[Student Name]

[Teacher/Professor Name]

[Subject/Course Name]

March 20, 2023

Baldwin Simulation Report

Introduction:

Our team participated in the business simulation game that aimed to teach students the

principles of strategic decision-making in a competitive market. This report outlines the

significant differences identified between Baldwin and its competitors in the simulation game,

Baldwin's main approach, where the company went wrong, and the efforts made to fix it.

Baldwin's Main Approach:

Baldwin's primary approach was a differentiation strategy to work on all segments while

differentiating its products from the competition. In the first three rounds, Baldwin achieved a

leading market share in the traditional product segment and developed a product that met

customer criteria for overall contribution margin while increasing contribution margin by

increasing automation and capacity. Baldwin used a lot of automation to reduce variable costs,

and as a result, the second shift variable costs decreased, and the sales price increased, resulting

in a higher marketing budget. In the performance segment, Baldwin focused on positioning its

product, Bold, as the most superior and polished option in terms of size and performance within

its category. The plan was to invest in R&D specifically for the performance segment's customer

criteria and expand production capacity to meet anticipated demand. The goal was to create a
higher demand for Baldwin's niche performance product, increase its market share, and boost

profitability.

Significant Differences Identified Between Baldwin and Competitors:

Baldwin faced a series of setbacks that significantly impacted its performance in the

simulation game. Poor sales and stock shortage of Bold resulted in a very poor contribution

margin. Baldwin received a substantial emergency loan of $16 million, and Chester obtained an

emergency loan of $9 million, which persisted into the third round, with an even larger

emergency loan of $98 million being taken out. In the fourth round, Baldwin went to an

emergency loan of $68 million. Baldwin recognized that Andrews and Chester had a larger

market share in the low-end product, so the company focused on Bead as its winning product

with the highest market share.

Where Baldwin Went Wrong:

Baldwin's biggest mistake in the simulation game was taking out a high emergency loan

that significantly impacted the company's performance in all future rounds. Baldwin spent the

experience trying to lower it, but every profit made was directed to the emergency loan, resulting

in negative profits, no matter what the company did. This was due to buying capacity and

investing in automation at the same time. Baldwin missed a very essential round, which gave its

competitors a great advantage over the company, resulting in the graph shifting while Baldwin's

products simultaneously furthered away from the center. This reduced Baldwin's market shares
due to being behind in R&D and becoming low quality in comparison to other products that were

invested in by the competitor companies at the same time. The difference showed in the

significant gap in age, and due to Baldwin's emergency loan, the company did not have enough

cash to invest properly.

Efforts To Fix It:

Baldwin adopted several strategies to generate cash flow, including issuing stocks,

borrowing current debt, and maximizing short and long-term debts. The company developed a

new product to keep up with the changing market, while cutting back on production for products

with high inventory. The goal was to sell everything and increase profitability. When Baldwin's

new product line failed, the company had to sell off all related assets and focused on reducing

labor costs. In addition, Baldwin aimed to offer the lowest prices in all segments except for high-

end products, hoping to appeal to customers. The company remained committed to generating

profits wherever possible to ensure its survival. Our strategy for the final round was to reduce

labor costs and sell excess capacity, as well as to review our product portfolio and discontinue

any unprofitable products. We identified three products that were generating losses and decided

to discontinue them. For our remaining products, we have focused on improving their

positioning in the market by investing in R&D and marketing.

Lessons Learned & Future Strategies

From the Baldwin simulation, we learned the importance of balancing investment in

automation and capacity with managing debt levels. We realized that taking on too much debt

can have a significant negative impact on profitability and limit our ability to invest in R&D and
marketing. We also learned the importance of keeping a close eye on stock prices and managing

our inventory levels effectively to prevent stock shortages. Looking ahead, we plan to adopt a

more balanced approach to investment, focusing on managing debt levels while investing in

R&D and marketing to improve our product positioning and appeal to customers. We will also

focus on managing inventory levels more effectively to prevent stock shortages and maintain

profitability. Additionally, we will closely monitor our stock prices and take steps to mitigate any

negative impacts on our financial performance.

The Baldwin simulation provided us with valuable insights into the challenges of

managing a business in a competitive market. We learned the importance of balancing

investment in automation and capacity with managing debt levels, as well as the importance of

managing inventory levels and monitoring stock prices. Moving forward, we will apply these

lessons to improve our financial performance and ensure our long-term success in the market.