Cesim 2e2c5s

CESIM SIMULATION GAME –

COMPANY NAME-RED MOBILES LTD.

Rajdeep Nayak ( Team Lead ) Madhusmita Das Manoj Yadav Shivangini Dalal Saurabh Sasidharan

EXECUTIVE SUMMARY BUSINESS SUMMARY – At Red mobiles, we produce four generation of mobile phones Tech 1,Tech 2 ,Tech 3, Tech 4 .we are a new generation luxury mobile brand with world class expertise .Our production facilities located in two countries ,USA and Asia. we have been established a strong relationship with numerous distributors throughout the USA, Europe and Asia . OPPORTUNITY AND MARKET GAPToday’s population demand a phone which is technologically advanced and are of quality. Market is ready to invest huge amount of their income in purchasing products due to the bandwagon effect. According to the market research we found there is major gap in the mobile phone sector .There is no company in the market who targets such kind of mobile phone .Thus taking advantage of this gap we launched and technologically advanced mobile phone in the market . TARGET MARKET There is a huge potential market in USA,EUROPE and ASIA. Thus we are targeting these market with huge potential .Red Mobiles also believes in world wide expansion thus we work continuously to achieve that goal . SALES AND MARKETING STRATEGY We are using extensive marketing campaigns on television ,billboard, magazine ,radio ,internet and word by mouth .Our advertising campaign use easy to slogan and catchy tune ,accustomed with well known logo .we are looking to expand our market worldwide.

COMPETITORS We have one major competitor in the market ,green mobiles in of market share .Our market share is approximately 10% but has a huge brand effect in the market .Inspite of having small market share Red mobiles generates huge revenue due to its brand value of technologically advanced and mobile phones . COMPETITIVE ADVANTAGE We are providing consumers innovative and alternative products which is not only technologically advanced but also providing a ,niche and luxury product which makes it worth showing off. we have intellectual property of patents ,copyrights and trademarks of our products which gives the mobiles a competitive advantage.

STRATEGY Red mobile business strategy can be classified as product differentiation in design and functionality. Red mobile business strategy also includes “building and expanding its own retail and online stores and its third-party distribution network to effectively reach more customers and provide them with a high-quality sales and post-sales experience.”As part of its business strategy, Red mobile “continues to expand its platform for the discovery and delivery of third-party digital content and applications through the Tunes Store”. An intensive international market expansion is another important aspect of Red mobile business strategy. According to its business strategy, Red mobile has adapted advanced features and capabilities of its products and services as bases of its competitive advantage. Red mobile business strategy can be also characterized as vertical integration in a way that the company has advanced expertise in software, hardware, and services at the same time. Red mobile ‘s vertical integration is one of the major factors that set it apart from the competition. The company has been benefiting from its vertical integration immensely. Specifically, an important source of Red mobile competitive advantage relates to its ecosystem, which is enabled by such integration. Red mobile devices and software sync easily and work well with each other. Applications work on multiple devices at the same time and there is no much difference in interfaces; however the same items do not pair with products of other companies, thus creating the likes of a closed ecosystem. Red mobile’s ecosystem creates switching costs for its customers to the competition. The ecosystem also provides the opportunities to leverage relationships with existing customers to offer other products and services. First mover advantage is another element of Red mobile competitive advantage. It has to be stated that Red mobile competitive advantage may be challenging to be sustained for long-term perspective. Specifically, the management may fail in of ensuring the addition of innovative features and capabilities in new versions of its products, thus compromising its competitive advantage.Starting from recently, the multinational technology company has placed Services business to the core of its business strategy. Services segment revenues have been consistently increasing during the last six years.

STRATEGY –ROUND WISE ROUND 1 ISSUES -Rapidly growth in all three markets -Health effects of Tech 2 experiment -Political tension between USA and china. DEMAND –(% Forecasted) USA 15-20 EUROPE 6-10 ASIA 25-30 COSTS -increasing of tariffs from USA to Asia(from $7 to $12 per handset) -No notable changes in production costs . FINANCE -EU is shaky position in the global marketplace (EU corporate tax rate =31%,the Euro is expected to fall) REVENUES Forecasted profit and sales based on estimates and decisions Profit (k USD) 59 707 Change in sales (%) 32 New plants USA 0 Asia 0 Financing Increase (+) / decrease (-) of long-term debt 0 Share issue 10000 Share buyback 2500

ROUND 2 ISSUES -Europe and USA are able to Tech 4 -Believed enormous R&D expenses for developing the new technology. -Tech 2 is now more attractive than ever, particularly in Asia. DEMAND-(%Forecasted) USA 7-10 EUROPE 5 ASIA 17-20 COSTS -Tariffs from USA to Asia =$12 per handset(offset imbalance) -Outsourcing capacity is upto by 9% production costs are up 2%(new players in the sourcing market) FINANCE -USA increased corporate tax rates to 38% -Asia increased corporate tax rates to 18% Forecasted profit and sales based on estimates and decisions Profit (k USD) 285 277 Change in sales (%) -13 New plants USA 0 Asia 0 Financing Increase (+) / decrease (-) of long-term debt 0 Share issue 0 Share buyback 0

