Strategy Corp

Guide to Case Study

Powered by Cesim
Congratulations on your New Role!
You have been selected as new top
management of the company Mobile Two
Inc. Products to Three Markets
launch
• You will compete with several other firms
to sell your mobiles in market.
4
Network Coverage Technology
• You will be responsible to formulate and level
execute the long term strategy for your
business.

Six
Your performance will assessed each Strategy
Divisions
year on your “Cumulative Shareholder
Return”.
History to Present of Mobile Inc
• The mobile communication industry has been evolved from end of 1980’s to beginning of 1990’s

• During the periods of recession also a heavy R&D investment was common in this Industry

• The cellular technology has travelled at long way from 2G >> 3G >> 4G

• Currently Mobile Inc. has 1.2 billion USD of annual sales revenue. The company handsets

business has developed favorably due to huge R&D Investment

• Appealing and customer driven designs have been named as some of key features for success
Present Market & Production Plant USA

• The company sell their product in USA, Asia and Europe.

• Production and R&D have always been in USA but recently

company has also decided to build up facilities at Asia too.

Asia
• The production facility in Europe is not available due to

their complicated and inflexible labour laws which makes

operations expensive.

Europe
USA Market
• USA is the local market of mobile and at the same time largest market

• USA is generally known to be leader of high-tech industry but in

mobile technology this is not case

• Product features are currently less appreciated than Europe, but

advertising seems to have good response

• Demand has to be expected to grow by 5-10% for next 2-3 years.

• According to some of the least conservative estimates, in a few years USA

with introduction of new technology demand may rise up by 15-20%
per annum
Asia Market
• It is predicted that the highest growth potential is in fact in Asia

• Currently the market grows at 20% per annum, but long-term growth
prospects are hard to make

• The market is quite polarized between high-spenders who always want to

have the latest technologies and late adopters who are happy with their
old devices.

• On average it seems that consumers are currently less responsive to new

technologies and features than their counterparts in USA and Europe. Asia
• The average responsiveness to prices is higher than elsewhere
Europe Market
• The companies have been exporting products to Europe for a
couple of years

• Production facilities will not be established in Europe because of

the high labour costs

• The market growth is expected to be about 10% p.a. and

demand is expected to grow steadily for several years to come

• This market appears to be the most responsive to product Europe

features currently
Future Challenges
• The pace of change in industry has been rapid and great

expectations have been set for new technologies

• The biggest challenge for a mobile handset manufacturer is

keeping up with technological evolution since R&D requires

Technology
continuous large investment

• The growth in global market and understanding consumer Business

base will create a momentum for your company

• As mobile industry evolves, the industry has been intensified

with competition
Production - Operations
• Production is complicated and high cost is involved in
opening up a new plant.
• Short product life cycle forces the company to open up
production plant as soon as possible while it takes 2 Production

year/period to start. Investment

• As company becomes acquainted with particular skills Outsourcing

learning curve effect takes place and production per unit Capacity

reduces.
• Addition of more plants is possible in any period on other
hand you can outsource manufacturing but in a limited
capacity.
Current Production:
12 plants in USA
Capacity/plant: 550,000 unit handset/year/plant
Time to open new plant 2 years from year of investment
Sales & Marketing - Operations
• The companies have traditionally operated in US
market but now our sales network has been in Asia
and Europe.
• Price and advertising plays an important role to Price
Advertising Market
promote brand and communicate product to our Feature

consumers
• Underlying technology of mobile handsets is not
very different for company so features play a
important role in product differentiation Note: Minimum number of feature is one and maximum is
10 for any technology.
• Feature includes design, cover, screen, size, Typical marketing spending in the industry is 3-5% of sales
revenue.
applications and processor speed.
Research & Development - Operations
• R&D is extremely important for IT and other high tech
Base
companies. The steps for R&D process is: Technolog
• First step is to choose an underlying base technology y
• Second step is to develop the product features for base technology

• In order to develop features we can use inhouse facility as Product

Features
well as outsource facility.
• The inhouse facility takes a time of 1 year to develop a
Inhouse
particular feature but is economic
• The outsource facility gives you an option to buy out
Outsource
licenses immediately but is costly.
• R&D expenditure won’t be capitalized in balance sheet but
would have an impact on P&L as operating expense.
Technologies - Operations
• So far, the companies have been manufacturing technology
level 1 handset only
• New mobile network will require new technology handsets Level 1

Technology
• R&D provides an option to develop new technology whose
investment is costly
• The technologies are dependent on network i.e.
Level 2
technology level 2 phone can’t operate in technology level
1 network Level 3
• Monitor network coverage forecast on demand page
before developing new technology in R&D Level 4
• New technology is crucial to secure prosperous future for
the company
Transportation & Logistics - Operations
• Transportation to export market is handled by

independent freight company per unit

transportation
cost
• The cost of service has been mentioned in parameters

tab in game Logistics

• There is no logistics cost involved when the good is cost
manufactures and sold in same area
tariff
• In case of conflict in demand, one can choose the

priority of different market where the demand gets

served first
Finance - Operations
• The companies can obtain financing from lending institutions
• Lending institutions provide long-term and short-term loans
with an interest rate depending on company financial conditions Short-
Long term
• Short-term debts is considered to be the last resort i.e. term loans
loans
emergency funding and always carries extra cost.
• Short-term debt is generated when the company cannot Internal
Transfer
maintain a minimum cash balance of USD 2 million.
• Funds can also be transferred to different countries by internal
loans.
• Internal loans can be used if accumulated cash is substantial in Managing Finance
reserve at Asia or Europe and need of any investment/paying
long-term loans at USA or Asia arises
Measure of Performance
Cumulative
Shareholder
Return
• The primary objective of the firm is to maximize the value to
its shareholders.

• In this case the returns to shareholders are measured by a

term called cumulative shareholder return.

• It takes into consideration the share price development over

time, profits, growth and various other parameters.
Let’s Start…
• You have replaced the top management of the company. The
previous years company performance will be visible in results
Learning
tab.

• You are the CEO of company named “Green” and will be

competing with other four competitors in market to sell your
mobile products.

• All the companies start at same position as yours but strategy of

each define their result. Fun
• Please carefully read other documents & videos to start playing
the game.