1

Running Head; CESIM SIMULATION FOR RED COMPANY

MGT3103 – Strategic Business Simulation and Project Management

Strategic Business Plan

The Red Company

By (Team Members’ Names)

Name Students’ ID No
Huda Abdulrahman Mohamed Abdulrahman Alhammadi H00416688)
Nurah Sayah Eissa Khalfan Almansoori H00370760)
Salama Theeban Hamad Humaid Almansoori H00413449)
Salma Sultan Rashed Ahmed Almansoori (H00351971)
Fatema Faraj Rashed Obaid Almansoori XXXX
Hasa Saeed Humaid Ali Almazrouei H00428479)
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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY
Table of Contents
A. Background Information......................................................................................................................................3
The logo of Red Company.......................................................................................................................................3
Vision......................................................................................................................................................................4
Mission....................................................................................................................................................................4
Red’s Core Values...................................................................................................................................................4
Organizational structure...........................................................................................................................................4
B) Current situation and Trends...................................................................................................................................5
Macro –Environment...............................................................................................................................................6
Micro; Industry and Competitive Environment.......................................................................................................8
C) Key Issues and Objectives....................................................................................................................................12
SWOT Analysis.....................................................................................................................................................13
Overall objectives of Red Company......................................................................................................................13
Functional objectives (4 SMART).........................................................................................................................14
D) Marketing Strategies/Action Plans.......................................................................................................................14
Objective 1: Marketing and Promotional Effectiveness................................................................................15
Objective 2: Operational efficiencies...............................................................................................................15
Objective 3: Innovation and Creativity............................................................................................................15
Objective 4: Financial Success.........................................................................................................................16
4P strategic tactics..........................................................................................................................................16
E) Key Performance Indicator...................................................................................................................................16
F) Financial Projections.............................................................................................................................................19
Conclusion.................................................................................................................................................................25
References................................................................................................................................................................. 26
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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY
A. Background Information
Red Company is one of the leading mobile phone manufacturers across Europe, Asia, and the United States of

America. The company’s headquarters id in the US, and makes cellphone products of various models with

varying technologies and designs. The electronics industry in which the firm operates is competitive in nature

because technology is generally a very dynamic phenomenon. It is however worth noting that in the technology

industry, the products share almost every technological single functionality characteristic, which then makes

product differentiation as the most fundamental tool in production and other possible business processes. In order

to meet the expectations of the shareholders, Red has consistently lived up to these expectations. In the simulated

business case, the participants of the sector in which Red operates were Orange, Blue, and Green. In order to meet

the consumer expectations, an aspect whose ultimate outcome is to maximize the general value of its

stakeholders, its strategic business operations are anchored on its mission, vision, and core values to provide a

sustainable blue print for both short and long run objectives in the global dynamic mobile phone sector.

The logo of Red Company

A logo is the identity of a company, and symbolizes several business aspects or objectives (Bresciani &
Del Ponte., 2017). For the case of our Company, Red, the clarity of the space in this logo symbolizes
clarity of vision for our firm’s business operations processes.
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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY
Vision
Red operates in the communications electronics industry driven by technology. The vision of Red is to provide

the best achievable mobile phone products with unique and differentiable features.

Mission
We are committed to making mobile phones with features that meet the demands of the consumer. We are

committed to manufacturing mobile using the most innovative design and emerging technologies in the market. In

order to attain this, it always important to employ the most effective business operations procedures to guarantee

quality, value, and meet demands.

Red’s Core Values

Commitment to sustainable business operations that meet the consumer demands is at the core of Red’s values.

i. Customer satisfaction: we understand the value of the need to value customers.

ii. Innovation: we value creativity in every business conduct and operation processes

iii. Resolution: In order to achieve our goals we utilize logical and pragmatic techniques.

iv. Research & development: we encourage partnership, collaborating, and teamwork to enhance

development of employees and other relevant stakeholders.

Organizational structure
The organizational structure of Red Company is structured in a way that supports corporate governance and

administration. An organizational structure such as Red’s enhances business decision making processes

(Meredith, Shafer, & Mantel Jr., 2017).

