Success Stories
BUSINESS SCENARIO PLANNING - MAJOR US TELECO
A major US telephone company was facing new competitive threats from deregulation, new technologies, and new industry entrants, such as cable. Non-equilibrium markets can develop when new technologies dramatically change price/performance ratios, when product variations make competing products difficult to compare, and when influences such as standardization drive market preference. Besieged by these challenges, companies may either exploit market characteristics, lose substantial market share to competitors, or give up too much revenue to maintain their market presence.
Quantum Leap created a multi-period business scenario simulation that predicts the market share of each competitor as a function of initial presence, price, quality, and advertising and computes fixed, block-wise, and variable costs. It then computes revenue and profit for each competitor as a result of these elements.
At the core of the system are algorithms that describe how sales of each competitor change as a function of overall market growth and changing market attributes such as price, quality, customer change, and growth of related markets. The system also considers the effects of technological limits on the growth of each competitor’s capacity and the effects of regulatory limits (if any) on growth and prices. The system may be used from the perspective of a vendor, customer, or competitor. Results of the simulation are presented as customizable graphs, which facilitate the detection and analysis of business trends. The telco was able to generate strategies for maximizing market share and improving certain performance metrics such as gross profit margins, and long-term profitability.
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