Strategic Management- Mobile Inc.

CESIM Simulation

IIM SAMBALPUR (भारतीय प्रबंध संस्थान संबलपुर)

Strategic Management –Term-III

Guided by Prof. Nilesh Khare

Simulation CESIM: Mobile Inc.

Submitted By Group 07:

Apoorva panigrahi(2021EXEMBA40)
Avishek Panigrahi(2021EXEMBA14)
Bikash Satpathy(2021EXEMBA04)
Jaswasi Samantray(2021EXEMBA48)
Nabagat Purohit(2021EXEMBA13)

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Strategic Management- Mobile Inc. CESIM Simulation

CONTENTS
1. Introduction ................................................................................................................................. 3
2. Background ................................................................................................................................. 3
3. Simulation game rounds………………………………………………………………………..4
4. Overall strategy of all rounds .................................................................................................... 16
5. Retrospective and Don’t ........................................................................................................... 17
6. Conclusion ................................................................................................................................ 17
7. References ............................................................................................................................................. 18

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 Strategic Management- Mobile Inc. CESIM Simulation

1. Introduction:
Strategic Management is a course which is essential for any business with product portfolio from one
to many as well as business which is dealing with in single market to multiple markets or a business
including conglomerate which is not contained within one country. This course teaches us AFI
theory under which a business introspects internal and external factors and then take strategic
decisions which can be summarized either as Vertical integration, Horizontal integration, or
Diversification. The modes can vary from organic, Alliance, or M&A.

This simulation gives a real-time feel of running a business in multi-geography scenarios involving
internal limitations, external influences like Industry behavior, geopolitical situations, and dynamics
of different markets.

The intention of this simulation is not to judge a winner versus a loser but to give a fun way platform
to implement the theories of strategic management by putting you in a practical real-life situation. In
this gamified mode of teaching the learning of a losing team matches the learning of a winning team.
All it requires it to a sincere and strategic approach to playing the game and applying the relevant
concepts of this subject.

2. Background:
The game was to be played on the Mobile.Inc industry across three regions i.e., Asia, Europe, and
the USA. The game was segregated into two universes each having five teams. There was a total of
five rounds to be played each round representing a year.

The game setup:

• Different technology from older to newer is termed Tech 1 to 4.

• Network coverage of each technology has been given for the USA, Europe, and Asia. Teams
need to choose the technology choices each round based on the network penetration and as
per its coverage forecast in each round.
• Each round has a different market outlook, which is basically a situation of the industry
behavior, growth potential, and geopolitical situation.
• Each team has to study the market outlook and decide on the demand forecast and
technology choices basically eyeing to increase their cumulative total shareholder return.
• Based on the given situation the team has to strategies the demand and tech prediction,
production planning, ESG score, HR, R&D choices, logistics, taxes, and Finance.
• Based on the decision taken team reviews their projection of income statement, Ratio
analysis, balance sheet, and parameters before submitting their decision for each round.
• Team needs to do a retrospective analysis of the result of the round and strategies for future
course of actions for the next round.

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 Strategic Management- Mobile Inc. CESIM Simulation
3. Simulation game rounds:
3.1. Round 1:

3.1.1. Industry position/Market Outlook:

• The demand for mobile handsets is expected to grow quite rapidly in all three markets
(Asia-30%, US-20% and Europe-10%).
• Serious Withdrawal symptoms exhibited by new technology.
• Political tensions – Tariffs almost doubled for American goods ($7 to $12)
• EU reached a common tax agreement - corporate taxes at 31%.
• Rising awareness of environmental issues and working conditions in the mobile phone
industry.
• Increasing compliance regulations to collect user data in the EU, else penalty up to 2% of
annual revenue.

3.1.2. Anticipated strategic position:

• To capture the maximum market share maintaining profitability in all markets. To have a
market-specific strategy keeping the core strategy of the economy of scale and WTP. For
the USA and Europe, the plan would be to focus on new tech and features backed by
promotion. For Asia lower the unit cost of production and go with competitive pricing.
• Aggressively building plants in the US (2) and Asia (6) to meet the demand in further
rounds, leverage economies of scale, and reduce production costs in Asia.
• In-house R&D for Tech 3 to avail the first mover advantage in round 3.
• Adding 2 features in Tech 1; buying Tech 2 with additional features to stand out.
• Salary increments and focus on basic and safety training, collaborating with labor unions
to improve public image.

