UEH UNIVERSITY
SCHOOL OF BUSINESS
FACULTY OF INTERNATIONAL BUSINESS - MARKETING
Subject: BUSINESS SIMULATION
REPORT ON YEAR 10 BUSINESS ANALYSIS
RESULTS, PLAN FOR YEAR 11
Lecturer PhD. Nguyễn Thị Hồng Thu
Class ID 24D1BUS50320103
Company F
Class - Batch IBC06 – K47
Ho Chi Minh, March 3rd 2024
GROUP MEMBERS
Full name Students ID
Nguyễn Ngọc Bảo Hân 31211025962
Đinh Việt Hoàng 31211024903
Phạm Lê Bảo Ngân 31211026342
Hoàng Bảo Tâm 31211022474
Lê Nguyễn Minh Tâm 31211023911
I. ANALYSIS OF 10TH YEAR DECISION RESULTS
1. Overall industry analysis
1.1. AC Camera (ACC)
Global statistics on ACC
Global trends of ACC (industry average price, P/Q ranking, and the number of active
features)
The average P/Q level of the ACC industry in year 10 slightly increased from 5.9* in year
9 to 6.3*. At the same time, the number of features also increased from 4.1 to 4.5. This indicates
that most companies in the ACC industry are tending to add new features and improve the
quality of their products.
In terms of price, the average wholesale price of the ACC industry decreased from $349 to
$335, equivalent to a 4% decrease compared to year 10. Among them, the Europe Africa market
and Latin America had the highest decrease at 4.7% and 4.4%.
The total demand for ACC in year 10 in all markets is 11,870 million products, an 13.8%
increase compared to year 9, and 6.2% higher than forecasted. However, the industry was
adequate to satisfy year 10 demand.
The total demand across all markets for the entire industry in year 11 is forecasted to be
12,463 million products, increasing steadily by 5% annually.
1.2. UAV Drone (UAV)
Global statistics of UAV
Chart showing the global trend of UAVs (industry average price, P/Q ranking, and
number of operational features)
In terms of average industry P/Q level, companies continue to invest in upgrading the
quality of UAV Drone products, with this average P/Q level highly increasing from 6.1* in year
9 to 6.7* in year 10. Along with this, companies have begun to add more features, with the
average number increasing from 5.5 to 5.6. This indicates that most companies in the UAV
industry are tending to add new features and improve the quality of their products, but this also
leads to a significant increase in costs.
In terms of price, the average wholesale price of UAV Drones in the industry in year 10
has increased significantly from $2,017 to $2,063, equivalent to a 1.02% increase compared to
year 9.
Regarding the total demand for UAV Drones in year 10 in all 4 markets, it was 1,920
million units. This figure is 1.2% lower than forecasted and increased 8.5% compared to year
9th. And the quantity of products is sufficient to supply all 4 markets.
The total demand for UAV Drones across all markets in year 11 is forecasted to reach
2,112 million units and will steadily increase by 8.1% each year.
2. Competitors analysis
2.1. AC Camera (ACC) (Ngân)
In the 10th year, our company pursues the Best Cost strategy for the AC Camera product
line. We increased product quality to 6 stars and increased product prices simultaneously in 4
markets.
2.1.1. North America Market
In order to improve the product's quality and raise its P/Q rating to 6*, we decided to
change the product design specifications for the North American market. This required us to
maintain price increases of more than 12.5% above the norm. We also made a significant
investment in marketing expenses this year by raising the advertising budget, which was the
biggest in the sector. In an attempt to capture additional market share, we also kept the 180-day
guarantee and raised retailer discounts to 24% for 16 weeks. But in this tenth year, nearly all
rivals have made very modest investments in this market; they primarily adhere to the Low Cost
Low Price approach, which involves reducing marketing expenses while keeping product costs
constant so as to sell the low price product. So we did not gain as much market share as desired.
2.1.2. Europe - Africa Market
Similar to the North American market, we made the decision to improve product quality in
the European and African markets by altering the parameters of the product design, which raised
the P/Q rating to 6* and made a significant investment in marketing expenses . However, in
order to turn a profit, we had to raise the selling price. In general, our cost increase is higher than
the market average but the quality is lower than average and rivals which leads to the result that
we lost market share in this market (down 2.3% compared to the previous year).
