Cake | Extra | James | Sukree

Agenda

Learning

Die Hard
Strategy

Overall
Results
 Resultsto Cesim
Approach
 Resultsto Cesim
Approach
Profit
1,200,000
1,000,000
800,000
600,000
400,000
200,000
-
(200,000) 0 1 2 3 4 5 6 7 8 9 10

(400,000)
(600,000)
Diehard Red Invoke Survivor Statos Kudeta

Results Strategy Learning

 Resultsto Cesim
Approach
Profit
1,200,000
1,000,000
800,000
600,000
400,000
200,000
-
(200,000) 0 1 2 3 4 5 6 7 8 9 10

(400,000)
(600,000)
Diehard Red Invoke Survivor Statos Kudeta

Results Strategy Learning

 Resultsto Cesim
Approach

Results Strategy Learning

Strategy Timeline

Price War High Tech Diversification

Initial Strategy
Strategy Strategy Strategy

Results Strategy Learning

 Initial Strategy
Approach to Cesim (Round 1-5)
• Tech 1: low price, low feature – focus on volume
• Tech 2: high price, max feature
• Gradual shift from tech 1 to tech 2
• Wait for lower R & D price for tech 3 & 4

Results Strategy Learning

 Outcome
Approach to Cesim
Profit
• Price War 400,000

• Round 1: Loss $6,286, heavy investment in Tech 2 300,000

200,000
 Tech 1: Production > Demand, lose out on price 100,000

 Tech 2: Production < Demand, badly underestimated demand -

(100,000) 0 1 2 3
for tech 2 (200,000)
 Tech2 outsource 500 from 2000, demand 1236; lost opportunity (300,000)
(400,000)
• Round 2: Profit $237,277, rapidly increased tech 2 features (500,000)

 Tech 1: Production > Demand, every group lowers price (600,000)

 Tech 2: Production > Demand, overestimated tech 2 growth

Diehard Red Invoke Survivor Statos Kudeta

 Realized Price War had begun

 Response: slightly lower tech1 price and higher tech2 price except Asia – Die Hard won’t enter price war
• Round 3: Loss $29,382, Die Hard finally No.1 (lowest loss)
 Tech 1: Production > Demand, price war + promotion war + bad economy
 Tech 2: Production > Demand, more features + higher price + didn’t meet target due to promotion
attack from other groups
 Die hard didn’t participate in the price war, so managed to avoid heavy losses like all other groups

Results Strategy Learning

 1 st Coach
Approach to Cesim
• Stage 1: Reverse psychology
Everyone had a loss
Coaching (believed that most groups would reconsider engaging in a price war)
Expected higher price
• Stage 2: Die Hard’s response
Capitalize on everyone’s decision to increase prices by lowering prices heavily
• Other groups’ response:
Some groups increased price as expected!!! , others experimented with new Techs
• Stage 3: Die Hard’s future strategy
Stay in Tech 1 and 2 + capture the market with fewer competitors +
wait for new tech costs to drop

Results Strategy Learning

 Outcome – After
Approach to Cesim 1 st Coach

• Round4: Profit $156,102, Extreme price dumping

• Tech 1: Production< Demand, underestimated demand again (lost opportunity)
• Tech 2: Production>Demand, price too high for feature + other groups enter new tech

Profit
500,000
400,000
300,000
200,000
100,000
-
(100,000) 0 1 2 3 4
(200,000)
(300,000)
(400,000)
(500,000)
(600,000)
Diehard Red Invoke Survivor Statos Kudeta

Results Strategy Learning

 High Tech
Approach Strategy (Round 5-6)
to Cesim

• Realized that profit potential of old tech was too low

• Profit margin too low
• Realized that market does not open up with fewer competitors
• Overtaken by “Statos” Profit
600,000

400,000

200,000

-
0 1 2 3 4
(200,000)

(400,000)

(600,000)
Diehard Red Invoke Survivor Statos Kudeta

Results Strategy Learning

 Outcome
Approach to Cesim
• Round 5: Profit $27,660, met targets + groups move to new Tech as expected + falling
behind Statos + Die Hard begins investing in new tech + start paying dividend
• Tech1: Production ≈ Demand
• Conservative with buffer Profit
800,000
• Huge price war in Asia
600,000
• Tech2: demand > production, wanted to avoid losses from 400,000

over-outsourcing 200,000

• Round 6: Profit $107,901, overtaken by many groups -

(200,000)
0 1 2 3 4 5 6

• Tech 1: Production > Demand, consumer move to Tech 4 (400,000)

