Table of Contents

Table of Contents........................................................................................1 Mission statement ......................................................................................2 Business Objectives.....................................................................................2 Market Segments........................................................................................2 Competitive advantages..............................................................................3 The choices of designs and options.............................................................3 The prices charged for each car..................................................................4 Production/ HRM decisions..........................................................................4 REFERENCE................................................................................................. 5 APPENDIX 1 Options & Reasons For City&Large Cars...............................6 APPENDIX 2 - Decision & Forecast Forms....................................................7 APPENDIX 3 - Minutes of the team meetings..............................................9

Mission statement
Our company named S&L motors, which means we are not only selling the small and larger cars, but also represents the implication of safety and luxury. The main purpose of our company is to provide high safety with comfortable driving experience and best service to our customers, at the same time making customers feel good value for money.

Business Objectives
For the end of Round 4, our objectives are mainly targeting on four sections. Firstly is to gain market share of 1.5% of the total car markets and to compete with key players in car industry. Secondly is to gain a profit of 20 million. Thirdly is to create brand awareness and loyalty. Finally is to constantly provide innovative products by R&D.

Market Segments
For this year, our company is launching two car models targeting on two market segments: City cars focusing on youths under 25 years and Large cars targeting on working adults from 41 to 55 years. In nowadays business, understanding our customers needs is the most fundamental element in decision making for new product development. This is an essential reason why we chose these two market segments since these age groups were found somewhat easier to understand. For the first model, City cars were chosen to target on youths approximately from age group of 18 to 25 years. In most of the youths minds, they tend to buy city cars rather than large cars because of its affordable price and convenience as compared to other types of cars. Though this segment has a large number of market shares in the city car market and there will be more competition, we do believe that there will be potentials 2

and opportunities. This age group is typically student or young working adult who needs cars for short distance travels and entertainment for leisureliness. According to their lifestyle, they are most likely to have city cars. The second model, which is Large car, mainly focuses on married working adults from 41-51 years having families, who have medium to high income and need large cars for travel and long distance uses because of its convenience for families. They much prefer leisure time with families travelling than others group. Furthermore, Large cars have more space and safer which make most fit for them. This age that could contribute a potential market.

Competitive advantages
Recently, the worlds economy is unstable, people tend to be much more pricing concerned. As a new company entering into the market, having a reasonable price with distinctive value in creating cars with safety concerns, luxury look and special features mainly designed in focusing on target markets is our very first competitive advantages. As compared to other competitors, we strategically invested more on promotion to create brand awareness by spending 646 per car in the first year. In R&D investment, we more focus on fuel efficiency and low emissions since environment friendly products are important in European market.

The choices of designs and options

Our most consideration for customers are to give them a safer and better driving experience with good price, fuel efficient and environmental friendly engine which are our firm value. Therefore, for both models, we selected Safety, Styling package, Air conditioning. In city car, we added styling package and a fantastic music system for a cool look and best entertainment, especially for the youths. For large car, SUV/MPV feature was mainly offered to provide bigger space for families and better comfort. Other features such as automatic transmission, run-flat 3

tyres, cruise control were selected for a smoother drive (Prefer Appendix 1 to be more specific).

The prices charged for each car

Our pricing strategy is Market Penetration for City car and Average Pricing for Large Car since we are still new to the market. Moreover, selling City cars at low price at the beginning is to attract customers and gain market share, whereas charging Large cars at an average price that is to be more flexible depending on markets responses. Within the range of 10,000 to 14,500 according to the market research paper, we need to set a price that should not be over-price but also not too low to be profitable. Being blind to a competitive price would be our problem in first round since we have no clue of the prices that our competitors set. Thus, we have to loss out some of the profit margins to avoid stocking cars which would lead to heavy overheads, and the risk of overdraft in next round. With 11% of profit margin for city car, we would only make profit from remarkable sales to cover up the overheads and the expenses such as promotion and R&D other than direct cost of the car. After taking such considerations, we set our city car in price of 10,299. Meanwhile, the Large car we produce comes with great offers that may impress our customers as we emphasise safety, comfort and luxury look on our cars. After calculating all the direct cost of the car, we were pleasant to know that our profit margin can be higher than we expected. As studied in the provided market research (NX0441 2011a), the market price of large car is from 15,000 to 45,000; our direct cost is 19,426. Since we provide number of options for large car, we expect it to be much more profitable than our city car. Yet, we do not want to overproduce our cars as we were told to target only 1% of large car market and also to avoid risk lead to massive overheads for unsold cars stock in our company. Finally, we decided to set the price for our large car at 26,999.

