The Primary Competitor For Team Andrews

1262 WordsSep 26, 20156 Pages
Introduction: The primary competitor for Team Andrews (a Niche Cost Leader) during the simulation was Team Digby, a chip manufacturer with a broad differentiator strategy. Digby’s presences in all markets compared to Andrews focus on the Low End and Traditional Segments revealed a number of advantages and weaknesses to maintaining a broader strategy compared to Andrews focus on higher volume / lower overhead products. While both strategies eventually proved quite successful (Andrews and Digby were the only competitors to have cumulative profits in excess of $100 million,) the significantly different strategies of both teams points to some clear advantages for either strategy. D.1. - Financial Statistics: Return on Sales (ROS): Return…show more content…
By round 4, the tide had turned with team Andrews establishing market share and volume, as well as reductions in labor costs, that provided Andrews with an ROS of 7.3% compared to Digby’s ROS of 4.8%. By round 6, the disparity had grown with Andrews achieving an ROS of 15.4% compared to Digby’s ROS of 5.9% The trend would continue as the Niche Cost Leader strategy evolved with increased production and volume of sales compared to better margins but much lower volume for Digby. Though the higher end products could provide profit, the volume available in that market couldn’t provide enough profit to offset the lack of volume compared to team Andrews. By the end of round 8, team Andrews, focused on low end and traditional products had an impressive ROS of 18.9%, Digby had a far less impressive ROS of 8.9%. Of note, Digby’s ROS was next to last for the teams involved in the simulation – an indication that the lower volume sales of the higher end product market sought after by a broad differentiator may not always pay off as richly as hoped even with though the high end products can provide better margins. The costs involved in producing the higher end products can be so extensive as to adversely affect many other metrics in a company’s financials. Return on Assets (ROA): “Return on assets is the ratio of annual net income to average total assets of a business during a financial year.” (Irfanullah, 2013) In short, it measures a company’s
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