How to increase leverage in capsim

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Topic: CAPSIM Simulation assignment for Business Policy Development and ImplementationFor any business, the primary function is to satisfy the goals of the stakeholders. This involves making profits (for the stakeholders), maintaining these profit margins, ensure high-quality products and also offer employment opportunities. The enterprise is organised into manageable groups each led by a leader whose function include:1) Planning2) Coordinating3) Controlling4) Organising5) CommandingThe interpersonal, political, conceptual, technical, diagnostic and leadership skills are vital for high performance accorded to any group. The groups involved included Chester, Andrews, Baldwin, Digby, Errie and Ferris. Each had its own leader.According to the implementation of policies and strategies in any business sector1) All policies should be agreed upon by the group members.2) An appropriate forecasting method should be inculcated to aid in sound decision-making.3) A team spirit and a favourable environment should be enhanced4) The set policies and strategies must be reviewed overtime to ensure the consistency of all plans and same objectives are aimed at.5) Depending on the changes in the sector, contingency plans should be developed.6) The leader must have the know-how (where and how) certain plans are useful.The analyses of the group performances are as based below.Profit-AnalysisIt is a type of cost-accounting applied for fundamental and short-term decisions. It extends the scope of the break-even analysis.Profit margin is a measure of the profitability index calculated as the ratio of the net income to the accrued revenues or the ratio of the net profits to the sales made. A higher profit margin depicts a more worthy investment having a greater degree of control over its cost when compared to other market players.Scrutiny of a company’s earnings does not depict its profitability index and a rise in its earnings also does not show increased profit margins. A company whose costs have increased at a greater rate compared to the sales depict a lower profit margin; the opposite is true.A little profit margin could show the effectiveness of the pricing strategy and also the impact of the market dynamics like competition. In the analysis of the profit margins, the following are considered:1) The average profit margin for the groups: Chester, Baldwin, Digby, Erie, Ferris and Andrews2) The difference between the operating margins and the profit margins for the said groups3) The available financing sources for the different groups.In the beginning, the groups had relatively same profit margins ($2,493,706), sales ($40,799,953) translating to 6.5% of the total turnover same leverage and no emergency loan. The market share was equally divided among the six groups. This is expected at the start before market dynamics entered to play.At round 1, the profit margins changed visibly across the six companies. Chester in particular made $2,786,788 (an increase of $293,082) with the sales at $56,515,995 (an increase of $15,716,042). This is quite commendable though the leverage decreased to 1.5 from 1.6 in the previous round though not comparable to the Ferris Company having a leverage of 1.9. This ra...