Questions are as follows. Case is attached below

Detailed steps you will take to achieve your discount, normal, or luxury strategy (examples are as follows)

? Business Model: How will you generate returns? Will you be a low cost provider through scale? Will you be a niche player? Will you be a technology leader?

? Products: What do you intend to be your "unique selling proposition"? On what basis will customers choose you rather than the competitors?

? Markets: Where will the firm be active? Which segments/customer groups? Which vehicle classes?

? Timing: What is the timing of your decisions on product introduction, capacity management? How are the decisions linked?

Case is attached below

Congratulations on your recent appointment to manage one of the firms in the StratSim industry. Though your primary objective will of course be to learn, you will also be setting specific goals and objectives for your firm. Those may be to become the market leader, or perhaps to maximize shareholder return, or possibly to generate the most net income over the course of the game. Selecting objectives is up to your group and your instructor. However, you will find that the firms who do best in StratSim are able to operate efficiently, successfully enter new markets while defending their own position, and prudently manage their financial resources. This is far easier to say than to achieve, but it is the challenge faced by all managers and executives. Industry Overview Firms competing in the StratSim world manufacture and sell cars and trucks. Manufacturers sell to affiliated automobile dealers in four regions in the domestic market. The dealers in turn sell cars and trucks to consumers. Firms in the industry start out manufacturing the same kinds of vehicles, have the same number of dealers in each region, and identical sales. Each firm sold 1.4 million units in the most recent year. Car and truck demand depends on trends in consumer preferences, changes in GDP and gas prices, as well as competitive dynamics. Based on projected GDP growth, total vehicle demand is expected to increase somewhat in the next year. For individual firms, vehicle selection, pricing, advertising and promotion, and dealer coverage will impact sales relative to the competition. Vehicle Attributes Vehicles have attributes that can be measured and compared. In StratSim, these include price, as wellas size, performance, interior, styling, safety, and quality. Each attribute has a range of values based on what can feasibly be designed and built by a firm. The interior, styling, safety, and quality attributes (ISSQ) have a maximum value dependent upon the firm's technical capability in that area. Vehicles with higher attributes in these four dimensions are more appealing to customers, all other things being equal. Customers may find a particular attribute more important (i.e. consider it a \"hot button\"), depending on their needs and preferences. In evaluating vehicles, customers weigh the ISSQ attributes against the price of the product, while also considering the size and engine performance of the vehicle. Exhibit 1.1 summarizes vehicle attributes and the range of values associated with each. Exhibit 1.1: Vehicle Attribute Descriptions Attribute Description Range of Values Generally ranges from $10,000 $50,000 Length and width of vehicle, which includes passenger and 1100 cargo space. Size is measured on a scale of 1100. (smallest to largest) 50300 HP Performance Measured by engine horsepower (HP). (low to high performance) Comfort, visibility, instrumentation, music systems, 1 to maximum rm ergonomics. capability 1 to maximum firm capability . . 1 to maximum rm Structural deslgn, bra klng systems, safety features. capability . .. .. . 1 to maximum firm m Overall rellabIIIty, durability, conSIstency of products. capability Note that the ranges for ISSQ attributes are based on firm limits at the start of the simulation, and investment in technology research can increase the limits. Manufacturer's Suggested Retail Price (MSRP). Actual (retail) selling price to customer will vary from MSRP. General curb appeal, styling, handling, finish I workmanship. Vehicle Classes The industry has historically been broken into seven vehicle classes Economy (E), Family (F), Luxury (L), Sports (S), Minivan (M), Truck (T), and Utility (U). However, one new class offers future potential if developed and marketed well the AEV (A) vehicle, which is a new breakthrough in drive technology. Each of these classes represents a unique configuration that requires a significant expenditure in R&D to develop. Exhibit 1.2 provides a brief description of each class of vehicle, along with typical ranges for price, size, and engine at the beginning of the simulation. The product class examples following the case provide a detailed description of each vehicle class, along with a sample picture. See Exhibit 1.2 on the following page. There are two broad approaches to analyzing the StratSim market by vehicle class and consumer segment. Each approach offers advantages, and both should be considered. There are ve consumer segments in StratSim, numbered 1 through 5. Some consumers in a segment have a strong preference for a particular vehicle class. For others, there