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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY

CEO

R&D Marketing Finance

Production
Department Department
Departmen Department
t

The CEO of the Red is mandated to formulation the most appropriate operations process plans and strategies,

ensuring there are aligned to the objectives of the company in short and long run. Production department will be

responsible for control of business operations and decisions associated with production,

R & D department is an essential component in research and other processes related to innovation and

technology. The department is crucial for decisions making involving investment in technology for better quality

products that are differentiated and with unique features.

Marketing department is tasked with promotion of the finished products and services provide by the company.

The department is important for developing necessary mechanisms for identifying market segments and target

consumer needs. The ultimate goal of the department is to boost sales by increasing demand.

Finance department is mandated with management of the financial processes and operations of the organization,

including financial reporting, analysis, budgeting, and general financial position of the company.

B) Current situation and Trends

The industry is currently approximated to be about 12 billion USD in sales revenues annually. The industry is

projected to grow even further as R&D investments by different players in the industry increases. The demand of

the handset electronics sector is projected to increase by about from the current demands of 9611lk units by 6% in
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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY
the US, about 7% in the Asian markets from the current 31445k units, and fall to the lowest levels in Europe by

up to -15% of the current 11656k units as shown in Table 1.

Table 1 Estimate of the total market demand

Predicted market
Market Total demand last round, k units
growth, %
USA 9 611 6.0

Asia 31 445 7.0

Europe 11 656 -15.0

The US is currently the largest local market for the electronics handsets. The features of our products are highest

in the US, and least in the European markets due to a myriad of reasons. The companies in the simulated business

case have all operated in the European market, that even though the demand for our products is low, advertising

and other promotional efforts seem to yield positive benefits. It is however worth noting that Red is not going to

establish production facilities in Europe due to high cost of labor and other associated factors.

Macro –Environment

The macro environment is regarded as fully operational economy in itself as it affects the businesses operations

and processes such as decisions making, goals, and even organizational strategies (Saif-Alyousfi., 2019).

PESTEL analysis provides the most efficient framework to evaluate the macro-environmental factors for an

organization.

Technological Factors

Red is currently trying to employ the most recent technology innovations. In response to the increasing demand,

its business operations have diversified the technologies to incorporate even more features in its products.

Economic conditions
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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY
Generally, prevailing the economic conditions affect virtually any business firm. For the case of our organization,

for instance, the high costs of labor inhibits further expansion into the European markets. In order to address this

limitation, Red has established mechanism to increase the demand of its products by increasing budgetary

allocations to promotion, research and development to understand the consumer needs.

Political factors

Politics influence the business environment, and consequently affect any organization trading in the environment.

For our hypothetical case, for instance, the political events influenced tax systems in different countries. In

response to this aspect, our company has committed its focus and efforts on managing its administration and

production processes. For instance, we are not intending to establish manufacturing facilities in European

markets.

Legal

Any company must comply with established legal frameworks regulating business operations and other aspects

such as quality, safety, pricing, and consumer protection. In order to avoid consequences such as increased

distribution costs associated with legal mechanisms in the market, we have recognized it as important, and then

priced our products in a manner that the profits will cover all the costs—including the additional costs due to legal

mechanisms.

Social factors

Social factors determine a wide range of decisions including production in an organization. The US market for

our case is less responsive to technological advancements and associated features, contrary to Asian markets

where response to technological development associated with mobile phones is moderate. At Red, we have

manufactured mobile phone products with different demographic factors such as age and class that determined
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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY
our pricing, incorporation o features such as larger displays, faster 5G internet, and higher storage capacities

targeting the younger consumers. Tech 4 is designed to needs of younger consumers at higher social classes, and

Tech 2 at lower costs for older consumer market segments.

Environmental forces

Environmental conditions in the market in which Red operates determine supplies and demands. In response to

this macro-environmental factor, our company has advanced its research efforts to ensure that in its production

operations, environmental responsibilities expected of a manufacturing company are satisfied.

Micro; Industry and Competitive Environment

Porter’s five forces is the most effective tool for evaluation the competitiveness of a given business organization

and the industry as a whole. It is useful as it provides resourceful information for planning and decisions making

to boost sales, and ultimately boost stakeholder value (Piontkevich & Shatkovskaya, 2020, May).