3.1.3. Decision Choices:

• Forecasting demand aggressively and focusing on capturing maximum market share.

• Aggressively building plants in the US (2) and Asia (6) to meet demand in further rounds,
leverage economies of scale, and reduce production costs in Asia.
• ESG – Reduce energy consumption and increase efficiency.
• Collaborating with labor unions to improve public image.
• Hiring employees, increasing salary, and focusing on training.
• In-house R&D for Tech 3 to be used in round 3.

In USA:
• Increase the willingness to pay by introducing 2 new features for tech 1.
• Tech 2 with two new features to stand out, also expecting a smaller number of players.
• Invest in promotions.

In Europe:
• Heavy promotions - Expecting it to be a promotion-driven market.
• Increase in price for Tech 1 with additional features

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Strategic Management- Mobile Inc. CESIM Simulation
• Tech 2 was introduced with two additional features as the European market is tech-
savvy.
• Keeping good margins, expecting it to be the most profitable market for us.

In Asia:
• Keeping relatively low price for tech 1 with additional features – expecting it to be a
price-sensitive market.
• Tech 2 was introduced with additional features and additional stress on promotions.
• Logistics: Products to be fulfilled in the country of manufacturing first, followed by
Europe and then others.
• Taxes/transfer pricing was adjusted to reduce the effective tax rate and increase profits.
• Internal loans to keep sufficient cash in all the markets to avoid short-term loans.
• Buy back shares to improve the share value.

3.2. Round 2

3.2.1. Analysis of round 1 result:

A. Competitive positioning:

• Overall:
➢ Highest in Revenue, Cumulative shareholder return (18.2%), 2 in market share.
nd

• USA:
➢ Though revenue is good, profit is negative.
➢ Price war by 5 Star and GreenTech left us with a huge inventory for tech 1 and some
for Tech 2.
➢ 3 in terms of market share and revenue.
rd

➢ 2 new plants are under construction.

• Asia :
➢ 3 in terms of market share and revenue.
rd

➢ Price war by 5 Star cost us market share and left us with a huge inventory for tech 1
and some for Tech 2.
➢ 6 plants are under construction.

• Europe:
➢ Best performance in terms of market share, sales revenue, and profits.

B. Company’s position: Overall 2nd position.

C. Retrospective:

• Good:
➢ Overall 2 in market share; highest in revenue; highest in market capitalization;
nd

highest total cumulative total shareholder return(pa) – 18.2%.

➢ Overall market leader in Europe with the highest revenue and profitability (1 in Tech
st

2 and 3 in Tech 1) - as planned.

rd

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Strategic Management- Mobile Inc. CESIM Simulation
➢ Highest market share of tech 2 in the US.

• Bad:
➢ 3 in terms of overall market share in the US (Tech 1 didn’t perform as expected)
rd

➢ 3 in terms of overall market share in Asia (17.17%) - Tech 1 didn’t perform as

rd

expected.
➢ Short-term unplanned loan of 160k.

• Ugly:
➢ 5 in ESG score.
th

➢ Both Tech 1 and 2 inventory are left from round 1.

3.2.2. Proposal for round 2:

A. Industry position

• Growth rates are expected to remain strong (USA - 10%, Asia - 20%, Europe – 5%)
• Tech 2 is more attractive now, particularly in Asia.
• Europe and USA are now able to support Tech 4 mobile phones.
• Tariffs increased in the US; competitors-built plants in Asia offset the effects.
• Contract manufacturing capacity is up by 9% however manufacturing costs are also
up by 2%.
• Corporate tax increased in all the markets – the US (38%), Asia (18%), and Europe
(31%).
• Customer’s reactions to ESG issues have settled down however negligent
manufacturers are targeted.

B. Anticipated strategic position

• Clear the remaining inventory.

