Business Simulation Games - Essay Example

Business Simulation Game Individual Report Table of Contents 3 Introduction 4 The Competitive Strategy 4 External Overview5 Porter’s Five Forces 6 Analysis of the Internal Factors of the Company 7 Decisions Taken 8 Results 11 Differentiation Strategy from Bowmen’s Strategy Clock Model 12 Underlying Strategic Principles 15 Key Learning Outcomes 16 Abstract Business simulation games form useful for the mediation and empowerment of business content in the learning context (Klassen & Willoughby 2013, p. 2). Such games act as serious games because they contribute to learning by simulating real-life situations, as well as business environments. Simulation games are especially important in the field of managing businesses as well as the corporate strategies (Sharif & Ranchhod 2009, p. 3). The blending of content curricular and design simulation technology gives the students risk-free opportunities that test various strategies that drive corporate activities. Our participation in such games gave us a chance of integrating strategic and financial strategies for their virtual businesses (Blazic, Ribeiro & Arh 2012, p. 13). This paper is a summary of the findings of a business simulation game that served as a learning tool for group work. The article gives a brief introduction and an outline of the conclusions of the game and the relevant strategies associated with the same game. Introduction Serious computer games from a part of new and emergent educational environment based on sophisticated technologies and elements of entertainment (William & Klass 2007, p. 4). For this case, there is a need to define a serious computer game. A serious game is one whose primary function is to provide education of any type rather than entertainment. The games provoke active learner involvement and as such, they form one of the best learning platforms for the students. There are unique properties of the games that define their relevance to the education system because they attract concentrations that other methods fail to do. This paper is therefore a personal report of the strategies of a game played for group work projects. The paper has eleven parts, which altogether outline the strategies that the game employed and their relevance of the game to the real-life situations. After the introduction, the ten remaining parts will proceed in the sequence outlined. Next, there shall be the competitive strategy, external overview analysis, internal summary analysis, the decisions taken, the results, and strategic directions. The remaining parts will discuss the underlying strategic principles, the key learning outcomes and finally, the reflections and conclusion. The Competitive Strategy This section analyses how the virtual company; Apanda Shoe Company played in the game entered each of the four markets in the group work assigned. The chosen methods were to introduce the company into the market considering that the market was already competitive. For instance, in year 11, we examined exporting to the foreign market in the North America market because of a number of reasons. First, we considered that the method is one of the most traditional and experimented approaches to internationalization. Other reasons were that the process of manufacturing has a domestic base, which means that it is less risky. The second aspect was that the method gave us a chance of learning and investigating the overseas market before venturing into it fully (Alsaaty 2012, p. 5). The second approach was licensing a foreign production and granting production rights to a shoe manufacturing in the Europe-Africa market. The rationale for such a move was the fact that the shipping costs to the market were higher than other markets. We also considered that strategy was one of the best in starting operations in the foreign countries and a way of spreading the risks of productions. For the Asia-Pacific market, we used joint ventures because of the risks involved in the production. There was a consideration that the method gave the best approach of learning the new market amid reduced risks because of the shared costs of production. Lastly, we used the foreign direct investment after we had assessed and determined that the method gave Apanda Shoe Company a direct control of its ventures and a chance to enjoy all the profits. External Overview We discussed and used the PESTLE and Porter’s Five Forces analyses as the best alternatives for analyzing the external environment of the company. Political Factors Because Apanda shoe company operated in four different geographical regions, there was a likelihood of interference by various political factors. The stabilities of various governments, the policies of taxation and the import duties were among the leading prospective elements. The Economic Factors A number of factors in the immediate environment had a potential effect on the performance of the products in their new markets. For instance, the levels of disposable income of the population and the money value for the different geographical regions were among the leading factors. Others were the levels of the GDPs of the countries of operation, the rates of inflation, unemployment