Congruence Model of Organizational Behaviour Order Instructions: BUS 599-SLP3
Module 3 – SLP
CONGRUENCE MODEL OF ORGANIZATIONAL BEHAVIOR
The Module 3 SLP requires that you enter the same pricing data into the simulation as you did in SLP2. In SLP3 however, you will face new entrants into the industry (new competition).
Forio Simulation: https://forio.com/simulation/solar-test/index.htm#page=market_research
At the landing page, click on “Play as an INDIVIDUAL.” Then, choose a Screen ID and click “Submit.”
Congruence Model of Organizational Behaviour Assignment
Go to the “Settings” page, and change the following:
1) Entry for New Competitors – On
2) Be sure to SAVE your change!
Now, input the SLP3 decisions:
1) Decision 1: For Years 2008-2012
a) Pricing – Manual
b) Module Price – $0.13
c) Revenue to Process Improvement – 5%
d) Years to Advance – 5 years
2) Decision 2: For Years 2013-2017
a) Pricing – Manual
b) Module Price – $0.11
c) Revenue to Process Improvement – 5%
d) Years to Advance – 5 years
3) Decision 3: For Years 2018-2022
a) Pricing – Manual
b) Module Price – $0.09
c) Revenue to Process Improvement – 5%
d) Years to Advance – 5 years
4) Decision 4: For Years 2023-2025
a) Pricing – Manual
b) Module Price – $0.08
c) Revenue to Process Improvement – 5%
d) Years to Advance – To end
Leave the process improvement percentage at 5%. Note that you will now need to monitor the market share and financial performance of new entrants entering the Solar Power industry (see the “Settings” page for definition of this concept).
Run the simulation once, keeping track of your pricing decisions and the outcome of each decision made (note market share of new entrants, profitability, etc).
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. For each decision point, be sure to include comparative tables that include what you believe to be the most important data. Don’t merely recite the data, however – instead, analyze it! As an MBA, what does it tell you?
3. Using Excel, provide a comparative analysis of key data to demonstrate the differences between SLP2 and SLP3 results. It is your responsibility to determine which data (and which comparisons) are most salient.
4. Explain the significance of new entrants into the PV industry. What is the impact that new competitors have on your company’s market share? Cumulative profitability? Cost to the consumer?
5. Make recommendations. What would you have done differently as it relates to pricing, process improvement, or other?
**** 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:
https://www2.uhv.edu/kuangy/acct6351/Sample%20Projects/sample%20project%20with%20pro%20forma%20%20analysis.pdf
Congruence Model of Organizational Behaviour Sample Answer
Introduction
When there is a new entrant into a market, this is often accompanied by changes in the variables that influence the business performance and an appropriate reaction is envisaged in order to maintain market position. This is attributable to the fact that the way in which the new entrant overcomes barriers to entry that exist in the market can guide in strategic approach to handle the new competition (Rainer & Turban, 2009). As the market changes, there is need to consider the new entrant’s strengths in order to devise an effective strategy with regards to cost reduction, pricing, and competition.
For instance, since the new entrant usually require the same materials as you require to offer the same products or services, in essence this translates to an entry of a new buyer in the market which often pushes the suppliers to increase their prices (Ireland, Hoskisson & Hitt, 2008). Also pricing strategy is imperative in tackling competition because the new entrant will often tend to sell their products or offer their services at reduced costs, which requires existing companies to leverage on other advantages such as location, low labor costs, or product design to compete on prices (Capon, 2008; Thompson, 2010). According to Ireland, Hoskisson & Hitt (2008) the manner in which the new entrant chooses to approach competition from other rivals in the market is crucial in determining how the new entrant affects business in the market as a whole. Thus, the need to strategically analyze the market competition after a new entrant is inevitable for a company to continue enjoying its position in the market by achieving competitive edge (Rainer & Turban, 2009).
