DEFIANCE MOTORS

J O N A T H A N J A E G E R & N I C K K A L I N K AI N D U S T R Y 1F I R M D

STRATEGY• Defiance Motors made the decision to continue targeting the

largest volume customer base and products situated within the largest volume of vehicle sales

• Initial competitors were firms A and E

• They had high percentage of family, truck, and economy vehicles

• It was necessary to keep a competitive advantage leadership in these classes

GOALS

• Goals were set to create:

• Maximum net income

• High standards for stock price

• The largest market share in the family and truck markets

• An emphasis on average quality, yet speedy and vast distribution coverage

MARKET SHARE• Initial focus: Truck & Family Class

• Ending Market Share: 35%

• Achieved Thru: Aggressive pursuit of truck and family classes and the high profit margin linked to each class

• Closest competitor: 10% behind Defiance Motors

CONSUMER SEGMENTS • We focused on two specific segments in order to ensure we

achieved market share within our three main classes

• Value seekers • Ended with 70% of the market

• Families • Ended with 32% of the market

ECONOMY CLASS STRATEGY• Within both segments (value seekers and families) the

customers are interested in the economy class of vehicles

• Because of this, the firm consistently showed potential to make money in this class due to our primary focus being on these segments

• Contributing to this was also Defiance Motors’ lower price on the economy vehicle

ECONOMY CLASS CONT.• This led to increasing our firm’s interest in the economy

class and therefore more money being put into it

• Our initiative to get back into the economy class was more of a defensive strategy, resulting in

• Gaining 10% of market share back in period 5

• Splitting the market 50/50 with firm A in period 6

AEV CLASS STRATEGY • An unplanned strategic change made was used near the middle of the

simulation

• A new vehicle was developed in the AEV market

• This decision helped claim the entire industry

• There were no competitors in the class, so Defiance Motors was the only firm to offer an AEV vehicle and in turn influenced new customers to buy our product if they wanted an AEV because there was no where else to go!

FINANCIAL ACTIONS• Issued higher dividends to raise stock price

• Outstanding free cash flow

• Consistent interest and dividend payments to shareholders and bondholders • Strong & Loyal Customer Base

• We opted to sell bonds instead of issue more stock • We left bonds outstanding to keep a higher cash flow• Our bonds were fairly valued as AAA bonds, never missing

interest payments or disappointing customers

MAINTAINING A HIGH STOCK PRICE• To do this, it was necessary to keep growing our sales, income,

and market value each period while at the same time maintaining lower levels of debt and COGS. • Sales: $19.33 Billion (Period 1) - $42.86 Billion (Period 9) • 50% increase over a 10 year span

• Stock Range/per share: $50 (initial) - $104 (final)

• Debt: Roughly $7 billion in debt (Period 1), reduced to $1.15 billion (Period 9)

IMPROVEMENTS FOR THE FUTURE• Forecast distribution expansion and customer demand to

better predict increasing capacities

• Utilize tools such as focus groups and customer research in order to optimize production

• To focus on customer base

• To capitalize on another large market segment, Enterprisers.

• The positions in these three markets were successfully maintained throughout the duration of the simulation

• We achieved:• Final cumulative net

income of 23.29 billion dollars• nearly 4 billion higher

than our nearest competitor 

• Our stock price is a direct reflection of our successful performance through the last ten years

CONCLUSION