ROUND 3 ISSUES -Civil war in Oilistan, the flow of oil has been cutoff to foreign countries. DEMAND-(% Forecasted) USA slightly + EUROPE heavilyASIA 5-8 COSTS -Transportation costs increase by 15% -Outsourcing capacity has risen by 13% in USA -Outsourcing capacity has risen by 10% in china. FINANCE -China corporate tax rate to 19% -Euro is expected to fall against USD -RMB should strengthen when compared to USD -European central bank has raised its interest rates by 0.5% Forecasted profit and sales based on estimates and decisions Profit (k USD) 1 306 376 Change in sales (%) -3 New plants USA 0 Asia 2 Financing Increase (+) / decrease (-) of long-term debt 0 Share issue 0 Share buyback 0

ROUND 4 ISSUES -War in Oilistan is over and oil exports have returned to normal -Mobile handset exploding news. DEMAND-(%Forecasted) USA -3 EUROPE unchanged ASIA -7 COSTS -Transportation costs diminish by approximately 6% -Outsourcing capacity has risen by 13% in USA and 19% in China -Outsourcing capacity has risen by outsourcing costs have fallen 46% FINANCE -Asia corporate tax rate rise to 22% RMB fall nearly 10% against USD. -Euro rebounds -Interest rates are up half a percentage point in china,up a quarter in USA and down a quarter in EU. Forecasted profit and sales based on estimates and decisions Profit (k USD) 1 306 376 Change in sales (%) -3 New plants USA 0 Asia 2 Financing Increase (+) / decrease (-) of long-term debt 0 Share issue 0 Share buyback 0

ROUND 5 ISSUES -The chinese –US predicament escalates DEMAND (% Forecasted) USA 20 ASIA over 40 EUROPE 15 COSTS -Production costs are expected to fall in the US by 5% and to remain level in Asia. -Outsourcing capacity has fallen by 15%(sourcing companies went out of business) -Sourcing costs are up to 10% FINANCE -RMB continues to devalue compared to USD ,Euro strengthens. -Interest rates are unchanged in USA and Europe, but up a Quarter in Asia. Forecasted profit and sales based on estimates and decisions Profit (k USD) 1 478 179 Change in sales (%) 43 New plants USA 0 Asia 0 Financing Increase (+) / decrease (-) of long-term debt 0 Share issue 0 Share buyback 0

ROUND 6 ISSUES -Robust market growth rates are expected to gradually decline over the next few years. -European are highly appreciative of the highest technologies . DEMAND USA under 20 ASIA over 30 EUROPE 15 COSTS -production costs and outsourcing costs are down in Asia. -Outsourcing costs are upto 2% worldwide -Increased fixed costs by production plant from social responsibility. FINANCE -Euro appreciates against USD -RMB appreciates almost 10% against USD from last year . -FED increases interest rates by half of a percentage point -Europe and Asia follow and raise their rates accordingly. Forecasted profit and sales based on estimates and decisions Profit (k USD) 358 502 Change in sales (%) -17 New plants USA 2 Asia 6 Financing Increase (+) / decrease (-) of long-term debt 0 Share issue 0 Share buyback 0

ROUND 7

Forecasted profit and sales based on estimates and decisions Profit (k USD) 1 443 353 Change in sales (%) 8 New plants USA 0 Asia 0

FINAL ROUND (DATA INPUTS )

Forecasted profit and sales based on estimates and decisions Profit (k USD) 7 615 832 Change in sales (%) 497

MISSION AND IDEOLOGY  Company has aimed to create niche market for their products.  Company has concentrated to use efficient tools to optimize the resource invested and incurred.  Company was able to understand the behavior of the market segments.  Company was able justify the shareholders too. MARKET ANALYSIS AND GROWTH  Company in initial years experimented with market module to understand the market behavior.  Steadily we tried to create our market segment.  We generated huge profit with less investment.  Optimized our features to provide the value for the money given by the consumer RESEARCH AND DEVELOPMENT  Research and development was wisely done to create the value for the money  Features were added to the product according to in market demand.  R&d has been a continuous process in each round to provide better goods with better features. REVENUE GENERATION  Company was able to sustain a good profit margin being low in market share  Though gross profit margin generate in some year went in negative due to the investment made in plant and features, profit generated was 200% according to cost incurred. LEARNINGS  Promotion is a essential part of sales revenue.  Maintaining lower operational cost helps to generate better profit.  Pre planning of plant investments according to the demnd forecast should be done.

 Understanding of suitable product for suitable market is necessity. FUTURE STRATEGY  Company tried to keep the insolvency factor by keeping operation cost low and long debt loan nil.  Company will be able to meet the demand and will be constant to maintain the consumer retention.  Company will grow steadily but strongly.  Company will never face the bankruptcy.