BUS599 MOD04 SLP Feedback Loop and Organizational Learning

BUS599: Strategic Management
Module 4 SLP: Feedback Loop and Organizational Learning
Derick Lewis Sr.
University:
Professor:
Date:
Introduction
Over the years, new solar power companies continues to enter into the solar power industry, hence increasing the intensity of competition. For this reason, each of chief management officers will try to come up strategic policies to retain their market coverage, position , increase profitability levels as well as their sustainable competitive advantages regardless of whether the the competitors had adopted the low pricing approach or not. In addition, basing on the market situation at hand, the CFO always has a duty to make strategic decisions that will ensure the company more strength in terms of competition despite the continues entry of new players in the market with low pricing business level policies. Pricing strategy is a critical approach that is employed by new firms joining the market as a way of penetrating the market. The logic behind the approach is to a gain a wide market share, reduce the cost of production, which will in turn increase of reduce revenue collection depending on whether the firm of enjoying the economies of scale or not. For example, when a firms set its price above the equilibrium price in the market, this would imply that a significant change in price increase would led a decree in demand of the products. On the hand, when the prices are set below equilibrium price, this will automatically increase the demand of the products, however, a firms is bound to experience a relatively lower profits than a firm that set its price above the equilibrium price. As a solar power company, the firm can be producing products such as photovoltaic panel, a product that is known to have low demand. Therefore, the CFO has to strategies a policy that will ensure such a product gets a position into the market as it has has a gap posed by the consumer’s reluctance to shift from using traditional electrical energy to the the modern solar energy. Consequently, an operative strategic decision and high levels of high-tech inventions and innovations would boost the firm’s profitability capacities.
Key Metrics and Decision Points
Even as decisions are made after the 2-year interval, there will be four decisions points. 2007 still remains the first year of the simulation covering the 18-year period and the next decision is 2012 and in the first simulation the module price is $ 0.13 kWh for both simulations (Sterman, 2014). As such, in 2012 in simulation 1 and 2 the company had 4.85% market share, but the information then differed in 2011 when the module price was $ 0.11 and $0.10 in simulation 1 and 2 respectively (Sterman, 2014). The solar energy users are sensitive to price and lowering the module price increased the demand for company’s solar energy compared to the competitor.
In the year 2025, under simulation 1 the market share was 45.90%, the consumer net price was 0.07 lower than the other solar firm when the module price was 0.07, while the unit direct cost was $0.03 lower than both the competitor and new entrants (Sterman, 2014). The cumulative profit had increased to $ 94.23 Billion in simulation 1, compared to $ 74.22 B for th...