• Building additional plants in both US (1) and Asia (3) to meet the demand in
further rounds, leverage economies of scale, and reduce production costs in both
US and Asia.
• Play the price game in the US and Asia (as no other choice) to beat a couple of
competitors who are playing irrationally.
• For Europe focus on the latest tech and features and promotions (focus is on
gaining market share for tech 1, maintaining our top position in Tech 2).
• In Asia, putting a very competitive price in both Tech 1 and 2 (with additional
features) to compete with other players and gain market share. Focus is less on
promotions (as it didn’t work as expected in round 1).
• In the USA focus will be to clear inventories for both Tech 1 and 2 by providing
the most competitive prices (price war started in Round 1) with additional
features.
• Develop the rest of Tech 3 and additional features for other Tech in-house to cut
costs.
• Do proper demand forecasting to avoid short-term loans and inventory left over.

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 Strategic Management- Mobile Inc. CESIM Simulation
Reading competitor’s mind:

GreenTech:
• Expecting them to reduce tech 1 price with new feature addition. We can match
the anticipated prices with more features.

Ocean:
• Not a major threat in the US and EU, their prices are very high compared to
feature offerings, and it will be difficult for them to compete with other players.
• However, 2 in market share for Tech 1. The lowest prices are difficult to match.
nd

Badmas:
• Not a threat - Playing with the highest prices, with the lowest market share
(10%).
• However, the leader for Tech 1 in EU with lowest prices.

5 STAR:
• Actual competitors of ours, they are experts on demand forecasting, their
inventory is almost zero in all the rounds and less short-term debts.
• Highest in global market shares as well as in US and Asia markets with low
prices. Expecting them to retain the prices in round 2. Need to enter the price
game to gain market share in the US and Asia.
• We are in a better position in Europe and must retain the market leader and try to
gain more market share with additional features and promotions.
• They can offer prices less than us as the cost of production is less for them (no
inventory).

C. Decision choices and rationale

• Aggressive demand forecasting as we are lowering our prices. Expect the actual
market demand to be the same as the forecast.
• Utilizing full plant and contract manufacturing capacity to leverage economy of
scale.
• Decided to go with the same tech choice as the earlier round for each of the
markets as Tech 3 R&D is still in progress.
• For US: - Focus is to clear all Tech 1 and 2 inventory with competitive prices and
usual promotions. This will also help us to gain market share.
• For Asia: - Focus is to gain market shares in Asia. With competitive pricing, we
gain at least a 20% market share.
• For Europe: - Aim is to retain the market leader, and gain market share with
additional features in Tech 1 and 2.
• Increase in salary and focus on training for employees.
• In-house R&D to cut costs (remaining development of Tech 3 and new features
for Tech 2).
• Take all required measures for ESG to avoid any negative brand image
• Logistics: Products to be fulfilled in the country of manufacturing first, followed
by Europe and then others.
• Adjust transfer prices and reduce the effective tax rate in whatever way possible to
get optimum profits in all markets.

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Strategic Management- Mobile Inc. CESIM Simulation
• 600k additional loan to pay short-term debts and cost of additional plants.
Distribute cash in each market to avoid any short-term loans.

3.3. Round 3

3.3.1. Analysis of round 2 results:

A. Competitive positioning:

• Overall:
➢ We were the market leader in terms of the sales revenue, market share and profit-
wise held the 2nd position with a small margin gap from the first player.

• USA:
➢ The second in revenue but profit was below expectation.
➢ Overall Leading the USA market share at 35.21 % in both tech 1 and tech 2.
➢ Huge inventory in USA 1958 units left.

• Asia:
• Though Asia is the biggest market still our market share was negligible. Third
position in terms of revenue, market share, and profit. Again, significant inventory
was left in tech 2 (1129 Units). One of the competitors beats us in tech 1 price by
offering a very low cost and grabbing more than half of the tech 1 market. This
hampered our estimation and market share. In Asia, we made the mistake of going
with features, less promotion, and competitive prices but lost the Asia market due
to competitors’ cheap prices and relatively higher promotion expenses.

