
increase in profit margin.
Product
The R&D
W1
R and D
W1
W2
W2
W3
W3
Percentage
Percentage
Percentage
breakeven
breakeven
breakeven
33%
33%
33%
33%
34%
34%
$188.85
percentage
New price
Price
$285.00
$251.31
$430.00
$334.80
$190.00
The sales
Volume
537,379
700,000
268,690
400,000
1,563,200 1,600,000
The
Sales
$153,153 $175,920,0
$115,536,5
$133,920,
$297,008, $302.160,00
revenue
Revenue
,103.45
51.72
000
000.00
volume
00.00
from sales
Table 1: Demonstrates the 2013 CVP analysis and results for Wonder Company
0.00
STRATEGIC CHOICES
4
The strategy adjustments for 2014
For SLP 2, the Wonder Company looks forward to maintaining the previous cost for their
product. As in the table, W1 will remain at $285, the W2 at $430, and W3 at $190. The research
and development indicated that there are still changes in the allocation of the market percentages.
That is W1 will be at 30%, W2 will be at 34% and that of W3 will be 36%. W3 outshines the
other competing products in growth despite it being overcharged whereas W1 is more demanded
in the market. In view of the CPV calculator examination, there will be cost reduction in the
product if the company maintains the cost of one brand and lowering the revenue allocated for
that commodity. For instance, if the company maintains the price for say W1 at $285 the amount
of quantity of sale will be 532,414 units.
Moreover, if the company reduces the selling price of the commodity W1 to say $250.9,
the number of sales will be 700,000. This will improve the expected revenue as a result of more
sales of the product. The Wonder Company also will have to retain the price of the W2 product at
$430 but strive to increase the volume of sales. In this case, the company will fit in the valuable
features of the product in accordance with the likeness of the consumers. In addition, for W3, the
company will stimulate the market by further reducing the cost of this commodity to $183.79 (table
2). Changing the price of a commodity attracts more customers in the market, therefore, increasing
the demand for that product, and in return, the sales of a company will increase significantly
resulting to increase in profits, (Hill and Jones, 2010).
Product
W1
W1
W2
W2
W3
W3
Percentage
Percentage
Percentage
breakeven
breakeven
breakeven
STRATEGIC CHOICES
The R&D
R and D
5
30%
30%
34%
34%
36%
36%
percentage
New price
Price
$285.00
$250.29
$430.00
$313.69
190.00
$183.79
The sales
Volume
532,414
700,000
269,517
450,000
1,572,800
1,800,000
The
Sales
$151,737
$175,200,0
$115,892
$141,160,0
$298,832,00
$330,640,0
revenue
Revenue
,931.03
00
,413.79
00
0.00
00.00
volume
from sales
Table 2: Demonstrates the 2014 CVP analysis and results for Wonder Company
The strategy adjustments for 2015
In this period, the company can decide to change the price of the W1 product by $5. This
decrease in the selling price of this product will attract more customers; hence, most of them will
be willing to purchase the product at the set price. The Wonder Company in its side will increase
their volume of sales for W1. Correspondingly, the price for W2 will be left at a constant price of
$430, while that for W3 will be sold at $185. It is also found that the reduction in the price of W3
will attract more customers. The research and development distributions will be guaranteed to
alteration, for instance; the research and development distribution for W1 will be at 28%, 32% for
W2 and 40% for W3. Personally, in my position, I will be bound to establish the prices at $242.29;
$295.36 and $179.80 for the W1, W2and W3 respectively (Table three) in order to achieve a good
sale for the products. Decreasing the prices further will make the market demand the products
increase.
