StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Simulation and Decision Making - Essay Example

Cite this document
Summary
Every firm or company in the business industry has the sole objective of profit maximization unless it is a parastatal. In pursuit of these profits therefore, different critical decisions have to be made in order to ensure that uncertainties are avoided…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER91.8% of users find it useful
Simulation and Decision Making
Read Text Preview

Extract of sample "Simulation and Decision Making"

Simulation and decision making Every firm or company in the business industry has the sole objective of profit maximization unless it is a parastatal. In pursuit of these profits therefore, different critical decisions have to be made in order to ensure that uncertainties are avoided. The business also has to come up with plans and simulation models that direct it to achieve its objectives. These models play a major role of preventing instances such as project failure. Hence, a project can only be implemented once the trials in the models prove to be successful.

Repeated trials are also important in ensuring success of the projects (GoldSim, 2012). A simulation played in the monopoly market would have no problem in the case of using pricing as a tool. This is because, since there are no competitors in the market, then the monopolist can choose to raise the prices up to the point where he makes supernormal profits. He or she however, still has to consider the possible effects of the high pricing on the firm due to cases of dead weight losses. In playing the simulation for a perfectly competitive firm, two factors have to be considered: the possibility of customers shifting to other buyers and the possibility of making massive losses due to low prices set.

In order to completely optimize the profits therefore, the business may decide to just maintain the same prices but improve the quality instead (Smith & Smith, 2011). In playing the simulation, for a monopoly market structure, the firm may limit the amounts of funds directed to advertising and promotion since the firm has no competitors. Some advertising may however be required to create awareness about new products in the firm or shifting of the location. In a perfectly competitive market and a monopolistic competition, firms need to promote their products entirely since the competition in the two markets is stiff.

For an oligopoly, the colluding markets should come together and choose the products that require advertising (Smith & Smith, 2011). Any new form of technology in a perfect competition market will be known by all firms since information is readily available to all firms. In playing the simulation therefore, I would choose to wait and observe the move of other firms towards the new form of technology. To keep up with competition, it is wise to make this decision depending on the decisions of the competing firms.

On this model however, I would assume that other firms adopt the technology, and then I adopt it too. For a firm in the monopolistic competitive market, a firm should acquire the technology but make some improvements on it to make it unique and differentiated. In playing the simulation for a monopoly market, the firm will have to consider the fact that an improvement in the technology might lead to an increase in prices leading to increased dead weight loss (Smith & Smith, 2011). The decisions I made in playing the above simulation include, increasing the prices in the monopoly market in order to optimize the profits.

The result of this decision is that the income increased, with the profits also increasing since the costs remained fixed. The firm also suffered some form of dead weight loss since the total sales still remained fixed. I also made a decision to increase the advertisement funds in the case of a firm in a perfect competition market. This is due to the large number of competitors thus, the need to attract and maintain customers. The result of this was an increase in the number of customers. Nevertheless, the number remained constant after a short period of time since other firms committed their funds to advertising too and thus, some customers shifted.

The decision to ensure intense promotions of new products in a monopoly market ensured that customers were kept aware of the new products trends in the market (Hirschey, 2008). Other key decisions include acquisition of technology in a firm that belongs to the monopolistic competition market. This mainly ensures that the firm is able to differentiate its products thus, increasing the potential customers. The decision to wait for the reaction of other firms in the case of a perfect competition might have negative effects or positive effects depending on the period that elapses after the reaction of the first firm is noted.

It would therefore be better to just make the decision without delay if prospective benefits have been noted. In the case of investment proposals, a firm can only invest in a project if it proves to be beneficial and profitable irrespective of the market in which it belongs. The result of the decision was that; investment losses were avoided while the firms also ensured that they benefitted from the profitable investment (Hirschey, 2008). The simulation model will thus, help the firms to come up with real strategies of building and maintaining a competitive advantage in the market.

The firms will also be able to make the right decisions for the success of the business. References GoldSim (2012, January 2). What is Simulation - GoldSim. Monte Carlo Simulation Software - GoldSim. Retrieved September 6, 2012, from http://www.goldsim.com/Web/Introduction/Simulation/ Hirschey, M. (2008). Managerial Economics (12th ed.). USA: Cengage Learning. Smith, T. J. (2011). Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures. USA: Cengage Learning.

