Capsim Strategy Memo Discussion
This memo should be about 1 page in length and should thoughtfully discuss how you plan to compete in product markets in the Capsim simulation. Please start by filling out the table outlined on Page 2 with respect to your company’s products and your company’s performance after the 1st Competition Round.
Recall that
Contribution Margin % = (sales – variable cost)/sales x100
Net margin %= (contribution margin (in $) – total period costs) /sales x100
The rest of the memo should address and analyze the following two issues:
Selected Product Market: Performance Hilt
#1. After completing the table, please discuss the performance of your products in market segment that you are competing in based on Round 1 performance. As a rule of thumb, the Contribution margin (%) should be greater than 30% and the Net Margin (%) should be greater than 20%. If the product’s Margins values (Contribution and/or Net Margin) are lower than these benchmark figures, there is room for improvement. For the product, please identify some of the root contributing factors that are causing your margins to be low for that specific market and come up with concrete strategies to fix those issues.
#2. How do you evaluate your performance with respect to market share in the product markets you are currently competing in? Please come up with a plan and list some steps to grow your market share in product market. (i.e., their contribution margin % and net margin % are above the threshold).