Production/ HRM decisions

Based on 1% of market share, we estimated to produce 51000 City cars and 27600 Large cars. It is because we should not be so confident to have the exact 1% of market 4

share and over-producing may lead to extra overhead. In the number of automations, we invested 12 units despite it is reported (NX0441 2011b) that typical productivity values for non-luxury car plant with low automation are 25-35. While at the beginning of business there is not much capital, we choose the half of low automation (8 automations for city car and 4 for large car respectively which depends on the production of cars) and it costs us 6 million that is quite high compared with the labour cost. We believe this amount of automations is enough for the first year. In the future, we will invest more on automation since it could greatly affect the quality of our cars and reduce cost of absence and annual cost.

REFERENCE
NX0441 2011a, Market research: April Training Executive (2010), Market Research Package for the European Passenger Automotive Industry, Executive Business Simulation. NX0441 2011b, User Manual: April Training Executive

APPENDIX 1 Options & Reasons For City&Large Cars

1. City Cars:
Design 2/3 Door Coupe Small Engine Look nicer Better driving experience Lower maintenance Fuel efficiency Reasons

Options Multi Location Airbags Air Conditioning Superior sound system/ipod aux Styling package

Reasons For the safety of the passengers Which is common in many cars For fantastic music entertainment To make it looks good from the outside/inside of the car

Run-flat tyres

Helps to resists the effects of deflation

2. Large Cars:
Design SUV/MPV Diesel engine Reason Spacious interior and hard body Powerful and ???

Options Multi Location Airbags Cruise Control Automatic Transmission Parking sensor Panoramic sunroof Run-flat tyres Electric adjustable seats Air Conditioning Superior sound system/ipod aux

Reasons For the safety of the passengers Maintains the same speed of travel For easy travel during traffics & long distance Helps passengers during parking or taking reverse A design option for the car Helps to resists the effects of deflation Makes you feel comfortable Which is common in many cars For fantastic entertainment during the 6

Bluetooth phone preparation Styling package Safety package Luxury package

journey For all the wireless calls/texts, necessary for working adults/ businessmen Gives good looks from the outside/inside for the car For the safety of the passengers Give a luxury look for the car from the inside for our customers who pursue quality of life and status.

APPENDIX 2 - Decision & Forecast Forms

APPENDIX 3 - Minutes of the team meetings

Group 7 Team 3 Meeting No.1 Date: 03/11/11 Time: 1pm

S & L Motors
Attendance Luwen Li Trang Bui Khaisoon Yoong Yongxi Bao Avinash Asokan

Agenda of meeting 1 Introduce ourselves to other group members We arrange topics and tasks for the next meeting

Topic discussed and decision made In the first meeting, we introduced ourselves include the advantages and disadvantages to other group members and shared the information and understanding of business game to make sure we follow the rules and processes. It was really nice and exciting moment for us to meet each other and start our venture, and we are confident to run our business successfully and have wonderful experience. Finally we discussed the arrangement for the next meeting and how to start our business. A good start is half the battle! Agenda for next meeting Date: 04/11/11 Time: 10am Read carefully about assignment structure and timetable of decision-making submission. 9

Preparing our own questions and suggestion to do. Deciding the market sectors and age groups for our cars. Group 7 Team 3 Meeting No. 2 Date: 04/11/11 Time: 10 am

S & L Motors
Attendance Luwen Li Trang Bui Khaisoon Yoong Yongxi Bao Avinash Asokan

Agenda of meeting 2 Deciding the market sectors and age groups Deciding the name of company and both cars Deciding the objectives Deciding the vision about the company

