Professional Documents
Culture Documents
2|Page
Original Strategy
Upon incorporation, The Erie Sensor Companys management decided to adopt a Broad Differentiation strategy by maintaining a competitive presence in every market segment. Through this strategy, we sought to gain a sustainable advantage over competitors by distinguishing our products with excellent design, high customer awareness, and easy product accessibility. Pursuant to this goal, we developed Research & Development (R&D) competencies to create fresh and exciting product designs. We implemented a marketing strategy which focused on limited promotional budgets and pricing our designs above market average. We crafted optimistic production forecasts, ever mindful of the need to increase industrial capacity as we generated increasing consumer demand. We decided to measure our performance in terms of Return on Equity (ROE), Return on Assets (ROA), and Asset Turnover.
Market Analysis
A sensor is a device that will sense a change, such as in atmospheric pressure, and which will then change voltage and transmit the information to another device, such as a thermometer. Electronic sensors are used in a wide variety of industries and applications, which demands constant modification and improvement to meet customer demand. In the Traditional segment, customers prefer modern, well-priced sensors. In the Low End segment, more affordable sensors are the customers choice. In the High End segment, faster and smaller sensors are in the highest demand. In the Performance segment, sensor reliability trumps all other attributes. In the Size segment, performance and size dictate customer preference. After considerable research, The Erie Sensor Company decided to enter this market and with the use of specialized software, Capsim Simulation, make critical decisions about R&D, Marketing, Production, and Finance. At the close of 2010, each of the companies in the electronic sensor industry was evenly positioned with 20% market share. Competing against The Erie Sensor Company were four
3|Page
The Erie Sensor Company competed against the four other companies over an eight year period. During this time, the Low End segment created more product demand than did all other segments within the market. In 2010, Low End captured 39.2% of the overall market, followed closely by Traditional with 32.4%, High End with 11.2%, Size with 8.7%, and Performance with 8.4%. At the close of 2018, Low End Customers still led consumer demand with 36.9% of the market share, again followed by Traditional with 26.9%, High End with 13.2%, Performance with 11.7% and Size with 11.7%. Growth rates fluctuated from year to year, with the percent of segment capture of overall market share, listed below.
TRADITIONAL 32.4% 31.4% 30.7% 29.4% 28.4% 28.4% 28.9% 27.9% 26.9% LOW END 39.2% 39.0% 38.0% 38.2% 37.8% 37.6% 38.1% 37.3% 36.9% HIGH END 11.2% 11.5% 12.0% 12.3% 12.6% 12.6% 12.8% 12.8% 13.2% PERFORMANCE 8.4% 8.9% 9.6% 10.1% 10.7% 10.7% 9.3% 11.0% 11.7% SIZE 8.7% 9.1% 9.7% 10.0% 10.5% 10.7% 10.8% 10.9% 11.4% TOTAL 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
4|Page
5|Page
6|Page
7|Page
EBB
1200 1523 700 744 1000 854 665 648 750 822 91 116 123 149 300 265
ECHO
700 416 500 462 600 445 532 499 500 161 36 221 239 314 366 333
EDGE
800 373 800 590 700 188 266 93 900 751 247 32 35 6 7 38
EGG
700 401 900 671 1000 802 997 798 1300 794 223 351 383 491 582 695
EMU
0 0 600 515 1500 1049 1330 616 950 525 135 716 774 956 1134 685
ELLENT
0 0 0 0 1000 0 333 1 300 70 23 88 93 305 311 343
EXIGE
0 0 0 0 0 0 0 0 300 0 0 0 100 0 0 0
TOTAL
4400 3564 5000 4448 8200 5123 6118 3884 6740 4335 962 2470 2737 3433 4026 3901
Sales Forecasts
8|Page
Production Forecasts
EAT 1200 851 950 1466 2150 1785 1651 1229 1740 1212 247 946 1316 1212 2100 1542 EBB 1500 1523 750 744 1000 854 529 648 750 822 120 116 162 149 361 265 ECHO 810 416 150 462 700 445 170 499 500 161 48 221 47 314 549 333 EDGE 840 373 400 590 500 188 0 93 900 751 33 32 47 6 0 38 EGG 780 401 550 671 500 802 1000 798 1300 794 300 351 228 491 1000 695 EMU 0 0 750 515 1400 1049 765 616 950 525 180 716 924 956 1776 685 ELLENT 0 0 0 0 0 350 1 300 70 30 88 0 305 467 343 EXIGE 0 0 0 0 0 0 0 0 1300 0 0 0 0 0 0 0 TOTAL 5130 3564 3550 4448 6250 5123 4465 3884 7740 4335 958 2470 2724 3433 6253 3901
Forecast Units Sold Forecast Units Sold Forecast Units Sold Forecast Units Sold Forecast Units Sold Forecast Units Sold Forecast Units Sold Forecast Units Sold
9|Page
Production forecasts routinely exceeded actual sales, except for the years of the recession in Rounds 6 and 7, where the Board reacted to consistently optimistic forecasts by retreating into a more pessimistic stance. Excess inventory following Round 5 prompted the Board to severely curtail all production, only gradually increasing product generation in Round 7. While production far exceeded sales in Round 8, the Board is positioning Erie for sharp increases in demand during the next few years.
Competitor Analysis
The Erie Sensor Companys strongest overall competitor was the Baldwin Sensor Company (especially after Round 5), given the upward trajectory of their stock price and their strong net income. In early rounds, the strongest competitor was not readily apparent with the market witnessing surges and declines in each round. Pricing Analysis: Based on our detailed competitor pricing analysis, promotion/sales budget analysis, and segment share capture analysis, the Board was unsuccessful in predicting our competitors movements with regard to pricing, R&D, and marketing. Most decisions were reactionary focused on mimicking successful products without fully appreciating why those products were so competitive.
10 | P a g e
11 | P a g e
12 | P a g e