Strats and Marketing Simulation – Strategic Guide and Practical Walkthrough (MBA-Level)
Welcome to this comprehensive guide to the Strats and Marketing business simulation, specifically designed for MBA students and professionals. This simulation places you in the role of a strategic decision-maker in the automotive industry, challenging you to manage product development, marketing, manufacturing, and pricing to outperform rival firms. Below is a detailed walkthrough based on a successful run where our team (Firm B) achieved the top position across almost every performance metric, including cumulative net income, stock price, and market share.
🧭 Overview of Performance (Period 10)
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Firm Performance: Cumulative net income reached $48 billion.
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Stock Price: Peaked at $258.
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Debt Management: Fully eliminated by Period 8.
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Unit Sales: Grew from ~400 to over 1,000 units by Period 10.
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Cash Position: Topped the leaderboard at $36 billion.
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Gross Margin: Concluded at 38.6% in Period 10.
These figures provide evidence of a disciplined, strategic approach that balanced innovation, demand responsiveness, and cost control.
🎯 Strategic Focus Areas
1. Product Development
This is the cornerstone of long-term success in the simulation.
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New Center Construction: Initiate construction of a new vehicle development center in Period 0.
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Vehicle Positioning: Align your vehicle design with the ideal coordinates on the positioning map early. Doing so ensures early market entry and long-term competitive advantage.
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Lead Time Awareness: Vehicle development takes 2–3 periods to complete. Early initiation is critical.
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Continuous Upgrades: Make incremental changes to match consumer preferences. These may include major upgrades, minor updates, or cost-reduction projects.
✅ Tip: Inventory will be written off after upgrades. Keep inventory low to avoid losses.
2. Marketing Strategy
Marketing is central to consumer demand creation.
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Budget Allocation:
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Corporate Marketing: Consistent investment each period (start at $1M–$2M and increase).
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Social Media & Direct Marketing: Invest incrementally to maintain visibility and engagement.
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Advertising:
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Ensure advertising spend reaches at least 80 across all categories.
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Promotions: Maintain at $240 or higher.
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MSRP Pricing:
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Review and increase MSRP every period to reflect rising base costs and inflation.
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Test price elasticity using the Test Market tool (see below).
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✅ Tip: In low price-sensitivity segments, increasing MSRP can enhance profit without reducing unit sales.
3. Manufacturing
Align production volumes with accurate sales forecasts.
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Zero-Inventory Approach: Aim for just-in-time production, especially during early rounds.
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Forecasting:
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Analyze prior sales and adjust for expected growth.
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Include buffer units (+2 or +3 units) for small fluctuations.
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Inventory Management During Upgrades:
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Low inventory = fewer write-offs when implementing upgrades or switching platforms.
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Production Comments: Watch for shortage or surplus warnings.
📌 Example: In Period 1, we increased production from 99 to 132 units based on demand forecasts, resulting in only 3 units of inventory—an optimal scenario.
4. Special Decisions
This area may include one-time or strategic decisions such as corporate partnerships, new facility launches, or sustainability initiatives.
⚠️ Instruction: Always review this tab for key opportunities or risks that may significantly affect long-term outcomes.
🔍 Market Analysis Tools
A. Microsegments
Analyze consumer expectations and segment demands.
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Hotspots on the Positioning Map: Aim to place vehicles inside the microsegment box and ideally near its center.
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Buzzy (Sports Car Example):
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Initial model was far from the box → unit share = 38.2%.
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After repositioning: unit share increased to 65.7%.
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Price Sensitivity: Confirm whether your target segment is price-sensitive. If not, leverage higher margins through premium pricing.
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Advertising Theme Alignment:
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Ensure vehicle ads match consumer preferences (e.g., Performance and Styling).
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Adjust themes in the Marketing tab as needed.
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B. Focus Groups
This tool provides qualitative insights about:
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Price competitiveness
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Product performance (e.g., horsepower, size, styling)
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Comparative advantages
✅ Use Case: Despite suboptimal pricing, high horsepower and styling helped sustain sales due to low price sensitivity.
C. Concept Test
Used prior to launching a new vehicle concept.
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Steps:
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Go to Product Development → New Concept.
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Select type (e.g., Utility Vehicle), size, horsepower, interior features.
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Return to Concept Test, select segment (e.g., For-You), and test price (e.g., $45,000).
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Evaluate likelihood of purchase. Aim for a high percentage in "Likely to Buy".
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✅ Tip: Iterate on concept variables (size, performance, price) until you achieve a strong market fit.
D. Test Market
Simulate market response to various MSRPs.
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Purpose: Optimize MSRP for maximum profitability.
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Example:
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AEV at $40,000: No gain from lowering or raising MSRP.
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Butte at $61,000: Increasing MSRP to $62,000 yields $128M in additional profit.
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✅ Key Insight: Even a $1,000 increase may result in significant gains if demand holds steady.
📊 Summary of Key Success Drivers
| Key Factor | Description |
|---|---|
| Vehicle Size | Primary driver of consumer preference |
| Horsepower | Secondary priority; should align with performance-focused segments |
| MSRP | Adjusted based on market feedback and cost trends |
| Upgrades & Timing | Early product development and minimal inventory allow strategic flexibility |
| Marketing Spend | Incremental increases to stay competitive |
| Ad Theme Match | Align ads with consumer priorities in each segment |
🏁 Final Note
Strategic consistency, early market entry, and data-driven adjustments are critical in the Strats and Marketing simulation. By monitoring feedback, managing cost structures, and keeping products aligned with consumer demand, your firm can achieve top-tier performance and outperform competitors—even in highly dynamic environments.
Good luck, and may your firm lead the market!
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