Decision-Making Strategies Based on Forecasting

In this module, you will begin with an overview of how decisions based on the ability to forecast affect the business results. For many companies, forecasting is one of the most critical aspects of planning. Forecasts serve as an input to numerous decisions, which can only be as good as the forecast upon which they are based. These decisions include production planning, workforce scheduling, inventory management, purchasing, capital budgeting, and various resource allocations. Forecasts are used by the proformas to calculate financial projections (see Part 6 of your Team Member Guide). In the simulation tool, if you enter a forecast that is unrealistically high, the proformas will take that forecast and project unrealistic revenue. Accurate forecasting is a key element for company success. Manufacturing too many units could result in higher inventory carrying costs. Manufacturing too few units could result in stockouts and lost sales opportunities, which can cost even more.

What strategy will you use and why? What are the strengths of your approach? What immediate things will you need to focus on to actualize this strategy? What will you need to focus on in the longer term? respond in 1-2 paragraphs

respond to two peer

peer 1:

I have selected the Broad Differentiator Strategy. This particular strategy appeals to a broad range of consumers, it has a presence in both high and low market segments (Capsim, 2012). The strategy is as it sounds, created to set it apart from the competition by offering a unique product that customers view as a superior product (Hendricks, n.d.). R&D is important with Broad Differentiator Strategy because products need to remain new and exciting to the consumer (Capism, 2012). The price will be on the higher side and capacity will increase as higher demand is created.

This type of strategy requires a higher budgeted marketing promotion and sales in order to be able to create awareness of the new product. Demand will validate the higher cost as well. Broad Differentiator Strategy creates customer loyalty for both high-end and low-end products, so you are catching both segments for a higher sales volume.

Automation levels will increase in order to improve margins. Products will need to be repositioned as segments move with time (Capism, 2012). As we have learned from our initial training, automation takes a year so this will need to be watched carefully as demand rises.

Financing will be done through stock issues, cash from operations, and some bonds on an as-needed basis. Assets/equity should remain between 1.5 and 2.0. This strategy avoids long-term debts and interest payments (Capism, 2012).

References:

Capsim. (2012) Six basic strategies. Team Member Guide Retrieved March 8. 2021 from https://ww2.capsim.com/guides/capstone2013/the-guide/12-six-basic-strategiesbc9c.html

Hendricks, B. (n.d.). Study.com. Retrieved March 09, 2021, from https://study.com/academy/lesson/broad-differentiation-strategy-definition-examples.html#:~:text=Here%20are%20some%20of%20the,unique’%20product%20or%20service%20offering

peer 2: The strategy the company will use is Broad Cost Leader strategy I feel this is the best option for the company. The reason why I have chosen to go with this strategy is because it allows companies to offer affordable prices and still be competitive with the competition. In business to be a successful you must find a way to be able to offer the wants and needs of your customers at an affordable price to keep your customers happy and wanting to keep coming back. A company wants to find ways to maximize their profit while being competitive with composition while also making their customers happy. With this strategy we will work to keep our products up to date in each segment despite high automation levels, without sacrificing our cost/price advantage (Capsim , 2012). Low-priced products for the industry with our brands offering solid value (Capsim , 2012). Wal-Mart uses Broad Cost Leader Strategy, and they are known for their affordable prices and thriving in the business world.

To actualize the Broad cost leader strategy, we will need to make all existing product line more affordable without losing too much money this may hurt at first but overall will help the company thrive. We will need to focus on making new products every few years that are well made and up to date without sacrificing our cost/price. We will need to make sure we are staying on top of the products that the target market is needing and wanting. Taking into mind the long-term the company will need to focus on like paying off debts and investing money back into the company in the R&D to be able to continue making new products and keep products up to date. Which will help the company be able to keep prices at an affordable amount.

References

Capsim . (2012). Retrieved from Capsim Management Simulations, Inc: https://ww3.capsim.com/student/portal/index.cfm?te…