• Tech 2: Production < Demand, other groups moved out + Die hard (600,000)
allocated more outsource to tech 4 Diehard Red Invoke
Survivor Statos Kudeta
• Tech 4: Production >> Demand, promotion + first mover advantage of
other groups resulted in lower demand for Die Hard
• Massive loss due to outsourcing 1600 while actual demand was 1100

Results Strategy Learning

 Diversification
Approach to Cesim Strategy (Round 7-10)
• Realized massive potential of Tech 3 (due to Scenario Analysis) +
Decided to do low price Tech 3
• Die Hard decides to go for every tech to maximize utilization + profit
• Capacity constraint set higher price by having all 4 products

Results Strategy Learning

 Diversification
Approach to Cesim Strategy (Round 7-10)
Scenario
Analysis

Results Strategy Learning

 Diversification
Approach to Cesim Strategy (Round 7-10)
Utilization

Results Strategy Learning

 Outcome
Approach to Cesim
• Round 7: Profit $140,651, + Begin investment in Tech 3 + stop invest in Tech 4 + Intense Data Analysis +
Scenario Analysis
• Tech 1: Production > Demand, demand continues to fall except in Asia
• Tech 2: Production ≈ Demand, growing in Asia (but smaller profit potential compared to Tech 3), falling in Europe
• Die Hard moved to Tech 4 in US
• Tech 4: Production ≈ Demand, set premium price in US and dump the rest in EU; Premium Price Dumping Strategy
Created
• Round 8: Profit $341,774, Die Hard returns with a vengeance, Tech 3 Profit
drives profit 1,000,000
• Tech 1: Production > Demand (constrained due to production capacity) 800,000
• Opportunity to increase price 600,000
400,000
• Tech 2: Production > Demand, penetrated the US market at low price 200,000
but the market was too small -
• Tech 3: Penetration Pricing, Production < Demand in Asia; Production> (200,000) 0 1 2 3 4 5 6 7 8
Demand in EU due to lack of features compared to competitors (400,000)
• Tech 4: Production ≈ Demand, Premium Price Dumping Strategy (600,000)
Diehard Red Invoke
Survivor Statos Kudeta

Results Strategy Learning

 Outcome
Approach to Cesim
• Round 9: (we thought this was the final round**Plant decision): Profit 519,630, found the
way to maximize potential of all techs.
• Tech 1: Production<Demand, Asia demand was very strong even at higher price
• Tech 2: Production<Demand, market continues to grow in the US, better than expected
• Tech 3: Production<Demand; continuous growth in all market Profit
• Tech 4: Production<Demand; continue premium price dumping strategy 1,200,000
• Reached 100% capacity everywhere 1,000,000
• promotion attack drives sales, used instead of R & D 800,000
600,000
• Round 10: Profit 794,050 400,000
• Tech 1:Production<Demand, Asia demand was very strong even at higher price200,000
• Tech 2:Production<Demand, promotion keeps demand high -
0 1 2 3 4 5 6 7 8 9 10
• Tech 3:Production<Demand, demand marginally affected by higher price (200,000)
(400,000)
• Tech 4:Production<Demand, continue premium price dumping strategy (600,000)
• Die Hard’s strategy pays off Diehard Red Invoke
• Slightly higher price would have taken Die Hard to No.2 or even No.1 Survivor Statos Kudeta
• High and continuing growth in profit

Results Strategy Learning

 Analyze the
Market Approach
Approach to Cesim
to Cesim
Determine Tech
for each Market

Create an optimal
Production plan

Determine R & D

Set the Prices

Determine the
Demand

Tweak Logistics

Decide on
Financial Issue Reviewing

Results Strategy Learning

 1. Analyze
Approach the Market
to Cesim

• Actual =? Budget
• See Competitors

Results Strategy Learning

 2. Determine
Approach to CesimTech for Each Market

• Coverage diagram
• Intense Data Analysis
• Scenario Analysis

Results Strategy Learning

 3. Create
Approach an Optimal Production Plan
to Cesim

Yes No
Results Strategy Learning
 4. Determine
Approach to CesimR & D to be Invested

