Simulation Case

The overall objectives of my simulation performance are to increase profitability and meanwhile improve the competitiveness of the products of Back Bay. However, after about 5 years’ investment, I failed at last due to my inaccurate forecast of the market demands. As showed by appendix 1, the total profit has been declined from 29.83 million of 2012 to -29.40 million of 2017.

To achieve my objectives, in the year of 2013, 2014 and 2015, the main strategy I adopted is differentiation. Differentiation means providing products that are unique and valuable to the buyer rather than simply offering a low price, and the key issue for differentiation is to create value for customers. During 2013 and 2014, my R&D investment places emphasis on NiMH battery development to prolong its self-charge time and shorten its recharge time. And in 2015, seeing that the operating profits have increased a lot, I think it is time to invest more to develop ultracapacitor because it is new and promising technology which will become a main trend in the future. The main advantage of ultracapacitor is its low energy density; therefore, I invest $5 million (see appendix 2) to this field and look forward to achieving some improvements. However, although the sales of ultracapacitor has increased a little, the sales of NiMH battery is declined dramatically from about 30 million units of 2013 to about 15 million units of 2015(see appendix 3), which has results in a negative profit earning for this year. To change the condition, I try to adjust my strategy in the year of 2016. Firstly, I lower the price of both the two batteries to gain more advantages in the market. The price of NiMH battery is lowered from $10 to$ 8 and that of the ultracapacitor is lowered from $20 to $18. And there are also adjustments towards

R&D investment. My investment emphasis is on ultracapacitor in 2015. However, as indicated by profit, my investment plan is failed because of my ignorance of the NiMH battery. Therefore, in 2006, I invest about $5 million on NiMH battery so as to improve its quality regarding recharge time, self-discharge and future performance, and in addition I also pay attention to develop ultracapacitor, hoping that the sales can improve and the profits can rise again. However, the condition had not changed a year later. Therefore, in 2007, I increase input on NiMH battery. All $8 million R&D investment is put into the development of NiMH battery (see appendix 2). And the price is increased a little from $8 to $8.5, because I hold customers are willing to pay more for the improvement of NiMH battery such as longer recharge cycle and short recharge time; and the price of ultracapacitor keeps the same. However, all these efforts fail to change the declining sales and negative profits. I am fired at last.

I have learnt a lot from this simulation practice. To peruse my objectives, I use differentiation strategy to improve the performance of the products.