Strategic Management for Competitive Advantage

STRATEGIC
MANAGEMENT FOR
COMPETITIVE
ADVANTAGE

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
COMPANY PERFORMANCE.......................................................................................................2
CRITICAL REFLECTION.............................................................................................................2
CONCLUSION................................................................................................................................3
TEAM PERFORMANCE...............................................................................................................3
REFERENCES................................................................................................................................6

INTRODUCTION
This assignment will lay emphasis upon Business with International Management (BIM)
organization which is a limited liability company located in Newcastle, United Kingdom. Main
business objective of BIM Ltd. is to enhance their market shares by 5% and profitability by 8%
in the third year. In tis assignment overall performance of company in the game will be
explained with description of level till which team members have successfully achieved their
main business objectives. Company had been successful in expanding their market share till a
certain extent and they are expected to grow their market share by 3 percent next year. Below
given details will help in explaining closing bank balance, unsold stock, shareholders funds etc at
the end of round 4.
Cash flow with opening bank balance
Opening Bank Balance 211.26
Revenue 5347.35
Extraordinary events
Wage Costs 240.61
Total Overheads 729.66
Factory Cost
Redundancy Costs
Automation Expenditure 21.60
Loan Repayments 105.63
Tax Payments 47.99
Bank Interest 52.84
New Model Production
Costs
Closing bank balance
Balance Before
Loan 341.53
New Loan
Closing Bank
Balance 341.53
1

Shareholders funds
Share Equity 500.00
Total Retained Profit (Loss) 863.51
Total Subsidies
Total Shareholders Funds 1,363.51
Total sales by product size
Team Small Medium Large Luxury
1: BIM 90608
1: BIM 64069
1: BIM *12170
1: BIM *50962
COMPANY PERFORMANCE
Round 1
Round 1 forecast of key performance measures
It was forecasted that car market will rise from 13.0 m to 13.2 m cars sold. There will be
changes within small car market next year, medium car market is also expected to show a little
change over, large car market is expected to grow by around 3% and luxury car market is
expected to grow by around 6%.
Forecast for Round 1 included Minimum target production that was required to be
produced and sold. Minimum target market production for Round 1 for market sector 6 was
42,000 whereas, target minimum forecasted production for Round 1 for market 1 was 44,000.
Market share for market 6 was forecasted 0.87% whereas for market 1 it was 0.84%.
Market Sector Model Name Target Production
6 M-21 42000
1 S-21 44000
Market
Sector
Model
name
Produced Sold In Stock Model
Price
Market
Share %
6 M-21 42000 42000 0 22535.40 0.87
1 S-21 44000 44000 0 16089.60 0.87
2

Comparison of Round results with forecast
If Round 1 results are compared to forecasted resulted then it can be said that Minimum
target production of Medium and small car production was achieved successfully i.e. Minimum
target market production for sector 6 and target minimum production for market 1 was achieved
successfully. Not only this all the produced medium and small cars produced were also sold. But
if it is compared with key performance measures then post tax profit i.e. sales percentage wa in
negative i.e. it was not as forecasted.
Total profitability of BIM company was £-17.84 m. in terms of turnover and profitability
BIM was on second position. On first position its top competitor was there named RAVEN
Motors pvt. Ltd.
Figure 1 Turnover and profitability of BIM and its companion with competitors.
3

It identified that overhead cost of vehicles was one of the main reason company suffered
loss.
Key issues that were raised
Key issues that were raised during Round was or key issues identified because of which
overall profitability was reduced are due to excessive over head cost such as: fixed overheads,
Stock upkept cost, Product Recall Cost, promotion, Research and Development, Professional
Charges, Warranty Claims and Training Cost.
Decisions of Round 2
In order to bring improvement within overall performance of BIM organization following
decisions were taken. BIM has announced new investment of £1 m in automation. They have
also announced new investment of £4 m in Research and Development. This cost will be used to
enhance Fuel Efficient Engine of Medium cars within 3 years. As large car and luxury car
market is expected to grow so they had announced the forthcoming launch of a new model.
Round 2
4