• See competitors’ R&D Expense

• See tech growth potential
• ROI > Cost

Results Strategy Learning

 5. Set the
Approach Prices + 6. Determine Demand
to Cesim

Results Strategy Learning

 7. Tweak
Approach Logistics
to Cesim

Results Strategy Learning

 8. Decide
Approach on Financial Issue
to Cesim

• Constant Dividend payment over the period

• Constant Share buyback
• Payback debt if cash is still in excess

Results Strategy Learning

Learning
 Learning
Approach to Cesim
• Teamwork and Synergy
• To anticipate and manipulate competitors’ move
• First-move incentives
• Understand how market works
• Customer demand (Price promotion sensitivity)
• Intense Data Analysis (IDA)
• Beat-the-Competitor Analysis (BCA)
• Learning Curve and Economies of Scale
• Premium Price Dumping Strategy (PPD)
• Multiple Scenario Utilization
• Transfer Pricing and Logistics Optimization
• Demand estimation process
• Face with reality

Results Strategy Learning

 Learningto
Approach – Teamwork
Cesim and Synergy

• Time arrangement
• Meeting scheduling
• Internet
• Face to face
• During coaching
• Teamwork and collaboration skills
• Everyone attends coaching session
• Delegate responsibility
• Learn to trust
• Utilization of diverse backgrounds
• Learn to improve overtime (TQM)

Results Strategy Learning

 Learning -to
Approach Anticipate
Cesim & Manipulate Competitors’ Move

Results Strategy Learning

 Learningto
Approach – First’s
Cesim Mover Incentives

Results Strategy Learning

 Learningto
Approach – Understand
Cesim How Market Works

• Customer’s Perception
• Global Economy
• Uncertainties
• Tax
• Tariff and Import Duties
• Currency
• Competitors

Results Strategy Learning

 Learningto
Approach – Customer’s
Cesim Demand

Demand (Q) is function of:

• (-) Price
• (+) Features
• (-) Substitute products (competitors, other techs)
• (+) Promotion
• (+) Length of time in the market
• (+) Market growth

Supply = Production Capacity

• In-house
• Outsource
• Capacity Constraints

Results Strategy Learning

 Learningto
Approach – Intense
Cesim Data Analysis (IDA)
Determine the tech with the
highest revenue

P*Q

Analyze why they change market

over the round
• Maybe tech1 performed better
in here than tech2, or they lack
capability to produce tech2
efficiently

Results Strategy Learning

 Learningto
Approach – Scenario
Cesim Analysis
Peaked! And continue declining Declining stage!

Market Growth from the

Market Condition

Product Lifecycle
• Growing
• Peak
• Declining
Results Strategy Learning
 Learningto
Approach – Beat-the-Competitor
Cesim Analysis

Results Strategy Learning

 Learningto
Approach – Beat-the-Competitor
Cesim Analysis

Cracking
R&D

Results Strategy Learning

 Learningto
Approach – Beat-the-Competitor
Cesim Analysis

Cracking
Production
Constraints

Results Strategy Learning

 Learningto
Approach – Beat-the-Competitor
Cesim Analysis

Consequences

Results Strategy Learning

 Learningto
Approach – Learning
Cesim Curve & Economies of Scale
Learning Curve Production Cost Function

• Allow workers to learn • Keep the plant utilize

• Achieve economies of scale • Avoid idle or over-utilize

Results Strategy Learning

 Learningto
Approach – Transfer
Cesim Pricing & Logistics

Results Strategy Learning

 Learningto
Approach – Transfer
Cesim Pricing & Logistics

Global

Results Strategy Learning

 Learningto
Approach – Premium
Cesim Price Dumping Strategy

Results Strategy Learning

 Learningto
Approach – Premium
Cesim Price Dumping Strategy

Results Strategy Learning

 Learningto
Approach – Premium
Cesim Price Dumping Strategy

Results Strategy Learning

 Learningto
Approach – Multiple
Cesim Scenario Utilization

Results Strategy Learning

 Learningto
Approach – Demand
Cesim Estimation Process

Results Strategy Learning

 Learningto
Approach – Demand
Cesim Estimation Process

Results Strategy Learning

 Learningto
Approach – Demand
Cesim Estimation Process

Results Strategy Learning

 Learningto
Approach – Reality
Cesim
Share Price
Die Hard Inc.
450
400
350
300
250
200
150
100
50
0
0 1 2 3 4 5 6 7 8 9 10
Diehard Red Invoke Survivor Statos Kudeta

