Discuss About The Business Simulation Experiential Learning?
The game, which is related to the business simulation, is very much important in order to understand the concept, which is behind the real business world mainly taking into consideration all the accounting calculations and all the theory. It directly helps to employ and implement different forms of strategy and to make appropriate decision in the real world. Mikesbikes can be considered one of the them; it is a business world which is virtual. The simulation consist of more than one segments, distribution debt and advertising allocation.
In the mikesbikes simulation of business, there are mainly two version, which are available: 1. Single play and 2. Multiplayer. Mikesbikes implemented the concept of multiplayer by Smartsims. The concept is very much helpful for the purpose of business simulation to get accustomed with the real world business. The aspect of multiplayer gives an environment, which is very much similar to the real world so that the user can understand the concept of the business quite easily.
The Mikesbikes multi play intro basically consist of the following segments such as development, price, production, PR, advertising, debt, distribution, capacity and equity etc. taking into consideration the following segments the users have to play wisely and accordingly make effective decisions. The main motive, which is behind the aspect, is the increase of shareholder value (SHV). At the beginning of the game, the user is eligible to involve with advertising and slowly can move towards other area, which would be free to control one by one. The strategy which is related to the price and advertising of the product is mainly achieved by means of research which put into the market. Taking into consideration year 1, according to the strategy we applied price, which were moderate, and campaign relating to advertising especially in the magazine and a little bit in the concept of PR and produce the mountain bikes in appropriate amount in order to get rid of sales loss. Along with the implementation of the previous strategy the attention, which was applied to the distribution margin, can be considered least with the focus on additional support and increase in the branding which adds more aspect of awareness in the second year. In the third year, much of the attention was applied to the concept of all the depts that are related to this aspect. This would be helpful in the process of reduction of expense rate which can be considered as a drawback relating to decrease in profit and capacity control where we increased the efficiency which is related to the reduction of wastage and increase in the quality which can be accounted for almost 90%. The most important year in this context was the year 4, which was very much challenging because the improvement in the mountain bike was needed which incurred a cost of $2m and product launch, which was new. We basically looked through the report and from the research report of the market it would founded that young bikes was the most popular launch taking into account the market and which cost us $1m and we had spent a heap of money on the advertisement on Television because it worked a lot for the young bikes. We directly increased the capacity and we had a lot of money spend in the concept of quality and efficiency. On the other hand in order to increase awareness branding of the product was majorly done. Besides this concept, we started to buy the equity, which can contribute a lot towards the increase of the shareholder value, and we paid almost 20 cents on the dividend. In the 5th year, the second biggest challenge was faced. The improvement in the sector of mountain, youth and launched road bikes, which almost cost us $4m, was done. As a result of the increase of the quality the product price was also effected which was increased up to a certain extend. The road bikes can be considered a very expensive product. Taking into consideration a market report it was founded out that the concept of quality is a king of the roads and PR relating to the magazine is very much important. In the 6th year, everything was under control. In this context an extra slot for available for the launch of a new product but we decided not to involve any new product due to the factor that the entire product was launched. If the decision of launching the product was considered it would be like a competition to ourselves only due to three products in the market. We directly improved the aspects of efficiency, capacity and quality due to the factor of increase in sales and increased the price relating to the products. All the equity, which could be afforded, was occupied and accordingly the dividend was paid. The strategy, which was followed, was a previous year concept taking into account the 7th year but the improvement of the products were stopped so that stability in the sales can be brought. In order to increase the stakeholder value the dividend was paid as much as possible. Taking into consideration last year there were hardly any changes made but again the reduction of the product price was made to maintain the previous sales.
The first consideration that was required was the name change of the company according to our selection. Bikes was the name, which was given by me for the simulation related to single player instance. In order to understand the idea the year report was taken into consideration by me, which was behind the market scenario and to take into consideration the steps, which was required to make effective decision in the business.
For the starting year, the company operated only with the mountain bikes. The main try was to enter the amounts, which were much higher taking into consideration the default price for example $700 with very small PR and the budget relating to advertisement. The result, which was seen after the first roll out, was not impressive due to the factor that the SHV was dropped from $11 to $. A discussion was made with the nearby students and I understood that the advertisement sector should be the focus point in the first year. I started the plan again and founded out that the SHV had risen to an amount of $. The next year for the game was very much important for the concept of distribution and branding. I decreased the price to $705 from $710 in order to push the sales.
