CESIM SIMULATION GAME –

COMPANY NAME-RED MOBILES LTD.

MEMBERS-

Rajdeep Nayak ( Team Lead )

Madhusmita Das
Manoj Yadav
Shivangini Dalal
Saurabh Sasidharan
EXECUTIVE SUMMARY

BUSINESS SUMMARY –

At Red mobiles, we produce four generation of mobile phones Tech

1,Tech 2 ,Tech 3, Tech 4 .we are a new generation luxury mobile
brand with world class expertise .Our production facilities located in
two countries ,USA and Asia. we have been established a strong
relationship with numerous distributors throughout the USA, Europe
and Asia .

OPPORTUNITY AND MARKET GAP-

Today’s population demand a phone which is technologically

advanced and are of premium quality. Market is ready to invest huge
amount of their income in purchasing premium products due to the
bandwagon effect. According to the market research we found there
is major gap in the mobile phone sector .There is no company in the
market who targets such kind of premium mobile phone .Thus taking
advantage of this gap we launched premium and technologically
advanced mobile phone in the market .

TARGET MARKET

There is a huge potential market in USA,EUROPE and ASIA. Thus we

are targeting these market with huge potential .Red Mobiles also
believes in world wide expansion thus we work continuously to
achieve that goal .

SALES AND MARKETING STRATEGY

We are using extensive marketing campaigns on television ,billboard,

magazine ,radio ,internet and word by mouth .Our advertising
campaign use easy to remember slogan and catchy tune ,accustomed
with well known logo .we are looking to expand our market
worldwide.
COMPETITORS

We have one major competitor in the market ,green mobiles in terms

of market share .Our market share is approximately 10% but has a
huge brand effect in the market .Inspite of having small market share
Red mobiles generates huge revenue due to its brand value of
technologically advanced and premium mobile phones .

COMPETITIVE ADVANTAGE

We are providing consumers innovative and alternative products

which is not only technologically advanced but also providing a
premium ,niche and luxury product which makes it worth showing
off. we have intellectual property of patents ,copyrights and
trademarks of our products which gives the mobiles a competitive
advantage.
STRATEGY

Red mobile business strategy can be classified as product

differentiation in design and functionality. Red mobile business
strategy also includes “building and expanding its own retail and
online stores and its third-party distribution network to effectively
reach more customers and provide them with a high-quality sales
and post-sales support experience.”As part of its business strategy,
Red mobile “continues to expand its platform for the discovery and
delivery of third-party digital content and applications through the
Tunes Store”. An intensive international market expansion is another
important aspect of Red mobile business strategy. According to its
business strategy, Red mobile has adapted advanced features and
capabilities of its products and services as bases of its competitive
advantage.
Red mobile business strategy can be also characterized as vertical
integration in a way that the company has advanced expertise in
software, hardware, and services at the same time. Red mobile ‘s
vertical integration is one of the major factors that set it apart from
the competition. The company has been benefiting from its vertical
integration immensely. Specifically, an important source of Red
mobile competitive advantage relates to its ecosystem, which is
enabled by such integration.
Red mobile devices and software sync easily and work well with each
other. Applications work on multiple devices at the same time and
there is no much difference in user interfaces; however the same
items do not pair with products of other companies, thus creating the
likes of a closed ecosystem. Red mobile’s ecosystem creates
switching costs for its customers to the competition. The ecosystem
also provides the opportunities to leverage relationships with
existing customers to offer other products and services.
First mover advantage is another element of Red mobile competitive
advantage. It has to be stated that Red mobile competitive advantage
may be challenging to be sustained for long-term perspective.
Specifically, the management may fail in terms of ensuring the
addition of innovative features and capabilities in new versions of its
products, thus compromising its competitive advantage.Starting from
recently, the multinational technology company has placed Services
business to the core of its business strategy. Services segment
revenues have been consistently increasing during the last six years.
STRATEGY –ROUND WISE

ROUND 1
ISSUES
-Rapidly growth in all three markets
-Health effects of Tech 2 experiment
-Political tension between USA and china.

DEMAND –(% Forecasted)

USA 15-20
EUROPE 6-10
ASIA 25-30

COSTS
-increasing of tariffs from USA to Asia(from $7 to $12 per
handset)
-No notable changes in production costs .

FINANCE
-EU is shaky position in the global marketplace
(EU corporate tax rate =31%,the Euro is expected to fall)

REVENUES -
Forecasted profit and sales based on estimates and decisions

Profit (k USD) 59 707

Change in sales (%) 32

New plants
USA 0
Asia 0

Financing
Increase (+) / decrease (-) of long-term debt 0
Share issue 10000
Share buyback 2500
ROUND 2
ISSUES
-Europe and USA are able to support Tech 4
-Believed enormous R&D expenses for developing the new
technology.
-Tech 2 is now more attractive than ever, particularly in Asia.

DEMAND-(%Forecasted)

USA 7-10
EUROPE 5
ASIA 17-20

COSTS
-Tariffs from USA to Asia =$12 per handset(offset imbalance)
-Outsourcing capacity is upto by 9% production costs are up 2%(new
players in the sourcing market)

FINANCE
-USA increased corporate tax rates to 38%
-Asia increased corporate tax rates to 18%

Forecasted profit and sales based on estimates and decisions

Profit (k USD) 285 277

Change in sales (%) -13

New plants

USA 0
Asia 0

Financing

Increase (+) / decrease (-) of long-term debt 0

Share issue 0
Share buyback 0
ROUND 3
ISSUES
-Civil war in Oilistan, the flow of oil has been cutoff to foreign
countries.