Results Strategy Learning

 Learningto
Approach – Reality
Cesim
Share Price
450
400
350
300
250
200
150
100
50
0
0 1 2 3 4 5 6 7 8 9 10
Diehard Red Invoke Survivor Statos Kudeta

Results Strategy Learning

 Learningto
Approach – Reality
Cesim

Results Strategy Learning

 Learningto
Approach – Reality
Cesim

Results Strategy Learning

 Conclusion
Approach to Cesim
Profit
1,200,000
1,000,000
800,000
600,000
400,000
200,000
-
(200,000) 0 1 2 3 4 5 6 7 8 9 10

(400,000)
(600,000)
Diehard Red Invoke Survivor Statos Kudeta
 Conclusion
Approach to Cesim
Cumulative Total Shareholders Return’s Growth
40.00
30.00
20.00
10.00
-
(10.00) 1 2 3 4 5 6 7 8 9 10

(20.00)
(30.00)
(40.00)
Diehard Red Invoke Survivor Statos Kudeta
 Sun Tsu
Approach to Quote
Cesim
Thank You
 Feedback
Approach to Cesim
• Does not take into account of overall stability over rounds.
• Limited components
• Promotion effect over time not clearly defined + first mover advantage
• Overall (Can learn more than learnt in textbook + application)
• We all enjoy it
• Should continue for the future

Note: We claimed an extra point for being

the first group to come up with the group
name and slogan
 Appendix
Approach to 1Cesim
– Excel Analysis
 Appendix
Approach to 1Cesim
– Excel Analysis
 Appendix
Approach to 1Cesim
– Excel Analysis
 Appendix
Approach to 2Cesim
- Results
 Appendix
Approach 2 - Results
to Cesim
Cumulative Total Shareholders Return (%)
30.00

20.00

10.00

-
0 1 2 3 4 5 6 7 8 9 10
(10.00)

(20.00)

(30.00)

(40.00)

(50.00)
Diehard Red Invoke Survivor Statos Kudeta

Results Strategy Learning

 Appendix
Approach 2 - Results
to Cesim
Cumulative Total Shareholders Return (%)
30.00

20.00

10.00

-
0 1 2 3 4 5 6 7 8 9 10
(10.00)

(20.00)

(30.00)

(40.00)

(50.00)
Diehard Red Invoke Survivor Statos Kudeta

Results Strategy Learning

 Appendix
Approach 2 - Results
to Cesim
Cumulative Total Shareholders Return’s Growth
40.00
30.00
20.00
10.00
-
(10.00) 1 2 3 4 5 6 7 8 9 10

(20.00)
(30.00)
(40.00)
Diehard Red Invoke Survivor Statos Kudeta

Results Strategy Learning

 Appendix
Approach 2 - Results
to Cesim
Cumulative Total Shareholders Return (%)

Results Strategy Learning

 Appendix
Approach 2 - Results
to Cesim

Results Strategy Learning

 Appendixto2Cesim
Approach - Results

Results Strategy Learning

 Appendix
Approach 2 - Results
to Cesim
Return on Sales (ROS)
40
30
20
10
-
(10) 0 1 2 3 4 5 6 7 8 9 10

(20)
(30)
(40)
Diehard Red Invoke Survivor Statos Kudeta

Results Strategy Learning

 Appendix
Approach 2 - Results
to Cesim
Return on Equity Ratio (ROE)
100

50

-
0 1 2 3 4 5 6 7 8 9 10
(50)

(100)

(150)
Diehard Red Invoke Survivor Statos Kudeta

Results Strategy Learning

 Appendix
Approach 2 - Results
to Cesim
Return on Capital Employed (ROCE)
100

80
60
40

20
-
0 1 2 3 4 5 6 7 8 9 10
(20)
(40)
Diehard Red Invoke Survivor Statos Kudeta

Results Strategy Learning

 Appendix
Approach to 3Cesim
– Sun Tsu Quotes