are two or more vehicle classes that would meet their needs. However, it should be noted that if a consumer finds another vehicle class that provides a better solution to their needs and budget, they might purchase that other vehicle class instead. Exhibit 1.3 provides an overview of each consumer segment. More detailed descriptions are provided in the section following the case. Exhibit 1.3: Consumer Market Segments Sales Segment Description (0005 _ Units)* Preferred Vehicle Class\" Value seekers have basic transportation needs, using their vehicle for commuting or as an all- purpose vehicle. Quality and safety are important to these price sensitive buyers. Families have somewhat basic transportation needs, but require exible vehicles with both people and cargo-carniing capabilities. Safety and quality are most important to these fairly price sensitive buyers. The singles market is young, and tends to spend a fairly high percentage of disposable income on Utility, Truck 3 nd (3) Singles their vehicles. Singles look for vehicles that are Sports fun to drive. Styling and performance are important to this segment. This segment includes families, professionals, or Family. Luxury. (4) High Income retirees. With high disposable income, they are Sports: arid Minivan willing to spend more for extra features. interior, styling, and safety are important attributes. (1) Value Seekers Economy and Truck Family, Economy (2) Families and Minivan Enterprisers see their vehicle as an extension 0 f their business and personal aspirations. They use their vehicles for business and also to impress. Styling and performance are important. Utility, Luxury, (5) Enterprisers and AEV *NOTE: Segment unit sales shown are per firm at startup. Actual market size varies with number afrms, and will change over time based an underlying market conditions and campetitivedynamics. \"NOTE: Vehicle classes are listed in order of preference within the segment. The needs of some consumer segments are not being met by the current selection of vehicles on the market. Customers may be looking for a new vehicle class, such as an AEV, or a significantly different configuration of an existing vehicle class. Firms must evaluate consumer needs and competitors' products to identify opportunities in the market. If a firm introduces a new vehicle that satisfies these unmet needs, it may stimulate demand in the marketplace. Consumer Purchase Process What vehicle a consumer will ultimately purchase reflects a complex decision making process. Consumers typically start out looking for a specific kind of vehicle in the right price range, though they may consider a couple of different kinds of vehicles. For example, a family buyer might consider both a minivan and a family class sedan in the 525,000-530,000 price range. When consumers find a vehicle of the right type, they will then take a close look at the attributes of the vehicle. Of course, the overall appeal of the vehicle is weighed against the price the customer will ultimately pay. This trade-off between price and appeal is what creates value in the mind of the buyer. Each consumer has different needs and also places a different importance on each need. Some attributes may be very important to the consumer ("hot buttons") while others are less important. In some cases, consumers may want more of an attribute, while in other cases, they may have a particular ideal in mind. Their decision will also be impacted by their knowledge of the vehicle (awareness), experience at the dealership (dealer rating, dealer coverage), and special promotional offers and activities. The diagram in exhibit 1.4 illustrates the consumer purchase process for cars and trucks in StratSim. Exhibit 1.4: Vehicle Purchase Process Training/Support Manufacturer Advertising Promotion MSRP Firm Decisions At the start of the simulation, each firm in the industry has developed vehicles for the Economy, Family, and Truck classes, and is selling them in the domestic market. Exhibit 1.5 shows the attributes and sales for the vehicles that your firm currently has on the market. Exhibit 1.5: Firm Vehicles Domestic Unit Sales (0005) mumm- Economy 12/120 1/1/1/1 $11,492 $10,916 72 71 73 82 303 Family 28/ 145 2/2/3/1 $20,350 $19, 1 26 1 67 1 81 1 82 1 79 708 Truck 70/190 2/2/1/1 $20,493 $19, 307 106 127 1 00 1 09 441 Vehicle Size/HP 5512 MSRP Avg. Selling Price Marketing In StratSim you will have to make marketing decisions for the corporation as a whole and for each product. To make your marketing effective, you must first identify the kind of company you want to be, then use advertising, promotion, and pricing decisions to project the appropriate corporate image and generate interest in your products. Corporate advertising budgets are set on a regional basis. These funds are spent on generating a corporate identity in support of the dealer network in the regions. A public relations budget is also set to support publicity events for the firm, corporate, and investor relations. Finally, direct marketing can be used to generate interest within a particular target segment. Product advertising plays an important role in establishing vehicle awareness and shaping consumers' perceptions of products. In the StratSim world, managers