Business Simulation Game Essay

The obtain of the Competition and Strategy course is to provide students with deep turn outledge on strategical decision-making in a dividing line environment and the strategic principles tooshie it. Within this course my team members Kristijan, Yaniv, George and me (Team KUGY) had the opportunity to apply our academic and speculative understanding and knowledge in an online business semblance spicy, wherein we created our own motor machine business and competed on the European car market fiction all(prenominal)y. This paper aims to b mightyen the advance of our strategic decision-making, observes the reasoning behind it and examines the following implementation of our approach. Founded on the definition of scheme being A plan of action designed to achieve a long-term or overall aim, we questi peerless and only(a)d ourselves in the commencement of the game what our system would be (Andrews, 2010). Subsequently, after considering the theories studied in class we determ ined that we needed to express our own and coherent schema in less than 40 words, fitting to the restrictions objective, advantage and scope (Tregoe, Zimmerman, Schuster, 2008).Attaining maximised favour able-bodiedness by carefully try to abridge to know our customers inescapably, consequently adapting our products to oblige their expectations to an extent where we would stop serving and start appreciating, so as to frivol away a premium hurt (Yaniv, George, Kristijan and Ugo). The theoretical model we chose to establish our strategy was Porters generic strategy, that led us to a differentiation- cogitate strategy. presumption to Porter, a competitive strategy is ab out(p) differentiation (Andrews, 2010). Thus we thought process that we should differentiate our business outperform by concentrating on a in die hard target, hence, a few(prenominal) market segments and heady that differentiation would be our competitive advantage. furthermore Porter claims that decent st rategic decision-making necessitates compromises and is slightly near what non to do rather than what to do (Porter, 1997). Based on this statement and our differentiation-concentrated strategy we immovable to serve only 4 out of 16 offered market segments, median(a) cars for 25 to 40year obsolescent customers, medium cars for 41 to 55 year old customers, large cars for customers over 55 year old and finally luxurious cars for 41 to 55 year old customers.So as opposed extending our products over the whole market to concreteise maximised gross KUGY decided to concentrate on ternion different segments with customers sharing inter revisionable needs, form tercet strategic business units whose goal it is to get to know the customers wants and needs to offer greater customer range and allow us to charge premium harms. Regarding finance, KUGYs started position was up to 500 million in the bank. In the archetypal three rounds, KUGY took out two loans in the first 3 rounds so as to perk up enough capitals to finance our actually damage concentrated strategy. Our expenses for question and development, contestation market search, product, and market were tidy over all five years, which is replicated in significant fixed cost figures over all five years. still the data acquired on market perception and controversy allowed us to get more familiar to our customers but as well to design our products and impersonate merchandise suits in harmony with their needs, by either adding and dropping product features, alternate look investments and distinguishing our products from the competition.Furthermore, KUGY enlarged the prices of all four models every(prenominal) year, which allowed us to increase r planeue progressively over the five years of the game. KUGY has preferred to barrier its payoff to small quantities because a limited target market is one of the well-nigh maneuverdamental parameters of a revolve about strategy (Andrews, 2010). In the segments KUGY served, quantities demanded tend to be small in comparison with segments whose customers demand is based on less price demanding cars. Hence, if revenue is delimitate as R = Q * P, price was definitely the main featureor in creating revenue instead of sell important quantities. KUGY tried to adapt production to such a aim where our team would not pass on any car in personal line of credit at the end of each business year and normally succeeded in this concern with minor exceptions. Moreover KUGY tried to decrease its labour cost and invest in automation instead. Our team decided it will meet our company strategy and image and to consume three extremely technologized production plants, with small but very skilled labour forces. We achieved further trade-offs concerning our market efforts.In regards to the four Ps, including price, product, place and promotion, KUGY took the decision to focus on all four would bemuse opposed our strategy implemented in th ebeginning. Hence, we focused our marketing strategy on product and promotion. As previously mentioned, we have invested significant sums in the development of our products, by investing in research and development over the rounds of the game, but also by adding and dropping features into sectors that seemed to be of significance to our customers and hence rose perceived benefits of our products from year to year. In humanitarian to this advertising expenses were similarly high too, because of the fact that KUGY recognized communicating the benefits of twain our efforts and our products to generate superior customer value as a first priority. George constantly highlighted that even the greatest product in the car market would not sell if its ascendancy or predominance were not kick the bucketd effectively. given to Porter if a corporation decides upon a generic strategy, the corporation is best informed by thoroughly scraming to this strategy so as to remain differentiated (Andr ews, 2010). According fact that we decided to focus on a relatively narrow target market, KUGY decided that trying to train more segments could jeopardize our current business. When presenting a new model KUGY stuck to segments whose customers needs are comparable so as to avoid being stuck in the middle as Porter cites it (Andrews, 2010). We all concord that changing our strategy could lead our team to fail. Regarding the company decisions and overall performance we decided to wedge to this strategy. Nevertheless, concord to the fact that we defined every model