Buyers

Consumers in the technology industry determine the pricing. For our case, the buyers have more bargaining

power for our products. However, our company has priced its products moderately and increased promotion

across markets marketing new features. These accounts for the relatively large global market share our company

controls in the market, illustrated in Pie Chart 1 below.

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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY
Chart 1 Global market shares by Company

In order to increase demand for our products at premium prices that ensures our financial operations are

functional, we successfully suppressed bargaining power of consumers by using Tech 1 and administrations

processes. These efforts have been productive in building a larger consumer base, and loyalty.

Suppliers:

The purchasing power of Red over suppliers is higher. The supply of most of the raw materials for mobile phone

sector in our simulated case is the US. Therefore, in order to reduce administration costs and other additional

expenses such as logistics, we have an global inventory base for reliable suppliers at lower costs for higher

quantities on time. Red influences trustworthy raw materials suppliers to give their offers at lower costs. This has

enabled our company fulfill consumer demands and meet objectives.

Rival firms:

There are numerous firms in the industry competing with Red, including Green, Blue, Orange, and grey.

However, by improving our administration and providing products with unique features that satisfy consumer
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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY
demands, we have raised demand for our products. The differentiation in our phones has provided our company a

better competing edge.

New Entrants:

There are numerous entrant companies in the tech industry making similar products as Red’s, reducing our share

of the local and international market. In response to this, we have focused on meeting consumer demands by

making differentiable products and enhancing administration.

Substitute Products

The consumer is the defining factor in the industry because of availability of a wide range of substitutes for

product such us those manufactured by Red. Our firm faces stiff competition from Orange, Blue, Grey, and

Green. In order increase demands for our products and operate competitively in the market with increasing

entrants, we increase the range of our products, and also invested more on redesign. We have also lower our

prices per technology in the US, our largest market, and priced at market rates and at bar with competitors. This is

illustrated in Chart 2.

Chart 2 Product price per technology in USA, USD

Competitors’ Analysis
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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY
Globally, our company possessed considerably high market share percentage compared to

competitors. For instance, in Round 1 the most shares for Tech 1 in Round 1 with 21.81%,

21.11% in Round 2, 32.61 in Round 3, 15.43% in Round 4, 28.23% in year 5, and 10.61 in

Round 6.Using Round 1 for instance, where Orange’s price per technology is highest in all the

markets, our prices were at par with competitors’ (See chart 1 a, b, and c), occupying 21.81%

of the global market share by Tech 1 equally with rival firm.

Chart 3 prices per technology, USD

(a) Product prices per technology in USA, USD

(b) Product prices per technology in Asia, RMB

(c) Product prices per technology in Europe, EUR

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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY

Also, compared to competitors, we have the highest sales revenue, valued at 1.43m USD, tying

in position 1 with Grey, Blue, and Green, while Orange trails at 1.01m USD. This suggests we

need to redesign our products to make them more differentiable and increase marketing to

boost demand. Our sales revenue is also consistently higher than opponents’.

Generally, our strengths include higher revenues, higher quality products, and larger market

share. However, weakness that need to be reconsidered include low development for Tech 3

and Tech 2, limited investment on inventories and plants in other markets, higher cost of

transport, and limited bargaining power over suppliers in foreign markets. However, our

competitive advantages include administration efficiency, high quality products, and

production partners. This evaluation of our status compared to competitors’ helped us

formulate better strategies, thus fulfilling consumer’s needs in the process. Accordingly

shareholders’ value is increased as this leads to increased sales.

C) Key Issues and Objectives

SWOT analysis is useful for assessing the organization’s capabilities from different perspective to determine

possible strengths to capitalize on, weaknesses that need to be addressed, opportunities to pursue, and threats to

take advantage.
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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY
SWOT Analysis
Strength Weaknesses
1. Effective administration 1. Low development for Tech 3
2. Large market share 2. High prices of commodities
3. High revenues 3. Low range of products
4. High shareholders’ value
5. Low turnover
Opportunities Threats
1. Higher market demand 1. Consistently increasing competition.
2. Increasing consumer needs 2. Price wars between rival firms
3. Increasing demand for new features in 3. Uncertainty of technological dynamics
electronics.