are responsible for setting an advertising budget and an advertising theme. The majority of the budget is spent on media buys, with the remainder on the creative input and theme. The theme emphasizes one of the primary characteristics of the vehicleperformance, interior, styling, safety, or quality. Product managers attempt to match the advertising theme with the "hot buttons" of their target customer. Promotional budgets are set at the product level and include special incentive programs and general promotional activities. The purpose of special incentive programs is to move product during slower periods of demand. Examples of incentives include consumer rebates, below market financing, and dealer-oriented sales incentives. Examples of general promotional activities include funds for brochures, advertising in support of incentive programs, mailings, trade shows, and motivational contests. Vehicle pricing and costing is complex and requires careful attention to detail. Depending on the context, price can have several meanings. The manufacturer sets the vehicle MSRP (Manufacturer's Suggested Retail Price}. This is the price that is posted in the window of the vehicle, but is rarely the price that the customer actually pays. Average retail price is the average of all the actual prices that customers pay. This price includes dealer mark-ups, promotional discounts, haggling with the dealer, etc. The dealer invoice is what the dealer pays for the vehicle and is the monetary value your firm receives as revenues. Finally, the manufacturing cost for the vehicle is the cost associated with production of the vehicle. The dealer invoice less the unit cost is the per unit margin the manufacturer receives for each sale. Choosing the best marketing mix for a vehicle is a difficult task. Test markets allow marketers to try different combinations of price, advertising, and promotion to determine their effects on sales and protability. In StratSim, test markets can be used with vehicles that have existing sales. A test market condition is created in a particular city where levels of price, advertising, and promotion are adjusted from your national levels and the change in the sales in that market is measured. By extrapolating this change to national levels, a marketing manager can make better judgments on how much to adjust the marketing mix variables for the coming year. Dealer Distribution While the purpose of advertising and promotion is to generate interest, create an image, and communicate information about the vehicle, it is the automobile dealership that actually makes the sale and provides follow-up services. In StratSim, each firm has a captive dealership distribution structure organized on a regional basis. Firms must decide how many dealerships to open or close in each region each period as well as allocate funds for training and support. You currently have 480 total dealerships, and are spending $10 million in training and support. Changes to your dealerships network are limited to 10% of the total established dealers. Since you currently have 480 dealers, the most you can add in your first decision is 48, though regional allocation of the openings is up to you. Note that it takes one year to open or close a deafership. Exhibit 1.6: Firm Dealerships by Region Number of Dealers Fail Coverage 200 250 150 200 300 Established 120 120 120 120 480 The profitability and success of a dealership depends to a large extent on the popularity of the manufacturer's vehicles. However, the number of dealerships also plays a role. In StratSim, this is referred to as dealer coverage, the number of dealers divided by the number of sales 0n the other hand, if coverage in a region exceeds 100%, sales can be spread too thinly across dealerships and lead to overly competitive pricing within the region. Management often looks to the sales, gross profit per dealer, and coverage as indicators of the proper balance. Dealer ratings can also provide insight into the success of dealerships. A strong dealer gross is expected to translate into a successful dealership, but training, support, and service revenues all contribute as well. Manufacturing Having good products, effective marketing, and a strong dealership network are all essential to creating demand for your products, but you must also produce enough vehicles to meet demand. In the short term, managers have to decide how to use plant capacity to produce the best mix of vehicles. Longer term, the firm must increase capacity to produce new vehicles and adjust to changing demand for existing vehicles. Capacity for each firm is fixed for a given year. However, changes of up to 50% of your current capacity may be initiated at any time. The increase or decrease takes one year to take effect. Thus, if you build additional capacity this year, next year you will be able to set production levels based on the new plant capacity. It is important to coordinate capacity increases with the launch of new products. In StratSim, firms may choose to set production levels above capacity in the short-run by running extra shifts and paying overtime. An over-capacity charge will be incurred if capacity utilization is over 100%. If the international module is enabled, you have the