patterns, rates of interest and others. The rates of exchange had the largest impact on the amounts of revenues that we generated. It therefore meant that we needed to have special consideration for the fluctuating exchange rates. The Social Factors There are defined patterns in the population concerning shoe-wearing practices. The practice is no longer a luxury in most societies of the countries of operation, which indicates that the company had prospects of a large market. There was also a consideration of the growing importance of the internet among the people across all the four geographic regions. Such a factor gave us the advantage of extending the influence of the company in its foreign market set-ups. Technological Factors The largest impact of technology on the shoe factory relates to the methods of production and industrial operations. Considerably, the use of computer technologies could serve as the tools reduce the workforce and reduce the costs of labor. Such technologies will help the business to optimize production and reduce the chances of risks associated with inadequate labor supply. Environmental Factors There was a discovery that the most influential factor on the foreign operation of the business was the corporate social responsibility. The public and the government expect the company to uphold a certain level of responsiveness to the community and the environment. The Legal Factors The central component of the legal setup is the licensing factor and the processes involved in the process. We considered registering the business because we could not trade before the relevant authorities identified the firm. Porter’s Five Forces Threat of New Entrants We assessed the threat of new entry into the market and rated the outcomes as being low to medium scale. We realized that the company would achieve economies of scale, which has a direct relevance to brand image and reputation. Intensity of Rivalry There are more established firms in the industry, which means that the intensity of rivalry is extremely high. Customer’s knowledge of the market gives them a flexibility of switching from one brand t another. Threat of Substitutes The threat of customers opting to choose substitutes is very high and intensified by customers’ knowledge of the market and the existence of many products. Bargaining Power of Suppliers We realized the bargaining power of the company on suppliers was very low because the company was new in the market. Bargaining Power of The Buyers Our company had medium levels of buyer bargaining power because of product differentiation and comparatively low costs of switching. Analysis of the Internal Factors of the Company For this section of the report, I write concerning the SWOT analysis of Apanda Shoe Company as a way of determining its internal environment. The Strengths Our excellent strategic position in the North American market, as well as a number of other regions, make the company have a large market base and prospects of making profits. Another strength was the collaborative aspect of the team members, which meant that we could source ideas on how to manage the company and make it successful. The Weaknesses The primary weakness that we considered was the high costs of market entry, especially for foreign direct investment and joint investments. The costs of product promotion that we employed were equally expensive, which means that the company could not realize profits within its first years of operation. Another weakness was the weak market command of the Latin-American and Asia-pacific region. Opportunities We considered diversifying the market especially in the use of raw material from recycled products so that we could lower the costs of production. There were chances that such methods could reduce the prices of our products and enhance competitive market entries for the weaker markets. Threats The firm risks operating on small profits for the initial years of market entries because of the extended periods of studying and adjusting to the prevailing conditions. There is also the threat of the loss of our market because of the severe competitive strategies employed by giant institutions in the industry. Decisions Taken Year 11 Decision Rationale Effects The use of Green Footwear materials We considered the effects of our operations in on the environment We improved our reputation in the market and considerably, our market prominence rose to considerable levels especially in the North-American Market We also wanted to save on the costs of production by lowering the costs of factor inputs We did not realize an immediate drop in the costs of production because the move raised the cost of materials by $ 3.00 The eleventh year of our simulation involved setting of objectives that we wished to attain. For this case. We decided to use green footwear materials in the manufacture of our products for two reasons. The first was a consideration of the effects of our actions on the environment. The second factor was saving on the costs of production so that we could offer products to our customers at the lowest prices. The effects were tremendous because we managed to improve the reputation of our firm in the markets that we had low