| Course | D361 Business Simulation |
|---|---|
| Task | Task 1 |
| Paper type | Business simulation performance report |
| Length | About 1,100 words, 3 pages |
| Format | APA 7 |
| School | Western Governors University (WGU) |
| Program | BS Finance |
| Updated | September 2026 |
Free sample paper for D361 Task 1
The Quarter We Cut Prices and Why We Stopped: A Business Performance Report on Six Quarters of a Composite Simulated Bicycle Company
Student Name
School of Business, Western Governors University
D361: Business Simulation, Task 1
Course Instructor
Month Day, Year
The Quarter We Cut Prices and Why We Stopped: A Business Performance Report on Six Quarters of a Composite Simulated Bicycle Company
The Company and Its Strategy
Ridgeback Cycles, the composite company in this report, entered a simulated bicycle market with $6 million of owner investment. The market had two main customer segments: mountain riders, who valued performance and durability and would pay for them, and commuters, who valued comfort and low price. Ridgeback chose a focused differentiation strategy aimed at mountain riders, planning to earn premium prices through better components and a brand known for reliability. Strategy involves choosing a distinct set of activities that delivers a unique mix of value, and deciding what not to do (Porter, 1996). Over six quarters, Ridgeback made decisions each quarter on product design, price, advertising, sales offices, factory capacity and financing.
Business simulations let students connect decisions to consequences in a compressed time frame, and research on business gaming finds they are most useful when participants reflect on why results occurred (Faria et al., 2009). This report does that.
Results by Quarter
Revenue grew each quarter: $0.9 million, $2.1 million, $3.0 million, $4.6 million, $6.2 million and $7.4 million. Net income was negative for the first three quarters, at a loss of $1.4 million, $0.9 million and $0.6 million, then positive at $0.3 million, $0.9 million and $1.3 million. Cumulative net income after six quarters was a loss of $0.4 million, but the trend in the last three quarters was strong and improving.
Income Statement Analysis
The early losses reflect start-up costs: research and development for the first models, opening sales offices and the fixed costs of the first factory before sales reached scale. These were expected.
The third quarter is the most instructive. In quarter two, Ridgeback built a second factory, expecting demand to grow faster than it did. With capacity utilization at 54% in quarter three, fixed costs per unit rose. To fill the factories, the team cut the price of its main mountain model from $620 to $540. Units sold rose 18%, but gross margin fell from 38% to 29%, and the loss narrowed only slightly. The price cut also moved Ridgeback toward the price-focused position its strategy was meant to avoid.
In quarter four, the team reversed course. It introduced a premium mountain model priced at $710 with upgraded suspension and brakes, returned the base model to $600 and shifted advertising from broad national campaigns to mountain-biking publications and events. Gross margin recovered to 41% by quarter six, and unit sales kept rising because the premium model scored highest in the simulation's customer satisfaction ratings for the mountain segment.
Balance Sheet Analysis
At the end of quarter six, Ridgeback had total assets of $8.4 million: cash of $1.8 million, receivables of $0.6 million, inventory of $0.9 million and net property and equipment of $5.1 million. Liabilities were $2.8 million, including $0.8 million of payables and a $2.0 million long-term loan taken in quarter two to fund the second factory. Equity was $5.6 million, the $6.0 million invested less the cumulative loss.
The balance sheet shows a company that is solvent and increasingly liquid, but it also shows the cost of the second factory: it tied up capital and required borrowing a quarter or two before demand justified it.
Cash Flow
Cash tells a slightly different story from profit. Operating cash flow turned positive in quarter four, the same quarter as net income, but it grew more slowly because receivables and inventory rose with sales; each new specialty retailer took thirty days to pay, and the premium model required larger stocks of expensive components. Investing cash flow was heavily negative in quarter two, when the second factory was built, and small thereafter. The $2.0 million loan covered most of that outlay, so Ridgeback never came close to running out of cash, but interest on the loan reduced net income by about $50,000 a quarter. By quarter six, operating cash was large enough to schedule the first principal repayment of $250,000 for quarter seven, a sign that the business had begun to fund itself.
Balanced Scorecard
Kaplan and Norton designed the balanced scorecard to set measures of customers, internal operations and organizational learning beside the financial ones, because financial results describe what has already happened while the other measures signal what is coming (Kaplan & Norton, 1992). Ridgeback's scorecard tells a consistent story.
Financial: cumulative profit was below target, but quarterly profit and cash flow improved steadily from quarter four.
Customer: Ridgeback's share of the mountain segment rose from 11% in quarter one to 27% in quarter six, the highest in the market, and its brand rating rose each quarter after the premium model launched.
Internal business process: capacity utilization fell to 54% in quarter three and recovered to 81% by quarter six; unit cost fell as volume grew.
Learning and growth: investment in research and development produced the premium model, and the sales force was retrained for specialty retailers.