ability to open a plant in one of the foreign regions and produce vehicles there when the capacity becomes available. Each region has associated costs and benefits. Added costs might include shipping and tariffs, while the benefit may be lower cost of production. Please note that all production for a particular vehicle must take place in one locationproduction cannot be split between plants in different regions. Production within the constraint of capacity is fairly flexible. Firms must decide on production volume for each product on the market. When the production level on a line is increased from the previous period, the capacity now associated with that product is upgraded and retooled. Retooling also occurs when current or new productive capacity is dedicated to a new product line. Lower plant maintenance costs are likely when the factory is updated. Firms may choose to use a flexible production option that increases or decreases production by up to 10% from the firm's target production value, depending on demand. If production volume is insufficient for demand, consumers who are unable to purchase a vehicle at the end of the period postpone their purchase decision until the beginning of the next year, purchase an alternative brand, or buy a used vehicle. Inventory levels should be considered when deciding on production schedules for the coming year. Too little inventory can mean lost sales, and too much increases costs and puts downward pressure on dealer margins. A reasonable target for inventory is 30 to 60 days. If a product is being redesigned or discontinued, the current inventory will be sold in markets outside the StratSim simulation at 90% of cost, so it is especially important to manage inventory levels when upgrading a vehicle. The costs for building plant capacity or retooling investment are recorded as an asset on the plant and equipment line of the balance sheet. The plant assets are depreciated over ten years and the expense included in the cost of manufacturing products each period. Cumulative depreciation is shown below plant and equipment on the balance sheet. Research and Development Each firm in the StratSim world has technological capabilities that parallel the vehicle attributes of interior, styling, safety, and quality (ISSQ). To keep measurement relatively straightforward, these are rated from 1 to the current maximum (where 1 equals a poor rating on that attribute). All firms in the industry start with initial technology ISSQ capabilities of 4/6/4/6. Firms have the ability to expand their capabilities up to current industry technology limits through investments in technology capabilities. These investments provide two advantages first, the ability to develop cars with enhanced features (e.g. higher ratings); and second, the lowering of costs to develop a similar set of characteristics. For example, a rm with technology ISSQ capabilities of 8/8/8/8 would be able to produce a 4/4/4/4 car at a lower unit cost than a rm with a technology profile of 6/6/6/6. Investing in technology does not automatically increase product attributes; you must upgrade specific vehicles by initiating a development project. As is the case with the automobile industry, product development in StratSim is expensive, time consuming, and risky. However, the reward of having the leading vehicle within a product class is often well worth the investment, and falling behind other vehicles in terms of styling, performance, and appeal is dangerous. Additionally, new products are needed to take advantage of opportunities in the market. For every development project, there is also an overall cost for the development process, an estimated unit cost, and a time to complete. Each firm has a limited number of product development centers affecting its ability to work on multiple development projects (upgrades and new products) concurrently. You start with two centers. Funding new centers increases your ability to develop more products at the same time. This investment corresponds to hiring more product development engineers and expanding the R&D facilities, allowing your firm to work on more new vehicles or upgrades at the same time. Developing a new vehicle starts with a concept created by development engineers based on your specifications. You can create as many concepts as you want, and there is no cost until you decide to start development by moving the concept into one of the development centers. Concept testing is an important s This is an opportunity for your firm to get early fe ostly development cycle begins. Spending some ti . ous amount of resources Exhibit 1.7: Product Development Timelines Current Period Period + 1 Period + 2 Period + 3 Cost Reduction $100-$200 Million in current year Minor Upgrade $100-$300 Million in current year Major Upgrade $250-$750 Million Spread over 2 Yrs. New Product (Existing class] 5250-51500 Mill. Spread over 2 Yrs. New Product (New class} SEED-52,500 Mill. Spread over 3 Yrs. Put in Dev. Center (no changes to specs allowed} Put in Dev. Center Tweak Specs'il Adjust Marketing Mix Adjust Production {Inventory disposed} Put in Dev. Center Modify Specs'r Build Add'l Capacity Create Concept Put in Dev. Center Name Product Build Ad d'l Capacity Create Concept Put in Dev. Center Name Product IN MARKET Retooling. Results impacted. {vehicle costs reduced, no impact on sales} IN MARKEI' Results impacted. {Including sales, retooling, inventory write-off} Project in Dev. Center Tweak Specs\" Adjust Marketing Mix Adjust Production {Inventory disposed) Project in Dev. Center Tweak Specs\" Set Marketing Mix Set Production Project in Dev. Center Tweak Specs\" Build Add'l Capacity IN MARKET Results im pacted. (Including sales, retooling, inventory write-off) IN MARKET Results impacted. {Including sales, retooling} Project in Dev. Center Tweak Specs\" Set Marketing Mix Set Production IN MARKET Results im pacted. {Including sales, retooling} "' Max change for each of the interior, styling, safety, and quality attributes (ISSQ) is 1; HP is 5; and size is 2. 