DEMAND-(% Forecasted)

USA slightly +
EUROPE heavily-
ASIA 5-8

COSTS
-Transportation costs increase by 15%
-Outsourcing capacity has risen by 13% in USA
-Outsourcing capacity has risen by 10% in china.

FINANCE
-China corporate tax rate to 19%
-Euro is expected to fall against USD
-RMB should strengthen when compared to USD
-European central bank has raised its interest rates by 0.5%

Forecasted profit and sales based on estimates and decisions

Profit (k USD) 1 306 376

Change in sales (%) -3

New plants

USA 0
Asia 2

Financing

Increase (+) / decrease (-) of long-term debt 0

Share issue 0
Share buyback 0
ROUND 4
ISSUES
-War in Oilistan is over and oil exports have returned to normal
-Mobile handset exploding news.

DEMAND-(%Forecasted)

USA -3
EUROPE unchanged
ASIA -7

COSTS
-Transportation costs diminish by approximately 6%
-Outsourcing capacity has risen by 13% in USA and 19% in China
-Outsourcing capacity has risen by outsourcing costs have fallen 4-
6%

FINANCE

-Asia corporate tax rate rise to 22%

RMB fall nearly 10% against USD.
-Euro rebounds
-Interest rates are up half a percentage point in china,up a quarter in
USA and down a quarter in EU.

Forecasted profit and sales based on estimates and decisions

Profit (k USD) 1 306 376

Change in sales (%) -3

New plants

USA 0
Asia 2

Financing

Increase (+) / decrease (-) of long-term debt 0

Share issue 0
Share buyback 0
ROUND 5
ISSUES
-The chinese –US predicament escalates

DEMAND (% Forecasted)

USA 20
ASIA over 40
EUROPE 15

COSTS
-Production costs are expected to fall in the US by 5% and to remain
level in Asia.
-Outsourcing capacity has fallen by 15%(sourcing companies went
out of business)
-Sourcing costs are up to 10%

FINANCE
-RMB continues to devalue compared to USD ,Euro strengthens.
-Interest rates are unchanged in USA and Europe, but up a Quarter in
Asia.

Forecasted profit and sales based on estimates and decisions

Profit (k USD) 1 478 179

Change in sales (%) 43

New plants

USA 0
Asia 0

Financing

Increase (+) / decrease (-) of long-term debt 0

Share issue 0
Share buyback 0
ROUND 6

ISSUES
-Robust market growth rates are expected to gradually decline over
the next few years.
-European are highly appreciative of the highest technologies .

DEMAND

USA under 20
ASIA over 30
EUROPE 15

COSTS
-production costs and outsourcing costs are down in Asia.
-Outsourcing costs are upto 2% worldwide
-Increased fixed costs by production plant from social responsibility.

FINANCE
-Euro appreciates against USD
-RMB appreciates almost 10% against USD from last year .
-FED increases interest rates by half of a percentage point
-Europe and Asia follow and raise their rates accordingly.

Forecasted profit and sales based on estimates and decisions

Profit (k USD) 358 502

Change in sales (%) -17

New plants

USA 2
Asia 6

Financing

Increase (+) / decrease (-) of long-term debt 0

Share issue 0
Share buyback 0
ROUND 7
Forecasted profit and sales based on estimates and decisions

Profit (k USD) 1 443 353

Change in sales (%) 8

New plants

USA 0
Asia 0

FINAL ROUND
(DATA INPUTS )

Forecasted profit and sales based on estimates and decisions

Profit (k USD) 7 615 832

Change in sales (%) 497
MISSION AND IDEOLOGY
 Company has aimed to create niche market for their premium
products.
 Company has concentrated to use efficient tools to optimize
the resource invested and incurred.
 Company was able to understand the behavior of the market
segments.
 Company was able justify the shareholders too.

MARKET ANALYSIS AND GROWTH

 Company in initial years experimented with market module to

understand the market behavior.
 Steadily we tried to create our market segment.
 We generated huge profit with less investment.
 Optimized our features to provide the value for the money
given by the consumer

RESEARCH AND DEVELOPMENT

 Research and development was wisely done to create the value

for the money
 Features were added to the product according to in market
demand.
 R&d has been a continuous process in each round to provide
better goods with better features.

REVENUE GENERATION
 Company was able to sustain a good profit margin being low in
market share
 Though gross profit margin generate in some year went in
negative due to the investment made in plant and features,
profit generated was 200% according to cost incurred.

LEARNINGS
 Promotion is a essential part of sales revenue.
 Maintaining lower operational cost helps to generate better
profit.
 Pre planning of plant investments according to the demnd
forecast should be done.
 Understanding of suitable product for suitable market is
necessity.

FUTURE STRATEGY

 Company tried to keep the insolvency factor by keeping

operation cost low and long debt loan nil.
 Company will be able to meet the demand and will be constant
to maintain the consumer retention.
 Company will grow steadily but strongly.
 Company will never face the bankruptcy.