Taking Simulation Game into International Business Plan: Aljohani's Group

Abstract

Aljohani entered the jetpack market with the introduction of Flying Wing, retailing for $60. The company pursued a pricing strategy by offering a functional jetpack that promised comfort and safety with minimal design and engine power consideration, as its target market was the elderly. This retail pricing was the lowest in the market, which helped the company achieve its main objective of providing affordable personal mobility and, at the same time, attaining robust financial growth and customer satisfaction. The company intended to continue investing in R&D and evolving the market, which led to the development of a new Dreamliner-787 jetpack targeting the academic segment. This continuous development allowed the company to gain other secondary segments and expand its market share. The company focused on low pricing and aggressive product innovation, as witnessed by its R&D budget of $92,500 in the first two years. This pricing worked in entering and gaining a broader market in the elderly and academics segments. The company remained competitive by increasing revenue sold in the second year and profit margin. The company adapted its strategy by producing an eco-friendly jetpack catering to the academics segment. This plan worked by capturing a broader market that values high-quality products at a higher price, even though its pricing strategy led to the decline of the elderly market share. However, the introduction of Dreamliner-787 and the subsequent withdrawal of Flying Wing from the market helped capture other market segments, but it also resulted in a reduction in margin profits. The limitation of this strategy involved increased operational costs due to raw materials, promotion, and high distribution costs. Nevertheless, the company has an opportunity to re-introduce Flying Wing to continue selling to price-conscious consumers and increase the Dreamliner-787 retail pricing to boost sales and profitability. The first product introduced into the market was the Flying Wing jetpack, designed to offer comfort and safety to the targeted elderly group. The product is suited mainly to cost-conscious consumers, which led to its popularity in the academics segment. Since the company did not invest much in its design, promotion, engine power, or environmental considerations, the average production cost for Flying Wing was $31. Therefore, selling it for $60 resulted in higher sales in the two segments and better returns. However, the company introduced its flagship jetpack, Dreamliner-787, towards the end of year 2. Dreamliner-787 was designed to offer superior comfort, environmental friendliness, and enhanced safety features. It also greatly improved the design and engine power by introducing additional features. The flagship jetpack helped address market needs such as ecological considerations by academics and environmentalists, aesthetics requirements for the hipsters, engine capability needed by youths, and comfort and safety preferred by the elderly. Therefore, by developing Dreamliner-787, the company delivered a product capable of handling longer distances, offering quality at an affordable price. Dreamliner-787 exploited the emerging trend of environmental-conscious consumers such as academics and environmentalists. It also provided an opportunity for the company to cater to the consumers who demand powerful engines and aesthetics in their jetpacks. Therefore, Aljohani created Dreamliner-787 with specific considerations of consumer needs and preferences. The innovative and quality features positioned the company to capture a broader market by capitalising on the growing demands. Strategic investments in R&D helped the company remain ahead of the competition. Initially, the company targeted the elderly segment with the Flying Wing jetpack. The company acquired 91.67% of the elderly market share in the first year. The company realised the popularity of the jetpack amongst academics as it acquired a market share of 94.78% in this segment. In the second year, the company began development of Dreamliner-787 and slowed down on the promotion of Flying Wing in anticipation of the launch of the new product. The decision led to the decline of market share in the two segments in the second year. The introduction of the Dreamliner-787 allowed the company to capture a wider market share by having a chunk of each segment available. 46.03% of the environmentalists, 44.85% of the academics, 38.89% of the hipsters, 26.30% of the teen boys, and 15.85% of the elderly purchased the Dreamliner-787 in the third year. This helped boost total volume sales revenue from $740,040 in the first year to $2,330,248 in the third year. The company distributed its product through department stores, online outlets, low-cost chains, high-end stores, and trade fairs. Using all available distribution channels allowed the company to reach all the segments, thus boosting Aljohani's market share. Aljohani utilised various channels to communicate with the target market. Considering the broad target and secondary segments as well as the varied preferences of the demographics, the company utilised both digital and traditional communication channels. They included Internet ads, Pictagram, Talkbook, TV and movies, radio, and trade fairs. The company managed to engage different consumers at various levels, increasing brand awareness and sales. Growth in sales and awareness resulted in increased total equity from $769,750 in year 1 to $3,167,369 in year 3. The growth in equity signified Aljohani's effectiveness as a jetpack manufacturer and distributor. However, the changes in market competition, saturation, and product offering resulted in a considerable decline in net income and net profit margin from year 1 to year 3. Net income started at $218,683 and increased in year 2 to $436,653 before a decline to $192,655 in year 3. This decline in profitability and net income occurred despite an increase in sales volume. Nevertheless, Aljohani remained profitable throughout the simulation period, and consistent growth in the number of units produced per year showed the ability of the company to increase its capacity to handle market demand.