1' In the rst period of a major upgrade, you're allowed a max change of2 for ISSQ, 20 for HP, and 1D for size. Im ortr'n Ex ortr'n In addition to developing its own vehicles, a firm may choose to import to the domestic region from firms in the Atlantic and Pacific regions. In this situation there are no development costs, and vehicles are purchased at a fixed unit price. For example, Firm A might import a truck based on the OmniBO, which is produced by Oceanic, a computer-run firm in the Pacific region. The product will be marketed under a new name, starting with \"A\The Atlantic region is known for vehicles with excellent styling and features, while the Pacific region is known for lower materials and labor costs for production. Although these regions may bear some resemblance to actual regions, one should carefully analyze the vehicle information and not rely on perceived similarities with actual countries or regions. Importing a platform from another firm is something worth considering if a manufacturer lacks experience in a vehicle class or has limited technological or development capabilities. Importing may be a short-term measure until R&D is able to design a vehicle internally. Exporting is a way to increase sales, especially if you see a gap you can fill in an international market. A firm cannot have more than four active import and four active export agreements. Please note that importing and exporting are optional features that your instructor can choose to enable or disable. Financing Financial management in StratSim is essential. In addition to choosing among investments in technology,manufacturing capacity, retooling, and product development, firms must also manage cash flow and investor expectations. A firm running low on cash has three options in StratSim: sell stock, issue bonds, or draw on a revolving line of credit. Selling stock has the benefit of not creating an interest expense or additional obligations. However, the drawback is dilution of the shares of stock that may lower the share price at the time of issuance. In StratSim, you specify the amount of capital to raise, and the appropriate number of shares will be sold at the current stock price in order to reach your goal. Stock sales are recorded at a par value of $1 per share, with any amount above that going to additional paid in capital on the balance sheet. The second option for raising capital is to sell 10-year bonds, callable after three years. The interest rate on the bonds will reflect current interest rates and the credit rating for the company. AAA rated bonds offer the lowest risk and therefore the lowest interest rate. The interest rate is xed for the life of the bonds and interest is paid out automatically each period, with the principle coming due at maturity, after the simulation is over. When bonds are sold, the issue amount is added to long-term debt on the balance sheet. After three years, the bonds can be called. Only one bond issue can be called in a period, the entire issue must be paid off at once, and there is a oneyear interest penalty for calling the bonds. StratSim firms must maintain a minimum amount of cash on hand to sustain operations, about 1% of revenue. If there are not enough funds available, a loan is automatically issued from a revolving line of credit to make up the difference, adding to short-term debt on the balance sheet. The interest rate on the line of credit tends to be higher than the rate on bonds, and will vary with changes in the prime rate and company credit rating. Interest due each period is paid automatically, but it is up to the finance manager to schedule repayment of the principal. Company Reports Financial statements allow you to track company results and make better decisions. Shareholders and lenders use a firm's nancial statements to evaluate its performance in setting a stock price and bond rating. In StratSim, firms have access to the income statement and balance sheet of all their competitors, allowing them to compare their own results against other firms in the industry. The Income Statement summarizes revenues and expenses for the company. The firm's income statement for the year just completed is closely approximated by exhibit 1.8. You can view the actual numbers in the simulation; they depend on the number of competitors. Revenues in StratSim consist of vehicle sales to dealers. All costs directly attributable to the production of the vehicles sold is shown under cost of