ROUND 1

The strategy adopted in round 1 was product differentiation. The strategy was pitched in to produce
shoes at the premium range. Since the product was premium, we have decided to add along the
technological improvement to gain higher profit margin share. The round 1 product was in premium
segment and following are the results of round 1.

  Round 1
WAREHOUSE
Quantity to Order 3000
Material Quality Premium
Product Delivery:
Single
Fulfilment Method shipment
FACTORY
Work mode All station
Employee Ashley
  Lucy
  Mark
  Ali
  Navid
SHOWROOM
Shoelace protector Yes
Technology improvement Yes
Customized flag add-on No
Upgraded performance insole No

Results of round 1:

  Round 1
2872/300
Quantity sold
0
Shoe quality 57.6/100
Price per unit $42.51
Net Sales $122079
Operating
($176010)
expense
Profit ($53931)
There was a considerable loss of $53931, the major errors were warehouse costs are high and so
needed to outsource certain activities and defectives products were also produced, to rectify the
training the employees is necessary.

ROUND 2
The strategy chosen in round 2 was cost leadership, the primary goal was to produce the shoes in
large quantity and with basic quality. The change was initiated following the loss of success from the
previous round. The profit projected to gain from this round was to produce in large quantity of
basic ratings. The following are the Project Inputs from round 2.

  Round 2 Round 1
WAREHOUSE
Quantity to Order 6000 3000
Material Quality Basic Premium
Additional Options Buying group Nil
Product Delivery:  
Delivery Method Outsourced Nil
Single Single
Fulfilment Method shipment shipment
Add Buffer for Final Delivery Nil Nil
FACTORY
Work mode All station All station
Employee Ashley Ashley
  Mark Lucy
  Ali Mark
  Navid Ali
    Navid
SHOWROOM
Shoelace protector No Yes
Technology improvement No Yes
Customized flag add-on Yes No
Upgraded performance insole No No
     
Manufacturer’s warranty None Nil
Product launch event $0 Nil
Results of round 2

  Round 2 Round 1
5190/600 2872/300
Quantity sold
0 0
Shoe quality 25.1/100 57.6/100
Price per unit $36.74 $42.51
Net Sales $160986 $122079
Operating
($127749) ($176010)
expense
Profit $33237 ($53931)

The changes from round 1 was in change in strategy from product differentiation to cost leadership.
The product produced were from premium segment to basic segment. Many new options where
available compared to round 1 such as mode of delivery, methods of fulfilling the orders and option
for buffer in final delivery.

Changes from Round 1

Revenue $38907
Spending ($48621)
Profit $87168

The profit gained from round 2 was $33237 and there was a huge shift of profit compared to
changes from round 1 of $87168. The success was due to the increased quantity of shoes produced
with a basic quality and also Minimum adds on were introduced.