Capstone Strategy

2. Chapter I: Strategic Plan

Part 1:  The strategic objectives

Part of our strategic plan we established several strategic objectives at the beginning of the rounds.

From the start our main financial objective was to reach a net profit of 10 million by the end of round 7. However, after the 3 firsts round we understood that it was difficult to reach. Therefore, we changed our strategy and decreased our net profit objective to 7millions. Part of the financial objectives we also set that we wanted to decrease the production costs as much as possible.

Regarding the customers’ strategic objectives our goal was to first increase the customer retention by meeting the market needs. In addition, we had the aim to conquer new customers and therefore increase our market share. We understood later on, that we couldn’t retain all type of customers and that we needed to target specifics market. Therefore, from round 3 our customers’ strategic objectives changed. We wanted to retain customers from the high end market, increase our market shares in the low end and traditional market and leave the customers from the size and performance market. We kept those objectives until the end.

We established several operational strategic objectives that we reviewed each round in order to remain competitive. At the beginning of the rounds we decided to have all our products to meet the standard of the market. In other words, we didn’t specialise in a particular market. However, we implanted a promotional plan that were targeting the low end and traditional market with heavy prom and sales budget investments. Through the rounds our operational strategic objectives evolve as we decided to focus on the low and traditional market. Therefore, our financial resources were mainly allocated to those segments. From then, our goal was to be the leader on those markets.

Part 2:  Anaelle

Part 3: Structure of the functional level strategies

R&D

At the beginning of round 1, as we didn’t know in which market our competitors will specialise, we decided to remain competitive in all the markets. Our strategy was to meet the size and performance expectations for all the market until round 3. Therefore, for round 1 & 2 we improved all our products. However, due to the high margin opportunity of the low end segment we had in mind to target this market. In round 1 we created the Blair product, a low end product with great performances for the market: perf 4,7 size 15,3. At the round 2, we started to have some clues about our competitors’ strategy: team A was targeting the high end segment, team D the size/performance segment and team C the low/traditional segment. As the team C strategy was the less aggressive one and that those markets allow to have a great margin we took the decisions to invest in the low and traditional segment. We therefore created a new traditional product with good attributes: perf 7,7 size 12,3. One of the reason why we wanted to have 2 products per market was to always have a great product on the market. Thus when one product was going under improvement, the other product from the same market was taking over.

But it’s only from the round 3 that we established a real strategy and that we specialized. We focused on the low end and traditional segment. Those two markets do not require many R&D investment as the product performance is only the third buying criteria. We didn’t improve the size product but slightly invested for the high end product. Furthermore, we decided to keep on investing on the performance product as they were still some market share to gain in this market. We increased its performance to 11,2 making it the leader in this category.

For the round 4 we slightly change our strategy. We kept focusing the low and traditional by improving the 2 originals products. However, as the margin for performance was really low we decided to leave this market and focused on high end. Therefore, we increased the performance of the high end to 10,5 and decreased the size to 9,5. Even though we made such improvement it remains below Andrews products, leader on this market.

For round 5 we focused on Baker and Bead, we made a great investment in R&D so that those products can remain competitive for the following year. In the meantime, Blair and Bloom were on the market and answering the markets expectations. We also improve the high end product as the performance and the size are the first buying criteria of the market.  

In round 6 no changes were made as, at this stage of the game, it takes a very long time to improve a product. We wanted all our products to be on the market for the last year.

We must highlight that we didn’t make many changes in the MTBF as this characteristic was the last buying criteria for most market. It appeared then unnecessary to spend money on this.  

Marketing

Price

As previously mentioned, from round 3 we focused on the low end and traditional market. For both market, the price was an important element of the buying process.

Indeed, for the low end sector the pricing strategy was crucial. We frist decreased the price to 17,80 on round 2 in order to be the lower priced product on the market and be the leader. We kept decreasing the price of the product through the rounds. However, on round 3 our competitor Chester became less expensive leading them to become leader on the market on round 4. As a consequence, on round 5 we highly decreased the price to 15,90 and on round 6 to 14,5. For our other low end product, Blair, our pricing strategy was different. In fact, this product had great performance and size characteristics therefore we didn’t want to lower it as much as Bead. The beginning price was 18,50 right in the middle of the market price expectation and lower than the Team A and D low end product. As this product wasn’t selling as much as expected we decreased the price for the round 5 to 17 allowing us to sell more products than Digby which was more expensive.

For our traditional product we didn’t play as much with the price was the market was less sensitive to these criteria. In round 1 we drop the price to 25 as 28 was too high compared to the price expectations. With the goal of being the leader on this market, in addition to improving the product we dropped the price to 24,50. Baker was then the cheapest product on the market but the market share didn’t increase. We decided to keep this price for the round 3 as the other products were more expensive. Chester’s product had better attributes than our product, thus we decided to attract customers by lowering our price to 24 on round 4 and 23,5 on round 5. Our other traditional product, Bloom, started to be effective on round 5. We fixed its price at 24, lower than Chester product and higher than Baker as it was a better product.