Back Bay Battery Simulation Manoj

RunningHead:BACKBAYBATTERYSIMULATION 1
Strategic Innovation Simulation: Back Bay Battery
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BACKBAY BATTERYSIMULATION 2
Strategic Innovation Simulation: Back Bay Battery
Back Bay Battery is a good simulation as it helps to put in practice the strategizing skills
that are needed for business or any organization management. Research and development
(R&D) are required as it enables the business firm to remain competitive, as it can answer
growing customer needs. However, managers face a tough decision allocating these funds as
they are required to constantly be as per with competitions, ensure that research and
development do not raise the unit cost, and always listen what the customer want. The
simulation equipped me with all these skills as I had to make a tough decision whether to invest
R&D on Nickel Hydride Metal (NiMH) batteries or invest in promising innovative disruptor
Ultracapacitor.
The news channel, customer desires, potential customers, and the Back Bay Battery
revenue details gave me the information I needed to make decisions. The power tools, two-way
radios, and power packs gave the Black Bay Battery Ltd the competitive advantage. However,
Lithium Ion batteries introduction into the market with many benefits over NIMH batteries
took computer batteries segment and other markets as well that generated revenue for the
company. The improvement in lithium-ion battery poses a risk as there is a possibility that it
can encroach the Black Bay Battery market niche. However, the Ultracapacitor with better
performance in most features such as recharge, the reliability over a long period as it is not
affected by the recharge cycles still stands a better position. Nevertheless, for Ultracapacitor to
be more appealing to customers, the energy density needs improvement, but it requires a lot of
research and development.
The Strategy
The 2012 news was promising as the overall sales of power Tools grew by 37% and 24.9
million units sold. I decided to maintain the price of NiMH at $10.00 and for Ultracapacitor at
$20.00 to cover R&D costs. I invested $2.0M in improving the energy density of NiMH to
fulfill customer needs and $1.0M to improve the processes, which could cut the unit costs. A
$4.0M investment was made for UC to improve the energy density as it was the only thing that
was missing. My investment paid out as the performance of both batteries improved and this
made the revenue to go up. I kept the price same for NiMH batteries for another two years, i.e.,
from 2014 to 2015, even though I found in the news that overall sales of Two Way Radios and
Power Packs have declined. However, in 2015 the mature competition requested a price
reduction; this necessitated me to reduce the Nickel Metal Hydride Batteries to $9 per unit to be
competitive in the market. But still, I found that my revenues dropped heavily, and my profit
was slowing down to a negative value. I found that the reason for this was a decrease in sales
during this year. In 2016, the price was being reduced, and the managers requested more price
reduction, and I definitely knew that the revenues would be affected. I was flexible enough to
drop my prices for NiMH to $8.49 according to the news. Still, I found that my operating profit
decreased to a negative value, -22m, with a reduction in revenues. I thought this might be
because of my competitors who might have reduced the price of batteries more and my
customers are moving away from me. With this thought, I maintained my price at $7.5per unit
of NiMH in 2018, but I invested in process improvement to cut the unit cost. I reduced the price
of UC to $17.8 in the notion that the customers are moving towards more innovative
technologies and because my R&D has improved the desired UC features I thought this might
improve the profit of my organization. I invested heavily in process improvement to reduce the
unit costs as the competitors were pushing the prices of the products down.
In 2020, I maintained the low price of NiMH as I thought the technology was obsolete
and but the price will make the product more desirable and buy the products in huge numbers
due to decreased prices. The customers were willing to pay the price of $20.8 for Ultra capacitors
so I maintained the price. The investment was a success as I was able to raise the profits of
Ultra-capacitors from -25% in 2012 to 2% in 2020 and those of NiMH from 31% to 39%. My
investment on the process improvement helped to reduce the unit costs of both products.
I thought that my strategy for Ultracapacitors was working, but I was lagging some
essential aspects in NiMH batteries. When I analyzed the situation, I thought it might be because
of higher R&D investments in Ultracapacitors, which paid the price ultimately. I also found out
that it is better to invest in energy density, recharge cycles, and process improvement for
Ultracapacitors. I found that the market is highly fickle. There are times when the market
conditions were good, and I thought to increase the price of NiMH batteries. At times when the
market conditions were poor, I dropped the prices of NiMH batteries. Apart from it, the R&D
investments were not constant. Sometimes I had as much as $11 million to invest, and
sometimes I had as low as $5 million to invest. The challenging task was to cope up with the
market conditions and to invest pragmatically in the R&D.
Conclusion
The simulation helped me to understand how volatile the market is and does not always
support one's business strategies, goals, and will. This is more applies when a company wants to
introduce a new product or a service that requires much R &D investments and handle the
changing market needs. Black Bay Battery Ltd. simulation improved my skills on how to address
Research and development funds. An excellent timing and an efficient allocation of the fund are
required to ensure that the company remains competitive in the marketplace. Moreover, I was
able to understand the interconnection between the investment decision on new disruptive
technologies and its input to the health of business and profitability.

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RunningHead:BACKBAYBATTERYSIMULATION 1

Strategic Innovation Simulation: Back Bay Battery

Strategic Innovation Simulation: Back Bay Battery

research and development.

market conditions and to invest pragmatically in the R&D.

technologies and its input to the health of business and profitability.

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