As we can see, most businesses in this market in year 10 that charge average or higher prices
find it difficult to acquire market share; instead, businesses who charge lower prices and have
P/Q ratings succeed. lower than average but with a large market share (businesses A, D, and J),
there are noticeable swings in the market, and customers often purchase goods of a moderate
price and quality. more affordable and sensible than purchasing expensive goods from the
market. As a result, the Best Cost approach used in this market for the tenth year did not produce
the anticipated outcomes.
2.1.3. Asia - Pacific Market
Even though we have defined this as a price-sensitive market in its tenth year, we continue
to employ the best cost strategy. Like the previous two markets, we made certain adjustments
this year in order to turn a profit, especially raising the selling price and changing the P/Q ratio to
6*. The company is still choosing to raise expenses for store assistance, discount promotions,
online display, and advertising in its tenth year of business. Given that the market share has
dropped by 3% from the prior year, our investment marketing strategy hasn't been successful in
this market.
2.1.4. Latin America Market
Minimizing the company's losses is our company's strategy plan for its tenth year in this
industry. As a result, even if the P/Q rating of our ACC product has been raised to 6* and its
design parameters have been modified, we are still selling it for $360, which is not too much
more than the going rate and it is in the mid range. Simultaneously, drastically increase
expenditures on advertising, product display on websites, supporting retailers, and product
discounts. The Latin market shows that while most companies' prices are not quite as low as
those in the markets above, there are some lower prices as well as those who promote quality and
raise prices. It is priced substantially less than the market. However, the issue raised here is that,
despite the fact that companies B, C, and H sell their items at low costs, consumers still want to
buy things with both price and quality. Although the price is quite costly, they have managed to
push the product quality to a high level and have taken a sizable portion of the market.
2.2. UAV Drone
For UAV products, we pursue the Best cost strategy by gradually improving
quality to 6.3* and changing selling prices in 4 specific markets as follows: selling price
of $2,056 in North America, $1,973 Europe-Africa, $1,771 in Asia-Pacific and $1,802
Latin America.
2.2.1. North America Market
The North American market focuses on mid-range products with 6 companies (B, D, F, G,
H, J) arranged near the segment. In this segment, company H focuses on increasing brand
reputation (92 in year 9 and reaching 94 in year 10) thereby helping to increase market share
(increasing both retail demand and direct sales to the market). Next is company J with a brand
reputation of 90. Ranked third is company G, which focuses on investing in retailers, so the
demand from third-party retailers ranks highest in this market.
The whole market, because the remaining companies (including our company) do not have
high enough brand reputation to attract customers while customers in this market consider the
brand's reputation.
2.2.2. Europe - Africa Market
The Europe-Africa market has a price and P/Q rating quite similar to the first market with
6 companies ranked in the medium end segment. With the same analysis as the North America
market, company H holds the highest market share (17.4%). Next is company J and ranked 3rd
in the market is company F.
2.2.3. Asia - Pacific Market
The Asia-Pacific market is a quite price-sensitive market. In the high end segment, from
the chart it is easy to see that companies A and E do not invest much in this market with
advertising and retailer discount costs falling sharply. Companies in the medium end segment are
still analyzed with data and visual images like the first two markets.
2.2.4. Latin America Market
Because it is also a price-sensitive market and the performance of companies is quite
similar to the above market, the analysis is performed similarly to the Asia-Pacific market.
From the 4 charts, it can be seen that companies B and D focus mainly on the North
America market, companies A, E and I focus on the North America market and Europe-Africa
market, the remaining 5 companies (including our company) invests in all 4 markets. However,
with the company's current strategy, we should consider the target markets as Asia-Pacific and
Latin America because they have a better market share than the first two markets. To achieve a
higher share next year, our company should focus on increasing brand reputation and increasing
retailer support as well as maintaining the amount of investment in marketing to increase market
share thereby helping increase business revenue and company profits.
3. Product design analysis
3.1. AC Camera
In the 10th year, the company's low-cost strategy is still applied as in previous years. The
company increased its P/Q rating from 5.4* in year 9 to 6.0* in year 10 but is still much lower
than the industry average of 6.3*. To have a competitive advantage with Special Offers, the
company still decided to keep the number of models at 4 to be able to compete with rival
companies and win this Special Contract.