Topics discussed and decision made We name S&L Motors Company. It means we sell the small and large car. What is more, it represents the safety and luxury car we provide. Model 1: Sector: City car Age Group: under 25 Cars name: NEMO Reasons: Large market segment in age Group Fuel efficient (better mileage) Targeted lower income people Convenient for short distance travel Environmental friendly

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Small cars are cheaper to maintain Its fun to drive (the first reason)

Firstly we chose the city car because of the increasing oil price and customers are sensitive on price and money value. City car is much cheaper and fuel efficiency that is environment friendly and also it is fun to drive that providing customers a different driving experience. While there was an argument on choosing the age group that under 25 or 25 to 40. Someone considered that age group under 25 who have low income are looking for the low price car with valuable allocations. While others argued that the group under25 take large market share, which means we will confront fierce competition therefore it is better to choose 25 to 40. Finally we agreed the group under 25 because, most of people in the group 25 to 40 may have family that means the city car is too small. Then we named the car NEMO, which is one character in Disney cartoon that represented the image of small, adorable and brave. We deliver the spirit of safety and money value, though the city car is small. Model 2: Sector: large cars Age groups: 41-55 Cars name: MAX Reasons: Safety is the main issue Value for money Moderate competition (lower competition than medium cars) Long distance travelling Comfortable travelling (luxury) More load space Targeted mainly on middle income people

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Powerful and efficient Helps more for off-roading

There was debate on selecting the second module car. Someone indicated that the medium car was much better because it is cheaper and fuel efficiency compared with large car especially during the economic recession. However, others preferred the large car because it is much safer and comfortable than medium car and we will target in the group 41 to 55 who spend much time on family leisure time to drive long distance. Mission statement: Following the assignment A, we discussed the mission statement of Company summarised the points. Provide more safety Value for money Unique design Driving experience Environmental friendly Bigger market Value for shares Continuous growth High quality of management and cars consistently To build good working environment and culture

Objectives: Customer loyalty Customer satisfaction 12

Market share Better quality Better driving experience Increase profit

Arrangement for next meeting Date: 8/11/11 Time: 12pm Things to do: Technical knowledge for design of cars for the next meeting Design option for the models

Group 7 Team 3

Meeting No. 3

Date: 08/11/11

Time: 1pm

S & L Motors
Attendance Luwen Li Trang Bui Khaisoon Yoong Yongxi Bao Avinash Asokan

Agenda of this meeting Make the decision for on city car design

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Make the decision of pricing strategy for the city car

Topic discussed and decisions made Since we have already made the decisions on the car modules that city car and large car, today the product designs and options will be chosen. Each car basically includes one body design and the engine, and then the additional options according to the car module and target market. City car (NEMO) under 25:

2/3door coupe. In general, the city car is the 2/3door coupe,which looks cool and our target market is under age 25 that like special and different. While some one argued that the 2/3door hatch is not convenient for people to go into the car and also it costs more than 3/5 door.

There is no doubt that small engine is suited to city car because of the fuel consumption and efficiency.

Firstly, the safety of car is priori to consider. Therefore we decided to choose Multi location automatic transmission that is easy to drive even though it costs lots on it. We met culture conflict when decided whether to take parking sensors. Because in China, there is no parking sensor on city car, however in Malaysia, Vietnam and India it is different. We finally added it because it focuses on European market.

Air conditioning must be included in the options, and also we focus on the Superior sound system that is more attractive for the young people. The high quality of music system is our differentiation from other normal city cars.

We still need further discussion whether other additional options can be added to increase our product unique, which depends on the total cost.

Finally, we discussed about the pricing strategy for the city car, we thought market penetration (pricing strategy) is the most suitable strategy for the city car. Firstly, this strategy helps us to expand the market and build our brand as soon as possible because we are new entrant. Second, based on our target group (under 25), this age of customers have low income.

Our group meeting runs smoothly and every member is motived to give opinions and 14

make the contribution on the task. We still work hard on this business game and complete the assignment A that achieving our goal. Agenda for the next meeting Date: 09/11/11 Time: 9:30am Tasks: Making the decision on large car designing. Focusing on the decision and forecast forms. Calculating the material cost and discussing the operating management.