goods sold (COGS). This includes both the variable cost of materials and labor, as well as the allocated fixed costs of the plant. The COGS report provides the details on how COGS is calculated. Subtracting COGS from revenue yields the gross margin on vehicles sold. Low gross margins are a sign that products are priced too low, or production costs are too high. Some expenses, such as marketing, research and development, and general administrative expense, are not directly attributable to production. Marketing expense includes corporate advertising, product advertising and promotion, and sales force expenses. Research and development shows the costs associated with product development and technology improvements. General and administrative expense includes overhead from sales and the dealership network. Dealership training and the cost of changes in the number of dealerships are the result of your decisions, but most G&A expenses are not under your direct control. Income from operations is calculated by subtracting these indirect expenses from gross margin. Income from operations is a good measure of the health of the company's core business. If gross margin is healthy but operating profit is low, that may be due to ineffective marketing, heavy investment in R&D, or rapid expansion of the dealer network. Interest income and expense as well as extraordinary items are applied to operating income to calculate income before tax. A high interest expense relative to income from operations could be a sign that a firm is having trouble managing its debt. Finally, taxes are deducted, leaving net income. Net income, less any dividends paid, is added to retained earnings on the balance sheet each period. If net income is negative, retained earnings will be reduced. There is no provision for tax loss carry-forward in StratSim. Exhibit 1.8: Company Income Statement SMIiI. SMiii. SaIes $22,503 100.0% Cost of Goods Sold 5(18,964) 194.3% Gross Margin $3,544 15. 7% Marketing 5(215) 4.0% Research and Development 50 0.0% General and Administrative 51918) 4.1% Income from Operations $2,411 10. 7% Interest Income 50 0. 0% Interest Expense 5500) -2.2% Extraordinary Items 50 O. 0% Income Before Taxes $1, 912 8.5% less Tax @ 35% 3(669) 3.0% Net Income 51,243 5. 5% The balance sheet provides a snapshot of the firm's assets, liabilities, and equity. Exhibit 1.9 shows a balance sheet that closely approximates the one for your firm at the start of the simulation. In StratSim, assets include cash, receivables, inventory, and plant and equipment less depreciation. The firm must always keep enough cash on hand to pay current expenses, about 1% of revenues. Cash does not earn interest, but investing in a one-year CD will make it more productive. Receivables are the unpaid invoices owed by dealers. Dealers who are struggling will be slower to pay, resulting in higher receivables as a percent of revenue. Rising inventory may indicate changes in demand or competitive environment, while inventory that is too low could be resulting in lost sales. Plant and equipment is the total investment in production facilities through expanded capacity and line retooling; depreciation on the balance sheet represents the cumulative plant depreciation expense shown on the income statement. Liabilities consist of accounts payable, shortterm debt and long-term debt. Accounts payable is the amount owed to suppliers and payroll taxes collected but not yet paid to the government. Short-term debt in StratSim is the balance on the revolving line of credit, while long-term debt is the total of bonds issued. Equity consists of the original value of stock at par, any additional paid in capital, and retained earnings. Stock is sold at 51 par value per share. Your firm starts with 500 million shares of stock outstanding, all sold at par value. If stock is issued at a higher price, then the amount over par is shown in a separate line item as additional paid in capital. Retained earnings sh ow the cumulative net income from the income statement, less any dividends distributed. Exhibit 1.9: Company Balance Sheet Assets SMiii. Liabilities $Miii. Cash $2, 622 Accounts Payabies $1,983 Receivables $1, 750 Short Term Debt $6,660 inventory $1,159 Long Term Debt $0 Piant and Equipment 57, 619 Totai Liabilities $8,643 Depreciation 5(2, 285} Stock (51 par) $500 Retained Earnings $1, 723 Totai Equity $2,223 Totai Assets $10,866 Totai tiab. And Equity $10,866 The Income Statement and Balance Sheet provide an overview of the financial health of the company. Managers use them to identify potential problems in the business. Correcting problems will require taking a closer look at additional reports. The Cash Flow and Cost of Goods statements, along with the Product Contribution report following are internal reports to help management make better decisions. The Cash Flow statement shows the sources and uses of the firm's cash. The changes in the amount of cash in the firm are calculated based on income from operations adjusted for depreciation, inventory, payables, and receivables; investment activities such as capacity increases, plant retooling, and CD investments; and financing activities such as stock or bonds issued, changes in loan balance, or dividend payments. A