igby

Business Strategy Using Capstone Simulation

Team members:

Avnish Kumar 2211347

Debayan Datta Chowdhury 2211235
Diksha Kumari 2211239
Martin Fournie 22E5041
Richa Kumari 2211180
Sourav Bassi 2211306
 Introduction
• Focus on innovation: Digby prioritizes creating
new solutions that disrupt the industry and drive
growth.
• Diverse product strategy: Digby offers a range of
products to meet the needs of different customers
across market segments.
• Established presence in traditional markets: Digby
maintains a robust foundation in low-end and
traditional product markets.
• Expanding into high-end markets: Digby is
strategically investing in high-end and performance
segments to maximize growth potential.
 Our Mission
We aim to disrupt and capture the market in low end and
traditional segments, and establish Digby as the most competitive
leader, while simultaneously leveraging our leadership in high end
segment to fuel unprecedented growth.

Our Vision
At Digby, our vision is to revolutionize the business landscape by
establishing a dominant presence in the market. We aspire to be
the foremost choice for customers seeking reliability, quality, and
innovation across a spectrum of products. By fostering a culture of
continuous improvement and adaptability, we aim to set new
industry standards, driving sustainable growth and consistently
exceeding the expectations of our stakeholders.
 Key ideas in market opportunity

Research new markets Innovative solutions

Analyze existing customer needs and Utilize technology and customer
identify gaps in the market to find new demans shift trends to consistently
opportunities come up with new products

Stay ahead of trends Seasonal spikes

Monitor changes in the marketplace, Identify times of year when demand for
such as shifts in consumer behavior, to certain products may spike, such as
stay competitive and capitalize on new holidays or special occasions, and use
opportunities and trends these times to target customers
Round 1-4
 Market Analysis

Traditional and Low end

segments had highest %
share while other
segments had high
growth

Price and Age are two most important factors considering these segments
 Initial Strategy
High Exploitation

Based on miles and snow strategy chart,

Digby is a Prospector: it stands to innovate,
Defender Analyzer take calculated risks, pursue new
possibilities, and expand.
Low Exploration

High Exploration
• Biggest opportunity identified in
Traditional and Low end segment.

• Become a cost leader in these segments.

Add more products.
Reactor Prospector
• Expand in other segments, based on the
performance in those segments, pursue
igby more opportunities there

Low Exploitation
 IMPLEMENTATION STRATEGY (1/2)

R1
 Situational Analysis
R1 Overall, Digby is well R3
within the customer
Added Dell 2 in desires, specifically Product revision
Low end segment for the targeted of Daze and
to get share in segments. introduction of
the large Dot 2 in
segment. Products added in Performance
desired segments segment

R2 There is some R4
overlap of customers
withing segment
Added Daze 2 in Product revision
circles, driving
Traditional for Dell and Dell2
demand for our
segment to with high
traditional product-
increase share in automation.
daze
the segment
 What Went Well
Sales
25,00,00,000
20,00,00,000
15,00,00,000
10,00,00,000
5,00,00,000
0
R0 R1 R2 R3 R4

• Sales have grown yearly at 13.6% YoY

• Market share had increased from 16% to 20%
• Potential Mkt Share (Trad, Low End) is highest among competition
• This is line with market demand
• Capacity increase in target segments
• Most product introductions and most product revisions done against
competition
• Awareness increased from $1300 to $2000 on products
 What Went Wrong

• Marketing budget was lower than competition. Awareness & accessibility among customers
affected despite good products
• Emergency loan was taken to fund our expansion, but it turned out to be bad decision due to
interest
• Our strategy was Cost Leadership in Low segments, but Competition turned out to be way cut-
throat than others
• Leverage was high. RoS and RoE suffered because of high investment in capacity building, high
inventory levels without min. critical sales need to break even
• Contribution Margin remained constant at ~28%
 Key Learnings (Round 1-4)
Strategic Flexibility and Cost Management and Operational Financial Management and
Adaptation Efficiency Planning
The initial rounds show Digby Persistent losses despite increased The reliance on emergency loans
struggling with negative returns and sales underline the importance of indicates a gap in effective financial
financial distress, highlighting the stringent cost management and management and planning,
critical need for strategic flexibility operational efficiencies to improve emphasizing the need for better cash
and the ability to quickly adapt to profitability. flow management and financial
market and competitive dynamics. forecasting.
Inventory Management Interdependency of
and Forecasting Marketing Decisions
Challenges in balancing stock levels Investment in marketing must be The interplay between decisions, such
with demand highlight the strategically aligned with market as R&D, and strategic decisions, like
importance of accurate forecasting segments and customer preferences marketing, production, and Finance
to minimize carrying costs and avoid to enhance brand recognition and underscores the need for an integrated
stockouts or excess inventory, demand, impacting sales and approach to decision-making to
affecting financial performance. profitability. optimize outcomes.
Round 5-6
 Market Analysis

Traditional and Low end

segments had highest %
share. Growth declined
in overall industry in R4

Industry growth fluctuated. Inventory forecast affected.

