Вы находитесь на странице: 1из 11
Simulation Project R6 Board Report of EMG Motor Reference: SIMP/10246995/Jul17/GA2c By Team 5: Joel Looi

Simulation Project R6

Board Report of EMG Motor

Simulation Project R6 Board Report of EMG Motor
Simulation Project R6 Board Report of EMG Motor Reference: SIMP/10246995/Jul17/GA2c By Team 5: Joel Looi Tan,

Reference: SIMP/10246995/Jul17/GA2c

By Team 5:

Joel Looi Tan, Yap Hong

Venus Cheung Chang, Xiaoran

Supervised by:

David and Nick

Financial Position • In R5, the company successfully turned around a period of underproduction and

Financial Position

Financial Position • In R5, the company successfully turned around a period of underproduction and underpricing

• In R5, the company successfully turned around a period of underproduction and underpricing to move up the share price league table to be the 1st in Singapore cohort and 2nd in the worldwide cohort.

• In R5, we introduce a new car model Delta in the medium car market that caters for the 41-55 age group to be sold at a price level of 7.4% higher than Alpha+ (also in the medium car category) of £43500 and sold all 58000 units.

• We have unsold stocks of 2153 out of the 40000 units of Beta+ produced, indicating market saturation for large cars in the 41 - 55 age group.

• In R5, our cash surplus increased to £2410.88 in R5 from £205.05. Although most of the markets we are in will shrink by at least 3% in R6, our cash surplus will further increase as we improve our

profitability. In R5, we have paid a further £100m of the loan to bring down the loan to £350m

and improve gearing to 0.13.

In R5, we have paid a further £100m of the loan to bring down the loan
In R5, we have paid a further £100m of the loan to bring down the loan
Financial Decisions • In R6, we are aiming to achieve a share price of £2681.35

Financial Decisions

• In R6, we are aiming to achieve a share price of £2681.35 on sales revenue of £8060.30. We have underproduced all 4 models, except Beta+ previously. In R6, we wish to recoup some of our past losses and go for a market penetration strategy.

• In R5, the company has chosen to grow its revenue base through a mixed strategy of organic growth and acquisition. In R6, the share price of all our investments (Team 1/3/4/6) have risen to new levels and we are taking profit on these shares giving us a disposal income of £918.63m now.

• In R5, we will use surplus funds to pay back all £350m of the long-term loan, further reducing the gearing to 0.

• In R6, the company will increase its workforce by 35% to 764 from 566 in R4 and increase automation expenditure by 17% to £180m to improve productivity across all models. We will also also invest £35.52m in R&D efforts for a new medium car model, Epsilon. We will pay dividends of £16.8m to give a dividend cover of 33.77 which we considered optimal for our growing company.

will pay dividends of £16.8m to give a dividend cover of 33.77 which we considered optimal
Marketing - GTM

Marketing - GTM

Marketing - GTM
BCG Matrix - Strategic planning BCG matrix - based on forecast in R6 • We

BCG Matrix - Strategic planning

BCG matrix - based on forecast in R6

• We have started to milk Beta+ and Delta as they are the cash cows with high market share but their sales did not grow much.

• We also tried to increase our production of Alpha and Epsilon as they are the stars that would require more investment to excel.

• We are slowly divesting our investment in Gamma as it is a “dog” that would be a drain on our resources.

• We are slowly divesting our investment in Gamma as it is a “ dog ”
Pricing and Sales/Profit Forecast EMG enjoys a strong brand name and maintains high standards of

Pricing and Sales/Profit Forecast

EMG enjoys a strong brand name and maintains high standards of excellent design, engineering and build quality. Thus, We set the price of our product with an aim to achieve higher margin (55% to 60%). Furthermore, higher margin results in higher profit which generates sufficient cashflow for investment on new products, share dividend, productivity improvement, etc. The below illustrates how we price the products according key product metrics measured:

Forecast

share price 2681.35 (gross profit: 4630.86m, net profit: 2617.56, bank balance: 3722.40m, retained profit: 2752.55m)

   

Unit Sold

Selling Price £

Basic Cost

Margin

 

Revenue £m

 

Profit £m

R5

R6

R5

R6

 

R5

R6

R5

R6

R5 Gross

R6 Gross

Model

Sold

Change

Sold

Price

Change

Price

R5 £

R6 £

Margin

Margin

Revenue

Change

Revenue

Profit

Change

Profit

Alpha+

(M25-40) 78000 -34% 50882 40500

-2%

39500

17924

15696

55%

60%

3159

-36%

2010

1761

-31%

1211

Beta+*

       

(L41-55)

37847

-34%

24897

56000

0%

56500

27699

28174

50%

50%

2119

-33%

1407

1071

-34%

705

Gamma

(S<25)

51000 -37% 31733 25000

0%

25000

10224

10069

59%

59%

1275

-37%

793

754

-37%

474

Delta

       

(M41-55)

58000

-26%

42877

43500

-1%

43000

19817

18943

54%

55%

2523

-26%

1844

1374

-24%

1032

Epsilon

(M25-40)

51455

39000

0

15501

60%

0

2007

0

1209

Situation Complication Strategy Production and Operation ● In R5, our EMG’s index was 9.49 or

Situation

Complication

Strategy

Production and Operation

In R5, our EMG’s index was 9.49 or 401.06 cars/worker/year, about 29% of improvement from last round due to automation.