Cost of each product structure:
− Image sensor size: maintain 9mm quality at a cost of $3.44/product unit, equal to the
industry average of $7.04/product unit
− The LCD display remains the same at 920k pixels with a price of $8.60/product unit,
slightly higher than the industry average of $7.98/product unit.
− Image quality remains at 2704x2028 pixels but at a cost of only $6.88/product unit,
lower than the industry average of $8.54/product unit.
− Regarding the photography mode factor, it increased from 7/3 models to 8/3 modes with
a price of $7.74/product unit and the highest in the industry compared to the industry average of
$6.86/unit.
− Besides that, other factors are Camera housing and Post-production capabilities and
sharing with a cost of $14/product unit, lower than the industry average of $15/product unit; The
Accessories factor comes at a cost of $16/product unit, lower than the industry average of
$16.6/product unit. For the number of additional features at a cost of $10.35/product unit, lower
than the industry average of $15.39/product unit.
− The total cost of structural components of the AC camera product is $81.01/product unit,
lower than the industry average of $92.42/product unit.
After many tests, the company found that this is the combination of strategies for each AC
camera product structure in innovation that produces a P/Q score = 6.0* with the most optimal
cost. The results show that with this P/Q level, the company still meets market demand well and
holds high market shares in all four markets even though the P/Q ranking is lower than the
industry average. This shows that the strategy for the AC Camera product line that our company
is pursuing is reasonable and will probably continue to apply in the following years.
R&D costs: Because the company realizes that an R&D investment of $50 million still
helps the company gain certain advantages such as reducing product production costs and
reducing warranty costs, the company We continue to maintain this level of R&D investment for
10 years, leading the industry in R&D investment level.
3.2. UAV Drone
In the 10th year, the company decided to increase the P/Q of the product line from 5.7* to
6.3*, lower than the industry average of 6.7*. With this P/Q level, the company's market share in
each market is higher than the industry average, only slightly low in the North America market.
Cost of each product structure:
− Integrated camera: retain the Minor Upgrade version at a cost of $233.53/product unit,
higher than the industry average of $212.74/product unit.
− GPS / WiFi / Bluetooth criteria remain at Advanced level with cost reduced to
$66/product unit, lower than the industry average of $73.06/product unit.
− Battery life is improved to 15 minutes at a cost of $132/product unit, higher than the
industry average of $138.03/product unit.
− The number of Rotors increased to 8 rotors and the performance of Rotors still increased
to Advanced level with a cost of $108.24/product unit, lower than the industry average of
$102.78/product unit.
− Regarding the criteria, the body frame structure is kept at Carbon Fiber level to make the
body frame as sturdy as possible. The cost is $39.6/product unit, higher than the industry average
of $39.1/product unit
− The surrounding obstacle sensing feature remains at 3600 Basic. The cost of these
components and features has been reduced to $58.96/unit, below the industry average of
$63.36/unit.
− We also kept the camera stabilization device at the Advanced level with the cost reduced
to $15.84/product unit, lower than the industry average of $33.08/product unit.
− Criteria for additional features, the company decided to keep at level 5 with costs
reduced to $69.7/product unit, lower than the industry average of $88.95/product unit
− Total Cost of Drone Components and Features is $723.87/product unit, lower than the
industry average of $750.41/product unit.
− The company's Drone production cost is $1,219.76/product unit, higher than the industry
average of $1,128.98/product unit. It can be seen that companies tend to improve product quality
a lot.
R&D Expenses: Last year, we invested $50 million in R&D expenses. With the highest
costs in the industry, this shows that most companies tend to spend heavily on R&D to focus on
winning the customer segment that favors high quality products.
4. Compensation & Facilities analysis
4.1. AC Camera
4.1.1 AC Camera Assembly Facility
Activity of assembly in the 10th year
With the product ACC, in the 10th year, the company decides to increased the additional
performance at 4 and the number of samples at 4 and the level of assessment ratio P/Q also
increases to 6*. In addition, the company maintains 300 workspaces and 300 workstations
Investment in infrastructure in the 10th year
Net investment in the 10th year compared to the 9th year decreased to $115,273.
