Task 1: Business Fundamentals

Task 1: Business Fundamentals

Documents from the Simulation of the Company

Fourth Quarter Cumulative Balance Score Card

Cumulative industry results for last four quarters ending in quarter: 4

 

Minimum

Maximum

Average

Zeus Tech Pvt. Ltd.

Total Overall

0.00

556.29

14.84

38.17

Financial Performance

-61.60

171.26

13.68

54.31

Market Performance

0.00

0.71

0.16

0.35

Marketing Effectiveness

0.00

0.82

0.33

0.75

Investment in Future

0.00

4,938,272.84

6,050.21

1.40

Wealth

-1.63

4.34

0.66

1.98

Human Resource Management

0.00

0.82

0.34

0.70

Asset Management

0.00

2.29

0.54

1.44

Manufacturing Productivity

0.00

1.00

0.35

1.00

Financial Risk

0.00

1.00

0.44

0.98

Four Quarters Income Statement

Income Statement

 

Quarter 1

Quarter 2

Quarter 3

Quarter 4

Gross Profit

  Revenues

0

2,670,550

5,378,850

15,648,050

- Rebates

0

39,925

50,135

27,625

- Cost of Goods Sold

0

1,970,937

3,271,523

8,864,908

= Gross Profit

0

659,688

2,057,192

6,755,517

Expenses

  Research and Development

120,000

0

120,000

60,000

+ Advertising

0

157,900

230,820

170,820

+ Sales Force Expense

0

151,790

347,880

319,449

+ Sales Office Expense

430,000

470,000

370,000

370,000

+ Marketing Research

0

15,000

15,000

15,000

+ Shipping

0

43,532

66,737

157,756

+ Inventory Holding Costs

0

0

0

0

+ Excess Capacity Cost

0

0

0

0

+ Depreciation

0

25,000

108,333

133,333

= Total Expenses

550,000

863,222

1,258,770

1,226,358

  Operating Profit

-550,000

-203,534

798,422

5,529,159

Miscellaneous Income and Expenses

+ Other Income

0

0

0

0

- Other Expenses

0

0

0

0

= Earnings Before Interest and Taxes

-550,000

-203,534

798,422

5,529,159

+ Interest Income

12,000

0

0

0

- Interest Charges

0

0

15,827

0

= Income Before Taxes

-538,000

-203,534

782,595

5,529,159

- Loss Carry Forward

0

0

741,534

0

= Taxable Income

0

0

41,061

5,529,159

- Income Taxes

0

0

12,318

1,658,748

= Net Income

-538,000

-203,534

770,276

3,870,411

Earnings per Share

-27

-7

19

96

Balance Sheet of Four Quarters

Balance Sheet

 

Quarter 1

Quarter 2

Quarter 3

Quarter 4

Current Assets

  Cash

62,000

1

962,076

4,365,820

+ 3 Month Certificate of Deposit

800,000

0

0

0

+ Finished Goods Inventory

0

0

0

0

Long Term Assets

+ Net Fixed Assets

600,000

2,575,000

3,066,667

3,533,333

= Total

1,462,000

2,575,001

4,028,743

7,899,153

Debt

+ Emergency Loan

0

316,535

0

0

Equity

+ Common Stock

2,000,000

3,000,000

4,000,000

4,000,000

+ Retained Earnings

-538,000

-741,534

28,742

3,899,153

= Total

1,462,000

2,575,001

4,028,743

7,899,153

Analysis of Simulation Result

The company Zeus Tech Pvt. Ltd., was started off by employing, limited number of sales force, with initial level of inventory. The name was choosing as the company aspires to be the best microcomputer manufacturer in the world. The brand Pegasus represents the traveler category; Olympus is for the Workhorse category while Hercules was developed as a high performance “Mercedes” computing machine.

The company initially focused on the two major segments of the industry and deliberately didn't committed the resources to the 'Mercedes' category. The aim was to establish the perception of the brand in the market and then target the premium segment based on this prestige. New York, North America and Paris-Europe represented the largest markets so the company opened sales offices in these cities. Initially the manufacturing capacity booked was limited to the 1625 units as the company didn't expected the sales to be significant as the company was new. The advertisements, which were developed in the first quarter, failed to attract the traveler segment and resulted in the other brands taking the lead in sales and popularity. The company didn't hire the sales person in first quarter but built the factors for the micro computers. Zeus faced losses in its year of operations. The excess cash, remaining at the end of the first quarter was invested at 1.5% per quarter.

In the second quarter, Zeus Tech hired sales officers and adjusted the advertisement and brand composition after reviewing the high ranking competitor brand. Production forecasting was carried out in order to plan manufacturing operations. The company earned some revenues from sales in 2nd quarter. The company incurred losses as it the sales force hired and the marketing efforts, created more demand then the company had planned the production. It created an ill will and company faced an opportunity loss. The company opened up another sales office in Tokyo, Japan as it the manufacturing facility was located in the same country. It received the first mover advantage but was unable to capitalize on it due to its limited production capacity. The company stuck to the two brands and improved in their visibility and adjusted them to ...