The aim of the Competition and Strategy training course is to provide students with deep expertise on proper decision-making in a business environment and the tactical principles behind it. Within this training course my affiliates Kristijan, Yaniv, George and me (Team KUGY) experienced the opportunity to apply our academics and theoretical understanding and knowledge in an online business simulation game, wherein we produced our own car business and competed within the European car market fictionally.
This paper aims to elucidate the progress of our ideal decision-making, observes the reasoning behind it and examines this implementation of the approach. Based on the definition of strategy being A course of action designed to achieve a long-term or perhaps overall aim, we inhibited ourselves inside the commencement in the game what our strategy would be (Andrews, 2010). Consequently, after considering the theories studied in class we decided we needed to communicate our own and coherent strategy in less than forty words, fitting to the restrictions objective, edge and range (Tregoe, Zimmerman, Schuster, 2008).
Attaining maximised profitability by simply carefully hoping to get to know the customers’ requires, consequently establishing our items to suit their very own expectations to a extent in which we would end serving and commence appreciating, in order to charge a premium price (Yaniv, George, Kristijan and Ugo). The theoretical model we chose to create our strategy was Porter’s generic approach, that led us into a differentiation-focused strategy. Given to Avoir, a competitive strategy is about differentiation (Andrews, 2010).
Hence we thought that all we should differentiate our business best by simply concentrating on a narrow focus on, hence, handful of market sectors and made a decision that difference would be our competitive edge. Furthermore Assurer claims that decent proper decision-making necessitates compromises and is slightly about what not to do rather than what to do (Porter, 1997). Depending on this declaration and the differentiation-concentrated approach we chosen to serve only 4 out of of sixteen offered industry segments, channel cars intended for 25 to 40 year outdated customers, moderate cars for 41 to 55 year old customers, large cars for customers over 55 year old and lastly luxurious vehicles for forty one to fifty five year old consumers.
So as opposed extending the products over the whole marketplace to realise maximised revenue KUGY decided to concentrate on three several segments with customers sharing similar needs, form three strategic business units whose aim it is to get to know the customer’s wants and desires to offer greater customer worth and allow all of us to charge premium rates. Regarding finance, KUGY’s started out position was up to 500 million in the bank. In the first three rounds, KUGY took away two financial loans in the initial 3 rounds so as to have sufficient capitals to finance each of our very expense concentrated technique.
Our bills for r and d, competition researching the market, product, and marketing had been considerable overall five years, which is duplicated in significant fixed cost figures overall five years. However the data acquired about market belief and competition allowed all of us to get more familiar to our consumers but likewise to design our products and put marketing attempts in balance with their requirements, by both adding and dropping item features, replacing research investments and differentiating our items from the competition. Furthermore, KUGY increased the amount paid of all four models annually, which allowed us to enhance revenue slowly over the five years of the sport.
KUGY has preferred to limit the production to small volumes because a limited target market is among the most important parameters of your focus approach (Andrews, 2010). In the portions KUGY served, quantities demanded tend to always be small in comparison with segments in whose customers require is based on significantly less price challenging cars. Therefore, if revenue is defined as Ur = Queen * P, price was definitely the main factor in creating revenue rather than selling significant quantities. KUGY tried to modify production to such an amount where we would not have any car in share at the end of every business 12 months and normally succeeded with this concern with minor exceptions. In addition KUGY tried to decrease the labour cost and spend money on automation rather.
Our team decided it will fit our company technique and photo and to have got three really technologized production plants, with small although very qualified labour causes. We accomplished further trade-offs concerning the marketing work. In regards to the 4 Ps, which include price, merchandise, place and promotion, KUGY took your decision to focus on all four would have compared with our approach implemented in the beginning.
Hence, we focused our online strategy on item and advertising. As previously mentioned, we have put in significant amounts in the progress our items, by investing in research and development over the models of the game, but also by adding and dropping features into groups that appeared to be of relevance to our buyers and hence increased perceived advantages of our products from year upon year. In addition to this promoting expenses were similarly substantial too, because of the fact that KUGY recognized conversing the benefits of both equally our initiatives and each of our products to create superior client value as a first priority.
George continuously highlighted that even the very best product in a vehicle market will not sell in the event its ascendancy or predominance were not disseminated effectively. Given to Porter if the corporation decides upon a generic approach, the corporation is the most suitable informed by simply thoroughly sticking with this strategy so as to remain differentiated (Andrews, 2010). According reality we made a decision to focus on a comparatively narrow target market, KUGY determined that aiming to study even more segments may jeopardize our current organization.