dominance. However, we did not realize a reduction in the costs of production for the products. Year 12 Decision Rationale Effects Training the entire workforce of the company on ethics We thought the ethics of business was the best approach to attracting the members of the public to new products in the market We could not measure the levels of reputation that the firm gained in the year because we did not have a mechanism for the same. However, we alluded the improvements in the volume of sales to improved PR For this year, we targeted to impact business ethics in our business through the training of our staff. We considered such a factor because we thought ethics played a leading role in the improvement of a company’s reputation. There were no mechanisms that could measure our efforts for the same. However, we realized the effect of the decision in the improved volume of sales and alluded it to an improvement in the PR of the company. Year 13 Decision Rationale Effects Avoiding the diversity of the workforce We wanted to experiment the effects of workforce diversity on the reputation of the company across the four geographic regions There were remarkable reductions in the volumes of sales in the Asia-Pacific and Latin America and Africa markets. Such effects indicated that some markets have the sensitivity to diversity as a part of the social responsibilities of the company. In this year, we considered the effects of workforce diversity on the reputation of APanda Shoe Company across the four geographic regions in which we operated. We learned that there were remarkable reductions in the volumes of sales in the Asia-Pacific and Latin America and Africa markets. Such effects indicated that some markets have the sensitivity to diversity as a part of the social responsibilities of the company. Year 14 Decision Rationale Effects Competitive internet advertising We wanted to improve the volume of sales for the company especially for the low-performing markets The method resulted in remarkable improvements in the volumes of our sales in the lowly- performing markets It was necessary that we experiment the effects of competitive advertising on the volumes of sales of the firm. Such was a matter of concern especially for the markets that we had low reputation and in which there were high levels of competition. The decision yielded remarkable improvements in the volumes of our sales in the lowly- performing markets. Year 15 Decision Rationale Effects Foreign direct investment and capacity expansion for the new markets We wanted to have a taste of the environment in the new markets and control the entire market The levels of production reduced considerably while the costs of operations rose, which meant that we operated with small sales for some markets In the last year of our simulation, we wanted to test the effects of foreign direct investment in the market. Such a move was essential because we wanted to test the pressure and effects of our activities directly. We found out that the levels of production reduced considerably while the costs of operations rose, which meant that we operated with small sales for some markets. Results Following the results from year 11 to year 15 and other previous years, the corporate social responsibility services of Apanda Shoe Company had fluctuating figures. The data indicates fluctuating figures in earnings per share under projected expectation ranged in 2 and 3 percent over the years. The fluctuations based on corporate citizenship were under sales forecast, plant capacity/upgrades, branded production, and distribution (Petter 2005, p. 12). Additionally, internet marketing, wholesale marketing, celebrity endorsements, and private label operations incorporated in the corporate social responsibility increased from year 11 to year 15-based services it offered. Furthermore, projected performance of Apanda Shoes Company, in the production of footwear had increasing and decreasing percentages of earnings per share between the ranges of 2 to 3%. Under the return on equity, it ranged from 5 to 15 rates over the years. Additionally, projected performance also incorporated earnings per share and image rating, which the company tried to meet from year 11 to year 15. Moreover, other measures included net revenues, net profits and ending cash, which had fluctuations in terms of values over the years (Payne & Frow 2013, p. 28). However comparing the results of year 11 and year 15 of Apanda shoes in terms of corporate social responsibility, the figures decreased and had significant fluctuations in projected results and other measures as shown diagram 1 of the appendix Analysis of the figures 1 and 2 in the appendix of Apanda shoe company in the years 11 and year 15 gives fluctuating and constant figures in projected performance.Year 11 expected performance under return on equity at 36.8% and investor returns at 15% giving a credit rating of A. In year 11 and investor expectation rating of B+. on the other hand, year 15 under returns on equity in year 15 gives 5.1% and investor expectation of 15%, same as year 11, while under credit ratings year 15 gives A and an investor expectation of B+. Comparison of the years, the difference only appears under