• Europe:
• Overall market leader in terms of profit, market share, and profit. 45% of market
share, sales revenue, and profit was almost double of the immediate competitor.
The strategy to spend on promotion and good features by increasing the WTP had
paid off.

B. Company’s position: Overall company’s position is 2nd Position.

C. Retrospective:

• Good:
➢ Europe’s market share increased from 31.84% to 44.85%. Sales revenue increased
from 712460 K USD to 1254941 K USD.
➢ We were also leading in market capitalization and share price (2nd position).
➢ First position in ROE (53.41) and EPS (13.70).

• Bad:
➢ ESG score needed improvement.
➢ Tech 2 inventory in the USA was huge.

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Strategic Management- Mobile Inc. CESIM Simulation
• Ugly:
➢ Despite having plants, we could not capture the major market that is in Asia. This was
due to the strategy we deployed for Asia which was beaten by lower prices by
competitors.

3.3.2. Proposal for round 3:

A. Industry position:

• USA slightly positive, Asia 5-8% and negative growth in Europe.

• Transportation cost got increased by almost 15%. Contract manufacturing capacity
increased 13% in the USA and 10% in Asia. Corporate taxes increased to 19% in
Asia.

B. Anticipated strategic position:

• No new investment in plant setup

• Introduce new tech to the market to gain first mover advantage (Tech 3 in Asia and
tech 4 in Europe)
• Focus is to improve on the ESG score and compliance.
• Find ways to sustain market share and profit in Europe, plan to increase profit and
sales revenue in Asia through capturing a large market share of tech 3
• Invest in New feature R&D of Tech 3 to extend Asia market share in the next round.

Reading Competitor’s Mind:

• GreenTech & Badmash Pricing game in Asia (low price) as they have a huge
inventory.
• GreenTech & Badmash heavy R & D spent, may be focusing on tech 4 in US and
Europe market.
• Ocean & Badmash will have 18 plants each as compared to 20 of ours in this round.
They may produce in bulk and try to capture market share by reducing the profit
margin
• 5 STAR may play with Tech 1 and Tech across the market, their game plan is to play
conservatively and have zero inventory in each round. This is evident with low
investment in R&D.

C. Decision choices and rationale:

• We want to play aggressively riding high on optimism and carrying confidence from
previous rounds.
• We would like to continue with the same offering of technology in the USA i.e.,
tech1 and tech 2 as there is negligible network coverage for tech 3 and 4.
• There is 32% network coverage of tech 3 in Asia. As we already planned to be the
first mover for tech 3 we would like to go ahead with it. This was possible we already
have the tech 3 feature available through R&D.

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Strategic Management- Mobile Inc. CESIM Simulation
• Same first mover strategy was applied in Europe by choosing tech 4 as the network
coverage for tech 4 was promising at 39%. However, we have to settle for higher
production costs by licensing for the tech 4 features.
• Now that we have already invested enough for new plants we decided not to go for
any new addition in this round.
• Another strategic move is to invest in R&D for tech 3 features. So, we would like to
increase the employee strength and skill by investing in training.
• Our plan is to utilize full production capacity.
• In the USA For tech 1 continue with the same promotion and go with no new feature
and keep the price competitive. For Tech 2 we would go with one additional feature
and the same price offering and promotion as the previous round.
• In Asia, Tech 2 adds 1 additional feature but improves profit by the higher price and
reducing the promotion. Introduce tech 3 with one feature, heavy promotion, and
keep a profit margin of ~ 70%.
• In Europe, introduce tech 4 with 1 feature backed by good promotion and having a
big profit margin of ~ 45% margin. Tech 2, increase 1 feature and slightly reduce the
price with the same promotion expense.
• Tech 3 and tech 4 both are produced in Asia so the prioritization is Asia->Europe.
• Adjust transport pricing to reduce the loss carry forward.
• We plan to take a long-term loan to counter short-term loans but improve share value
by offering dividends to shareholders.

3.4. Round 4

3.4.1. Analysis of round 3 results:

A. Competitive positioning:

• Overall:
• Downward journey (Cumulative shareholder return decreased from 6.71% to -
12.48%).

