StudentShare solutions
Triangle menu

Business Simulation in Motor Industry - Research Paper Example

Not dowloaded yet

Extract of sample
Business Simulation in Motor Industry

The first model caters to the market segment - City Size and Under 25 age group. The car is 3/5 Door Hatch Type with a 4 Cylinder Engine. It has an option of Superior Sound System/iPod. Buyers under 25 yrs of age are mostly single individuals with low to average income. They normally use the car as basic transportation for everyday activities.
The second model caters to the market segment - Medium Size and 25 to 40 age group. The car is a 2/4 Door Saloon/Estate Type with a Large 6-8 Cylinder Engine. It has several options such as Multi Location Airbags, Dual Fuel Operation, 6-Speed Gearbox, Speed Limiter, Electronic Stability Control, and Safety Package. Buyers in this age group are mostly average income individuals who have high preference in comfort, speed, style and safety.
As a new entrant to the motor industry, the corporate strategy of the company is cost leadership. The car models will be positioned in the market as low priced in order to effectively penetrate the customer base. The goal of the pricing strategy is to create a company's share in the total market. The first model will be priced at 11,007.08 while the second model will be priced at 18,216.85. However, even at a low price, the company forecasts an 18% gross profit margin.
At the first year of production, the company will be manufacturing in one factory. It will be producing 50,000 units of each model. The factory will be employing at full capacity of 4,000 workers. The average wage offered to each employee would be 400, which is higher than the minimum wage per week in the industry. In order to increase productivity, the company will initially invest in 20 units of automation.

Forecast Production and Sales


Model 1
Model 2
Total
Model cost per car [Mm]
7,200.00
9,385.00

Design cost per car [Md]
888.00
1,553.50

Options cost per car(1) [Mo]
450.00
3,486.50

Material cost per car [M=Mm+Md+Mo]
8,538.00
14,425.00





Productivity (cars/worker/year) [Pr]
41
39

Workers per car [Wk = 1 / Pr]
0.024
0,026

Weekly wage [W]
400.00
400.00

Labour cost per car [L = Wk*W*50]
487.80
512.82





Total cost per car [C = L + M]
9,025.80
14,937.80





Selling price [P]
11,007.08
18.216.85

Gross Margin % [= 100*(P - C)/P]
18%
18%





Forecast Sales (units) [S]
50,000
50,000
100,000
Total Sales Income m [= S*P]
550.35
910.84
1,461.19




Forecast production (units) [N]
50,000
50,000
100,000
Total Material Cost m [= M*N]
426.90
721.25
1,148.15
Total Labour Cost m [= L*N]
24.39
25.64
50.03


Profit Forecast ( million)

Income
Costs
Total Sales Income
1,461.19




Total Material Cost

1,148.15
Total Labour Cost

50.03



Gross Profit
263.01




Fixed Overhead(2)

124.11
Promotion

40.00
Depreciation(2)

66.00



Operating Profit
32.90




Net Interest Payment

14.00



Pre-tax profit
18.90




Tax (30%)

5.67



Post-tax profit
13.23



Cash Flow Forecast ( million)

Cash In
Cash Out
Opening Bank Balance
500.00




Total Sales Income
1,461.19




Total Material Cost

1,148.15
Total Labour Cost

50.03



Fixed Overhead(2)

124.11
Promotion Cost

40.00
Factory Cost

650.00
Automation Expenditure

10.00
Tax Payment

5.67



Balance before Loan
(66.77)

New Loan
200.00

Closing Bank Balance
133.23



NX0441 Business Game Decision Form
Semester 1 2009/10
Seminar Group . Team Number . ...Show more

Summary

The automobile market is segmented into age groups and car sizes. Figure 1 shows the percentage share of market segments in the total market according to car sizes and age groups. The pie graphs illustrates that the highest number of buyers are in the age group 25 to 40 who buys medium size cars…
Author : homenickjasper
Business Simulation in Motor Industry essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the research paper on your topic
"Business Simulation in Motor Industry"
with a personal 20% discount.
Grab the best paper

Related Essays

Information Managment Challenges for Ford Motor Company
According to the study there are new challenges in the IT department of Ford Motor Company every year.  According to the company’s mission statement, “Our customers, clients, suppliers, partners, employees, and stakeholders say, without hesitation, that Information Technology is a critical and competitive differentiator for Ford Motor Company. 
41 pages (10500 words) Research Paper
Ford Motor Company's Transformation to an e-business
It must be remembered that the 1990s was the time-period of the emergence of the so-called Internet superhighway. Thence, Nasser had predicted the vital role and the benefits offered by the growth of the software technology. In relation to the World Wide Web, he positioned the Ford Motor in such a way that the company attains the “vision we have for this new technology” (as cited in Greenhalgh, 2000, p.
2 pages (500 words) Research Paper
How Ford Motor Company Transformed From an e-business to an i-business
Existing e- business of Ford: In the year 1999 Ford motor company experienced a huge fall in revenue. Then some business strategies were announced to regain its position in the market. The usage of modern technologies was optimum in those strategies. They launched new websites, in-car computer facilities and other entertainments in car were provided.
2 pages (500 words) Research Paper
How did Ford Motor Company Successfully Turn Around its Business During the Recent Recession
The economic recession led to downturns in growth that further led to huge inflation, decreased credit availability and high interest rate. This along with job cuts and reduced salaries has also led to decrease in the disposable income of individuals; this has further reduced the sales volumes of various companies.
7 pages (1750 words) Research Paper
Information Managment Challenges for Ford Motor Company
We hold ourselves to this high standard with pride.” Further, the company states that: “Though our work is with people, our tool is with the computer.” With both of these critical components in mind, and along with the
42 pages (10500 words) Research Paper
How Ford Motor Company Transformed From an e-business to an i-business
They provided individual PCs to all the employees to connect more closely with the consumers. In this way the company managed to regain their position with the help of e-business (Ford’s e-Business Strategy, 2000). Ford’s CEO
2 pages (500 words) Research Paper
Ford Motor Company: Industry, Environment, Mission and Strategies
Government regulators are constantly pushing for tighter fuel economy regulation, while gas mileage is a prime concern for many consumers (Gas
2 pages (500 words) Research Paper
Tesla Motor
The company also markets electric powertrain components and considers it an independent automaker where they plan to offer electric cars at a cheaper price to the average consumers. Tesla’s designs and ideas have hugely changed the world because of the introduction of electric cars.
5 pages (1250 words) Research Paper
Finance simulation
Captivatingly, the simulation offers a wider perspective of managerial economics as it pertains to the nursing field and decision-making. Changing the skill mix and reducing agency staff were the chosen. Changing the skill mix reduces the
2 pages (500 words) Research Paper
Business Research & Analysis Plan For Market Readiness for Electric Pick-up Truck for Ford Motor Company
One field that is of great concern is that of automobile. Unlike in the past where there were only few companies manufacturing automobiles, this is not the case anymore. This is because currently there are many nations competing against each other for dominance
3 pages (750 words) Research Paper
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Rate this paper:
Thank you! Your comment has been sent and will be posted after moderation