Business Strategy Game

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With the purpose of reducing reject rate, Avan decides to invest more on TQM/Six Sigma Quality program by raising more $2 on each plant. In this sector, we also increase the number of models up to 250 in all plants for making sure that we must higher the industry average. This year, we continue pay for training and incentives as we plan at the beginning of the game.

We decide to produce with full capacity in North America plant, as we forecast the number of sale of wholesale and internet will reach the maximum N.A. plant capacity. Besides, the profit margin in this market is higher compare to our rate.

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We hope to keep the same market share at the last year in Latin America and Europe-Africa and based on the market forecast as get the amount of goods for shipping to those places. We also want to keep some inventory in all market for avoid stock out, which will dramatically destroy our profit and image. As we calculate, the lost sale will damage us much more than keeping inventory or using clearance option.

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As we mention above, in the year 15 Avan lost its entire market share in private-label in whole global market. Therefore, in this year 16, we will decrease the bid price considerably in Asia and Latin America to win the completion. That option is a must for us due to the requirement of raising company image and utilizing all capacity to keep the production cost per unit low.

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As the increase in investment for supportive services and sale activities, our group also decide to go up for the wholesale price in all markets but still keeps it below the average of the industry. The table demonstrates the surge in advertising budgets, retail outlets, retail supports and delivery to retailers. We aim to dominate the market by providing the best services comparing to our rivals who mainly play at price and product quality.

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We keep the same selling price and offer more models than the average of the market. We do not set the price down because we other supportive services will help much in improving the number of sales. It is believed for the following reasons. First, only Avan provides free shipping option to the customers. Second, we have increased stars to six; it is above the industry average.

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In term of celebrity endorsement, our group tries to win as many stars as we can but it has to win with low price so that we try biding all of celebrities. We offer the bid price higher DNPT Corp. in the last year because we see that rival is using the same biding strategy with us. The last year they won two celebrities with the same contract price $1 million while we bid all of them under that price just a little bit. We do not put very high bidding price due to this sector is depended so much on others while we can control fully with other marketing activities.

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In this year, Avan Company just repurchases 315 shares because we do not have much money and also want to borrow with that high interest rate even with credit rating A+. The other reason is that we are in the hope of winning this year game with new strategy for private-label segment; we cannot bear all the risks at the same time if those strategies fail. That is all of reasons for our group does not buy maximum allowed shares.