When presenting a new model KUGY stuck to segments in whose customers’ requirements are similar so as to avoid being stuck in the middle as Avoir cites this (Andrews, 2010). We all arranged that changing our approach could business lead our team to get corrupted. Regarding the business decisions and overall performance all of us decided to stay with this strategy. However, according to the reality we identified every version to be a single separate industry based ideal business unit, the production and marketing actions achieved in the business units various to an magnitude. The strategy used to every single SBU was also a focus strategy.
Even so the methods accustomed to attain difference varied. For example, we chosen to reveal each of our luxurious car model by using newspapers and dealer offers instead of TELEVISION advertising that people used for the medium and enormous car versions. Additionally , we decided upon less major price soars for each of our medium and enormous cars when compared with our deluxe model. KUGY’s achievement can be measured thanks to its income.
Furthermore, inside the second 12 months, our corporation’s profits had been rising yearly, which signifies a good tendency in accomplishment. When looking at our overall earnings calculation, as Pr sama dengan (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 frequent annual price rises as contrasting to quantities demanded that raised on a regular basis. Concerning the expense, overall expense was typically defined simply by elevated set costs intended for marketing/advertising, merchandise research and development, and competition and market research. KUGY’s competitive advantage was depending on these extensive investments that allowed us to raise rates.
According to the reality we were producing profit, the strategy appeared to work quite well, but it was unexpected to what extent selling price was receptive when comparing to all or any the work we put in our advertising products. We were amazed just how little we could raise the value keeping in mind how much money and effort we all put into recognized customer value/benefits and the quality of our products. It would not have been fair to tournament the suppleness used for revenue calculations by creators from the game, based on the fact that we lack the mathematical understanding to do so.
Even though it was quite disappointing once realising just how little difference measures including increased r and d, optimised advertising efforts and improved features made in comparison to changes in cost. After evaluating this organization game with all the real life, businesses that follow to the differentiation focus approach such as Porsche or LVMH are making a whole lot of revenue. Nevertheless, these types of firms have been completely into their business for decades and also have invested extensive resources and efforts to get their income and their position within the industry.
I assume that if we may have played this kind of business video game for a longer period of time, applying a differentiation-focused strategy could have possibly come to a higher profit margin general. However , theory and practice are very diverse. Particularly in very competitive industries such as the car industry and especially much more considerable monetary fluctuations, cost seems to be the key factor when ever it’s regarding making getting decisions.
Moreover, in my opinion, aiming to attain maximised profitability with a cost command method through this business game is perhaps easier and less frustrating in comparison to KUGY’s strategy in line with the fact that the players do not have to change the same amount of parameters and pay all the attention to few variables besides quantities required and price differences. While observing the info from the two competition and market reports, trying to attract conclusions and in addition conducting limitless amounts of test was occasionally very stressful but concurrently very addictive. I have to acknowledge I have incredibly benefited from contributing through this business game experience.
My group work with George Yaniv and Kristijan was on from the rare first good team-work experience I had formed in the last three years at Richmond University and even if we ran into some problems within the simulation video game, we often took time to speak about it and try to find solutions to those concerns. The fact that people were meeting on a regular basis has truly facilitated the cohesion in our group. Moreover, everyone has contributed equally to the general outcome, relating to creative inputs, estimating data, drawing results and essentially trying to input it into decisions. I sincerely appreciated dealing with my group members along with every round of the game we sometimes had extra discussions on this topic.
Many of us agreed that the key problem with implementing a technique was that you cannot find any right response and hence not any fundamental real truth in this subject area. There are a lot of different strategies to attain earnings and uncountable factors in the ever-changing sector environment that can affect a company’s of course profitably. When employing a strategy dozens of factors have to be taken into consideration to be able to allow the firm to react properly to modifications in its environment.
The theoretical element of implementing a strategy remained challenging, while the practical achievement had been even harder. When KUGY understood that individuals could not have the ability to raise rates to the magnitude we sought after so as to to attain estimated income, we did start to question each of our approach and wondered in the event the decisions we took in the beginning were still suitable.
We finally decided to stay with our technique and accomplished a reasonable work with it whether or not it could have already been better, but especially following we ended round three with a essential loss, I truly felt like we were not making use of the good approach and after brainstorming with our staff and while everyone was trying to convince each other what direction to go we finally decided to stick to our 1st plan. In my opinion that managers in real firms who need to communicate and defend their ideal decision with their superiors, panel of directors or staff cope with true difficulties. Nevertheless , contributing with this business simulation game was obviously a fun and extremely addictive experience and I really think I benefited a lot coming from it.
I also desire that the encounter I received from it will at some point become useful in the near future me while i will have to have my first strategic decisions.