Simulation Report of Back Bay Battery

Simulation Report of Back Bay Battery

1. Introduction

Battery performance criteria can be included in five different aspects: energy density, recharge cycles, self discharge, recharge time and price. The three main segments Back Bay Battery sell-into are power tools, two-way radios and power packs. In addition, NiMH and ultracapacitor are the main types of the product in this company.

1. Performance and key indicators

According to the simulation, the cumulative profit of the company in 2018 is $7.18 million and it was predicted to decline to $6.75 million dollars in 2020. The sales of NiMH raised from 13.4 million units from 15.7 million units between 2010 and 2020. Moreover, the sales of ultracapacitor showed the same trend, and it went up to 3 million units in 2020. From 2010 to 2013, the operating profit increased from -$8.7 million to $47.5 million. However, the operating profit sharply dropped to -$32.1 million in 2017, and it jumped up to -$2.9 million in 2020.

The key indicators are the five battery performance criteria, and price and energy density are more important compared with others. Customers have the higher desired performance in the energy density and price. Manufacturers need to have a reasonable price to make their products have competitiveness. As the competition became more and more fierce and the rechargeable batteries tend to come in standard, they are a fungible commodity with almost no barriers to substitution. Therefore, the price of products has been pushed down significantly. In addition, the key success factors also include that clarifying the demand of consumers (Jones, 1997). For example, in 2017, power tool customers have found that fast recharges can reduce the importance of battery life. Consumers do not need batteries last several hours, because power tools can be recharged nearly instantly. As a result, the desired performance of energy density and importance of energy has dropped, and the importance of recharge time has increased. In order to make profits from a specific market, the company needs to define the number of value customers place on its products and the price that the company for the products (Schatteman, 2016).

1. The strategy and reflection

From the graphs of potential and existing customers by the market, power tools have the biggest potential customers and installed base. In the first three years, the potential customers of power tools were about 102 million units. Companies need to strengthen relationships with core customers, and I chose to invest $3 million and $2 million respectively in the energy density of NiMH and ultracapacitor as the short-term strategy. As a result, the operating profit raised to $47.5 million in 2013. Because the company poured $5 million into the development of energy density, I improved the unit price of the products. Even though the sales by product has dropped about 4.33 per cent in 2013 compared to the sales in 2012, the potential and existing customers in the market of power tools showed a growing trend.