Final New Strategy Proposal using CVP Calculator for Tablet Research Paper

Final New Strategy Proposal using CVP Calculator for Tablet Development Corporation Product X5, X6 and X7 during 2012-2015 - Research Paper Example In order to bring a revolution in the existing business practices of the company, it is important that a new pricing strategy is devised that is based on the strategic objectives of each product individually. Furthermore, the decisions for the allocation of funds for the Research & Development (R&D) of each product should be taken individually and on annual basis to achieve the desired objectives of the product and the company. However, my strategic decision making for each year has resulted into 60% profitability in case of product X5 and 50% profitability in case of product X6. Furthermore, the increased spending on maintenance, support, enhancement and discovery for product X5 and X6 showed improved product which resulted in higher customer satisfaction. The discontinuation of product X7 through the four years helped in the success of the first two products. Nonetheless, a new strategy needs to be determined using contemporary strategy determining tools like Cost-Volume-Profit (CV P) analysis. The new strategy using CVP analysis has focused on X5 product in terms of its price but less allocation of R&D allocation in order to keep the other two products high on R&D investments. Thus, when X5 will attract less number of sales in one year, the other two products will attract higher number of sales volume. Overall, this strategy will help the Tablet Development Corporation to keep manufacturing all of its core products without discontinuing any of them. At the same time, it will allow Tablet Development Corporation to invest standardized amount of resources to each product and continue to produce a standard volume for sale purposes. As a result, the supply and demand of the product will remain balanced. At the same time, its products will remain in the market for a long time. 1.1 Aim The aim of this report is to develop a new pricing and R&D allocation strategy for the core products X5, X6 and X7 using CVP analysis and calculator. 1.2 Objectives To analyse the su bsequent performance and life cycles of each product due to the difference in the decisions. To determine the new pricing decisions and R&D budget allocation strategy for each core product, namely: X5, X6 and X7 taken in 4 years (i.e. from 2012-2015). To provide rationale of the proposed strategy with theoretical support. 2 Analysis of Pricing and R&D Allocation Strategy Used in Phase 3 Due to the use of CVP calculator, in the year 2012, the price of the product X5 was $263 and experienced a growth of 74% in its overall sales and revenue (See Annex 1). The customer base also experienced 60% new customers, 84% repeat sales and 113% profitability. The R&D budget was 15% from the estimated costs of $22,000,000. However, with the changed pricing strategy and R&D allocations, the product X5 experienced a growth of 65% in sales, 20% in new customers, 25% in repeat customers and 35% profitability in the year 2013. In the year 2013, the product X5 experienced a growth of 70% in sales, 26% i n new customers, 35% in repeat customers and 65% profitability. Likewise, in the year 2014, the product X5 experienced a growth of 85% in sales, 43% in new customers, 48% in repeat customers and 76% profitability. In 2015, the product X5 e