percentage returns, while the credit ratings remain the same. The outcome of the simulation exercise for the firm relative to the competition was fair and right. Apanda Shoe Company completed fairly with the other companies in the marketing of shoe as shown in figure 3 of the appendix. From figure 3, the simulation exercise and the application of external analysis, incorporating PESTLE analysis and internal analysis incorporating SWOT analysis enabled Apanda Company to compete fairly in the market. It was a good decision for Apanda Company since it allowed the company to compete fairly with other firms such as C Athlete C and diversity footwear. Differentiation Strategy from Bowmen’s Strategy Clock Model The Bowmen’s strategy clock model contains differentiation as the main strategy model for the marketing of Apanda Shoe Company products. Moreover, the model separates differentiation and focused differentiation as two different strategies used for selling Apanda shoe merchandises. Specifically, focused differentiation strategy in the model entails the increase of prices of Apanda Shoe Company products, without increasing benefits, to add value in the sale of the merchandise. On the other hand, differentiation incorporates the maintenance of prices as benefits are increased. From bowmen’s strategy clock model, the two differentiation strategies are deduced as the main schemes that allow for well-developed marketing plans that allow for massive sales of Apanda Shoe Company merchandise in the global market. Besides, the use of focused differentiation strategy from the model, allows for an effective market development globally, since it increases price while maintaining benefits, which adds value to the products sold by Apanda Shoe Company and hence growing the sales of Apanda Shoe Company. Focused Differentiation Strategy from Bowmen’s Clock Strategy Apanda Shoe Company matched the initial strategic direction selected. The development and use of focused differentiation from bowmen’s clock model allowed for a successful initial strategic plan. All the strategic choices such as corporate level, evaluation, innovation, and international and business levels incorporates focused differentiation strategy from bowmen’s clock model (Campbell, Edgar, & Stonehouse 2011, p. 33). Apanda Shoe Company matched the initial strategic direction selected. All the strategic choices such as corporate level, evaluation, innovation, international and business levels incorporated in the final strategic direction (Campbell, Edgar, & Stonehouse 2011, p. 33). Strategic direction was a movement from strategic analysis to strategic choice as initially developed during the planning period of Apanda Shoe Company. Moreover, the three generic strategies applied in the company developed from initial strategic direction is shown in the figure below In addition, linking of strategic analysis with the strategic choice in the initial strategic direction selected was used such as having clear strategic purpose in the mission, vision, and policy objectives. Besides, the use of SWOT analysis as in the initial strategic direction selected incorporated during this stage of the application such as identification of strengths and weaknesses as internal analysis and scrutinizing opportunities and threats as external review. Campbell, Edgar, and Storehouse (2011) argue that caveats and complications relate to the strategy chosen.It includes how to grow and compete implications drawn in guiding strategic choices and decisions, during implementation of the three generic strategies (Castronova, 2008, p. 12). It was feasible to adhere to the initial strategic direction chosen by all the diplomatic methods developed in the first plan such as the development of PEST and SWOT analysis implemented in the final strategic direction established. Moreover, challenges of how to compete and grow developed from initial strategic direction to final strategic direction as described in the diagrams below. The primary strategy to grow Apanda Shoe Company included the development of a strategy clock. It was implemented in the final strategic direction as shown in the above diagram. Moreover, we considered strategies on how to grow Apanda Shoe Company by incorporating the implementation of growth matrix as shown in the figure below Underlying Strategic Principles The main underlying strategic principles entailed principles in maintaining the relationship of marketing Apanda Shoe Company products such as foot wears (Payne 2012, p. 9). The relationship marketing principles used entailed stress on customer preservation through the extension of the lifespan value of clients over strategies and concentrating on reserved targeted clients. The second underlying principle included recognizing companies that need development relationships with the inclusion of market domains in achieving success in the marketplace. Moreover, the basic principles assisted the Apanda shoe company to develop and make bright decisions over the five years categorical as follows Year 11: The decision made was to increase internet marketing of the Apanda shoe company footwear. Strategic thinking over the decision was to develop a long lasting customer value as