Cost of assembly and production in the 10th year
In the 10th year, the production cost per product decreased from 213.83 to $201.48. This
figure is at the average of the industry, primarily due to a significant investment in R&D has
decreased, accounting for approximately $56.93 per product. However, the total labor and
training costs per product slightly decreased to $24.80 compared to the 9th year.
4.1.2 AC Camera Work Force Statistics
The labor force in the 10th year
In the 10th year, all bonus levels slightly increased compared to the 9th, the basic salary
increase is 2% for each assembly team member, the incentive decreased for assembly quality is
$2.0 per product, the year-end bonus for diligence is $50 per employee, and other welfare
packages are $200 per employee. The total bonus per employee in the 10th year is $24,3366
which is below average compared to the market.
The investment level for training activities increased to $3,000 per PAT. However,
productivity has also increased from 3,004 products/PAT/year to 3,076 products/PAT/year in the
10th year, which is below compared to the industry average.
The number of employees remaining in the 10th year is 858 employees. The workspace
remains at 300, and the number of workstations is 300, these numbers are still low compared to
the industry."
4.2. UAV Drone
4.2.1 UAV Drone Assembly Facility
Activity of assembly in the 10th year
Compared to the 9th year, in the 10th year, the company increased the number of product
samples by 3 and maintained the additional efficiency by 5, but the change in the P/Q ratio
increased from 5.7* to 6.3*. The company maintains the workspace at 130 and the number of
workstations increased at 130 machines.
Investment in infrastructure in the 10th year
In the 10th year, the net investment decreased to $96,487 compared to the 10th year and
the company continued use Robots for the UAV product.
Cost of assembly and production in the 10th year
The total labor and training costs to produce a product have slightly decreased from
$45.69 per product in year 9 to $42.54 per product in year 10. Additionally, the total production
costs have also risen from $1093.09 per product to $1246.09 per product, which is below the
industry average.
4.2.2 UAV Drone Work Force Statistics
The labor force in the 10th year
In the 10th year, the company has increased the basic salary rate of 1% for each PAT
member, the quality incentive for assembly is $6.0 per product, and other welfare packages
remain at $1,300 per employee. The total bonus salary received by each employee in the 10th
year is $32,209, which is still relatively low compared to the industry average.
The company has increased the training budget to $9000. The productivity of each PAT
member has increased from 1,806 products per year to 1,890 products per year, which is still
relatively low compared to the industry average. The labor cost per product is above industry
average of $42.54.
The number of employees has increased by 76. The workspace capacity is 130, and the
number of workstations is 130, which are still relatively above compared to the industry average.
5. Finance & cash flow analysis (MTam)
5.1. Financial status of the company
Our company F's revenue in the 10th year has grown relatively compared to the
previous year and reached more than 689 million USD. In the 10th year, revenue from
AC camera products and UAV Drone products increased significantly. This is the result
of strategic changes for each product type. In the Latin American market, revenue mainly
comes from AC Camera products with a revenue growth rate of 2 times compared to the
previous year. While in the remaining 3 markets, the main source of revenue comes from
UAV Drone products with a quite high revenue growth rate.
With the "Best cost" strategy for both AC Camera and UAV Drone products, the
company has significantly reduced production costs and will instead focus more on
marketing and human resources activities. Net profit this year increased sharply
compared to last year and reached 120,156 USD.
At the end of the 10th year, the company's cash flow mostly comes from sales revenue
because the company has no plans to borrow or issue additional shares. Net profit
increased while we kept the number of shares outstanding so EPS was raised to $4.98.
The company's remaining cash of $30,541 (000s) is still at a safe level to serve as a
stepping stone for the company's investment and development in the next year.
The increase in Current Ratio from 1.74 to 2.00 along with the increase in Interest
Coverage Ratio from 10.09 to 17.14 contributed to the company's credit rating remaining
at A-.
5.2. Industry financial status
In year 10, the industry's average revenue reached 744,816 ($000) and our
company's revenue is 689,984 (000), 7.4% lower than the industry average, which is a
significant warning for company F to reconsider. Similarly, when looking at the profit
column, the industry average profit is 94,271 ($000) while our company's profit is only
80,521 ($000), 13.8% lower than the industry average. The main reason is because the
company has not been able to offer competitive prices and revenue has not met
expectations.
