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Capstone Business Simulation

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VMO Statement

Capstone Project

Tablet Inc

GROUP U14T6

BM

2017-2019

[pic 1]

Bimalendu Pal

UM17267

Jagat Jyoti Ghosh

UM17273

XAVIER INSTITUTE OF MANAGEMENT, BHUBANESWAR

XAVIER UNIVERSITY, BHUBANESWAR

JULY 2018

  1. VMG Framework

1.1. Vision

“To be the household name for Tablets through innovation and affordability”

1.2. Mission

To be the market leader in tablet industry (in terms of units sold) capturing 16% market share in the next 10 years thorough innovative products at affordable prices.

1.3. Objectives

Based on the mission, the objectives are set as follows:

  • To achieve market share of 16% in the next 10 years
  • To take the advantage of different Tax Structure in different market areas through Transfer Pricing.
  • To sale maximum where margins are higher
  • To take first mover advantage by outsourcing
  • To make suitable capex decision to take advantage of the learning curve effect and meet the growing demand
  • To make decisions regarding addition of features- in house R&D or Licensing based on relative costs

  1. Market Demand Forecasting

Assumptions:

  • The growth rate in each of the market area- USA, Europe and Asia are assumed based on the market conditions and penetration of technology infrastructure
  • The growth rate for each year is based on overall economy
  • The composition of various technologies- Tech 1, Tech 2, Tech 3 and Tech 4 is proportionate to the network coverage percentage in each market i.e., the network coverage percentage for each technology is taken as surrogate for demand for that particular technology

[pic 2]

Figure 1: YoY Market Growth Rate in %

Demand Forecasting:

Based on the growth rate for each year and each market areas, the demand was forecast using the:

(Demand at year n+1) = (Demand at year n )* (1+ YoY Growth rate)

[pic 3]

Figure 2: Demand Forecasting

  1. Technology Launch Schedule

Launch Strategy:

  • Tech 2 will be launched in the Year 1
  • Tech 3 will be launched in the Year 5
  • Tech 4 will be launched in the Year 4
  1. Market Share Forecasting

The market share to be captured in each market area- USA, Europe and Asia is based on the assumptions as delineated below:

[pic 4]

Figure 3: Area wise Market Share

The global market share is as below:

[pic 5]

Figure 4: Global Market Share

  1. Production Schedule

The target market share for each technology gives the production requirements for the same.

Based on the target market share for each year and forecasted demand, the production requirement is calculated as

Production= Target Market Share * Demand

[pic 6]

Figure 5: Production Schedule

  1. Capex Schedule

 

The global supply of tablets determines the capex requirements under the following constraints:

Capex Constraints:

  • Production capacity per plant= 550 units
  • Contract Manufacturing/ Outsourcing Limit= 2000 units (1000 each in Asia and USA)
  • Gestation Period= 1 year

Year

No. of Plants

0

9

1

11

2

14

3

16

4

20

5

22

6

26

7

31

8

36

9

42

10

48

11

55

12

62

Figure 6: Capex Schedule

From the above schedule, investments can be made suitably.

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