STRATEGIC CHOICES
Product
The R&D
Product
R and D
6
W1
W1
W2
W2
W3
W3
Percentage
Percentage
Percentage
breakeven
breakeven
breakeven
28%
28%
32%
32%
40%
40%
percentage
New price
Price
$280.00
$242.29
$420.00
$295.36
$185.00
$179.80
The sales
Volume
548,000
750,000
277,429
500,000
1,768,889
2000,000
The
Sales
$153,44
$181,720,
$116,52
$147,680,0
$327,244,
$359,600,00
revenue
Revenue
0,000
000
0,000
00
444.44
0.00
volume
from sales
Table 3: Demonstrates the 2015 CVP analysis and results for Wonder Company
The strategy adjustments for 2016
As indicated in the SLP 2; the input choices in the financial year in 2016 would be chosen
as follows; W1 price at $285 while its research and development held at 33%, the price for W2 at
$430 and its research to development at 34% while W3 price at $ 185. The total amount for the
prices of these products at this financial year is set at $1,514,700,825. The demand for product W3
increase because a reduction in the price through the total profit margin reduces by to 23%. The
CVP calculator analysis asserts that it is important for the company to keep the prices for their
products as low as possible to so that they keep off the competitors in the market. The product W1
has reached the point that its prices will not be reduced further; the company will not be making
any good sales because of this decline in the market. For this reason, the company is compelled to
set the research and development percentage to 33% and make some further adjustments of the
STRATEGIC CHOICES
7
price to $259.88 and the Wonder Company will make the sales totaling to $168,920,000 by selling
the total volume of 650,000 units. The Wonder Company the same time will be bound to set the
price for W2 and W3 at 294.40 and $175.42 respectively, at the price the total sales of the revenue
will be $320,337,777.78 and $385,920,000 respectively.
Product
W1
W1
W2
W2
W3
W3
Percentage
Percentage
Percentage
breakeven
breakeven
breakeven
The R&D
33%
33%
34%
34%
33%
33%
New price
$285.00
$259.88
$420.00
$294.40
$185.00
$175.42
The sales
537,379
650,000
275,714
500,000
1,731,556
2,200,000
The
$153,153,
$168,920,0
$115,800,
$147,200,00
$320,337,7
$385,920,0
revenue
103.45
00
000.00
.00
77.78
00.00
volume
from sales
Table 4: Demonstrates the 2016 CVP analysis and results for Wonder Company
The Wonder Company needs to change the prices, sales volume, and research and
development percentage distribution of the products regularly to meet market dynamics and to
exploit its product. Basing on the allocation of the research and development, the company should
add the features on their products that are considered attractive to the customers for them to
conquer the market. The company too should to do more researches on the cost leadership and
pricing strategies and come up with the final decision on the prices that will keep off their
competitors. Wonder Company should keep on changing the prices of their product to maximize
its sales capacity and hence higher sales revenue as well ass gaining more profit from their
products.
STRATEGIC CHOICES
8
References
Hill, C. W. L., & Jones, G. R. (2010). Strategic management theory: An integrated approach.
Irfanullah, J. (2013). Cost-Volume-Profit Analysis. Accounting Explained. Retrieved
from http://accountingexplained.com/managerial/cvp-analysis/
Tucker, I. B. (2010). Macroeconomics for today. Mason, OH: South-Western Cengage Learning.
Running head: TRENDS IN MANAGEMENT ACCOUNTING DISCUSSION
The Trends in Management Accounting Discussion
Student’s Name:
Institutional Affiliation:
1
TRENDS IN MANAGEMENT ACCOUNTING DISCUSSION
2
Introduction
Decision making is a critical part of the company’s management process (Harrison et al.,
1995). It involves making resolutions that can impact the company either directly or indirectly.
This paper therefore, provides a review of Thomas decisions, regarding the company’s products
for the last four years (from 2013 to 2016) that he has been working in the Wonder Company as
the Vice President of marketing. The review comes as a result of the poor performance of the then
vice president of marketing which led to the enormous losses to the company. The paper shall,
additionally, provide a comprehensive report on the sales, the product development, pricing as
well as the overall products’ performance in the company. This report shall also bears the proposal
of my new strategy, as the newly appointed vice president of the marketing, specifically the
marketing strategy that will help in boosting the overall performance of the company’s products.
Review of Thomas’s decision regarding the company’s products (W1, W2, and W3) from
2013 to 2016.
The increasing market dynamics have made almost impossible for most of the companies
to out-compete well in the market. Therefore, decision regarding the product such as the pricing,
cost and the product development remains critical as it helps in acquiring the substantial market
share as well as the good reputation which improves the company’s overall performance.
