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Module 4 – SLP

Feedback Loop and Organizational Learning

Overview

In the Module 4 SLP, you will develop your own pricing strategy, running the simulation at least twice. Your objective is to earn the highest cumulative profit, and to expand market share to the greatest extent possible. In this final SLP, you will continue to compete with new entrants; in SLP4, however, the pricing policy of competitors will be more aggressive (i.e., competitors will be increasingly inclined to undercut your pricing).

Assignment

For this final SLP, go to “Settings” page, and change the following:

1) Competitor Price Policy – Low

2) Entry for New Competitors – On

3) Be sure to SAVE your changes.

For the Module 4 SLP, you are asked to complete the simulation, making pricing decisions at 2-year intervals. Leave the process improvement percentage at 5%. Note that you will again need to monitor the market share and financial performance of new entrants into the Solar Power industry. Also, you will now find competitors’ pricing to be more highly aggressive.

Run the complete 18-year simulation two times.  For each simulation run, keep track of the pricing decisions you make at each of the four decision intervals. Also, keep your results (note key metrics like market share of new entrants vs. your company’s market share, revenue, margins, profitability, etc). Give justification for your pricing decisions, and using key data, compare your results between Simulation Run #1 and Simulation Run #2.

Keys to the Assignment

The key aspects of this assignment that should be covered and taken into account in preparing your 5-6 page  paper include:

1. Include discussion and analysis of key metrics at the end of each decision point (e.g., among other data, be sure to include total market share, revenue, cumulative profit, consumer net price, modular price, unit cost, etc.). As an MBA, it is your job to identify cause and effect!
2. Using Excel, provide a comparative analysis of key data to demonstrate the differences between the results of Simulation Run #1 vs. Simulation Run #2 at key decision points. It is your job to determine which data (and which comparisons) are most significant. Don’t merely recite the data you’ve collected, however – instead, analyze the data! As an MBA, what does it tell you?
3. Comment on the impact of the more highly aggressive pricing strategies used by competitors. What has been the effect of aggressive competitor pricing on your results (profitability, market share, cost to consumer, etc.)?
4. What recommendations would you give to a newly-hired CFO who will be responsible for setting pricing for the company going forward? If you were responsible for orientation of the new CFO, what lessons learned, pricing/ marketing strategies, and other recommendations might you have? Be specific.

**** NOTE: The 5-6 page requirement includes written analysis and all supporting tables, figures, and graphics. However, it does not include Cover or Reference page. Be sure to adhere to the TUI Writing Guide for formatting of all papers. If you are unsure how to complete a financial analysis, please review the following sample report:

Gilbert O’Neil Mushure. (2014). Financial analysis report: Malaysia airlines 2007 – 2011. International Journal of Sciences : Basic and Applied Research, 14 (2), 148-153.

Also refer to the following source on business writing:

O’Hara, C. (2014, November 20). How to improve your business writing. Harvard Business Review. Retrieved from https://hbr.org/2014/11/how-to-improve-your-business-writing?utm_campaign=Socialflow&utm_source=Socialflow&utm_medium=Tweet

SLP Assignment Expectations

Your paper will be evaluated based on the Rubric.

      Please note the following tips and suggestions:

• Include a cover page and reference page, in addition to the 5-6 pages of analysis described above.
• Include headings for all papers greater than two pages (basically all papers), but do not use headings as “space fillers.”
• Cite and reference all sources that you use in your work, including those that you paraphrase. This means include citations and quotation marks for direct quotes of more than five words, and citations for that information which you have “borrowed” or paraphrased from other sources.

      Hints for success!

Throughout this SLP, you will be asked to make business decisions under conditions of incomplete information and uncertainty. To do so, you will need to make assumptions based on what you have learned throughout the MBA program about how markets operate. Thus, your strategies in approaching this decision need to rely on models, financial analysis, and theories from such classes as Economics, Finance, Accounting, Marketing, Strategy, and Quantitative Analysis. In addition, the simulation will give you some additional market information as you progress.

Be sure to explicitly draw on concepts and theories from the courses you have taken throughout the MBA program. That means you need to “think like an MBA” and use the financial data you are given. You will have to crunch some numbers and present your data analysis professionally by creating some simple tables, charts and graphs.

Module 4 – Background

Feedback Loop and Organizational Learning

While most models of organizational diagnosis that we have been exposed to in this class recognize the existence of feedback loops, none of them really offer a thorough discussion of the complexity of feedback or how it can be used to promote organizational improvement and development. To get a better view of this topic, we turn to the work on systems thinking and organizational learning. Much of this literature is based on the work of Peter Senge, whose seminal book The Fifth Discipline popularized the notion that organizations are capable of learning.

In all of the reading, pay particular attention to thetwo types of Feedback Loops: Reinforcing Feedback that causes growth, and Balancing Feedback that provides stabilizing effects.

Required Reading

This first reading is a good overview.

Bellinger, G. (2004). Introduction to systems thinking. Retrieved from http://www.systems-thinking.org/intst/int.htm.

This second reading is quite long and reviews much of the work in the area of learning organizations. Read it all if you like (see menu on left side of the page), but the most relevant part of the paper for this course is part VI, which covers systems thinking:

Larsen, K., McInerney, C., Nyquist, C., Santos, A., & Silsbee, D. (1996). Learning Organizations (Part VI: Systems Thinking) Retrieved from http://leeds-faculty.colorado.edu/larsenk/learnorg/index.html.

If you are still confused about feedback loops, here is another tutorial on this complex concept: Feedback Loops in System Dynamics.

Optional Reading

Bellinger, G. (2004) theWay of systems. Retrieved from http://www.systems-thinking.org/theWay/theWay.htm

Bellinger, G. (2004) Archetypes. Retrieved from http://www.systems-thinking.org/arch/arch.htm.

This is the home page for the extensive site from which much of the material for this module was taken: http://www.systems-thinking.org/index.htm.