• USA:
➢ Additional plants available to produce more units (increase market share)
➢ Though revenue is good but profit is negative
➢ Huge tech 2 inventory
➢ 2 teams beat us in the price game for tech 2 leaving us with a huge inventory

• Asia:
➢ Negligible market share
➢ Huge tech 3 inventory (not much traction for tech 3)
➢ Huge loss in the Asian market due to leftover inventory (Tech 2, tech 3, and tech
4)
➢ 3 teams beat us in the price game for tech 2 leaving us with a huge inventory

• Europe:
➢ Great performance in terms of market share, sales revenue
➢ Avg profit due to heavy tech 4 leftover inventory

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Strategic Management- Mobile Inc. CESIM Simulation
➢ Could not capture full market share despite low price for tech 4 (Badmas & Green
Tech captured part of the market despite the high price and less promotion)

B. Company’s position: Overall 2nd position.

C. Retrospective:

• Good:
➢ Market leader in Europe (both tech 2 and tech 4 in market share, sales revenue) -
as planned
➢ Market leader in the USA (top market share in Tech 1, good sales revenue)
➢ 2nd in terms of market capitalization (3925089k), 2nd in avg share trading price
(201)

• Bad:
➢ Asia market share (just 6.2 %, 4th position)
➢ The combined ESG score was just avg (3rd position)
➢ -ve cumulative shareholder return, avg equity ratio

• Ugly:
➢ very poor demand forecasting leading to huge inventory (for all 3-tech combined -
4544)
➢ Huge short-term loan due to leftover inventory (2182332)
➢ Very poor EBITDA, ROE, and EPS.

3.4.2. Proposal for round 4:

A. Industry position:

• Growth rates are declining for all 3 markets, and demand is expected to decrease
(USA - 3%, Asia - 7%, Europe - unchanged)
• Mobile handset explosion in an aircraft will have a negative impact on demand
• Transportation cost reduced by 6 %, in-house production cost remains constant,
contracting capacity increased, and cost decreased by around 6 %.
• Corporate tax increasing in Asia to 22 %
• Additional focus towards ESG due to mounting public pressure, companies are
targeting to be 100 % carbon neutral.

B. Anticipated strategic position:

Our strategic position:

• Find a way to clear inventory for all 3 techs (tech 2, tech 3, tech 4)
• Leverage the available plants to advantage for market share capture
• Play the price game (no other choice) to beat a couple of competitors who are
playing irrationally
• For Europe focus on the latest tech and features (focus on tech 4, add new features
to Tech 2)

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Strategic Management- Mobile Inc. CESIM Simulation
• In Asia, stick to Tech 2 and tech 3. Demand for tech 1 should reduce in this round.
Put very competitive price to compete with other players and gain market share
• In the USA focus will be to clear all Tech 2 inventory, maintain Tech 1 leading
position
• Don't spend much on R&D, we already have many features
• Do proper demand forecasting to avoid short-term loans and inventory left over

Reading competitor’s mind:

GreenTech:
• Expecting them to reduce tech 2 price with new feature addition. It will be
difficult to match them in the price game. Better to reduce prices to their level.

Ocean:
• Not a major threat, their price is very high compared to feature offerings, so it will
be difficult for them to compete with other players.

Badmas:
• Playing with no rationale, it will be suicidal to chase them in price, looks like they
may be incurring loss with their price offering.

5 STAR:
• Actual competitors of ours, they are experts on demand forecasting, their
inventory is almost zero in all the rounds
• However, we are in a better position in Europe and have to retain the market lead.
In Asia they will not opt for Tech 3, and we can grab the whole tech 3 market
• They have an almost equal number of plants like ours, so will be in a position
manufacturer many units to capture market
• They are in a position to offer prices less than us as the cost of production is less
for them (no inventory)

