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Vensim
1. The focus of this assessment revolves around the organization, Winery A. The main product offered by the firm constitutes wine. The main problem affecting the organization’s operations concerns the efficiency in increasing sales. Even though there has been a boost in sales since 2005, the profit margin slumped in 2011 when the sales dropped considerably. Apart from the respective issue, Winery A has also been experiencing several issues related to the promotion and distribution of its product. Accordingly, the company has been facing problems within its distribution channels. Concerning this, the firm has attempted to shift its focus towards reaching people and gaining a decent margin. Moreover, appealing to more customers at times of unfavorable weather is also a challenge for the firm.
2. The main variable liable for the reduction in sales for Winery A is the substantial increase in inventories. Due to the increase, the sales have been reducing since the firm continues to produce more commodities. Nonetheless, certain variables are responsible for the dissemination of the problem within this particular organization. Foremost, the decrease in sales has been attributable to the firm’s lack of a vision. Accordingly, Winery A’s mission involves the production of the best-produced southwest wine from natural fruits. Irrespective of this, the organization seeks to be short of a vision based on the actuality that it has not defined one yet. Additionally, the predisposition towards focusing more in production than demand also affects the level of sales negatively. Undeniably, Winery A has focused considerably on its produce rather than its needs forcing the sales to decrease consistently. Lastly, insufficient and inadequate investment also poses a negative impact on the sales by exacerbating the situation.
3. Indeed, several hypotheses elucidate the problem that Winery A has been experiencing over the last two years. As mentioned, these assumptions comprise the lack of a vision for the organization, the considerable focus on the firm’s production rather than the demand and lastly, insufficient investment for the company. These factors are common since they influence the decrease in the level of sales for Winery A. Therefore, this makes it difficult for the firm to achieve a decent profit margin due to the unsatisfactory performance it has been exhibiting from 2011.
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4. In order to improve the performance of the organization’s system, it is crucial to establish a strategy that will guarantee the elimination of the problem affecting Winery A. Based on this, the main tactic that the firm can apply comprises a structural strategy. From the study, it is clear that the company in question has been experiencing such problems as an outcome of its structure. These framework constraints affect the business strategies that Winery A implements by exacerbating the decreasing level of sales. Thus, to ensure that the issue undergoes mitigation, it is imperative to fix certain aspects of the organization’s internal structure. Foremost, Winery A can focus on the reduction of production. This is crucial since it will assure much focus on the demand side. By implementing this strategy, the company will be able to establish the relationship between the production and demand at equilibrium. When there is a balance between the level of production and the degree of demand, then the firm will be able to curb increasing inventories. The occurrence of such a situation will allow Winery A to sell more of its products and gain a substantial profit margin.