In the second week of the game I started to understand a bit more of the basics related to the business, this mainly resulted in taking better decision than last few weeks. The following recording was made during the play.
For the starting year, the generic unit price relating to the market bikes was $700 with the initial forecast of 18000 units sale and 16500 units, which were put for sale. The increase in price was made to increase the PR and the advertisement. The production was also increased but later on, it was rolled over. Following are the result, which was acquired.
After the process of studying the I came to a conclusion relating to the factor of low production and concept of awareness which was high sales amount was lost. Due to this factor, forecast sales were increased as well as the production. I raised the budget, which was related to brand awareness to 700000 from 250000 and the support of the mountain bike was made in three channels where I majorly focused on sports stores giving them a profit margin of 25% over sales. Following are the result of the roll over.
It can be stated that the result were very much promising when comparing it over the time spend on the concept of simulation. I realized that the awareness rise and the PR paid of well in this concept. There were no loss in sales and there was considerable amount of rise in share market. The concept of spending on branding was very much crucial for achieving this result. However, in this context the lagging was in the concept of distribution due to factor that I did not reach enough distributors for the product. The capacity level was eventually under control as there was not any closing stock, which directly reduced the expense, which was related to keeping and storing the bikes in the warehouse .
In the year 2020, the decision planning was made according to the instruction, and I made a point to stick to the principle underline there and follow them. The retail price was increased a little bit with focus on the sector of PR and advertisement. In my understanding the budget was considered to be appropriate therefore the factor was not taken into consideration expect I saw a drop in the forecasted level related to quality. I also became stagnant and the market share at the rising level was taken into consideration the previous report. The rate of commission was also increased for the bike store due to the factor that I believed it would be directly increasing the sales. The following results were recorded after the roll over.
The new product were introduced in single player in the fourth year of the business. Every instruction was clear which were provided at the year ahead of the summery, basically that was very much important and very much reasonable to help to make a decision or an adequate strategy.
- To launch a new product it would be costing around $1 million.
- In order to improve the specification for the project which exists it would be costing around $1 million.
- To reduce the cost of the existing project it would cost around $1millions.
- In order to improve the specification as well as reduce the cost of the existing product it would be costing $ 2 million.
Taking into account my income level, I made a decision of launching a young bike. At the product launch, I decided to increase the support to the stores by giving them discount also the setting of the PR and advertisements was done according to the requirement, which was stated in the report. Most of the buyer could reach us by means of Television; therefore, I spend equally in the advertisement and the PR campaign for the young bikes.
The outcome, which was reached in the year 2021, was very much encouraging, as SHV had risen in a single year span. This was possible due to the spot on the strategy of distribution; however, there was a loss in the young bikes sales due to the factor of under production. Therefore, the focus, which was taken in the next year, would be the concept of appropriate production level and maintaining the customers.
I also planned to launch road bikes of $2100 with the capacity production of 50000 aligned with other capacity of production of 25000 youth and 25000 mountain bikes. The price relating to the youth bike and the mountain bikes increased. The decision of $0 dividend was also taken into account and made with $200000 shares buy back. Above decision were favorable in comparison with the competitors.
If the comparison was made of 6 years with the machine, I performed well in the first 4 years and I had bad 2 years, which provided me with a proper insight of the crucial factors of finance. The focus should have been more on the finance area. Eventually results came for me taking into account last 2 years with the increasing SHV as shown above but the competitive target was not meet. Despite the leading provider of the bikes taking into account three categories I was still lacking the value in shareholders.
Mainly there are five points, which can be included in the concept which can be beneficial for the concept of multiplayer. The points are as follows:
- Mountain bike awareness should be build strong by spending more money on the factor of advertisement. The need to understand which media channel target which particular product should be taken into consideration
- Establish distribution plan, which are powerful to supply the adequate quality of bikes.
- Maintain the productivity capacity is very much crucial.
- Focus on the concept of efficiency up to the point, which is suggested by the market research. The production level can reduce the operational expenditure and other expenses in this field.
- Ones the market share of 50% is reached we may decide to raise the price due to the factor that people have recognized us previously.
The game was really enjoyed and I leaned many things from the multi-player concept and I realistically experienced that let me know the type of strategy which can be incorporated for making the customers happy. The multi-player game also helped us to make important decision especially in crucial years. Taking into account the business of Mikesbikes, the game of simulation is one of the best ways to learn the business concept and to lean from the mistakes which were made.
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