C. Decision choices and rationale

• We have made our forecast based on the assumption that the industry will behave
as per the market outlook.
• Decided to go with same tech choice as earlier round for each of the market based
on the network coverage and market outlook forecast.
• Expecting good market for Tech 3 in Asia, we being the only player can capture
100% of market.
• Target Europe market with additional feature for both tech 2 and tech 4; however,
put higher price for Tech 2. Target is to sell Tech 4 at a lower price to clear
inventory. This will be backed by higher amount of promotion too.
• The strategy is to clear Tech 2 inventory in USA with competitive pricing and
medium promotional effort.
• We had taken a conservative approach in demand prediction compared to previous
round where we were more aggressive in demand prediction.
• The Asian market share % in previous round was mere 6.20% leaving a huge
inventory. So, the strategy is to gain the market share at-least 30 % with pricing
strategy and low unit cost.
• Expecting to retain Europe market share.

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Strategic Management- Mobile Inc. CESIM Simulation
• Reduce the number of employees as R&D won’t be needed in next round (just do
minimal R& D - 1 feature for tech 2)
• Take all required measure for ESG to avoid any negative brand image
• Logistic - Send Tech 4 from Asia to Europe. Send part of Tech 2 left over
inventory from last round to Europe. Try to sell all tech 2 inventory from Asia in
Asia itself. There is no plan to sell tech 3 in any other market than Asia, so try to
clear inventory in Asia only
• Reduce the effective tax rate and loss carry forward in whatever way possible
based on adjusting the transfer pricing.
• Not planning to take additional loan, dilution of equity or dividend pay-out.

3.5. Round 5

3.5.1. Analysis of round 4 result:

A. Competitive positioning:

• The industry growth was negative from ~4 to 8 % down.

• Negative profit due to decreased sales revenue and net financing expenses.
• Except Europe another region profit was in negative.
• Cumulative total shareholder return stayed at -ve 12.20 because of share price 14$
fall of share price after the round.
• Overall global market share was also taken a hit and company is positioned at 4th
at 16.59%.
• However positive boost is the maximum market share in USA 26.62%, which was
due to the price strategy and clearing all inventory.
• Similar positivity in Europe as company got second highest market share at 24.84.
• The price strategy by competitor has harmed our market share in Asia and we
managed to capture only a mere 6.78% in Asia leaving behind a huge inventory.
• One positive from Asia market was maximum market share in tech2 in Asia.
• Some compulsive choice was made in HR which has increased the per employee
cost.
• Lowest co2 emission and water consumption in USA and similar performance in
Asia as well.
• Big inventory in tech1 in USA and tec3,4 in Asia.
• Avg cost of production is at par with the competition in the USA but need big time
improvement in other regions.

B. Company’s position: Overall third in terms of Market share % and revenue.

C. Retrospective:

• Good:
➢ Market leader in the USA (both tech 1 and tech 2 have a major market share)
➢ Overall 2nd in global market share %
➢ Highest market share in Asia in Tech 2 (35.04 %)
➢ Consistent ESG score.

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Strategic Management- Mobile Inc. CESIM Simulation
• Bad:
➢ Very low market share in Asia 6.78%, 4th overall
➢ Asia market share (just 6.2 %, 4th position)
➢ Low-capacity utilization due to carry-over inventory.
➢ Highest free capacity (77.6% and 50.3% in USA and Asia respectively)
➢ Negative cumulative shareholder return and -ve avg equity ratio (overall 3rd)

• Ugly:
➢ Strategic defeat in Europe Tech 4, price strategy seems to have worked in Europe
compared to Tech, features & promotion
➢ Big unplanned debt
➢ Very poor EBITDA, ROE, and EPS

3.5.2. Proposal for round 5:

A. Industry position

• Robust market growth rates are expected Europe is expecting a growth rate of roughly
15%, USA just under 20%, and Asia of over 40%
• US-China economic war has caused increased tariff of 15$/unit in USA and China
reciprocate the same in retaliation.
• Contract manufacturing cost has fallen by 15% and the cost has increased by 10%.
• RMB continues to devalue. Interest rate up slightly in ASIA.
• Additional focus towards ESG due to mounting public pressure and GDPR regulation
is on full swing.