Group 7 Team 3

Meeting No. 4

Date: 09/11/11

Time: 9.30am

S & L Motors
Attendance Luwen Li Trang Bui Khaisoon Yoong Yongxi Bao 15

Avinash Asokan

Agenda of meeting 4

The change of design on the city car Making decisions on the large car designing Pricing strategy for the large car

Topic discussed and decisions made Our last meeting is mainly discussed about the designing of the city car and its pricing strategy. In this meeting, we firstly changed cost of design for the city car, and later we had to bring changes to the options for the city car. We then continued to make decisions on the large car designing, later we came to the conclusion that we will use the average pricing strategy for the large car. After these, we selected the options for the large car and we calculated the cost of the cars (but not finish).

According to the meeting 1 and 2, the second model we have decided is large car

(age 41-55), the target market we were looking for is mainly focused on family with medium to high income, business men, and also people who need a car for travel and long-distances use. The cost of options we have discussed for the large car is as following:

Options For the Large Car

Multi Location Airbags Cruise Control Automatic Transmission Parking sensor

Reasons
For the safety of the passengers It maintains the same speed of travel For easy travel during traffics Help the passenger during parking or 16

Speed limiter Electronic stability control Panoramic sunroof Run-flat tyres Electric adjustable seats Air Conditioning Superior sound system/ipod Bluetooth phone preparation Metallic paint Styling package Safety package Luxury package

taking reverse Limits the speed Help during braking in the rain Its just a design option for the car Helps to resists the effects of deflation Makes you feel comfortable Which is common in many cars For the music for the years For all the wireless calls/texts Gives a glossy look for the car Gives some good looks from the outside/inside for your car For the safety of the passengers Give a luxury look for the car from the inside

Pricing strategy for the large car About the decision of pricing strategy, our group has different opinions on this topic. Some of our group members argued that skimming pricing will be the best strategy for the large car, because this strategy may create high profit for our company, but given the economic crisis issue, we finally decided to apply the average pricing strategy for the large car. The use of this strategy may give us more flexible space to adjust the selling price based on the changes of future market. Group performance of meeting 4 Our group meeting runs smoothly. All the members are worked hard together try to make the best decisions for the business game. We selected the cost of options, pricing strategy for the large car, and discussed each others opinions to modify the options for the city car. Overall performance is good. Agenda for next meeting Date: 11/11/2011 17

Time: 2pm Tasks: Calculating the cost for the cars Deciding the number of cars for production, and number of labours Deciding the selling price of the cars Forecast for Round 1 and complete the forecast form Discuss Assignment A

Group 7 Team 3

Meeting No. 5

Date: 14/11/11

Time: 10.30am

S & L Motors
Attendance Luwen Li Trang Bui Khaisoon Yoong 18

Yongxi Bao Avinash Asokan

Agenda of meeting 5 Finalising the production of the cars Setting the selling price of the cars Forecasting the profit Investment for training Selection of R&D

Topic discussed and decisions made This meeting is mainly for finalising and setting the price and production of the cars. We increased the production of both cars because we all came to a decision that we had set the production less during the last meeting, so we made a decision by mutual understanding that we could increase the production of the cars and if there is any cars left in stock we could sell them in the next year by reducing the cost of production as an discount option. Since we have increased the production there will be a change in the cost of production and we can reduce the price of the cars (higher the production = lower the selling price).

Later we came to set the selling price of the cars. We should set the selling price reasonable, and if we sell the car with higher price we cant sell any cars, therefore we decided to add new options that a customer can afford and then reducing the price by lowering the profit margin. For the city car we choose 10,299 and added features like style and safety, which are more useful and better options for the age group of 1825. And for the large car we set the selling price to 26,999 with more luxury and safer options for the age group of 41-55. The options for both cars were selected in a 19

manner that it would be affordable for the customers and safer with more comfort for the drive, so we had to take the options into consideration while setting the selling price of the cars.

