BUS- SLP4
Order Description
FEEDBACK LOOP AND ORGANIZATIONAL LEARNING
Overview
In the Module 4 SLP, you will develop your own pricing strategy, running the simulation at least twice. Your objective is to earn the highest cumulative profit, and to expand market share to the greatest extent possible. In this final SLP, you will continue to compete with new entrants; in SLP4, however, the pricing policy of competitors will be more aggressive (i.e., competitors will be increasingly inclined to undercut your pricing).
Assignment
Visit the simulation here:
https://forio.com/simulation/solar-test/index.htm#page=market_research
For this final SLP, go to “Settings” page, and change the following:
1) Competitor Price Policy – Low
2) Entry for New Competitors – On
3) Be sure to SAVE your changes.
For the Module 4 SLP, you are asked to complete the simulation, making pricing decisions at 2-year intervals. Leave the process improvement percentage at 5%. Note that you will again need to monitor the market share and financial performance of new entrants into the Solar Power industry. Also, you will now find competitors’ pricing to be more highly aggressive.
Run the complete 18-year simulation two times. For each simulation run, keep track of the pricing decisions you make at each of the four decision intervals. Also, keep your results (note key metrics like market share of new entrants vs. your company’s market share, revenue, margins, profitability, etc). Give justification for your pricing decisions, and using key data, compare your results between Simulation Run #1 and Simulation Run #2.
Keys to the Assignment
The key aspects of this assignment that should be covered and taken into account in preparing your 5-6 page paper include:
1. Include discussion and analysis of key metrics at the end of each decision point (e.g., among other data, be sure to include total market share, revenue, cumulative profit, consumer net price, modular price, unit cost, etc.). As an MBA, it is your job to identify cause and effect!
2. Using Excel, provide a comparative analysis of key data to demonstrate the differences between the results of Simulation Run #1 vs. Simulation Run #2 at key decision points. It is your job to determine which data (and which comparisons) are most significant. Don’t merely recite the data you’ve collected, however – instead, analyze the data! As an MBA, what does it tell you?
3. Comment on the impact of the more highly aggressive pricing strategies used by competitors. What has been the effect of aggressive competitor pricing on your results (profitability, market share, cost to consumer, etc.)?
4. What recommendations would you give to a newly-hired CFO who will be responsible for setting pricing for the company going forward? If you were responsible for orientation of the new CFO, what lessons learned, pricing/ marketing strategies, and other recommendations might you have? Be specific.
**** NOTE: The 5-6 page requirement includes written analysis and all supporting tables, figures, and graphics. However, it does not include Cover or Reference page. Be sure to adhere to the TUI Writing Guide for formatting of all papers. If you are unsure how to complete a financial analysis, please review the following sample report:
https://www2.uhv.edu/kuangy/acct6351/Sample%20Projects/sample%20project%20with%20pro%20forma%20%20analysis.pdf
Eclipsing the Competition: The Solar PV Industry Simulation 2008-2012 2013-2017 2018-2022 2023-2025
Sun Power (You) Other Solar Sun Power (You) Other Solar Sun Power (You) Other Solar Sun Power (You) Other Solar
Market Share (%) 3.8% 92.2% 5.3% 94.7% 9.7% 90.3% 19.3% 80.7%
Consumer Net Price ($/kWh) $0.17 $0.17 $0.15 $ 0.16 $0.13 $0.14 $0.11 $0.13
Module Price ($/kWh) $0.15 $0.15 $0.13 $0.14 $0.11 $0.12 $0.09 $0.10
Unit Direct Cost ($/kWh) $0.10 $0.08 $0.08 $0.07 $0.07 $0.06 $0.05 $0.05
Annual Revenue ($/Year) $564.68M $14.40B $1.18B $23.89B $5.04B $55.53B $22.53B $122.61B
Annual Net Income ($/Year) $84.59M $3.55B $179.15M $7.67B $1.01B $18.95B $5.33B $41.34B
Annual Shipments (MW/Yr) 147.24 3.82K 355.93 6.54K 1.79K 17.79K 9.79K 45.95K
Installed Base (MW) 620.23 18.77K 1.70K 39.65K 5.91K 86.91K 22.62K 175.24K
Share of Installed Base (%) 3.2% 96.8% 4.11% 95.89% 6.37% 93.63% 11.43% 88.57%
Cumulative Profit ($) $263.85M $11.70B $745.75M $41.64B $2.76B $105.72B $10.75B $202.26B
Percent of Rev to Process Improvement (%) 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%
Grid Power Price ($/kWh) $0.13 $0.13 $0.13 $0.13
Industry Net Income ($/Yr) $3.63B $7.85B $19.96B $46.67B
Industry Subsidy ($/kWh) $0.12 $0.12 $0.12 $0.12
SLP 1 Results
SLP 2 Results
Eclipsing the Competition: The Solar PV Industry Simulation 2008-2012 2013-2017 2018-2022 2023-2025
Sun Power (You) Other Solar Sun Power (You) Other Solar Sun Power (You) Other Solar Sun Power (You) Other Solar
Market Share (%) 4.85% 95.15% 8.46% 91.54% 32.88% 67.12% 54.45% 45.55%
Consumer Net Price ($/kWh) $0.15 $0.17 $0.13 $ 0.16 $0.11 $0.14 $0.10 $0.12
Module Price ($/kWh) $0.13 0.15 $0.11 0.14 $0.09 0.11 $0.08 $0.10
Unit Direct Cost ($/kWh) $0.10 $0.08 $0.08 $0.07 $0.06 $0.06 $0.04 $0.05
Annual Revenue ($/Year) $626.82M $14.60B $1.71B $25.28B $21.53B $65.48B $128.49B $148.76B
Annual Net Income ($/Year) $35.85M $3.65B $110.86M $8.13B $4.24B $20.71B $48.96B $48.24B
Installed Base (MW) 721.43J 18.85K 2.44K 40.72K 19.96K 98.37K 129.91K 214.68K
Cumulative Profit ($) $51.84M $11.97B $134.36M $43.99B $5.84B $111.77B $83.04B $222.93B
Percent of Rev to Process Improvement (%) 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%
Grid Power Price ($/kWh) $0.13 $0.13 $0.13 $0.13
Industry Net Income ($/Yr) $3.63B $8.24B $24.95B $97.20B
Industry Subsidy ($/kWh) $0.12 $0.12 $0.12 $0.12