In order to ensure a successful attempt at the stimulation game, it is required for there to be a well thought out and detailed business plan in place in order to effectively attempt the game in the manner required. Initially groups were formed before the start of the game and each assigned a different business that which would be played over the following weeks. Within the groups, group members are then assigned a role within the company, whether it be in management, purchasing, marketing or finance; this is done to even out the workload and better focus on each individual sector. By working together, it allows for the group to be united in a common goal; this being success. decisions within the game were based within the three main categories, inventory, marketing and financial, each week different decisions chosen based on ranking and improvement.
The business plan consisted of a few main areas, the generic competitive strategy, the chosen market segment, a set of targets, a SWOT analysis and the Ansoff matrix. The generic competitive strategy as defined by Porter “The two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them, lead to three generic strategies for achieving above average performance in an industry: cost leadership, differentiation, and focus” (Porter, Michael E.). The main focus of the sneaker company was to be low-cost, with a variety of sneakers mainly focused at women and men. This is due to them being seen as having the largest income base (children rely on their parent income) and variety is needed as not every adult is the same. The targets that were initially set were ‘to optimise buying power through being cost effective and having an attractive price’ and ‘to focus on marketing the product on a wide scale and ensuring there were a variety of products on offer’.
The SWOT analysis used in the business plan consisted on focusing upon the predicted strengths, weaknesses, opportunities and threats of the brand. The strengths were that there was a low-cost feature and therefore this would entice those who perhaps did not have a large budget to spend, the opportunity to this is that if they are marketed correctly then this could lead to a trend where even though who are of a higher income bracket would want to buy the sneaker in order to look ‘cool’ such as what happened with the Nike Airforce sneaker; it was important to tap into this hidden market. On the other hand, the weaknesses were that it can be difficult to have a low cost, high quality sneaker so therefore it is necessary to produce one of medium quality. In addition, the threat being that competitors who had higher prices may attract a different market group and therefore produce larger sales and a higher revenue. The Ansoff Matrix was also key in the business plan as it served as a manner that the market and product growth strategy was determined. The tool that applied most to business simulation game was that of market penetration. “Market penetration is a low pricing strategy adopted by companies for new and existing products to a attract larger number of buyers and a larger market share” (Kotler and Armstrong, 2009). This was adopted through attracting a large number of buyers through the male and female demand, and providing a low price so as to attract a larger market.
Throughout the game, the approach changed due to the fact that at times it was identified that quality is a big indicator for customers as to what sneaker they will buy regardless of price and therefore the transition from medium quality to high quality was required and a slight increase in price.
The different categories consisted of Management, Purchasing, Marketing, Staff and Financial and a heavy amount of rationale was needed when undertaking decisions in the key categories. The first category Management is based upon the company directors who have an overall responsibility over what and how decisions are made. One important decision was “Which management activities will be considered the most important for the upcoming year and will get the complete focus of your management team?” (Business Simulation, 2020). Especially making the decision as to what the customer base will be in terms of gender and age group. This is highly important because it bases the decisions as to pricing, quality and marketing strategy. So therefore a business decision undertaken by the Management team has a knock on effect for the other departments and how they deal with their own decisions.
The Financial category is mainly responsible for any loans that the business itself requires, the ideal is for the business to not require any loans as this ultimately makes it more desirable. However, when needed it was essential to ensure paying it back as soon as was possible so thus to avoid interest charges and the overwhelming, outstanding debt.
The Marketing department “is responsible for creating and disseminating images, messages and ideas that best communicate the brand value” (Verdoy, 2020). When approaching making decisions within Marketing, it is required that the 4Ps are taken into consideration; these being product, price, place and promotion. Price is extremely important and interlinks directly with product, by deciding the way the product will look then it can be determined what price is set. The place was deciding where the sneaker would be sold and the most effective was that of an intensive distribution, as the costs would be kept low and the sneaker sold for a low price then it is most effective as the “product is available at as many shops as possible, aiming for the highest number of sales” (Business Simulation, 2020), as this helped to improve the position within the market. Finally the promotion is to decide how the sneaker will be promoted to the buyers, and the most efficient manner was through social media as this allows for a vast number of potential customers to be reached, especially as nearly everyone within society is on some form of social media.
