Back Bay battery simulation Reflection Report (Group Submission)

These findings should:

● Include your collective strategy on how Back Bay Battery should invest in R&D and in
which areas it would benefit the most;
● Include formative decisions that indicate how the company should place its new
technologies, keeping in mind the demands of the product, its existing space in the
market, the external environment, the internal competitors and the brand’s proposition;
○ Table for these pointers (porter)
● Include the data that defines the company’s strategy to meet its financial objectives,
describing the aspects that would need more investment versus those that need to be
brought in;
And explain this graph

●
● Include recommendations on how Back Bay Battery can respond to evolving market
dynamics and forecasts for the subsequent year’s sales.??

Background of the case study and your individual simulation findings

In this section, we will talk about the brief background of the case study and our individual group
findings.
Background
The Back Bay simulation exercise was where I engaged as the president of Back bay Battery,
Inc ($240 million revenue division) as a company stood out as a specialist in AGM batteries
acquiring a good market share and around 60% revenue, and 30% revenue from
Supercapacitors. They focussed on the industrial application of AGM batteries’ high energy
density which made them more attractive than Li-on batteries.
Back Bay currently focuses on three main market segments: Automobiles, Warehouse
equipment & Marine.
Market pressure on pricing is endemic in the battery manufacturing industry due to rivalry
among competitors and low entry barriers, a competitive force exacerbated by Asian
manufacturers. Unfortunately, the impact of this has weakened supplier bargaining power
and subsequently increased buyers' bargaining power.
Another challenge I faced as President of Back Bay Inc was the pressures to innovate from
our R&D scientists, who saw the potentials of supercapacitors (SC) batteries. In addition,
there were further pressures from our sales teams. They continuously clamored for
improved AGM battery offerings, believing that slight technological enhancements or
technical advantages could swing large sales orders in our favor in a price-sensitive market.
 Individual simulation findings
■ Looking at the current market situation where AGM is a profitable product for the company.
■ Supercapacitor battery is a potentially disruptive technology, however, it needs process
improvement to enhance our potential profit by bringing down its unit cost.
■ Investment to improve features like energy density and self-discharge SC increased market
share, which helped increase cumulative revenue year on year.
■ With continuous improvements in SC, the profit margin can improve.
■ R&D budget was used primarily to improve the operational costs so the production cost could
be reduced.

Team member Name Ankita S Piyush W Pratiksha P Arnab C Annie T

Cumulative revenue in Million $2126.2 $2126 $2033 $1921.3 $1831.3

Highlights of the combined report

Here’s the summary of the combined report

Parameters AGM (From Year 1-10) Super Capacitor (From Year 1-10)

Revenue $115.8M to ⬆ $127.7M $87.5M to ⬆ $153.1M

Profit From 30% to 32% -25% to 33% (in Year 10)

Unit cost $6.50 to $6.04 $25 to $11.63

Price $10 to $9.10 $20 to $18.00

● Disruptive technology
 ○In Year 6, 7 we achieved a disruptive technology growth in two areas
■ Process improvement for SC which brought the overall variable costs for
SC by $11.62
■ For Energy density where for SC while AGM performance was improving
slightly, we invested heavily in R&D for SC for Energy density from
around 100 watt Hours/Kg (Year 5) to 500 watt Hours/Kg (Year 10)
● Frameworks
○ McKinsey’s 3 horizons
■ Horizon 1 (1-2 Years)
● We tried to capture more market for the Automobile and
Warehouse customers by enhancing on the product features for
SC for Energy density. Since AGM was profit-making ($115.8M),
we did try to capture new customers by slight price reduction
■ Horizon 2 (3-5 Years)
● To keep the unit sales at par, we looked at reducing the per unit
selling price for AGM and SC to capture price-sensitive customers
like Warehouse and Marine
■ Horizon 3 (5+ Years)
● To seed future profit from SC, we invested not only in the features
of SC but also the process improvement to bring down the costs
and make it a profit-making product

● Porters 5 forces analysis for Back Bay battery

● Internal competitors - AGM and

SC were the internal products providing a
similar value
● Brand proposition - Back Bay
built a profitable business as a supplier to
integrators/segments who built
uninterruptible
power supplies.The office
computers/PCs or point-of-sale systems
running during short outages (UPS). The
other area value proposition of the
company was power-management
applications requiring many rapid charge/discharge cycles for short-term power needs.

Conclusion of the report

● Overall strategy **
(Mention the numbers)
○ Looking at market size and potential for SC, we took the approach for a long-term
strategy for SC and improve its sales and variable costs to make it profitable
○ AGM though its profitable, but was reaching a market saturation
○ Invest heavily in Process improvement for SC
○ Invest heavily in R&D for SC and well as AGM for
■ Energy density
■ Self discharge

● Pricing strategy
○ Overall from Year 3 to 5, there was not significant cost reduction for AGM and SC
○ Keeping AGM and SC prices competitive to increase AGM and SC to increase
sales in Warehouse and Marine segments
○ After Year 5 since we saw a sudden dip in sales (12% this year to 20.9 million
units annually and Warehouse Equipment declined by 63% this year to 2.0
million units annually) due to external forces, we changed the
○ Also, after year 5, Automobile market was reaching its saturation with the overall
market reducing to 9.79M unit sales
○ During year 7 and year 8, we saw a sudden rise in the sales for the SC where the
unit sales plummeted.
■ This was due to the fact that we invested heavily in process improvement
and energy density
■ For Warehouse and Automobile, ED was an important feature however
Warehouse and Marine were very price sensitive
■ Due to heavy reduction in price in Years 8 & 9, we attracted price
sensitive customers from Warehouse and Marine bases
● R&D strategy
○ Tried to tackle the two main disadvantages of Super Capacitor, namely, lower
energy density and self-discharge rate.
○ Invest in Energy Density for SC based on the customers from Year 3 to Year 8
to achieve disruptive technology in this area for the customer segments of
Automobiles and Warehouse
○ Investing in Self Discharge for AGM and SC from year 7 onwards based on the
demands of Marine and Warehouse customers
○ Process improvement for SC for variable cost reduction in order to generate
more profit with per unit sale
● Learnings
○ Focussing on long term strategy to improve SC by looking at the market
requirements
 ○ Focussing on the overall profitability and revenue for not only AGM but SC as a
part of emerging technology
○ The simulation helped us understand the relationship between our investment
decisions on new disruptive technologies, strategic product planning and its
consecutive contribution to the profitability of a business/product.
○ Recommendations on how Back Bay Battery can respond to evolving market
dynamics and forecasts for the subsequent year’s sales**

● Unit sales (Graphs can be in the end?)

Reduction in variable costs for the production of SC

Disruptive technology (SC)