We can draw some comparisons as follows:
Company A is currently the leading company with a profit of 135,207 USD, nearly
5 times higher than the industry average. It can be seen that company A has a completely
different strategy than our company with a relatively low cost of goods sold and
competitive prices, so company A achieves very high revenue and profits.
In contrast to company H, although company J had the highest sales revenue
(927,214 ($000)), it earned the second lowest profit at 73,592 ($000). Company J invests
heavily in innovation. This causes the cost of goods sold per product to increase quite
high.
From the table above, it can be seen that company A borrowed a large amount of
long-term debt to invest in Total Assets with an amount of 569,315 USD. Furthermore,
company A is also the company with the largest profit margin in the industry with 41.1%.
With an investment strategy to improve product quality, especially drones, our
company has achieved a profit margin close to the industry average (38.5%). By
continuing this strategy, the company can achieve more optimistic results in the industry,
improving margins and profits per product.
6. Corporate citizenship analysis (MTam)
In the 10th year, many companies focused on investing in building their brand image
with significant differences in scores. Specifically, our image rating of company F only
reached 72 points, this number dóe not meet investors' expectations. Company J is
leading with a score of 93, so its investor expectations (I.E.) standard reaches 22 points
(highest), including the maximum 20 points in the image and 2 points because company J
exceeded expectations by 18 points. This made company J's best overall industry image
(B-B-I) score the highest at 20 points. Besides, the company I ranked last with 67 points.
The 10th year marked an important milestone in the initial steps of building the
company's image and creating a stronger brand. This is the period when the company
needs to take breakthrough steps but also needs to be very cautious. much. With the
image score results of the 10th year, our company needs to try harder in the following
years.
Social responsibility and corporate citizenship (CSR) are quite important factors in
forming a company's brand and good image. With the situation and level of competition
in the 9th year, the 10th year will probably be a big turning point for all 10 companies
when we witness fluctuations as well as quite large differences in the amount of money
spent on CSR. investment companies. The largest amount is up to $12,533 and there are
also companies that choose not to invest any money this year, on average companies
spend $6,104 on CSR in the 10th year. Regarding Image Rating Points from CSR
activities, we see that some companies received a maximum of 15 points, on average
companies received about 8 points, however there were companies that did not receive
any points from CSR activities. This shows that most companies pay attention to CSR in
developing corporate image, but it is not really clear. Perhaps in the near future there will
be big changes to the company's CSR decisions because this will be one of the strategies
that companies do not want their competitors to decode yet.
In the 10th year, with the CSR strategy that the company has pursued from the beginning,
the company continues spending for charitable contributions. Besides, the company
invests in cafeterias and child care facilities at accommodations for factory employees, as
well as additional safety equipment and improved lighting/ventilation systems. Although
quite expensive, improving working conditions for employees is the right thing to do.
II. 11TH YEAR STRATEGIC PLAN
1. Decide on product design
1.1. AC Camera (ACC)
After observing and analyzing data for the 10th year, the company realized that rival
companies are sharply increasing their P/Q levels to compete on quality, while the AC Camera
product line is at a P/Q level. is 6.0*, lower than the industry average. However, we still will not
significantly increase the P/Q level in this product line this year because we do not have a cost
advantage compared to rival companies.
Besides, the strategy the company is pursuing is proving quite effective so we continue
with this strategy so we decided to increase it to about 6.3* with the lowest cost and price to be
able to win the offer. in the next year. Regarding R&D investment, the company decided to keep
it at $50 million because during this period the company does not want to focus much on R&D
investment costs.
1.2. UAV Drone
Similar to AC Camera, companies in year 10 also tend to increase the P/Q of the UAV
Drone product line quite high compared to year 9 but still lower than the average. Therefore, our
company decided to increase P/Q to 6.7* with the most optimal cost. Because last year did not
invest much in R&D, this year the company decided to slightly increase its investment in R&D
so as not to be too far behind in terms of technology compared to other companies. In this year
11, we still keep R&D investment up to 50 million dollars to be able to compete on price in the
coming years.