IMPLEMENTATION STRATEGY (2/2)
 Pivot in Strategy
High Exploitation

In this phase, Digby is an Analyzer: it stands

to maintain a steady business while
Defender Analyzer innovating on the periphery

• Maintaining leadership in Traditional

Low Exploration

igby

High Exploration
and Low end segment

• Reduce price to become more

competitive in these segments

Reactor Prospector • Maintain leadership in other segments

Low Exploitation
 Situational Analysis
Product revision Marketing budget
R5
for all products increased to R6
for meeting the Overall, Digby is well within the
reduce inventory
customer customer desires, specifically
and gain shares in
requirements. for the targeted segments.
the upcoming
rounds
Some unsold inventory is left
due to higher price point in
Low end segment

Leadership in market share in

all segments except High end
 What Went Well

• RoS increased from -1.9% to high 3.5% (R7)

• Profits increased from -3.8Mn to +6.2M (R7)
• Maintained market leadership at 20% with more focus
on Low & Trad segments
• Digby was able to match market demand with our
production supply
• Loan was cleared off by subsequent payments
• Leverage decreased from ~4.2 to ~2.9
 Sales What Went Wrong
$25,00,00,000

$20,00,00,000

$15,00,00,000

$10,00,00,000

$5,00,00,000

$0
R5 R6 R7 R8

• Sales suffered a decline in 18% due to bad pricing decisions in Low End segment
• Marketing forecast was not done properly due to higher than Competition price in Low end
segment
• Inventory levels remained high despite attempts to clear it.
• Variable costs were higher than Competition, leading on hit on profit margins. We could have
increased Automation in all segments (esp Low, Trad)
• Not able to meet demand in targeted segments despite having high potential
 Key Learnings (Round 5-6)

Strategic Recovery Financial Stabilization Operational Efficiencies

Implementation of strategic Avoidance of emergency loans in The increase in EBIT from $8,834,855
adjustments led to improved Round 5 signals better financial in Round 5 to $22,038,802 in Round 6
financial performance, indicating management and stabilization demonstrates improved operational
the importance of adaptability in efforts. efficiency and cost management using
response to past challenges. automation we did in round 4.

Market Responsiveness Integrated Approach

Adjusting marketing strategies and The importance of integrating
product offerings in response to decisions across different business
market trends likely supported sales areas to drive overall performance
growth. improvements became evident.
Round 7-8
 Market Analysis

Overall industry growth is

high. Matching company
growth with industry
growth is crucial.

Industry growth increased steadily for next four rounds.

 Future Strategy
High Exploitation

In this phase, Digby is an Defender: Maintain

stability and leadership
Defender Analyzer
• Maintaining leadership in all four
segments- Traditional, Low end, Size and
Low Exploration

igby

High Exploration
Performance

• Disinvest from High end to get capital

gains

Reactor Prospector • Matching production with customer

demand forecast and product
specifications with customer expectations

Low Exploitation
 Profitability Analysis – Green shoots
1. Return on Sales (ROS): Digby's ROS at end of Round 6 is +2%, indicating that the company had a positive profit margin.
Digby’s sales revenue exceeded its profits, resulting in a profit.
2. Asset Turnover: Digby's asset turnover ratio is 1.22, which means that the company generated $1.22 in sales for every dollar
of assets. This is because Digby’s debt financing is finally started to pay out at of Round 6
3. Return on Assets (ROA): Digby's ROA for Round 6 is +4.3%, indicating that the company had a positive return on its assets.
Digby's assets were effectively utilized to generate profits.
4. Leverage (Assets/Equity): Digby's leverage ratio is 2.9, indicating that the company has a higher level of debt compared to
its equity. This is because Digby relied more on debt financing to support its operations.
5. Return on Equity (ROE): Digby's ROE for Round 6 is 12.5%, indicating that the company had a positive return on its
shareholders' equity. Digby's shareholders did receive a positive return on their investment.

Overall, Digby's profitability performance in R6 has improved over the last years.
 Efficiency Analysis
Digby's efficiency can be analyzed by looking at various factors such as productivity, turnover rate, and training hours.
1. Productivity: Digby's productivity index is 100.0%, which means it is performing at the same level as the benchmark. This
shows that Digby is maintaining a consistent level of productivity.
2. Human Capital Turnover Rate: Digby's turnover rate is 9.3%, which is higher than the average rate of 8.5% for the other
companies. Digby may be experiencing higher employee turnover, which can impact efficiency and continuity in operations.
3. Training Hours: Digby has allocated 20 hours for training, which is lower compared to other companies. Digby is not
investing as much in employee development and training, which can affect efficiency in the long run. Management will be
focusing to change this in the upcoming years.

Overall, Digby's efficiency is doing good in terms of productivity, but there may be room for improvement in managing turnover
rate
 Solvency Analysis
• The balance sheet shows that Digby has total assets of $199,638 and total liabilities of $155,657. This means that Digby's
total equity is $43,981. To further assess solvency, we can calculate the debt-to-equity ratio. Digby's long-term debt is
$83,794 and its total equity is $43,981. Therefore, the debt-to-equity ratio is approximately 1.91.

• A debt-to-equity ratio of 1.91 indicates that Digby has more debt than equity. This is because we are using borrowed
funds to fund our product expansion plans. Management is closely monitoring its debt levels and ensure that it has
sufficient cash flow to meet its short-term liabilities.

Cash Flow Analysis

• Digby's cash flow from operating activities for the period is $30,689. This indicates that Digby generated a net cash
inflow from its core business operations.
• Digby's cash flow from investing activities shows a net cash outflow of ($17,540) for plant improvements. This is
because that Digby invested in improving its plant and equipment during the period.
• In terms of financing activities, Digby had a net cash inflow of $13,575. This includes cash from long-term debt issued
$17,000, cash from current debt borrowing ($20,850), and net cash from financing activities $13,575.
Overall, Digby experienced a net change in cash position of $0. It means that Digby's cash balance remained unchanged
during the period
 Thanks!

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+34 654 321 432
digby.com