In order to minimize threats, our company has increased investment on mobile technology R&D with

support of stakeholders. This will increase demand, expand our market share, and boost stakeholder value.

For opportunities, we invest more in R&D to understand consumer markets needs so that our future

designs meet those demands. Also, to address maximize our weaknesses for our advantage, we is pricing

its products at par with competitors’ while increasing the quality of our products, features, and talk time

per single charge, and make unique and differentiated products. Also, for threats, we our company is

partnering with companies across the industry for purposes of research and development to boost

innovation.

Overall objectives of Red Company

Red is a mobile phone manufacturing company offering a wide range of communication handsets in the

most effective administration processes and product costs to ensure its customers’ satisfactions and rising

demand—this will increase sales and boost stakeholder value. For Red, consumer satisfaction is a priority

to create a larger market base and share, thus increasing sales revenues. These will enable achievement of

all the goals of the company, including higher stakeholder earnings and value in short, medium and long

run.
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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY
Functional objectives (4 SMART)

Year Objective Strategy

Year 1
Production: Boost production Raise or firm’s capacity of production
Marketing Increase awareness Use print, social and mass media
R&D: Understand consumer needs Increase advertising budgetary allocation
Finance: Lower costs Use alternative cheaper transport
Year 2
Production: Employ additional staff Increase inventory
Marketing Promote our new models Expand market share
R&D: Invest in innovation and tech Develop Tech 3
Finance: Reduce operations cost Lower expenses
Year 3
Production: Increase capacity
Marketing Market our products
R&D: Retain our influence for Tech 1 Increase share of market
Finance: Pay shareholding partners Trade shares
Year 4
Production: Additional Inventory Boost our capacity of production
Marketing Increase sales Increase advertising budget
R&D: Understand market dynamics Invest in appropriate future tech
Finance: Reduce logistics cost Use cheaper means of transport
Year 5
Production: Retain current turnover Retain talented employees
Marketing Promote brand Use mass media, e.g TV
R&D: Reduce threats Partnership in R&D
Finance: Invest in Tech Understand better Tech 3 and 4
Year 6
Production: Increase production infrastructure Retain high utilization capacity
Marketing Retain share of market Increase sales
R&D: Invest in future Tech Remain dynamic in the sector
Finance: Pay existing debts Use profits

D) Marketing Strategies/Action Plans

The overall strategy for our company is differentiation. This is achieved by providing creative designs of products

that are unique compared to competitors’. Additionally, we intent to extend our products line in line with our
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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY
mission statement—fulfilling consumer demands, and maximize value for consumers and other stakeholders in

that process. More importantly, we aim to attaining maximum administration efficiency. As a consequent, all

other operation processes including financial, marketing and promotional, production, and technological

innovations through R&D. Accordingly, we have established strategies to improve efficiency of marketing and

promotion (Socea., 2012).

Objective 1: Marketing and Promotional Effectiveness

Our brand as an organization was the top most priority over the six year period. Red aims to focus its

efforts more on promotional and marketing activities to market our new products’ features, attain

maximum market reach, increase market share, and boost sales. For the organization to meet these

objectives in a cost effective manner, we will employ digital advertising media, print media, and social

platforms that are popular in respective markets.

Objective 2: Operational efficiencies

We aim at achieving business operations efficiency, particularly, for our case, production. In order to

reduce costs of operation, operations efficiency is critical considering our position over the last couple of

years. Accordingly, we aim to minimize waste by retaining the lower turnover, investing in recent

innovation and technology, and enhancing R&D.

Objective 3: Innovation and Creativity

We aim to move with the technology dynamics, and stay informed about our competitors. To meet these

objectives, we will invest more on R&D and partnership to gain more insights into business operations

processes and management.

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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY
Objective 4: Financial Success

Red aims to be more financially sustainable and strong. The major issues associated that need address to

achieve this goal is to minimize operations cost, increase share value of the organization, insure business

operations assets, and establish financial risks strategies to mitigate possible dangers. 4Ps are useful as

tactical tools for achieving these goals (Black., 2004)

4P strategic tactics

Product Strategy: Red provides communication handset devices that that are unique and differentiated to

meet the demands of consumers.