Thomas’s decisions regarding the products’ pricing as well as the products development was not
impressive as such since the company continued to experience losses and fluctuation in terms of
profits during his tenure.
TRENDS IN MANAGEMENT ACCOUNTING DISCUSSION
3
a) Product W1
The table labeled figure 1 below demonstrates the history of product W1, regarding the
financial and the market information, during the Joe’s tenure as the vice president of marketing.
PRODUCT W1
2013
2014
Year
Financials:
Sales (units)
1,603,357
2,068,658
Revenue
$456,956,682 $589,567,507
Variable cost
$240,503,517 $310,298,688
Fixed cost
$75,000,000 $75,000,000
R&D cost
$7,200,000
$7,200,000
Total cost
$322,703,517 $392,498,688
Profit
$134,253,165 $197,068,819
Profitability
29%
33%
Market information:
Price
$285
$285
Installed customer base
1,917,729
3,356,281
Remaining customers
5,117,271
3,678,719
Market saturation
27%
48%
First time customers
1,428,552
1,784,306
Repeat sales
164,805
284,352
Performance
1.03
1.02
Fig.1 Simulation results/data for product W1
2015
2016
1,821,723
1,006,936
$519,191,126 $286,976,844
$273,258,488 $151,040,444
$75,000,000 $75,000,000
$7,200,000
$7,200,000
$355,458,488 $233,240,444
$163,732,639 $53,736,400
32%
19%
$285
5,140,587
1,894,413
73%
1,391,199
430,524
1.00
$285
6,531,787
503,213
93%
465,095
540,841
1.00
The life cycle, price and performance
Product W1 is a product that was already existing in the market even before the beginning
of Joe’s tenure. This is informed by the fact the product had a high number of the installed customer
base of 1,917,729 customers as compared with other products. The life cycle of this product seems
to be perpetual since its installed customer base is increasingly yearly (1,917,729 to6, 531,787)
from 2013 to 2016. Additionally, the product prices stacks up due to the high product costs. The
cost such as the fixed cost, variable cost and research and development cost keeps on increasing
TRENDS IN MANAGEMENT ACCOUNTING DISCUSSION
4
yearly thereby making it almost impossible to adjust price in order for the product to compete
fairly in the market. The stack up in price leads to the poor performance as shown in figure 1
above. The product performance decreases from 2013 through 2016.
Financial review
The sales for W1 was at peak in 2014 after which it declined from 2015 through 2016. This
could have been due to the increased number install base. In addition to the increased base of
customers, the product was not yet maximized as the market saturation was very low (48%).
The product’s profitability increased in 2014 to 33% after which it also dropped to 19 %
in 2016. This drastic drop in the product’s profitability is attributed to the increasing costs
associated with the product. Joe’s decision was not informed as it failed to adjust cost in order to
increase the product profitability. In addition to costs of the product, Joe failed to adjust the
product’s prices in order to provide room for a favorable competition which could have led to the
increased product’s profitability.
The market review
The product experienced an increase in the number of new sales in 2014. In addition, its
repeat sales kept on increasing through the four years. However, the sales drastically dropped to
465,095 units in 2016. The drastic drop is attributed to the increasing market saturation (from 27%
to 93% in 2016).
TRENDS IN MANAGEMENT ACCOUNTING DISCUSSION
5
b) Product W2
PRODUCT W 2
2014
Year
2013
Financials:
Sales (units)
1,431,588
2,659,768
Revenue
$628,466,922 $1,167,638,165
Variable cost
$393,686,569 $731,436,208
Fixed cost
$37,500,000 $37,500,000
R&D cost
$10,080,000 $10,080,000
Total cost
$441,266,569 $779,016,208
Profit
$187,200,354 $388,621,957
Profitability
30%
33%
Market information:
Price
$439
$439
Installed customer base 1,066,018
2,368,014
Remaining customers
5,483,982
4,181,986
Market saturation
16%
36%
First time customers
1,301,997
2,352,694
Repeat sales
129,591
307,074
Performance
1.46
1.56
Fig. 2 Simulation results/data for product W2
2015
2016
2,473,436
$1,085,838,538
$680,194,984
$37,500,000
$10,080,000
$727,774,984
$358,063,554
33%
931,337
$408,856,892
$256,117,643
$37,500,000
$10,080,000
$303,697,643
$105,159,249
26%
$439
4,720,709
1,829,291
72%
1,829,291
644,145
1.64
$439
6,550,000
0
100%
0
931,337
1.71
Life cycle, price and performance
Just like the product W1, W2 was already existing in the market and had four years of life
cycle. At this year, the product is in the growth phase of its life cycle. The product’s life cycle is
informed by its market saturation which was at peak (100%) in 2016 as shown in figure 2 above.
