12.4 Broad Differentiation - Practice Round 3

Practice Round 3

R & D Round 3

Daze - Improve positioning and reduce age. Hold reliability (MTBF) steady. Example: Increase Daze ' s performance by 0.9 and reduce size by 0.9.

Dell - Reposition Dell to the current leading edge of the Low End segment. This will take 1.5 to 2.0 years, and it will sacrifice both positioning and age. It is necessary, however, to keep Dell within the Low End segment in the long run. Example: Increase Dell's performance by 2.5 units and reduce size by 2.5 units.

Dixie - Improve positioning and reduce age. Hold reliability (MTBF) steady. Example: Increase Dixie 's performance by 1.1 and reduce size by 1.1.

Dot - Improve positioning and reduce age. Hold reliability (MTBF) steady. Example: Increase Dot's performance by 1.4 and reduce size by 0.5.

Dune - Improve positioning and reduce age. Hold reliability (MTBF) steady. Example: Increase Dune' s performance by 0.4 and reduce size by 1.4.

Marketing Round 3

Daze - Hold price high, maintain promotion and sales budget. Forecast reduced sales as Daze will not emerge from R&D until late in the year. Example: Price $28.50, promotion budget $2200, sales budget $2200, and sales forecast 1700.

Dell - Hold price high, maintain promotion and sales budget. Forecast moderate unit sales growth. Example: Price $23.00, promotion budget $2200, sales budget $2200, and sales forecast 1800.

Dixie - Hold price high, maintain promotion and sales budget. Forecast unit sales near last year's level. Example: Price $38.50, promotion budget $2000, sales budget $2000, sales forecast 420.

Dot - Hold price high, maintain promotion and sales budget. Forecast improved unit sales. Example: Price $33.50, promotion budget $1800, sales budget $1800, sales forecast 650.

Dune - Hold price high, maintain promotion and sales budget. Forecast improved unit sales. Example: Price $33.50, promotion budget $1800, sales budget $1800, sales forecast 600.

Production Round 3

For each product, schedule production using the formula:

(Unit Sales Forecast X 1.15) - Inventory On Hand

Daze - No change required.

Dell - No change required.

Dixie - No change required.

Dot - Buy 150,000 units of capacity by entering 150 in the Buy Sell Capacity cell.

Dune - Buy 150,000 units of capacity by entering 150 in the Buy Sell Capacity cell.

Important: There is a one year lag between purchase and use of new capacity and automation for both new and existing products.

Finance Round 3

You may have cash on hand to cover your plant and equipment investment. If not, issue stock to cover the shortfall.

Look at the proforma balance sheet, and add together your cash and inventory accounts. Apply the following rule of thumb. Keep between 15% and 20% of your balance sheet assets in cash plus inventory. You do not care about the mix, but you do want to have adequate reserves to cover unexpected swings in inventory.

Adjust your cash position to meet the guideline from Round 1. If you are cash poor, issue stock. If you are cash rich, pay dividends and buy back stock.

Do not issue current debt.

Save decisions (select "directly to the website").