PDA Slim 4 Essay Example | Topics and Well Written Essays - 750 words

PDA Slim 4 - Essay Example I decrease the price of X5 item 10%, increased the X6 by 10% and decreased the X7 price by 20%. During this simulation run I accelerated the X7 results and was able for the first time to obtain positive profits for X7 in the first round for the first time. I was able to do by lowering the price in the initial run by 20% for an overall price of $136. The market saturation growth doubled from 4% to 8%. My cumulative profits after the first round were $341 million. After completing the first round I studied the behavior of the X5 marketplace. I noticed by analyzing the historical data that the last two times I ran the simulation after the second round the results for the X5 product were negative. Independent of the price movement upwards or backwards the product became unprofitable and saturated. Based on this information I learned that this was a clear indicator that the best course of action was to eliminate the product out of the market since its existence was detrimental to the cumulative profits of the company. The profits I achieved during this round amounted to $194 million of which the X6 contributed $107 million, while the X5 provided $87 million. In the third round of this simulation I noticed that the internal information provided by the advisors of handheld became more useful and insightful. I would imagine the reason the information became more useful is that the management of the company now had more time to concentrate of their efforts in a more simplified strategy since more time could be spend in analyzing each product now. For example for the X6 the advisor told me that the customers pay more the X6 product than other comparable products. This originally made me raise the price of the item. Along with this comment another advice came in saying that the competition for the X6 has comparable products with more features. The added information was an indicator that a small decrease in price would provide greater value for the customers. I

Industry Assignment #2 Volkswagen AG Group Essay

Industry Assignment #2 Volkswagen AG Group - Essay Example Volkswagen with it's headquarter in Wolfsburg is one of the world's leading automobile manufacturers and the largest car producer in Europe. It operates 44 manufacturing facilities in 12 countries in Europe and in a further six countries in America, Asia and Africa. While the Company operates in two divisions, Automotive and Financial Services, our research is focused on its car manufacturing division. Volkswagen AG ('Company') is engaged in the manufacture and sale of automobiles worldwide. The Company's brands cut across different vehicle classes, from the top luxury class occupied by the Bentley, Bugatti and Lamborghini models, down to the bottom class where Skoda, Seat and Volkswagen are positioned. But the Volkswagen and Audi brands in particular cut right across the vertical class range. Each brand has maintained its own individual character and operates independently in the market. Its diverse range of brands gives the Company a critical competitive advantage. While it is difficult to track consumer habits in a rapidly evolving automobile market, price competitiveness will certainly remain a critical success factor. The mass-market consumers are likely to make product selections based on the price competitiveness, fuel efficiency and liberal credit availability. Valued-added features, more lucrative sales incentives to dealers, extended warranty coverage will emerge as some of the means to retain and increase market share in this extremely price sensitive market segment. Strategies of Volkswagen For many decades, Volkswagen was a classical single product mass manufacturer of Beetle brand; thus achieving a high level of inflexible and dedicated automation. In the late nineties, while the Company continued to focus on scale economies it changed its strategy from being a single product manufacture to a modern volume manufacturer offering a range of vehicles for different section of the market. A multi-brand strategy gives a clear market positioning. Volkswagen keeps adjusting its structure and strategies to cope up with the dynamics of car manufacturing industry. As per the Porter's 5 force model, the profit potential of an industry depends on the combined strength of the following five basic competitive forces: 1. Rivalry among existing firms 2. Threat to new entrants 3. Pressure from substitute products 4. Bargaining power of buyers 5. Bargaining powers of sellers According to Michael Porter, any company in any industry can achieve a competitive advantage through cost leadership, product differentiation and market segmentation. Volkswagen is a good example of proving Porter's theory. The Company has followed the strategy of product differentiation and market segmentation to achieve the competitive advantage. The following section highlights the strategies followed by Volkswagen to achieve its competitive advantage in the dynamic car manufacturing industry. Multi-Brand Strategy Volkswagen's brands cut across different vehicle classes, from the top luxury class occupied by the Bentley, Bugatti and Lamborghini models, down to the bottom class where Skoda, Seat and Volkswagen are positioned. However, each brand has maintained its own individual character and operates independently in the market. This multi-brand strategy enables the Company to generate economies of scale and to fill up price gaps and quality gaps