The price of the product also remained constant throughout its life cycle. The performance in the
market generally increased throughout the life cycle of the product. It increased from 1.46 in 2013
to 1.71 in 2016 (Fig.2).
TRENDS IN MANAGEMENT ACCOUNTING DISCUSSION
6
Financial review
The product’s sales volume increased in 2014 and drastically dropped in 2016. Increase in
sales were attributed to the increased number of customers. The new customers increased to about
2.3 million in 2014 thereby pushing the sales as well as revenue higher. The product market
saturation had its peak in 2016. This contributed to the drop in sales. In addition, the product cost
remained high throughout the product life despite a slight drop in 2016. The high cost associated
with the product is majorly driven by the variable costs.
Market review
The product is doing well in the market. This is informed by its improved profitability ratio.
However, the overall profitability dropped in 2016. This could be as a result of the market
saturation which had already reached 100%. The repeat sales for the product increased throughout
the four years. Increase in the repeat sales is attributed to the growing number of installed
customers. Installed customers grew up to 6,550,000 in 2016 as compared to 1,066,018 in 2013.
c) Product W3
Year
Financials:
Sales (units)
Revenue
Variable cost
Fixed cost
R&D cost
Total cost
Profit
Profitability
Market information:
Price
2013
PRODUCT W 3
2014
2015
2016
165,586
$30,633,325
$9,107,205
$37,500,000
$6,720,000
$53,327,205
-$22,693,879
-74%
232,629
$43,036,295
$12,794,574
$37,500,000
$6,720,000
$57,014,574
-$13,978,279
-32%
325,068
$60,137,489
$17,878,713
$37,500,000
$6,720,000
$62,098,713
-$1,961,224
-3%
450,850
$83,407,341
$24,796,777
$37,500,000
$6,720,000
$69,016,777
$14,390,564
17%
$185
$185
$185
$185
TRENDS IN MANAGEMENT ACCOUNTING DISCUSSION
Installed customer base
340,000
481,538
Remaining customers
17,500,000
17,358,462
Market saturation
2%
3%
First time customers
141,538
198,609
Repeat sales
24,048
34,020
Performance
0.85
0.85
Fig.3 Simulation results/data for product W3
680,147
17,159,853
4%
277,060
48,007
0.85
7
957,207
16,882,793
5%
383,338
67,512
0.85
The product life cycle, price and performance
The product was introduced to the market by the then vice president of marketing, Joe
Thomas in 2013. The products life cycle is not complete since its market saturation is still very
low, about 5% in the market (fig.3). The price of the product also remained unchanged throughout
the four years. Joe set the price of W3 at $185 which was really competitive but could not offset
its cost.
Financial review
From the sale’s figures, it can be deduced that the product W3 is quite doing well in the
market. This is because the sales units increased from 2013 through 2016. However, the company
continued to make a lot losses due to the poor pricing decision made by Thomas. Despite the
increased revenue flows during the period, losses were incurred due to high cost and the low price
associate with the product.
Market review
The product’s first time sales and the repeat sales increased yearly because of its low
market saturation as well as increasing number of installed customer base. Installed customer base
increased from 340,000 customers to 957, 207 in 2016 (fig.3). However, the remaining customers
TRENDS IN MANAGEMENT ACCOUNTING DISCUSSION
8
declined throughout the four ye…
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