RapidKnowHow > Business Simulation : Risks of Competitor Attacks
Show a Business Simulation Model for Risks of Competitor Attacks > in Excel > Step-by-Step > Examples > Results and Insight
Creating a Business Simulation Model for the risks of competitor attacks in Excel can provide valuable insights into how your business might be impacted under different competitive scenarios.
Here’s a comprehensive step-by-step guide with examples and insights.
Step 1: Define the Variables
- Sales Volume: Current sales volume.
- Market Share: Current market share percentage.
- Competitor Response Rate: Likelihood or tendency of competitors to respond aggressively (percent).
- Competitor Price Reduction: Expected percentage price reduction by competitors.
- Impact on Sales: Estimated impact on sales volume as a result of competitor actions.
- Duration of Impact: How long (in months) the impact lasts.
Step 2: Set Up Excel
- Open Excel and create a new workbook.
- Label the Columns:
- A: Description
- B: Values
- C: Competitor Response1
- D: Competitor Response2
- E: Competitor Response3
Step 3: Input Baseline Data
In cells under the Description column, input the following:
| A | B | |——————|————–|
| Sales Volume |100,000 |
| Market Share | 20% |
| Competitor Response Rate | 40% |
| Competitor Price Reduction |10% |
| Impact on Sales | -30% (for example) |
| Duration of Impact | 6 (in months) |
Step4: Create Simulation Scenarios
- Response Scenarios:
- Scenario1: Minimal Competitor Response (10%)
- Scenario 2: Moderate Competitor Response (40%)
- Scenario3: Aggressive Competitor Response (70%)
Fill in these scenarios in columns C, D, and E with the anticipated impact on the Sales Volume:
| Description | Values | Competitor Response 1 | Competitor Response 2 | Competitor Response 3 | |——————————-|———————–|————————|————————|————————|
| Sales Volume | 100,000 | 100,000 | 100,000 | 100,000 |
| Market Share |20% | 20% |20% | 20% |
| Competitor Response Rate | 10% |40% | 70% |
| Competitor Price Reduction | 10% |10% | 10% |10% |
| Impact on Sales | -5% | -15% | -30% | -45% |
| Duration of Impact | 6 | 6 | 6 | 6 |
| Adjusted Sales Volume | =B2(1+B5) | =B2(1+C5) | =B2(1+D5) | =B2(1+E5) |
Step5: Calculate Results
- Use formulas in the Adjusted Sales Volume row to calculate the projected sales volume under each scenario:
- For Competitor Response1 (C):
- In cell C7:
=B2 * (1 + C5) - For Competitor Response 2 (D):
- In cell D7:
=B2 * (1 + D5) - For Competitor Response3 (E):
- In cell E7:
=B2 * (1 + E5)
Step 6: Analyze Results
Once you have filled in the formulas, your Excel sheet should look something like this:
| A | B | C | D | E | |—————————-|—————-|————————–|————————–|————————–|
| Sales Volume |100,000 |95,000 |70,000 |55,000 |
| Market Share | 20% |19% | 17% |15% |
| Competitor Response Rate |10% | 40% |70% | |
| Competitor Price Reduction |10% | 10% | 10% | |
| Impact on Sales | -5% | -15% | -30% | -45% |
| Duration of Impact | 6 | 6 | 6 | 6 |
| Adjusted Sales Volume | =B2(1+B5) | =B2(1+C5) | =B2(1+D5) | =B2(1+E5) |
Step 7: Insights and Conclusions
- Impact of Competitor Strategy: The results show how varying competitor response levels can significantly impact your adjusted sales volume.
- Market Share Analysis: As competitors respond more aggressively, not only does your sales decrease, but your market share might also drop.
- Strategic Planning: Use these insights to prepare contingency plans. For example, if the competitor has a high chance of responding aggressively (70%), consider proactive strategies such as product enhancements, targeted marketing, or price adjustments.
Optional: Create Visualizations
To enhance the analysis, you might consider creating charts or graphs in Excel based on the adjusted sales volume to visually represent the potential impacts of competitor attacks.
- Highlight the results.
- Go to the Insert tab and choose Charts to create a bar chart or line graph comparing the adjusted sales volumes.
This simulation will help your business understand potential risks and prepare for various competitor actions more effectively.