suggested in principle one that accounts for 6% of total branded footwear demanded. The performance in relation to other customers was that it increased the companys sales forecast in all branded segments over it is competitors Year 12: The decision was to engage in corporate social responsibility and citizenship by engaging in the provision of green footwear. The strategic thinking was to raise the cost of standard materials by $0.50 and superior by $1.00. The outcome is that it increased the workforce issue, and it is performance with competitors was high on the side of Apanda Shoe Company Year 13: The main decisions made were the development of the use of recycled boxing or packaging. The strategic thinking that each pair of athletic footwear at the company distribution centers raises shoe-packaging costs by $0.20 per pair. Moreover, performance of the other companies was that increased diversity over the other companies Year 14: Our main decision was to increase the consumer base and countries of supplying footwear products. Strategic thinking was to improve credit rating over the years. It had a significant income since it enabled for high exchange rates impact on the cost of pairs shipped primarily from North America plant, hence having positive effects on the markets beating other competitors. Year 15: Decision was to increase the energy efficiency initiatives within Apanda shoe. The strategic thinking based on the third principle of cross-national responsibility.It improved efficiency and depreciated capital investment by 5% per year, allowing Apanda Shoe Company to reduce it is energy cost over it is competitors. Over the years, the central underlying strategic principle that allowed for the marketing of Apanda Shoe Company was the principle of cross-national responsibility. Besides; it increased the marketing of Apanda shoe products such as footwear and making them perform better in the market over the other companies. Key Learning Outcomes Strategic knowledge of the company’s development includes the implementation of PEST and SWOT analysis. Clear focus of the company included the analysis of political and technological aspects of the PEST analysis, to focus the company on meeting it is goals. On the other hand, SWOT analysis enabled for the importance of external aspects of the enterprise such as strengths and weaknesses.internal analyses of opportunities and threats according to the SWOT analysis, which gives the company an opportunity for growth and competition with the other firms. The complexities of running a business included maintaining relevance in the market through competing with competitors and dealing with the government’s policies. Moreover, the expectation of other stakeholders such as the government is to ensure that the company meets its corporate social responsibility and citizenship, through all the necessary policies developed by the government. Reflections and Conclusions The simulation started with no particular strategy allowing external influences to design strategies. Moreover, the simulation assisted in developing prompt strategy. The next year our developing strategy became a combined approach comprising of crossbreed strategy. Moreover, we wanted to become the best cost for value provider in the Industry, by providing footwear that has high value and quality at price low prices as compared to competitors. Besides, focused diversity strategy entailed the identifying of a function in the market by providing a variety of shoe products in the industry, incorporating exclusive quality and valuing superior prices. This policy decided upon according to the significant competitors and resources identified in the company. Our considered direction applied throughout the six decision years that led to final success. Additionally, throughout this process we identified many remarkable learning points about strategy in theory and practice. Furthermost importantly, we saw the importance of policy as an aspect of business, as it developed almost every achievement. The use of PEST and SWOT analysis is important in developing strategies for the development and operations of companies. Bibliography Alsaaty, F. M. 2012, The utilization of simulation games to enhance student learning in colleges and schools of business: A case study, retrieved March 21, 2015 from. http://www.aabri.com/manuscripts/131719.pdf Blazic, A. J., Ribeiro, C., & Arh, T 2012, Analysing the Required Properties of Business Simulation Games to Be Used in E-Learning and Education, Intelligent Information Management, 4, 6. 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Wawer, M., Milosz, M., Muryjas, P., & Rzemieniak, M 2010, Business simulation games in forming students’ entrepreneurship, International Journal of Euro-Mediterranean Studies, 3(1), 49-73. Williams, R & Klass, D 2007, Developing a business simulation game: integrating multiple development tools, Issues in Informing Science and Information Technology, 4. Appendix Figure 1: Apanda Shoes Company Year 11 Results of Corporate Social Responsibility and Citizenship Figure 2: Apanda Shoe Company Corporate Social Reasonability and Citizenship Year 15 Figure 3: Competition Results for All the Companies Read More