Reference no: EM131815057

The SLP for this course involves participating in a simulation exercise. Unlike cases, which are static, simulations are interactive and you can see the results of your decisions. Additionally, you can repeat the simulation to improve the quality of your decisions.

GENERAL SLP SCENARIO:
The 4-module SLP sequence for BUS599 requires that you run a simulation over an 18-year period, and that you analyze the outcome of the decisions you make at each decision point.

In this course, we will be using the MIT Solar Power Pricing Simulation.

The Industry Evolution Management Flight Simulator portrays the growth and competition of firms as an industry evolves. Playing the role of chief executive for one of the firms in the industry, you make key decisions involving pricing, investment and marketing in order to succeed in the marketplace.

This version of the simulator has been customized to portray the solar power industry, specifically SunPower and other manufacturers of photovoltaic panels (PVs). While historically the cost of electricity from PV panels has limited them to niche applications, there is massive potential for growth in the market if solar power could become a viable alternative to traditional sources of electricity.

In the simulator, your job is to maximize SunPower's cumulative profit over a period of eighteen years. To do this, you make pricing and investment decisions each simulated time period.

As a young company with a new innovation, you will start the game with a technology that you hope stays proprietary. In theory you can reap the benefits of technological advancements from the rest of the industry while spreading your advancements to them.

In addition, you (or your administrator) have the option of setting several other competitive and market scenarios, including the sources and rates of learning, the strength of knowledge spillovers, entry of new competitors, and external incentives that help to drive consumers towards using solar power.

You will receive periodic reports including your income statement and industry data.

You need to select your strategies based on those reports, your understanding of the underlying industry structure, and your best judgment about how your competitor and customers may respond.

Though the model has been carefully calibrated and tested, it is not designed to predict the future or exactly match the history and special circumstances of SunPower. Rather, it is used to illustrate competitive dynamics important not only in the photovoltaic panel industry but in other contexts you may face. Instead of merely "beating the game," focus on understanding the underlying industry structure so you can develop robust, successful strategies.

GET FAMILIAR WITH THE SIMULATION
Familiarize yourself with the simulation. This will require that you get an in-depth understanding of the terminology used in the simulation, as well as the pricing and cost structure of the product. As you begin this simulation (Year 1), your market share is only 2.40%. Your role with the company is to expand your company's market share over the multi-year period of operations - while recognizing the highest possible cumulative profit. To do this, you must make favorable pricing decisions, and you must ensure that you are improving your product while simultaneously lowering unit costs. Product improvements are determined by the % of revenue allocated to process improvement (i.e., technological advancement = lower unit costs).

Be sure to review the SunPower case study, as it will provide you with background and context for the simulation.

SLP
ORGANIZATIONAL DIAGNOSTIC MODELS

Overview
In SLP2, you will again be provided the numbers to be input for each of four decision points. For purposes of SLP2, pricing will be more conservative (lower) than the pricing strategy reflected in the Module 1 SLP.

Assignment
Run the simulation, entering the following numbers at each of the four major decision points:

1) Decision 1: For Years 2008-2012
a) Pricing - Manual
b) Module Price - $0.13
c) Revenue to Process Improvement - 5%
d) Years to Advance - 5 years

2) Decision 2: For Years 2013-2017
a) Pricing - Manual
b) Module Price - $0.11
c) Revenue to Process Improvement - 5%
d) Years to Advance - 5 years

3) Decision 3: For Years 2018-2022
a) Pricing - Manual
b) Module Price - $0.09
c) Revenue to Process Improvement - 5%
d) Years to Advance - 5 years

4) Decision 4: For Years 2023-2025

a) Pricing - Manual

b) Module Price - $0.08

c) Revenue to Process Improvement - 5%

d) Years to Advance - To end

NOTE: Do not change the numbers displayed in the "Settings" tab!

At each of the four (4) decision points above, you are required to analyze the impact of your Module Price on market share and total profits. You are also required to determine how process improvements yield a reduction in unit costs. Be sure to copy tables and charts to support your analysis. You may need t use Excel to edit the charts and tables. However, do not use figures and tables as "space fillers" - use these only to support your analysis.

Keys to the Assignment

The key aspects of this assignment that should be covered and taken into account in preparing your 5-6 page paper include:

1. Include discussion and analysis of key metrics at the end of each decision point (e.g., among other data, be sure to include total market share, revenue, cumulative profit, consumer net price, modular price, unit cost, etc.). As an MBA, it is your job to identify cause and effect!

2. For each decision point, be sure to include comparative tables that include what you believe to be the most important data. Don't merely recite the data, however - instead, analyze the data! As an MBA, what does it tell you?

3. Make recommendations. What would you have done differently as it relates to pricing, process improvement, or other?

4. Compare and contrast the pricing decisions made in SLP1 and SLP2. Give key metrics that demonstrate how the different pricing decisions have affected market share, cost to the customer, cost of goods sold, revenue, profits, etc., etc.

Be sure that you retain all SLP2 notes, tables, and figures, as you will be comparing the results of SLP2 with those of SLP3 in the next module.

NOTE: The 5-6 page requirement includes written analysis and all supporting tables, figures, and graphics. However, it does not include Cover or Reference page.