B. Anticipated strategic position:

• Anticipated strategic position was expected to rise to second in competition universe-

II but the clear goal was to achieve a positive growth rate.
• The decision was to lower the cost of production and come up with the lowest price in
the market. Since the market was expected at high growth rate, it was certain that we
cannot go with limited unit or else we could miss out to capture the market
• The price was very competitive. In each tech there was at least on competitor who
was selling the product at very low cost.
• From previous round, we saw that price has the most crucial part for market share,
followed by features and promotion. In total the overall brand value.
• We did not want to go out of market due to our past bad performance. So, the strategy
was to clearly establish a good market share and continue to be a major competitor in
the industry.
• Once this is retained, we can focus on profit-making strategy and brand promotion to
be the market leader in a future round.
• So even if the game was for 5 rounds, our thought process was to play the simulation
as a real-life competition and test the theory of strategic management to gain the
much-required confidence before we venture into the real deal.

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Strategic Management- Mobile Inc. CESIM Simulation
C. Decision choices and rationale

• We have made our forecast based on the assumption that the industry will behave as
per the market outlook.
• Decision on technology choices were primary based on the market share anticipation
by observing previous round industry market share, market network per region and as
per the available inventory from previous round.
• We made an aggressive prediction of around 3-5% extra than the market outlook for
round 5. This was based on the price strategy and available inventory as well as in-
house production capacity.
• Becoming profitable was difficult for us in this round as competitors already had a
low cost of production and good revenue to compete. In such a situation, the only
thing relevant was to capture as much market share as possible and bounce back in the
future round by making a profit a priority. So, the strategy was to clear inventory with
aggressive pricing and continue to be a big player in the market by selling maximum
units and becoming a household name. This will make spending less on promotion in
future rounds.
• Expecting good market for Tech 1 and Tech 2 the in the USA from the market
network and little less competition.
• Similar strategy was taken for Asia by opting for tech1 and 3 and for Europe by
taking Tech 2 and 4.
• Low unit cost was planned by adjusting optimum choice between in-house and
contract manufacturing.
• Cost cutting was done with higher productivity by cutting down on ESG expenses in
this round.
• Reduce the number of employees as R&D won’t be needed in the next round (just do
minimal R& D – features were chosen.
• Meticulous Logistic handling to avoid internal transfer costs.
• Reduce the effective tax rate and loss carry forward in whatever way possible based
on adjusting the transfer pricing.

Result from Round 5:

Company’s position: Overall 3rd position.

• Overall:
➢ Downward journey (Cumulative shareholder return slightly improved but still in the
negative -9.82%)
➢ Second in global market share 22.93% compared to 25.07%
➢ Huge inventory for Tech1 and Tech2. Failed to capture unsatisfied demand in tech3
Asia.

• USA:
➢ Negative profit from the round
➢ Though revenue is fine but profit is negative
➢ Lowest short-term debt as planned
➢ Price strategy seems to have worked, although cash strapped, we had to compromise
on features and promotion. Able to maintain market share

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 Strategic Management- Mobile Inc. CESIM Simulation
➢ The strategy to get market share by low price offering had worked, Sold the highest
unit of tech 2.
➢ Low demand and promotion activities have led to ending inventory of tech1, 891 and
tech2 1693 units.

• Asia:
➢ In previous rounds market shares in Asia was very low. The Price strategy seems to
have worked in Asia as market share and sales revenue has improved to over all to
second best at 24.42 and 1312884 K USD.
➢ However poor demand prediction has caused huge inventory of tech-1 1948 and
unsatisfied demand for tech-3.
➢ Huge loss in the Asian market due to leftover inventory (Tech 2, tech 3 and tech 4).
➢ 3 teams beat us in the price game for tech 2 leaving us with huge inventory .

• Europe:
➢ Great performance in terms of technology prediction and inventory management. No
inventory left
➢ However, the market share was below expectation due to the effect of promotion by
competitors.

