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Group25-Back Bay Battery-Report

1. The Back Bay Battery simulation gave insights into managing a battery business through strategic decisions around research and development investments. 2. Key learnings included investing in energy density and self-discharge for supercapacitors, balancing R&D spending between mature AGM and promising supercapacitor technologies, and adjusting pricing over time. 3. The simulation showed the importance of consistent supercapacitor investments to achieve profitability despite initially high costs, as well as leveraging revenues from mature AGM batteries during market downturns.

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AKHIL REDDY
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812 views4 pages

Group25-Back Bay Battery-Report

1. The Back Bay Battery simulation gave insights into managing a battery business through strategic decisions around research and development investments. 2. Key learnings included investing in energy density and self-discharge for supercapacitors, balancing R&D spending between mature AGM and promising supercapacitor technologies, and adjusting pricing over time. 3. The simulation showed the importance of consistent supercapacitor investments to achieve profitability despite initially high costs, as well as leveraging revenues from mature AGM batteries during market downturns.

Uploaded by

AKHIL REDDY
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Back Bay Battery, Inc.

Simulation
Advanced Program Management – IMT Ghaziabad.

Aug 15, 2023

Suraj Sikarwar,
Dimple Kanwar,
Koya Akhil Reddy,
Pranay Prakash
Guha Prasad Venkataraman

The Back Bay Simulation project gave us an actual experience of running a business
and training us on how to make strategic decisions as a manager. The following are
our collective observations we found during our simulations:

1. While we played the simulation we observed that Research and development


(R&D) investments played integral part to the growth of the business because
it enhances competitiveness and realization of consumer needs and make the
product a good fit to the market. According to the observations Back Bay
Battery should invest in the energy density segment and self discharge as it
will improve the overall product and also the market segments will be
satisfied. Another strategy it should implement is to divide the R&D
investments into 30% for AGM as it is a strong product and only slight
improvements are required and 70% on SC as it is a future technology which
will get a rise in demand as the product gets better.
2. The Following strategies which should be implemented by Bay back Battery.
a) Ensuring that the price for the product remains $10 for AGM and $20 for
supercapacitors until the feature demand is met. So with this pricing it will
increase the revenues for AGM batteries that were gaining increased
popularity in many applications.
b) However, when the sales report data shows a drop in variance the company
should lower price of AGM and gradually decrease the price of SC to $19
which would attract more consumers.
c) When there is a breakthrough for the features of the SC the forecasted
sales should be kept high so that the revenue profits get boosted as eventually
the AGM will loose the popularity due to the change in market preferences.

3.
Background
Back Bay Battery is a leading battery industry with a considerable market share. Their
revenue distribution is 80% from AGM batteries and 20% from SC. With its stronghold in
the AGM battery market, the company confronts the rising prominence and potential of
Supercapacitor battery technology. As the AGM segment shows signs of maturity and
decline, the supercapacitor segment represents innovation and future market potential.
They face the challenges of balancing its investments between the consistent yet diminishing
returns from AGM vs the upcoming yet prospects of supercapacitor technology. Their main
market segments were : Automobiles (75.8%), Warehouses (23.9%) and Marines (0.3%)

Guha Prasad Venkataraman’s Simulation Findings:


1. During the assessment phase of simulation, the UPS market segment was substituted
with Marine. Consequently, the primary market segments became Automobiles and
Warehouses. Marine's contribution to Revenue was minimal, ranging from 0.3% to
2%.
2. A distinct market/economic slump was observed during years 5, 6, and 7, primarily
attributed to external influences.
3. The Automobile segment began ramping up their SC purchases once the SC's energy
density surpassed 600+ watt hours/kg. In my trials, an investment of about $17M
was needed to push the SC's energy density beyond 600 watt hours/kg. This increase
coincided with an economic upswing in years 8, leading both Automobile and
Warehouse segments to favour SC over AGM. The Marine segment also began its
procurement of SC at this juncture.
4. Due to the initial high variable costs of SC leading to negative profits, it was essential
to make consistent investments from the start. Over the course of six years (years 3
to 8), with a cumulative investment reaching $20M, the SC business became
profitable.

Highlights of the Report:


We adopted Porter’s General Strategy, focusing on Cost Optimization and Value Creation.
Recognizing the AGM batteries as a 'Star' in the Ansoff Matrix, we ensured in the initial three
years that our AGM product met customer demands in terms of energy density, thanks to
our R&D investments. This foresight paid off: AGM consistently generated robust revenues,
bolstering our financials during the market slump in years 5, 6, and 7. This stability provided
the leverage to strategically invest in the Super capacitor.

Taking advantage of market downturn, we redoubled our R&D commitments to the SC,
transitioning it from a 'Question mark' to a 'Star' status. This proactive approach was
twofold: capitalizing on market share when the economy rebounded and enticing our
existing clientele with this premium product. In tandem, we streamlined SC's processes for
optimal profitability. And in recent years, we strategically slashed SC's pricing, broadening its
market foothold and boosting revenues.
Background
Leading the battery market with a sizable market share is Back Bay Battery. Their revenue is
split 80/20 between SC and AGM batteries. The corporation, with its dominant position in
the AGM battery market, must deal with the potential and growing importance of
supercapacitor battery technology. The supercapacitor section stands for innovation and
potential future market growth as the AGM segment demonstrates indicators of maturation
and decline. They must balance their investments between the steady but dwindling
revenues from AGM and the still-unknown but promising supercapacitor technology.
Automobiles (75.8%), warehouses (23.9%), and marines (0.3%) were their three main
market categories.

Koya Akhil Reddy’s Simulation Findings:


1. Marine was used in place of the UPS market sector during the simulation's
assessment phase. Consequently, Automobiles and Warehouses were the two main
market sectors. Marine's minor contribution to revenue, which ranged from 0.3% to
2%, was small.
2. During years 5, 6, and 7, a clear market and economic decline was noted and mostly
attributable to outside factors.
3. As soon as the SC's energy density reached 600+ watt hours/kg, the automotive
industry started ramping up its SC acquisitions. In my tests, it took an investment of
around $17 million to increase the SC's energy density over 600 watt hours per
kilogramme. The economic recovery in years 8 corresponded with this growth, which
caused both the automobile and warehouse sectors to prefer SC over AGM. At this
point, the Marine section also started buying SC.
4. It was crucial to make continuous investments right away because SC's large variable
expenses at first caused negative earnings. The SC business turned a profit over the
course of six years (years 3 to 8), with a total investment of $20M.

Conclusion:
In line with Porter's general strategy, we took the decision to favor SC over AGM, though
seemingly a risk of product cannibalization, was a strategic push towards value creation and
competitive advantage. Using the VRIO framework, it became clear that SC's unique
attributes provided an edge, making it a valuable and difficult-to-imitate asset. This move
also represents a blend of product development in existing markets and diversification into
new spaces (pushing a Question Mark to Star). This resulted in a considerable expansion of
market share, boosted revenues, and substantial profits, positioning the company as a
leader in the battery innovation landscape.

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