In order to choose the size of a warehouse to store the sneakers, the Purchasing department must take lead. The option of a fast and effective delivery is enticing to buyers as there is a desire to not wait for products, therefore a company that can provide this is respected by existing and potential buyers. Whilst it may be less cost effective, it improves level of services and the amount of deliveries that are made.
Recruitment of new staff and resolving issues related to the current one is a responsibility held by the Staff department. Decisions regarding the recruitment of employees and the dismissal of others was principal yet difficult as the main focus was to cut unnecessary costs.
Decision ‘environment’ and how did you overcome these?
The external decision environment can be quite challenging as it can be difficult trying to make the right decisions that will progress the company to success. As there are many different areas where decisions are needed to be made, the elements that provide the most uncertainty are the competition, the market catered to, the supply and the demand. The demand of the sneakers is extremely relevant as it is a governing factor as to whether a business will succeed, will customers want to purchase? How much demand is there? Tackling this uncertain element was conquered by doing two test trial weeks and determining whether potential clients responded effectively to the design and price of the product. Uncertainty of competition is also highly prominent as it is important to scout and to get to know the competition in order to identify what tactics they have taken and the quality and cost of sneaker on offer, therefore if they perform more favourably than our company then it will be easier to understand the reasons behind it. The supply was an uncertain element as it was difficult determining whether there would be demand of the sneaker in the following week, and if one week the sneaker sold out then how much should the supply be increased by in order to supply this demand without being left over with too much stock. The knock-on effect of these uncertain elements is that it results in the internal decisions such as choosing suppliers and price to be impacted. If demand is low then price needs to be reduced and supply needs to be decreased in order to cut costs whilst increasing revenue. There is also the issue of the broader changes in the market environment within the news and determining how online sales and retail stores are performing as well as with the issues surrounding Brexit, this impacts as to where material and the sneakers are supplied as it can be more expensive.
The company’s future is optimistic and bright, there is always room for improvement as society is constantly changing and there is an ever growing need to keep up with it. The company is one with a potential for high success as there is a determination within group members to succeed and be the best at selling sneakers, this is essentially attractive to potential investors as they view and relate success with determination; being able to possess this quality means that it will be a positive investment. “Investors are in the business of putting money into growing businesses so they can make money. If you can demonstrate that your business will make them money, then you’re 90% there” (7 Things Investors Look for Before Investing | Accion, 2020). By showing success through the game and effective decision making, this entices an investor and is why they should invest in the company. The future of the company is also determined and relies heavy upon the co-operation of group members and how well they work with one another.
The skills developed during the business simulation game are effective within a future work life and within future studies as it taught resilience and swift ability to tackle and solve problems. The ability to solve problems is highly valuable and sort after by society as in any work setting this skill is needed in order to tackle issues within the workplace. Issues within the game were those related to a fall in sales, and a loss in interest by buyers by losing them to competitors. Being able to identify perhaps what a competitor is doing effectively and then adapting the business plan in order to, not entirely imitate it, but improve it so that the customers return back to buying from the business. It is also an important skill to be able to accept certain failures and not allowing them to effect the business, but rather allowing the failures to change the strategy of the business and adapt it into a more effective and successful one. Communication was also heavily improved upon during the game as it was key to be able to communicate effectively and clearly with team members, ensuring no disagreements arose and if they did arise then they will quickly resolved in order to keep the game flowing without any issues. When communication fails, then this can lead to group members making decisions without the knowledge of their group members causing the business to fail and for disastrous disagreements to occur. Another skill developed during the game was planning, being able to plan decisions a week in advance before sharing them the other group members, this requires calculated planning as to how the business will succeed and determining which decisions will best lead to it. If this skill is not effectively enacted then it can prove to be detrimental because research and planning is key in being able to make the correct and most relevant decisions.
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