Capsim Strategy Essay

859 WordsJan 18, 20134 Pages
We chose Broad Differentiator as the basic strategy for our company. Through this strategy, our company will attempt to differentiate our product line in several distinct dimensions. By providing products that are vastly superior and unique from our competitors and pricing the products affordably, we can gain customers’ loyalty and awareness. Since our company’s main focus is premium products we will aim for high contribution margins, around 50%, on average, over all five products. After establishing our company brand and products within the market we will look to increase contribution margin to be between 55%-60% over all five products. Our company’s optimal balance is to have variable costs outweigh fixed costs unless our…show more content…
Our company will plan to finance our strategy principally through issuing stock and cash flows from operating activities generated from the company’s normal business functions. It is undesirable for our strategy to issue debt because we would like to stay away from interest payments. Our company anticipates our debt to equity leverage ratio to be around 0.5. Through this strategy, a strength our company possesses is the ability to offer a premium product for every customer in each segment of the industry. We compete by giving all of our customers the very best, up-to-date products. Another strength is that since we have a premium product line, we are able to charge an above average price to our customers, thus leading to higher profitability in the long run. Although these are positive qualities of our company, our competitive advantage is costly. By having a product for every customer, we may not be focusing enough on our best product that could be generating the highest profit. If we invest the same amount for every product, it could lead to investing too much money on those products not performing as well; moreover, not investing enough on those products performing the

More about Capsim Strategy Essay

Open Document