Price strategy: The technique used at Red is market driven. For instance, we price our products at par with

competitors in the US to retain our price competitiveness. This ensures consumer value is guaranteed,

considering the additional features, quality, and design compared to competitors’.

Promotion Strategy: this strategy at our firm will adopt both below the Line (BTL) and Promotion Above

the Line (ATL) initiatives to achieve highest brand exposure limits and increase share of market.

Distribution Strategy: in order to enhance distribution efficiencies, Red will partner with third party

transport and logistics companies to expand its networks.

E) Key Performance Indicator

(i) Operating profit (EBIT)

EBIT is used to evaluate profitability before deducting expenses and income taxes. This is determined by

subtracting expenses from gross profits (Lozada-Contreras et al., 2020) . For our simulated business case,

we obtained 46.86% for Round 1, 52.75% for Round 2, 51.61% for Round 4, -36.07%, etc.
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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY
(ii) Return on sales (ROS):

Return on sales (ROS) is a proportion used to assess an organization's operational effectiveness.

This measure gives knowledge into how much benefit is being created per dollar of deals. An

expanding ROS

(iii) Return on equity (ROE):

ROE is a proportion of budget implementation, and is obtained by dividing the net income of the

company by the average of the equity of the shareholders. For Red, it was 48.49% for Round 1

and 24.87% for Round 6.

(iv) Earnings per share (EPS):

It refers to the percentage of benefits per share of the company. For Red, it is 14.28% for Round 1

and 28.76% for Round 6. It’s important for determining different shareholders’ value aspects.

(v) Cumulative total shareholder returns p.a.(%)

For the case of our CESIM simulation, it refers to the average returns in percentage an

organization gives to its shareholders for the entire simulation period. For the entire process, the

trends of the cumulative Shareholder returns paid to the shareholders each Round is presented on

the chart below.

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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY

Similarly, EBDITA (%) varies with time as shown below.

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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY
F) Financial Projections

In order to achieve the goals of the organization both short and long run, there is a wide range of decisions we

have established. These will provide a blueprint for strategic businesses processes operations and management

(Maynard., 2017). During the first year, we were ranked at position 1 together with Green and Blue at 1.43M

USD worth of sales revenue, and profit of 428.43 USD.

Financial Statements for the 1st year

Profit and Loss statement, k USD

  Green Red Blue Orange Grey
Sales revenue
Sales revenue 1 427 773 1 427 773 1 427 773 1 009 353 1 427 773
Costs and expenses
Variable production costs 447 614 447 614 447 614 171 474 447 614
Feature costs 69 636 69 636 69 636 40 790 69 636
Contract manufacturing costs 564 564 564 133 883 564
Transportation and tariffs 96 734 96 734 96 734 17 870 96 734
R&D 15 933 15 933 15 933 15 936 15 933
Promotion 29 180 29 180 29 180 29 180 29 180
Administration 99 076 99 076 99 076 101 719 99 076
Costs and expenses total 758 738 758 738 758 738 510 853 758 738
OPERATING PROFIT BEFORE DEPR. (EBITDA) 669 035 669 035 669 035 498 500 669 035
Depreciation from fixed assets 126 225 126 225 126 225 126 225 126 225
OPERATING PROFIT (EBIT) 542 810 542 810 542 810 372 275 542 810
Net financing expenses 5 756 5 756 5 756 13 959 5 756
PROFIT BEFORE TAXES 537 054 537 054 537 054 358 316 537 054
Income taxes 108 620 108 620 108 620 81 827 108 620
PROFIT FOR THE ROUND 428 434 428 434 428 434 276 490 428 434

Financial Statements for the 2nd

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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY
During the second year, our profits rose 486 002 USD while sales revenues had felled to 1.38m USD, together

with that of Green, Blue and Grey.