EMG has 8 R&D projects in R5. 3 out 8 R&D projects have been completed and have already improved the sales of products by better quality and look.

All models are under-produced with 0 stock remaining in R5. Although we tried to produce slightly more (around 10%) than the forecasted sales, the market was still able to consume all of the stocks except for Model Beta (with 5% stocks left).

Tt is required to keep 5% to 10% of machine asset for depreciation. As there was 280 automations in R5 which will incur depreciation cost in R6.

Maintain workforce and automation when new model Epsilon will be introduced. Number of automation units can be calculated with data analysis tools.

Align production size of model Alpha/Beta/Gamma/Delta/Epsilon with sales forecast to mitigate over-production or under-production

DO NOT kick off any R&D projects as the market is going to shrink and limited budget will be allocated for R&D.

Continue to encourage workspace happiness by continuing to pay above-average wage (i.e. 480.00) and discourage OT

Team Signoff for Finalizing Decisions EMG Motor
Team Signoff for Finalizing
Decisions
EMG Motor

The EMG Management Team

The EMG Management Team Tan, Yap Hong Chang, Xiaoran Joel Looi Venus Cheung Team Leader Finance
Tan, Yap Hong Chang, Xiaoran Joel Looi Venus Cheung
Tan, Yap Hong
Chang, Xiaoran
Joel Looi
Venus Cheung

Team Leader

Finance

Production

Marketing

The strength of the team is each individual member. The strength of each member is
The strength of the team is each individual member. The strength
of
each member is the team.
--Phil Jackson

Conclusion and Learnings

Despite obtaining good results in R5, it wasn’t the final round, and there are always room for improvements. As mentioned by Dr. Deming, continuous improvement is the way to go to achieve the status as leaders. That, is exactly what we did as a team.

We discussed and reviewed all internal factors that could improve our performances; not intending to miss out on anything. We also went on to conduct analysis, to understand the strengths of our top competitors; the

to understand the strengths of our top competitors ; the Surprises, surprises! We were delighted that

Surprises, surprises! We were delighted that most of our objectives were met. We got our decisions right and steered closer to the top of the group; new production in middle-sized car, economies of scale, and mature age group for large-sized car. Manchester Team 4’s extraordinary results had also gotten us cracking our heads. New discoveries, interesting ideas for improvements. We were aware of the potential in the mass market, and it was on our books to implement another medium market cars (age: 25-40). We were surprised to observe and learn that Manchester Team 4 had already performed well with this. Hence, the second mover advantage was applied for this next car’s model.

Learning from our competitors, we observed that going for a 60% gross profit margin was achievable. We went back to restudy on our options and designs, and its effect from popularity factors. Combining this with our prior knowledge, we made only the necessary changes; targeting an optimum result on all of our car models.

With more brainstorming of ideas, team decisions weren’t a smooth ride to attain. We made new discoveries in stock obsoletes: through holding of buffer stocks, stock obsoletes only amounted to less than 0.1% decrease in stock value. As stocks can be maintained as an asset, sales can be optimized in this manner. However, there was a feeling of uncertainty. After rounds of discussions and some tests: we agreed that we should not miss out on sales opportunity. Striking a fine balance to further increase our buffer stock % for the next round, but not holding on to too much inventory at the end.

increase our buffer stock % for the next round, but not holding on to too much
Conclusion
Conclusion

Learnings

Conclusion and Learnings Cash are lying idle in bank, but we intend to realise our

Conclusion and Learnings

Cash are lying idle in bank, but we intend to realise our profits from our investment portfolio, for the final round. We do not have a very clear understanding on how the stock market functions in the system, akin to a black-box; hence we went for slightly lower share prices, in a bid to ensure that the sales go through. There are no other investment opportunities to increase our rate of returns, and all loans were paid off. We would yearn to redeem our shares very much, through share buy-backs, but such an option was not made available.

At the end of the day, with all the commitments and trusts from everyone, we came to compromises and decisions as a team; taking a leap of faith on new ideas for better results. Given the tight timeline, we were wary of last minute issues and started early on our discussions. Everyone was enthusiastic and engaging, with constant flow of thoughts and ideas going into our WhatsApp messaging application all the time. As each round goes by, we enjoyed one another’s company even more and were assured of our quality of work collectively. A strong foundation laid right from the start, Communications is key to a successful winning business. It may be exaggerating to say that we are even becoming telepathic; but we are very much thankful and enjoy for the fact that we are indeed performing well, as a good team, in the performing stage.

Time is a scarce resource and we had learnt to be flexible, efficient and effective; offering help to one another. Accommodating to one another’s busy schedule, there were certainly sacrifices that could have been spent for more family time or rests, after a hectic day at work. We are all thankful that the long hours and efforts put together via our Google Hangout meetings, have come to fruition now.

hours and efforts put together via our Google Hangout meetings, have come to fruition now. Conclusion

Conclusion

Learnings