CHESTER SENSORS. INC.

CAPSIM BUSINESS SIMULATION

Individual Analysis Report

Abstract
This report shows a representation of different strategies applied by the Chester’s Sensor industry management team until the
current calendar year. A report will give an in-depth analysis with thorough documentation about how different strategies
applied by Chester’s team have worked for the company, an explanation on how each strategy performed for an individual
business function and based on above what is the current state of the company. Furthermore, a discussion about what can be
done in the future to sustain and improve the future operations. And finally, the learning outcomes from the simulation.

Quasain Ali
Student ID: 1715057
Group: 13
1.1 Chester Sensors. Inc. Introduction:
Since the beginning, Chester Sensors strategy was to create the customer loyalty. Chester,
achieved it by continuously offering high quality, low priced sensors to its customer. The market
where Chester was performing business had five other very similar companies as the competitors
producing the sensors. The important decision was to appropriately position Chester’s products
in to the sensors market with thorough strategic analysis.

After going through the market share and market growth of all the product, Chester realized that,
with the market growth of 11.7 % in low end segment the forecast demand was estimated up to
10 million. With these figures, Chester decided to apply the BCG Market Growth Matrix
(Marketing91.com, 2017) in order to know its products value. “BCG Growth matrix is a
business tool, which uses relative market share and industry growth rate factors to evaluate the
potential of business brand portfolio and suggest further investment strategies”. (Strategic
Management Insight, 1 May 2013). Chester team decided to have an initial focus only on the
segments that lied under the Cash cow and Star quadrant (i.e. Low end and High end segments).
Based on the applied strategy the main focus of the team, was to maintain the R&D elements of
each product according to the buying criteria of the customers and focus more on the promo and
sales of low end and high end segment. Continues effort and using the same strategy, team
Chester soon realized that company’s market shares have dropped constantly and company have
ended into the loss of more than $ 9 million.

Market Share Market Growth

30

18.30 19.8
20 16.7 16.5
14.3 16.2 15.50
13
11.7
9.2
10

0
High end Size Low End Traditional Performance
Fig 1.1: Relative market share and Market Growth

Fig 1.2: Relative market share and Market Growth

1.2 Chester’s Sensors. Inc. turning point:

In Year 5 Chester team decided to re analyze company’s products based on the market growth
rate and market share in regards to its competitors and realized to give up the High end and Size
segment completely by shutting down their production and by keeping the focus on the
remaining three segments (i.e. Low end, Traditional and Performance). On the basis of customer
buying criteria, proper demand forecasting and proper investment on TQM, production and
promotion/sales Chester Management saw a huge increase in company’s financial results.

2.1 Chester’s Sensors. Inc. Current State:

Year 2024, Chester is in a very well financial conditions with a profit of more than $ 20 million,
with an industry market share of 13.5 %, ROE of 34.7% and ROA of 19.1% compared to
previous years (Fig 1.1).

Fig 2.1: Year 2024 company analysis

To understand Chester’s current state it is important to know company’s current

strategic capabilities in regards to its environmental influence (Exploring Strategy,
p 91). Therefore a SWOT Analysis is conducted to know the company’s current
state in details
 Strengths: Weaknesses:
1. Above high average Cont. Margin 1. No proper forecast
2. No emergency loans 2. Less fund allocation on HR
3. Effective TQM strategy 3. Loss of high end and size market
4. Competitive Pricing on Low end
5. High Customer reach

Opportunities:
1. Gain high market share in current market
segments
2. New product innovation in size and high end
market with better R&D strategy.
3. Strong cont. margin as competitive
advantage in pricing strategy
Threats:
1. Less targeted marketing segments as
compared to competitors.
2. Baldwin Sensors highest customer rating in
Size Segment
3. Change in Customer buying behavior

Fig 2.1 Chester SWOT analysis

Strength & Weakness Analysis:

As seen from the Fig 2.1 Chester Sensors.inc have managed to maintain above high avg. cont.
margin. Has a very well financial condition with no emergency loans. The investments in right
TQM have helped the company to maintain its customer reach and helped very well in managing
employee cost. Chester Sensors have managed to have a higher customer rating in low end
market based on competitive price strategy. Seeing Chester’s current state, it is realized by the
management that proper forecasting should be done in order to meet customer demands in the
performance segment. Company needs to have more allocated budget for Human Resource
department in order to have more training for employees.
3.0 Future Routes for Chester Sensors. Inc.

In future, Chester Sensors. Inc. believe to grab the opportunities by eliminating

threats as mentioned in SWOT analysis (fig. 2.1)
1. Introducing New Product/Being innovative:

Seeing a growth in Market share of Size segment, Chester team should tend
to introduce new product and enter in to the size segment. It will help the
company to open up the customer base and attract more customer for its
products. In the future, company also should work to be more innovative in
launching new products. Being first in the industry to come up with newer
product may appeal to customer.

2. Introducing some Complementary Services:

Chester Sensors. Inc. in future should introduce a complementary good or
services to its customer, by introducing warranty programs, free installation
etc. to get the competitive advantage on its customer.

3. Investment in more TQM:

Company should be keen to invest in more TQM especially in QIT, JIT,
UNEP Green programs and 6 sigma training. This will help the company to
create more market awareness, decrease labor cost and material cost in the
future.
4. Act more market Oriented:
Chester Sensors. Inc. Should be more market oriented by doing market
surveys and research in order to know well about its customer needs. A
focus should be on what customer demands for and accordingly company
should react to them.
4.0 Learning outcomes.
1. Team work:
“Coming together is a beginning. Keeping together is progress. Working together is
success” (Henry Ford).
As said by Mr. Henry Ford above, team work brings you a success. What we have
learned is how to work in a team effectively to gain better outcomes.

2. To Have economies of Sales:

Chester Sensors. Inc. should have maintained the economies of sales in the low end
segment to meet the customer demands as well as it would have helped us in decreasing
the fixed cost per unit.

3. Have a complete Market and industry knowledge:

To run a business, it is very important to first have a thorough knowledge about its
customers and the market a company tends to run in. It is very important to go through all
the details mentioned in the reports given at earlier stages and to make further decisions
accordingly.

4. Proper Forecasting:
Proper forecasting methods should be applied, to have an understanding on the
production schedule, sales budget and promo budget.
Reference List:
1. Jurevicius, O. (2013, May 01). How to Focus on the Stars with a Clever BCG Matrix.
https://www.strategicmanagementinsight.com/tools/bcg-matrix-growth-share.html.

2. Johnson, G., Wettington, R., & Scholes, K. (n.d.). SWOT Analysis. In Exploring
Strategy (9th ed., p. 91). Pearson.

3. Staff, I. (2016, March 14). Economies of Scale.

https://www.investopedia.com/terms/e/economiesofscale.asp

4. Capsim 2017, Capsim® Courier Round 7, Management Simulations, Inc., Chicago,

Viewed 10 November, 2017

5. Capsim 2017, Capsim® Courier Round 5, Management Simulations, Inc., Chicago,

Viewed 10 November, 2017

6. Glenn M.Parker 2008, Team and TeamWork, Wiley.