Profit and Loss statement, k USD

  Green Red Blue Orange Grey
Sales revenue
Sales revenue 1 378 825 1 378 825 1 378 825 1 042 207 1 378 825
Costs and expenses
Variable production costs 353 722 353 722 353 722 184 617 353 722
Feature costs 64 152 64 152 64 152 70 996 64 152
Contract manufacturing costs 0 0 0 147 040 0
Transportation and tariffs 89 575 89 575 89 575 63 546 89 575
R&D 15 997 15 997 15 997 213 366 15 997
Promotion 29 180 29 180 29 180 20 580 29 180
Administration 98 802 98 802 98 802 106 128 98 802
Costs and expenses total 651 429 651 429 651 429 806 273 651 429
OPERATING PROFIT BEFORE DEPR. (EBITDA) 727 396 727 396 727 396 235 934 727 396
Depreciation from fixed assets 107 291 107 291 107 291 107 291 107 291
OPERATING PROFIT (EBIT) 620 105 620 105 620 105 128 643 620 105
Net financing expenses -15 457 -15 457 -15 457 84 965 -15 457
PROFIT BEFORE TAXES 635 562 635 562 635 562 43 677 635 562
Income taxes 149 560 149 560 149 560 122 981 149 560
PROFIT FOR THE ROUND 486 002 486 002 486 002 -79 304 486 002

Financial Statements for the 3rd year

In the third year, our sales revenue rose to highest height of 1.92m USD while profits was also the highest

compared to competitors-determined to be 689 358 USD.

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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY
Profit and Loss statement, k USD
  Green Red Blue Orange Grey
Sales revenue
Sales revenue 1 405 565 1 913 048 1 405 565 205 061 1 405 565
Costs and expenses
Variable production costs 336 194 347 192 336 194 51 629 336 194
Feature costs 64 152 93 167 64 152 4 878 64 152
Contract manufacturing costs 0 224 886 0 36 402 0
Transportation and tariffs 88 271 115 584 88 271 0 88 271
R&D 16 050 11 901 16 050 116 787 16 050
Promotion 29 180 33 600 29 180 17 000 29 180
Administration 98 802 99 364 98 802 130 250 98 802
Costs and expenses total 632 649 925 694 632 649 356 946 632 649
OPERATING PROFIT BEFORE DEPR. (EBITDA) 772 916 987 354 772 916 -151 884 772 916
Depreciation from fixed assets 91 198 91 198 91 198 181 198 91 198
OPERATING PROFIT (EBIT) 681 718 896 156 681 718 -333 082 681 718
Net financing expenses -38 292 -14 671 -38 292 465 876 -38 292
PROFIT BEFORE TAXES 720 010 910 827 720 010 -798 958 720 010
Income taxes 192 525 221 469 192 525 0 192 525
PROFIT FOR THE ROUND 527 486 689 358 527 486 -798 958 527 486

Financial Statements for the 4th year

During the fourth year, our company was ranked at position 3 with a sales revenue of 1.37m USD and biggest

loss of -860 635 USD compared.

Sales revenue, k USD

Profit and Loss statement, k USD
  Green Red Blue Orange Grey
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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY
Sales revenue
Sales revenue 1 643 185 1 371 630 2 187 848 278 284 1 329 609
Costs and expenses
Variable production costs 315 265 121 243 341 589 61 973 315 265
Feature costs 80 952 96 171 113 360 6 587 64 152
Contract manufacturing costs 119 643 172 221 259 017 39 158 0
Transportation and tariffs 123 027 37 727 115 472 0 85 156
R&D 123 526 1 282 867 68 580 6 787 16 108
Promotion 29 180 33 000 28 600 17 000 29 180
Administration 98 802 123 194 98 802 178 448 98 802
Costs and expenses total 890 395 1 866 423 1 025 421 309 954 608 664
OPERATING PROFIT BEFORE DEPR.
752 790 -494 793 1 162 427 -31 669 720 946
(EBITDA)
Depreciation from fixed assets 77 518 191 518 77 518 397 018 77 518
OPERATING PROFIT (EBIT) 675 272 -686 311 1 084 909 -428 687 643 428
Net financing expenses -80 825 126 017 -43 691 900 098 -60 526
PROFIT BEFORE TAXES 756 097 -812 328 1 128 600 -1 328 785 703 954
Income taxes 200 420 48 307 316 992 0 207 569
PROFIT FOR THE ROUND 555 677 -860 635 811 608 -1 328 785 496 385

Financial Statements for the 5th year

In the fifth year, our sales revenues rose to 2.6m USD, while net profits for that year were reported to be 849 796

USD, placing our company at position 2 after Blue.