2. Decide on Marketing Strategy
2.1. AC Camera (ACC)
In terms of pricing, the business will raise prices in line with a rise in the P/Q rating and
modify them in light of earnings and exchange rates. In order to maximize Operating Profit
Margin and increase market share in two key markets—Asia Pacific and Latin America,
followed by North America and Europe and Africa—the company will concentrate on raising
Net Profit by increasing Revenue. In order to draw clients, the business will also raise Sale
Promotion levels (number of weeks, percentage discount), but it will reduce marketing expenses
in order to optimize earnings.
2.2. UAV Drone
For UAVs, our strategy next year is to focus on two target markets: the Asia-Pacific
market and the Latin America market to increase profits. As for the 2 markets that are not the 2
target markets: the North America and the Europe-Africa market, we will change the strategy to
be more suitable for each market. Specifically: we will decrease the investment in North
America and the Europe-Africa market and maintain it in the Asia-Pacific and the Latin America
market.
3. Decide on compensation & facilities
3.1. AC Camera
3.1.1 Compensation
We have noticed that a 1% increase in the basic salary is appropriate because the
company's basic salary is relatively equal to the industry's basic salary, so we have decided to 1%
increase.
The incentive payment for quality assembly has been maintained at $2.0 to improve
product quality.
Year-end bonuses and other welfare benefits are currently at the industry average, so we
have decided to keep them the same as in the 10th year.
The investment amount for training to increase productivity maintained at $3,000.
3.1.2 Facilities
The work station will maintained at 300 spaces and 300 workstaitions.
3.2. UAV Drone
3.2.1 Compensation:
We have noticed that a 1% increase in the basic salary is appropriate because the
company's basic salary is relatively average to the industry's basic salary, so we have decided to
increase to 1%
The incentive payment for quality assembly has been raised to $6.0 in order to improve
product quality.
We have increased the year-end bonus to $1300.
Other benefits are currently below industry average, so we have decided to increased the
Fringe Benefit Package to 5000 per worker
The investment for training to increase productivity remains at $9,000.
3.2.2 Facilities
The work station will maintained at 300 spaces and 300 workstaitions
4. Decide on finance & cash flow
At the end of fiscal year q0, the company's cash surplus is 30,451 ($000). In the
11th year, our company will promote investment in training company employees.
Besides, we will increase productivity by improving working conditions for employees
and creating a good image for the company. After the 10th year of business investment,
to achieve a safe financial cash surplus, the company needs to borrow capital to
supplement.
At the same time, the finance department realized that the company's loans were
creating great financial pressure for the company with large interest payments of up to
9,770 USD. Therefore, the Ministry of Finance decided to borrow a 10-year long-term
loan with a lower interest rate (5.8%) to pay off the long-term debt of 2 previous long-
term loans. The company decided to borrow long-term because these are long-term
strategies that the company is aiming for. To increase EPS and increase stock price, the
finance department decided to buy back 1,042 shares.
Therefore, the Ministry of Finance decided to borrow long-term debt (10 years) in
the amount of 200,000 ($000)
5. Decide on corporate citizenship
5.1. Charitable Contributions: $0
5.2. "Green" Initiatives to Promote Environmental Sustainability:
The Green Initiative to promote environmental sustainability is a very good and intuitive
idea, directly appealing to the psyche of both customers and retailers. However, in the 11th year,
the company should not invest in developing this idea as it would significantly reduce the
company's cash flow.
5.3. Renewable Energy Program: $0.00
5.4. Improved Working Conditions:
Cafeteria and On-Site Child Care Facilities for Plant Employees: Continue.
Additional Safety Equipment and Improved Lighting / Ventilation: Continue.
5.5. Institution of a Supplier Code of Conduct and Compliance Monitoring of
Suppliers:
Institutionalize a Supplier Code of Conduct and monitor supplier compliance,
demonstrating a dedicated effort to promote fair employment and safe working
conditions at supplier factories (related to excessive work hours, substandard wages,
underage labor, exposure to hazardous materials, and unsafe work practices). Requires
additional annual administrative costs of $500k.
⇒ Remain the same as last year (choose ‘Yes’).
