Reflection – Systems Structures and Operations (SSO)

Name: Suma Abdul Rahman

Student ID: S2302111

Date: 28th March 2024

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Fifth Year of Simulation

In the fifth year of simulation, we focused on penetrating Australian market following the advice of our peers to expand into multiple
markets concurrently to improve our simulation ranking. We specifically chose Australia as there is minimal local competitors in the
market and relatively larger price segment of the market. Consequently, we envisioned that our affordable smartphones could thrive
in the market amplifying our turnover and foster brand establishment within the Australian market with prospects for sustained
growth.

In order to achieve the strategic objective ‘Cost Leadership’, a deliberate decision was made to align the price cost of smartphone
with cost per smartphone. This adjustment was aimed to leverage aggressive pricing to increase demand and fostering a potential
upsurge in turnover. By positioning as the market leader in terms of cost, we aimed to increase market share and strengthen our
competitive standing.

As per the results, our company was at the brink of bankruptcy, however we decided not to secure a loan and aim to achieve a net
profit to mitigate the financial challenges. Hence, the decisions for the fifth year of simulation reflects our target to achieve net
profit.

The results of fifth years simulations mirrored the preceding years with the persistent losses leading to a state of technical
bankruptcy.

Sixth Year of Simulation

In the sixth year of simulation, the strategic decision was made to expand into Sirunam market. This decision was informed by the
market’s low yearly local office costs and minimal local competitors. The primary objective behind this strategic decision was to
achieve a net profit leveraging low operational expenses in the market consequently leading to a surge in turnover. Given the
financial challenges owing to the consistent losses over the preceding years, a deliberate strategic decision was made to adjust the
quality of our phone to two-star rating in order to reduce our cost per smartphone to $169.34, subsequently facilitating a price
reduction of $209 for Sirunam market. This strategic price adjustment was underpinned by a nuanced understanding of the
prevailing consumer behavior within the Sirunam market, where a significant portion of the consumer base exhibits a strong
inclination towards price sensitivity. Therefore, it was theorised that this pricing adjustment would serve as a catalyst for a
considerable increase in turnover within the targeted market segment.

Considering the bankruptcy matter, a mutual decision was taken within the group to address the financial loss via external financing.
To mitigate the risks of associated with substantial borrowing, we opted to secure a traditional bank loan of $2 million. Moreover, in
an effort to reduce the burden of obligatory annual repayments inclusive of interests, the loan tenure was extended to six years. This
decision was aimed to spread the financial obligation over a prolonged period, thereby allowing a feasible repayment plan for the
company.

Despite our efforts to achieve a net profit, our expenditures exceeded income, thereby precluding any profitability. We reflected on
our decisions and analysis to conclude that Australian market is a liability to our operations. This stemmed from several
observations, notably the persistently low level of consumer awareness of our brand within the Australian market leading to minimal
turnover.