Strategic management involves the analysis, formulating and implementing strategies devised for the creation or sustaining competitive advantages (Capon, 2008; Thompson, 2010). In the context of this project, analysis will be done from the perspective of the influence of new entrants into the market and monitor how the company is affected by the new competition arising from new entrants in the market. Congruence model ssimulations are used to monitor the effect of new entrants in terms of the company market share and profitability. SunPower limited is facing stiff competitive in the market but still managing to command a considerable market share in addition to making satisfactory extent of profits. Therefore, the congruence model will be used base on Forio Simulation to determine the influence of new entrants also known new competition with regards to the four strategy decisions taken.
1) Decision 1: For Years 2008-2012
- a) Pricing – Manual
- b) Module Price – $0.13
- c) Revenue to Process Improvement – 5%
- d) Years to Advance – 5 years
Maintaining the company’s module price at $0.13 between 2007 and 2012 is projected to give module price of $0.13 and unit direct cost of $0.10 for SunPower, while for others it gives module price of $0.15 and unit direct cost of $0.08.
In the same line, the annual revenue is $626.82M and annual net income is $35.85M for the company, while it is $14.60B and $3.65 for others respectively. The market share has also grown whereby the share is 4.85% and annual net income is 721.43 for the company, while it is 95.15% and 18.85K for others respectively as shown in figures and table 1 below.
Table 1
SunPower’s Simulation data after five years (2012)
| Sun Power (You) | Other Solar | ||
| Market Share (%) | |||
| Consumer Net Price ($/kWh) | |||
| Module Price ($/kWh) | |||
| Unit Direct Cost ($/kWh) | |||
| Annual Revenue ($/Year) | |||
| Annual Net Income ($/Year) | |||
| Annual Shipments (MW/Yr) | |||
| Installed Base (MW) | |||
| Share of Installed Base (%) | |||
| Cumulative Profit ($) | |||
| Percent of Rev to Process Imprv (%) | |||
| Grid Power Price ($/kWh) | |||
| Industry Net Income ($/Yr) | |||
| Industry Subsidy ($/kWh) | |||
| New Entrants |
2) Decision 2: For Years 2013-2017
- a) Pricing – Manual
- b) Module Price – $0.11
- c) Revenue to Process Improvement – 5%
- d) Years to Advance – 5 years
The module price between 2013 and 2017 is projected to give module price of $0.11, $0.13, and $0.11 for the company, other competitors and new entrants and unit direct cost of $0.08, $0.07, and $0.06 for SunPower, others and new entrants as shown in figures below.
In the same line, the annual revenues are $1.78B, 25.90B and 3.12B for SunPower, others and new entrants respectively whereas annual net incomes are $124.99M, 7.91B and 877.18M SunPower, others and new entrants respectively. On the other hand, the market shares are 7.42%, 80.94% and 11.64% for SunPower, others and new entrants respectively whereas installed bases are 2.46K, 41.30K and 2.64K SunPower, others and new entrants respectively as shown in figures and table 2 below.
Table 2
SunPower Simulation Data for Years 2013-2017
| Sun Power (You) | Other Solar | New Firms | |
| Market Share (%) | |||
| Consumer Net Price ($/kWh) | |||
| Module Price ($/kWh) | |||
| Unit Direct Cost ($/kWh) | |||
| Annual Revenue ($/Year) | |||
| Annual Net Income ($/Year) | |||
| Annual Shipments (MW/Yr) | |||
| Installed Base (MW) | |||
| Share of Installed Base (%) | |||
| Cumulative Profit ($) | |||
| Percent of Rev to Process Imprv (%) | |||
| Grid Power Price ($/kWh) | |||
| Industry Net Income ($/Yr) | |||
| Industry Subsidy ($/kWh) | |||
| New Entrants |
3) Decision 3: For Years 2018-2022
- a) Pricing – Manual
- b) Module Price – $0.09
- c) Revenue to Process Improvement – 5%
- d) Years to Advance – 5 years
Sterman (2011) reiterates that in most technology-oriented companies there is greater competition and among the most significant sources of positive externality is increasing return due to costs increase and product attractiveness is associated with the scale of production. The module price between 2018 and 2022 is projected to give module price of $0.09, $0.11, and $0.10 for the company, other competitors and new entrants and unit direct cost of $0.05, $0.06, and $0.06 for SunPower, others and new entrants as shown in figures below.