healthy company will have positive cash ow generated by core operations, though a negative cash flow as a result of investment in the company could be a sign of futuregrowth. The Cost of Goods report details the costs directly attributable to the production of vehicles sold in the period. It starts with inventory at the beginning of the period, adds the value of all vehicles manufactured during the period, and subtracts the value ofthe ending inventory to calculate the cost of goods sold. The report details the cost of materials, labor, depreciation, and overhead in manufacture, and is a good place to start in evaluating the efficiency of production in the company. The reports discussed so far give an overview of the results for the entire company. The Product Contribution report allows managers to identify which products are contributing toward the success of the company, and which products need improvement in development or marketing. When calculating product contribution, only revenues generated by the product and direct variable costs, along withmdered. The report is very helpful in prioritizing development projects and identifying the effectiveness of marketing for specific products. Industry Reports and Tools StratSim provides a number of reports with information on the market environment and the competition. Market reports include general news in the industry, market shares by vehicle, regional analysis, and sales by consumer segment. Competitive reports are available on the products in the market, technology capabilities of competitors, spending on marketing, dealer networks, manufacturing capacity and utilization, and a summary of the financial results for each rm. Analyzing data on the market, customers, and competitors will help managers make better decisions. There are a number of tools available in StratSim to help you convert data into knowledge and to improve your ability to make good decisions. Some tools will help you with product design, others will help you with resource allocation, and others may offer competitive insights not available from public secondary sources. The exact tools that will be available to your team will depend on the configuration of your game. New tools may also be introduced as the game is advanced, so be aware of changes in availability. Most of these tools will cost money to use, just important! Since everyone on your team is sharing the same decision set, when there are a iimitea' number of studies that can be run, this totai is for your E NTiRE team, not just you as an individuai. So be sure to coordinate purchase of research studies. Once someone on your team purchases a study or tooi, your entire team wiii have access to the resuits of that research. as ordering and designing market research studies would in the real world. So you should spend some time knowing when and where these tools will be of the most value to you. Next Steps The task of the management team is to maintain long-term profitability in the context of an increasingly competitive and changing environment. Customer needs and tastes will evolve. Competitors will be battling for market share and entering new product classes. Technologies and cost structures for the rms will change over time. Every simulated year, each firm will perform a situation analysis, identify problems and opportunities, and generate alternative options for decisions. Finally, based on careful consideration, persuasive presentation of competing ideas, and probably some arm-twisting, your team will come to a consensus as to which set of decision is best and implement them. Once your firm has a thorough understanding of the StratSim world, one of the first tasks should be to dene a strategy. A successful firm will likely have a strategy that is well thought out and executed. Creating a sound strategy is the most important process your firm will undertake because your strategy is the framework for all decisionmaking and firm organization. The strategy should be a long-term vision foryour firm that every member of your team can reference when making decisions and analyzing data. Strategy is defining segments served and creating a sustainable competitive advantage. It is your road map. It is where and how your firm chooses to compete. It is essential. Enjoy your tenure as a management team in the StratSim world. It should be an exciting and challenging learning experience. Good luck and have fun! Summary of Decisions Each period your firm will need to make a large number of decisions. The table below provides a summary of these decisions to help you track them Decision Category Firm Decision Product Decision Corporate Advertising Pricing By Region MSRP Themes Dealer Discounts Marketing Social Media Advertising Direct Marketing Budget Budget Theme Target Segments Promotion Dealer Openings / Closings Distribution . By Region Distribute in Market D Training and Support Schedule Production Manufacturing D Capacity Change Flexible Product On / Off Vehicle Upgrade Technology Investment Major Interior Minor Styling R&D Cost Reduction . Safety New Vehicle Quality Create Concept New Development Center Move to Development Sell Stock D Issue Bonds Finance D Borrow / Repay Loan D Purchase CD D Distribute Dividends