Project #81677 - Need Edit

I need edit with my work bellow:

 

 

By dropping price, one would expect market share to increase. Observe what actually happens and explain the observed behavior in terms of circles of causality:

 

Answer

It is amazing how the simulation demonstrates some results totally the opposite of what one can expect. By dropping the prices, based on a simple mental model decision, it did not have the expected outcome. In the contrary, the result was far from the market or competition performance. There is only one explanation for this poor performance, which is the perception of the feedbacks. Our mental model did not look into the competition strategy and decision taken to increase their market share.

 

The price:

The competition has launched the same product at the same time (scenario 1). The prices were same at the launch of the product, However after about two quarters the market share shifted towards the competition even though we dropped the prices comparing to the competition who had higher prices. It seems that we can cause more damage unintentionally (Fixes the fail) when we tace actions without understanding the causes and the dynamics that lead the competition to gain more market share.

 

The market share:

The competitor  had lowered prices progressively in order to gain market share. By doing so,  the competitor attract more customers, thus it increases the size its market share by increase in demand, which is substantial during the startup phase.

 

Margin: A boom-and-bust cycle is one in which the expansions are rapid and the contractions are steep and severe.

 

Product Availability and Delivery Delay:  

The delivery delay  rate of the competition is lower. We all know that some customers are willing to buy the more expensive product if they can get it immediately rather than waiting. Product availability can have more attractiveness rate than the price. Thus during the simulation we noticed that no matter how we lower the price, the competition was ahead, with higher price, due to the availability of the product and lower delivery delay.

The causal link between orders and product availability describes  the loop interaction between price raise and falls in relation to the product availabilities.

Let’s assume that the orders increase suddenly, as seen in Beer game which is a vicious circle, which will reduce product availability. However additional orders will cause production availability to drop and prices raise, and the contrary is correct. As a result, this will cause frustration and negative feedback from customers.

 

 

 

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Due By (Pacific Time) 09/11/2015 08:00 am
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