How Decisions Drove Results
Three decisions explain most of the results. Building the second factory early raised fixed costs before demand arrived, creating the quarter-three problem. Cutting prices to fill capacity treated a symptom and weakened the brand's premium position. Returning to the differentiation strategy, with a better product and focused advertising, restored margins and share. The lesson is that capacity decisions should follow evidence of demand, and that when results disappoint, the answer may be to strengthen the strategy rather than abandon it.
What the Team Would Change
With hindsight, Ridgeback would delay the second factory until quarter four, when mountain segment demand was clearly growing, and lease additional capacity in the meantime. It would test price changes in one region before applying them everywhere. And it would track the scorecard's customer and process measures weekly, since the drop in utilization was visible a quarter before it showed up as a loss.
Conclusion
Ridgeback Cycles ended six quarters profitable, growing and leading its chosen segment, after a costly detour into price competition. Its financial statements and balanced scorecard show that results followed decisions: an early capacity bet and a price cut hurt performance, while a return to focused differentiation restored it. The experience demonstrates why a clear strategy, applied consistently, matters more than any single quarter's numbers.
References
Faria, A. J., Hutchinson, D., Wellington, W. J., & Gold, S. (2009). Developments in business gaming: A review of the past 40 years. Simulation & Gaming, 40(4), 464-487. https://doi.org/10.1177/1046878108327585
Kaplan, R. S., & Norton, D. P. (1992). The balanced scorecard: Measures that drive performance. Harvard Business Review, 70(1), 71-79.
Porter, M. E. (1996). What is strategy? Harvard Business Review, 74(6), 61-78.
What the D361 Task 1 instructions ask
The first D361 task asks you to report on your simulated company's performance. Most versions want the company and its strategy, results quarter by quarter, an analysis of all three financial statements, build a balanced scorecard, explain how decisions drove results and reflect on what you would change. Evaluators look for figures that match your simulation, interpreted rather than listed. Each financial statement should be analyzed for what it shows, such as why cash lagged profit. The balanced scorecard should include measures beyond finance, drawn from your simulation data. The link between decisions and results is central, so name the decisions and trace their effects. Reflection should be honest about mistakes and describe specific changes, since the course values learning from the simulation.
How this D361 Task 1 example is built
The report opens with the company, the two market segments and the strategy chosen. A results section presents revenue and net income by quarter in a table. The income statement analysis explains early losses as start-up costs and examines the third quarter in detail. The balance sheet analysis reports assets, liabilities and equity at the end of quarter six and comments on debt. The cash flow section explains why operating cash grew more slowly than profit as receivables and inventory rose. The balanced scorecard applies its four perspectives with measures from the simulation, such as customer satisfaction and segment share. A section on decisions traces three choices to their results. The reflection names what the team would do differently. Notes explain each section's role.
Where the D361 Task 1 rubric puts the marks
D361 Task 1 aspects are graded competent, approaching competence or not evident. A strategy aspect asks for the company's approach described. The results aspect rewards quarterly figures presented accurately. Statement aspects look for each of the three statements analyzed on its own, with the changes explained. A scorecard aspect wants measures across the four perspectives, drawn from the simulation. The decisions aspect checks that results are traced to specific choices. A reflection aspect asks what the team learned and would change. Evaluators notice when analysis explains why numbers moved, not just that they did. Writing and APA citation are assessed, including sources for the balanced scorecard and strategy concepts.
D361 Task 1 help: what sends it back
Simulation reports lose marks when numbers are listed without interpretation. After each figure, say what caused it and what it means. Some papers analyze only the income statement, when evaluators expect the balance sheet and cash flow too. Cash flow is often misread; explain why it differs from profit, and point to the receivables and inventory lines that cause the gap. Balanced scorecards sometimes contain only financial measures, so add customer, process and learning measures from your simulation. The decisions section can be vague, such as we made good choices; name the decisions and trace their effects. Reflections may avoid mistakes, yet the course rewards honest learning. Check that every figure matches your simulation reports, and cite the frameworks you use.
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D361 Task 1 questions, answered
Is the D361 bicycle company real?
No. Ridgeback Cycles is a composite used to show the report's structure. Your own report must use your simulation's results; the balanced scorecard and strategy sources cited are real.
What goes in the D361 balanced scorecard?
Measures from each of the scorecard's four perspectives, money, customers, operations and people's growth. The sample uses simulation data such as segment share, satisfaction scores and production efficiency.
Should D361 figures match my simulation?
Yes, every one of them. Evaluators compare your report with your simulation results, so use your own figures and explain them; the sample's numbers are illustrative only.
Why did cash lag profit in the D361 sample?
Because receivables and inventory rose with sales. Each new retailer took time to pay, and more stock was held to supply them, so operating cash grew more slowly than net income.
Where can I find a free D361 Task 1 sample paper?
The bicycle company performance report sits above with commentary. Upload your simulation results, and your first custom D361 report will be drafted at no cost.