4. Overall strategy of all rounds:

• Overall, second position in market share.
• Tech 2 had zero markets in round 5, whereas tech 3 share rose from~7% to ~33% in
Asia but our bet was on tech 1 from a profit point of view and tech 3 was to clear
inventory and increased revenue. However, that did not help our cause.
• The strategy for the entire competition was to improve the shareholder profit. The
method applied was WTP by providing the latest and necessary technology with
updated and maximum features. Be ready for the economy of scale. Improve the
branding by promotion and ESG score. Go carbon neutral and low energy and have
skilled professionals.
• Key highlights of the strategic victory- economy scale, Europe market,
• Tech choices- USA tech 1 and tech 2 consistent, Europe market tech 1
• HR policy- was better, salary, skill, in-house capabilities
• Early adopter of tech 3, Tech 2 in-housing and licensing combination for the low cost
of production which helped us become a market leader in most of the rounds.
• Logistic transfer from Asia to Europe was a good strategy to lower the cost.
• Most of our initial stage strategy was adopted by our competitor but we could not
capitalize on those later on.
• Reflective notes on business strategy concepts, their applications, and their impact on
firm performance
• Our strategy met most of our expectations. We failed to capture some key and minor
factors in combination with our core strategy which hurt our market position and
share value. The market share was not as per expectation and below our estimation.
Upon retrospect, we understood that competitors had applied a large sum to product
promotion. So that was a key strategy we have learned.
• The other strategy which we failed and still searching for, is the accurate estimation of
demand.

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 Strategic Management- Mobile Inc. CESIM Simulation
• This has been the single source mistake that has triggered our downfall from the third
round onwards. Another cause was also based on the assumption game rule, which
said the product demand will always move for new technology and the demand has a
direct correlation with the market network. This notion harmed us big time as there
have been a situation where the maximum market share was taken by older
technology and we ended up getting a very small portion of the market by adopting
higher technology in that round.
• Also, sometimes you must be prepared with some of the external factors which you
cannot control like a market downturn, war situations, and some irrational player who
can come up with dirt cheap prices and disruption the market equation. The strategy
and brand value should be strengthened and prepared to face this dynamism in the
market situation.
• Also, a thing to learn is to manage the internal loan efficiently to dodge some of the
stringent taxations by specific country regions.
• Last but not least is to be very cautious when you want to be taken advantage of by
the first mover. We adopted new technology when the demand was low, and we
assumed that the cost of production of the new technology will always be high
compared to older technology. That was a big mistake from us, which cost us dearly.
We faced the wrath of competition when the same technology which was costing
~900k USD in rounds 1 and 2 ended up lower than older technology from round 3
onwards.

5. Retrospective and Don’ts:

• Don’t expect fair play from competitors. Dynamic planning for sustained competitive
advantage is the key.
• Plan for the long term, don’t worry much about any temporary dip in
growth/performance.
• We can’t control the external environment, the proven strategy that worked many
times may prove disaster some other time.
• Consumer behaviors vary across geographies, and within geography too with due
course of time.
• It is extremely hard to balance “Willingness to Pay” & “Total Cost of Production”.
Sometimes we must jump to the price game knowing it’s suicidal for all players.

6. Conclusion:
The most important activity in a business would be accurate demand prediction as it has a cascading
impact on capital investment, inventory cost, cost of production, and finances like a short-term loan,
ultimately affecting profit.

We chose the Capability-based perspective (keeping the flexibility to approach the market when the
cost in the market is profiting) and tapered vertical integration (both in-house and licensing) from
corporate strategy. However, the crucial theory we missed to implement in time was the real options
theory that is in case of uncertainty play conservative which we saw in the 3rd and 4th rounds having
adverse market situations.

The other corresponding learning is to not ignore the external factors. Failure to gauge the market
situation may be detrimental to the business, such as in a WAR situation, political instability
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 Strategic Management- Mobile Inc. CESIM Simulation
resources utilization and business strategy should be optimum rather than play with optimism. We
also need to be mindful of the competitor’s moves and be ready to counter by anticipating aggressive
as well as irrational market play.

In all these strategies, if given a chance again, we would like to explore one strategy that is tacit
collaboration and communication with competitor by doing capabilities and resource sharing.

7. References: -
https://sim.cesim.com/ul/Results?panel=ranking&sim=gc

—End of Document—

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