to be one separate market based strategic business unit, the production and marketing activities achieved within the business units varied to an extent. The strategy used to every SBU was also a focus strategy.However the methods used to attain differentiation varied. For instance, we decided to reveal our luxurious car model by using newspapers and trader incentives instead of TV advertising that we used for our medium and large car models. Additionally, we decided upon less radical price rises for our medium and large cars in comparison with our luxurious model. KUGYs achievement can be thrifty thanks to its pays. Furthermore, in the second year, our corporations boodles have been rising yearly, which signifies a good tendency in achievement. When looking at our overall profit calculation, as Pr = (P*Q Q*VC FC), with P (Price), Pr (Profit), Q (Quantities demanded), FC (fixed cost) and VC (variable cost), the most significant factor on revenue was the constant annual price rises as contrasting toquantities demanded that set aheadd regularly. Concerning the cost, overall cost was mostly defined by elevated fixed costs for marketing/advertising, product research and development, and competition and market research. KUGYs competitive advantage was based on these considerable investments that allowed us to raise prices.According to the fact that we were making profit, our strategy appeared to w ork quite well, but it was unexpected to what extent price was clear when comparing to all the efforts we put into our marketing and products. We were amazed how little we could raise the price keeping in mind how much money and effort we put into perceived customer value/benefits and the quality of our products. It would not have been fair to contest the elasticity used for profit calculations by the creators of the game, according to the fact that we lack the mathematical understanding to do so. Though it was quite disappointing when realising how little difference measures such as increased research and development, optimised marketing efforts and improved features made in comparison to changes in price. later comparing this business game with the real life, businesses that obey to the differentiation focus strategy such as Porsche or LVMH are making a lot of profits.Nevertheless, these firms have been into their business for decades and have invested considerable resources an d efforts to attain their profit margins and their position within the market. I assume that if we would have played this business game for a longer period of time, applying a differentiation-focused strategy could have possibly resulted to a higher profit margin overall. However, theory and figure are very different. Particularly in very competitive industries such as the car industry and especially in times of considerable economic fluctuations, price seems to be the main factor when its about making purchasing decisions. Moreover, in my opinion, trying to attain maximised profitableness by a cost leadership method in this business game is perhaps easier and less time consuming in comparison to KUGYs strategy according to the fact that the players do not have to change the same amount of parameters and pay as much attention to few variables besides quantities demanded and price differences. While observing the data from both competition and market reports, trying to draw conclus ions and also conducting endless amounts of test was sometimes very exhausting but at the same time very addictive.I have to admit I have very benefited from bestow in this business gameexperience. My group work with George Yaniv and Kristijan was on of the old first good teamwork experience I had in the last three years at Richmond University and even if we ran into some problems over the simulation game, we always took time to talk about it and try to find solutions to those issues. The fact that we were meeting on a regular basis has really facilitated the viscidity into our group. Moreover, everyone has contributed equally to the overall outcome, concerning creative inputs, estimating data, drawing conclusions and essentially trying to put it into decisions. I sincerely appreciated working with my group members and after every round of the game we sometimes had extra discussions on this way out. We all agreed that the key issue with implementing a strategy was that there is no right answer and hence no fundamental truth in this topic area.There are a lot of different methods to attain profitability and uncountable factors within the ever-changing industry environment that can affect a companys profitably. When implementing a strategy all those factors need to be taken into consideration so as to allow the company to act properly to modifications in its environment. The theoretical part of implementing a strategy remained difficult, art object the practical achievement were even harder. When KUGY understood that we could not be able to raise prices to the extent we hunted so as to to attain estimated profit margins, we started to question our approach and wondered if the decisions we took in the beginning were still suitable. We finally decided to stick to our strategy and accomplished a reasonable work with it even if it could have been better, but especially after we ended round three with a important loss, I really felt like we were not applying th e good strategy and after brainstorming with our team and while everyone was trying to convince each other what to do we finally decided to stick to our first plan.I believe that managers in real firms who need to communicate and defend their strategic decision to their superiors, board of directors or employees cope with real difficulties. However, contributing in this business simulation game was a fun and very addictive experience and I really think I benefited a lot from it. I also hope that the experience I gained from it will at some point be useful in the future me when I will have to take my first strategic decisions.BibliographyTregoe, B., Zimmerman, J., Schuster, S., 2008. Top Management Strategy? Harvard Business Review April 2008. Available at http//www.nickols.us/strategy_definitions.pdf/ Accessed 13 April 2014 Andrews, K., 2010. The Concept of Corporate Strategy, 3rd Edition. Financial Times apprentice Hall. Accessed 13 April 2014 Porter, E., 1997. What is Strategy? H arvard Business Review Nov-Dec2008. Available at http//www.nickols.us/strategy_definitions.pdf Accessed 13 April 2014