After we finalised the production and selling price, we set focus on the forecast form. We modified the operating forecast, profit forecast, and the cash flow forecast with the details, and then calculated the total overheads and since our bank balance was in negative we had to get loan for 140 million to bring the closing balance to positive.

For the investment on the training, it was purely based on the number of cars producing in one year and we should know how many staffs working in the company. There were two types of training that one is skill and other is management we decided to invest 1.04 million (0.42 million on skill training and 0.62 on management training). Section of R&D was focused on the future of the company and development of new car models to attract more customers, which help them to have a great driving experience. We selected the R&D based on which we would decide the future of our cars we selected 5 R&D for the first year such as Product re-launch Facelift Fuel efficient Low emission Improved build quality

Our group meeting went smoothly and all had contributed well for the team. Everyone performed their roles and task very well for our team to achieve our goal.

Arrangements for the next meeting Date: 15/11/11 20

Time: 11:30am Tasks: Selection of promotion & Setting the initial strategy Meeting No. 6 Date: 15/11/11 Time: 11am

Group 7 Team 3

S & L Motors
Attendance Luwen Li Trang Bui Khaisoon Yoong Yongxi Bao Avinash Asokan

Agenda of meeting 6 Selection of promotion

Topic discussed and decisions mad The main topic that was to be decided in this meeting was the selection of the promotion; since we were new to the market it was necessary for us to invest more on promotion so we decided to invest 50.82 million on investment. From that investment we had to separate the cost for different forms of media therefore we decided to separate the cost with the effects they have in the market likewise: Television 40% Promotional offers 20% Internet 15%

We focused mainly on these three media because the effects for these where more, 21

and the other 25% goes to the other media options.

Television: we invested more on television because it is one the most effective and easier way to attract the customer by showing the features of model and to show the different features that make us different from other companies and to attract mainly the age group of 24-50.

Promotional offers: we invested 20% of the amount on this to attract the age group of 30-50. Because they look on free offers like insurance, roadsides assistance etc to get them attracted to us.

Internet: we selected as our third option of media by investing 15% in it. It is one the fastest growing medium and advertising targeting the age group of 18-30.

Others: the 25% of the investments goes to the other promotion forms like local radio, periodicals/reviews, dealer incentives and sponsorship. These are also some of the main forms of promotion so we needed to invest on this.

Our group meeting went smoothly and all had contributed well for the team. Everyone performed their roles and task very well for our team to achieve our goal.

Arrangements for the next meeting Date: 16/11/11 Time: 11:30am Tasks: Creating the presentation

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Group 7 Team 3

Meeting No. 7

Date: 16/11/11

Time: 11.30am

S & L Motors
Attendance Luwen Li Trang Bui Khaisoon Yoong Yongxi Bao Avinash Asokan

Agenda of meeting 7 Creating the presentation and understanding it

Topic discussed and decisions made We had to create the presentation for the next seminar of the business game; we started the presentation with the logo and the name of our company. We had to 23

finalise with the logo and the colour for the slides for a better presentation.

We then started with the initial strategy for the company by setting up a vision and the mission of the company to tell the other shareholders what our company is all about and why they can buy our shares. Then came the objective/goals for the company what we want to be and the market position in the future, what are the things we as a company can offer to our customers.

The third slide was about the market segment ,which is manufactured in the first year to show the share holders what type of cars and features we are providing to the customers for their driving experience and the selling price of both the cars.

The fourth slide is about the investment we made to develop our company and for the promotion and to tell the shareholders why these investments were made to the company and what the benefits we bring to the company. The investments that are shown in the slide will change yearly.

The fifth and sixth slide tells the shareholders about the finical statements for both the cars and the company. This helps them to look out for our sales and profit margins made for the cars and even the company to help them buy shares of our company.

The last slide just shows the roles of the team member as a company similar to that of an original company, so it makes them to get involved and have a similar feeling how an car manufacturer works and how their management works.

Our group meeting went smoothly and all had contributed well for the team. Everyone performed their roles and task very well for our team to achieve our goal.

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Arrangements for the next meeting Date: 18/11/11 Time: 10am Task: Reading the assignment A written by other group members and giving feedback. Modifying the assignment A and completed all of it.

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