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Simulation and Decision Making Essay Example | Topics and Well Written Essays - 500 words”, n.d.)
Simulation and Decision Making Essay Example | Topics and Well Written Essays - 500 words. Retrieved from https://studentshare.org/marketing/1456662-value-creation-communication-and-evaluation
(Simulation and Decision Making Essay Example | Topics and Well Written Essays - 500 Words)
Simulation and Decision Making Essay Example | Topics and Well Written Essays - 500 Words. https://studentshare.org/marketing/1456662-value-creation-communication-and-evaluation.
“Simulation and Decision Making Essay Example | Topics and Well Written Essays - 500 Words”, n.d. https://studentshare.org/marketing/1456662-value-creation-communication-and-evaluation.
  • Cited: 0 times

CHECK THESE SAMPLES OF Simulation and Decision Making

Simulation and systems modelling

First of all, Simulation is considered to be a powerful decision making tool for managers.... Xianglong et al (2001) provided simulation system that can provide the decision-maker a sequential decision-making environment by establishing a virtual reality simulation system.... Semini et al (2006) listed several reasons why a simulation can support manufacturing logistics decision-making:It facilitates understanding of the real system and its behavior....
12 Pages (3000 words) Essay

DECISION MAKING PROCESS

The decision making process in military… This paper compares and contrasts the problem identification and formulation styles in military before taking decisions. “The full MDMP (Military decision making process) is a detailed, deliberate, Decisions making process in military decision making Process in Military decision making process is a routine activity in everybody's life.... The decision making process in military is entirely different from the decision making process in other originations....
2 Pages (500 words) Research Paper

Using Simulation to Enhance Critical Thinking in Nursing Students

he authors identify the role of educators in making simulation real in the nursing sector.... This annotated bibliography "Using simulation to Enhance Critical Thinking in Nursing Students" focuses on teaching technologies that have the potential for creating an online community and facility for teaching human, interaction skills to nurses.... hellip; The aspects of this book covered diverse areas in nursing, which include the changing needs for nursing education in the current technological multifaceted setting, meeting the challenges of clinical placement, challenges, and benefits of integrating simulation techniques in the nursing curriculum with proper evidence....
10 Pages (2500 words) Annotated Bibliography

Report/Diary from Simulation Experience

In essence, this procedure represents a unique experience for the students because it provides a platform, through which foremost experience of the behavioural factors, which influence the student's thought- process during investments decision making.... This is fundamental in making viable decisions, which includes experience on efficient trade execution with less expensive re-quotes.... Accordingly, students and traders around the world benefit from the market research and technical analysis through the Amplify's experience when making financial market decisions....
4 Pages (1000 words) Essay

Management Decision Making

The paper “Management decision making” seeks to evaluate analogical reasoning, which involves establishing a common relation between two or more situation and generating a suitable conclusion.... Wishful thinking and beliefs of individuals may act as suitable motivations for biased decision making.... Heuristics is the process of making decisions quickly without analyzing the same in-depth or logically....
4 Pages (1000 words) Assignment

Business Decision Making - Investigating the Leisure Industries

The following re the main six sort of division of the Heuristics: the recognition heuristic, the minimalist strategies, the lexicographic strategy, take the last strategy, sequential decision making, and elimination by aspect.... Goodwin & Wright (2014) assert that heuristic is used for multiple making decisions that involve several or multiple objectives.... Miao & Mattila (2007) illuminates that information results in confidence in making judgment in reference to the price of the consumers and their decisions....
5 Pages (1250 words) Assignment

Consumer Decision Making

This paper "Consumer decision making" conducts an exploratory study of reasons why consumers delay making decisions.... Three of these - task avoidance and unpleasantness, time pressure, and uncertainty have been identified in other decision contexts, while causes related to the difficulty of selecting the best brand and perceived risk of product performance are more specific to consumer decision making.... Delay and procrastination can improve decision making (Janis and Mann, 1977, 17) and be an adaptive reaction to a decision (Taylor, 1979, 43), hut excessive delay can become maladaptive, prolonging a decision so long that it is finally made at the last minute in a slipshod fashion (Lay, 1986, 475, 1988, 203; Solomon and Rothblum, 1984, 505), perhaps so late that the situation requiring the decision becomes moot (Simmons, Klein, and Thornton, 1974, 89)....
7 Pages (1750 words) Research Paper

Mega Business Simulation Undertaken by My Team

The paper "Mega Business simulation Undertaken by My Team" states that the author survived how it is to feel the competition and how stressful it can become when in real-life examples.... hellip; If I was going to experience again such a simulation game I would be more prepared and know from the beginning what is going on....
7 Pages (1750 words) Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us