TRANSFORMATION: TIME WARP

Transformation: Time Warp

Transformation: Time Warp 3

There are three strategies that are suggested in the last run these are market segmentation, the use of marketing strategies and increasing the R&D expenditures in the long run. We attempt to implement these suggestions in this run of the PDA simulation. The first marketing strategy that the company can apply is the pricing strategy. The price of X5 is increased because it is in the growth phase of the simulation, and the price of X7 is also increased as it is expected to be in the growth stage. As X6 is expected to continue in the maturity stage of the PLC, we increase its price slightly with the expectation that it will get higher revenues and profits. We implement the suggestion from the first simulation that R& D allocation is increased. We increase the R&D expenditure allocation by increasing the R&D allocation of X5 since it is in the growth phase and X7 since it is in the introduction stage. The decisions I made for years 2006 through 2009 are as follows.

Year 2006

Discontinue a Product eliminates both cost and revenue for that product: (Input)

Discontinuing selling X5: No

Discontinuing selling X6: No

Discontinuing selling X7: No

View Summary: (Output)

My score: 256,164,049

Product

Price $

R&D Allocation %

Profits

X5

260

33

93,467,124

X6

420

30

164,282,465

X7

230

36

-1,585,539

Total

256,164,049

The second year we implement the marketing strategy (pricing) by reducing the prices of X5 and X7, the objective is quick penetration and increase in volumes. The strategy of increasing R& D expenditures is continued. The R&D allocation in X5 and X7 is increased. These two products are in the growth phase.

Year 2007

Discontinue a Product eliminates both cost and revenue for that product: (Input)

Discontinuing selling X5: No

Discontinuing selling X6: No

Discontinuing selling X7: No

View Summary: (Output)

My score: 329,480,595

Product

Price $

R&D Allocation %

Profits

X5

240

35

115,082,523

X6

420

28

187,957,069

X7

180

36

26,441,004

Total

329,480,595

The success of the strategy to increase volumes by reducing prices is ...