Profit and Loss statement, k USD

  Green Red Blue Orange Grey
Sales revenue
Sales revenue 1 926 612 2 598 460 2 670 801 427 417 1 332 381
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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY
Costs and expenses
Variable production costs 177 961 379 636 339 751 89 238 284 407
Feature costs 57 672 213 874 80 501 11 207 64 152
Contract manufacturing costs 215 459 95 787 277 353 40 428 0
Transportation and tariffs 53 038 177 494 113 379 0 72 850
R&D 276 675 122 649 285 754 6 787 16 043
Promotion 20 500 33 000 21 100 17 000 29 180
Administration 100 073 149 163 119 000 195 503 98 802
Costs and expenses total 901 378 1 171 603 1 236 837 360 164 565 434
OPERATING PROFIT BEFORE
1 025 235 1 426 857 1 433 964 67 253 766 947
DEPR. (EBITDA)
Depreciation from fixed assets 65 890 297 790 179 890 337 465 65 890
OPERATING PROFIT (EBIT) 959 344 1 129 066 1 254 074 -270 212 701 057
Net financing expenses -105 795 26 455 -71 786 1 251 863 -81 224
-1 522 07
PROFIT BEFORE TAXES 1 065 140 1 102 611 1 325 860 782 281
5
Income taxes 296 881 252 816 404 160 0 253 831
-1 522 07
PROFIT FOR THE ROUND 768 259 849 796 921 700 528 450
5

Financial Statements for the 6th

Finally, during the 6th year, our company, the Red Company was ranked at position one with highest sales

revenues valued at 3.67m USD and net profits of 1 234 201 USD.

Profit and Loss statement, k USD

  Green Red Blue Orange Grey
Sales revenue
Sales revenue 2 640 748 3 672 059 3 245 637 648 393 1 309 529
Costs and expenses
Variable production costs 535 465 941 876 716 288 102 514 272 561
Feature costs 54 402 119 443 58 246 14 640 64 152
Contract manufacturing costs 173 904 252 559 176 416 53 728 0
Transportation and tariffs 28 346 55 223 32 011 170 116 158
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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY
R&D 610 722 235 455 507 420 6 790 16 207
Promotion 123 600 82 700 112 500 17 000 29 180
Administration 136 881 170 650 157 158 227 853 106 103
Costs and expenses total 1 663 320 1 857 905 1 760 038 422 695 604 361
OPERATING PROFIT BEFORE DEPR.
977 428 1 814 154 1 485 599 225 698 705 167
(EBITDA)
Depreciation from fixed assets 170 007 253 122 287 907 286 845 56 007
OPERATING PROFIT (EBIT) 807 421 1 561 032 1 197 692 -61 148 649 161
Net financing expenses -89 113 5 101 -81 178 1 613 305 -103 400
PROFIT BEFORE TAXES 896 534 1 555 931 1 278 870 -1 674 453752 561
Income taxes 326 831 321 730 401 738 0 201 359
PROFIT FOR THE ROUND 569 702 1 234 201 877 132 -1 674 453551 201

Conclusion
The goal of this CESIM simulation of a business case was to maximize the organization’s stakeholder value, an

aspect that was measured using cumulative shareholder return pa annum, expressed I percentage. The measure

incorporates both price developments of the company’s share given to shareholders. Overall, the objectives of the

project were achieved. Had it not been for CESIM simulation, we would not have had a better way as a team to

put the classroom knowledge into practices in in real world scenario. For any organization therefore, in order to

develop effective operations strategies processes such administration, it is important to understand the business

environment, the objectives in short and long run, note the key performance indicators, financial projections, and

other factors that influencing businesses operations and processes management in the mobile devices technology

and other sectors.

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CESIM BUSINESS CASE SIMULATION FOR RED COMPANY

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