In the same line, the annual revenues are $34.02B, 81.55B and 15.12B for SunPower, others and new entrants respectively whereas annual net incomes are $8.23B, 26.39B and 4.08B SunPower, others and new entrants respectively. On the other hand, the market shares are 33.30%, 55.15% and 11.56% for SunPower, others and new entrants respectively whereas installed bases are 30.20K, 113.84K and 15.99K SunPower, others and new entrants respectively as shown in figures and table 3 below.
Table 3
SunPower Simulation Data for Years 2018-2022
| Sun Power (You) | Other Solar | New Firms | |
| Market Share (%) | |||
| Consumer Net Price ($/kWh) | |||
| Module Price ($/kWh) | |||
| Unit Direct Cost ($/kWh) | |||
| Annual Revenue ($/Year) | |||
| Annual Net Income ($/Year) | |||
| Annual Shipments (MW/Yr) | |||
| Installed Base (MW) | |||
| Share of Installed Base (%) | |||
| Cumulative Profit ($) | |||
| Percent of Rev to Process Imprv (%) | |||
| Grid Power Price ($/kWh) | |||
| Industry Net Income ($/Yr) | |||
| Industry Subsidy ($/kWh) | |||
| New Entrants |
4) Decision 4: For Years 2023-2025
- a) Pricing – Manual
- b) Module Price – $0.08
- c) Revenue to Process Improvement – 5%
- d) Years to Advance – To end
According to Thompson (2010) pricing is one of the fundamental strategic decisions that SunPower can take to achieve competitive edge in the company considering that perfect elasticity is rare in real world. As a result, pricing strategy influences both the consumers’ decisions to purchase as well as signalling the competitive advantage to competitors of an entity.
The module price between 2023 and 2025 is projected to give module price of $0.08, $0.09, and $0.09 for the company, other competitors and new entrants and unit direct cost of $0.03, $0.05, and $0.05 for SunPower, others and new entrants as shown in figures below.
In the same line, the annual revenues are $157.60B, 168.91B and 42.87B for SunPower, others and new entrants respectively whereas annual net incomes are $66.52B, 54.90B and 10.80B SunPower, others and new entrants respectively. On the other hand, the market shares are 48.61%, 39.58% and 11.81% for SunPower, others and new entrants respectively whereas installed bases are 172.80K, 252.68K and 51.80K SunPower, others and new entrants respectively as shown in figures and table 4 below.
Table 4
SunPower Simulation Data Years 2023-2025
| Sun Power (You) | Other Solar | New Firms | |
| Market Share (%) | |||
| Consumer Net Price ($/kWh) | |||
| Module Price ($/kWh) | |||
| Unit Direct Cost ($/kWh) | |||
| Annual Revenue ($/Year) | |||
| Annual Net Income ($/Year) | |||
| Annual Shipments (MW/Yr) | |||
| Installed Base (MW) | |||
| Share of Installed Base (%) | |||
| Cumulative Profit ($) | |||
| Percent of Rev to Process Imprv (%) | |||
| Grid Power Price ($/kWh) | |||
| Industry Net Income ($/Yr) | |||
| Industry Subsidy ($/kWh) | |||
| New Entrants | 6 |
Congruence Model of Organizational Behaviour Conclusion
It is evident that globalization force and technological changes in companies are imperative in ensuring that they achieve competitive advantages. In the present competition which is imperfect for solar products and technology sector, Sun Power has the ability to gain profit from its customers, upon signalling to its competitors about its willingness to focus on margin rather than market share. This implies that, SunPower should continue with its business strategy decisions, which have proven to mitigate the threat of new entrants and made it to continue thriving despite the new competition.
Congruence Model of Organizational Behaviour References
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