Effective Strategies of SimVenture - Term Paper Example

Business Creation and Growth The report seeks to provide insight into the functionality of the simulation model during the management of an actual business. Entrepreneurs can incorporate management theories like the SWOT Analysis, the Going Concern theory, the Supply Chain Networking theory, Modern and Postmodern theories into the model to as to identify the similarities and differences during actual application. The entrepreneurs can then evaluate effective strategies to apply in eradicating variances. Introduction SimVenture is a business simulation game which helps entrepreneurs to understand the dynamic facets of operating a real business. SimVenture allows the entrepreneurs to evaluate the basic units of an organizational namely: Sales and Marketing, Operations, Finance and Organization. Further, the entrepreneurs can use the business game to implement the management theories into practice. The game enables entrepreneurs to understand the variance and similarities of the management process so as to control future deviations. Discussion Sales and Marketing Similarities When formulating a start business for example of selling computers using the SimVenture model, the business has to follow the common Sales and Marketing theories. The business will first analyse the external environment through the use of SWOT Analysis theory. SWOT Analysis theory assists in the evaluation of the business internal environment so as to achieve its objectives (Hatfield, 2011). When using the game model, every business must study its Strengths, Weaknesses, Opportunities and Threats so as to understand the internal and external forces that may affect the business market and profits. The SimVenture game model provides 36 months for the stability of the business, whereby in the first 6 months, the simulated business will analyse all possible internal and external challenges and subsequently there solutions, to ensure efficiency. This is a typical similar situation in the real management practice where a manager has to evaluate the company’s internal environment so as to plan penetration (McCain, 2010). Differences In the SimVenture model, it oversees future inevitable changes like termination and resignation of employees which unlike SWOT Analysis, depicts the situation through the use of weaknesses and threats functions. SimVenture is cost effective in marketing promotions unlike SWOT Analysis theory which faces financial crunches in execution (Myerson, 1991). Limitations SimVenture assumes motivated participants which cannot always be the case since the attitudes do change. For example the simulated computer business, assumes the strength of motivated sales executives which is impractical as compared to SWOT theory. According to Gintis (2009) when using the SWOT theory, the simulated model overlooks unforeseen factors like technological changes. The use of sales executives in sales promotion can be outdated in the unforeseen future and advanced forms of promotion may exist at the time for example; film marketing or digital marketing. Finance Similarities SimVenture simulation can also employ financial theories like the Going concern theory. The theory provides that the business operations should continue even in the unforeseeable period. SimVenture models portray businesses as physical entities which have all the functional units of a real business. Going Concern theory provides that the company has no intension of becoming bankrupt in the near future. The SimVenture model is formulated with of aim of increasing wealth with a cost efficient perspective (Tadelis, 2013). Differences In the SimVenture theory, the figures are projected without accounting to economic factors like taxes and inflation. Going concern theory is accounted for in relation to economic determinants at inception. For example, the CEO of the simulated computer business accounts for the daily profits without the deductions of VATs which is a must in the real financial theory. Therefore, the figures are exaggerated in comparison to the compared the Going Concern theory. Limitation In the SimVenture model, incentives like goodwill, discounts are not integrated in the financial records. Goodwill and discounts have financial values which are omitted when making final reports. The computer business will have a balanced sheet with net profit without the deduction of duties (ECRM & Mcclean, 2012). Operations Similarities SimVenture can use operational theories like the Supply Chain Network which are used in practical organizations. The theory enables SimVenture management to monitor the products circulation at different levels. SimVenture model further evaluates time assessment between various stakeholders like in the actual theory objective. The Supply Chain Network theory can project a product’s life cycle in relation to time which the SimVenture model can perform with set instructions. Based on Gallagher (2013) Six Sigma theories can be implemented in the SimVenture model so as to correct the operational defects within the business. Six sigma theories constitute the statistical measures used to improve the effectiveness of the business. The SimVenture contains operation systems which perform the basic functions of the management theory. Additionally, the SimVenture can easily be compatible with the Hawthorne Effect theory since it is an observational concept. The SimVenture can perform the Hawthorne theory functionality with reference to the observed subject. For example the simulated business management can hypothetically observe the sales executives at the field during their routine, which will in turn influence their productivity (Jones, (2013). Differences Hawthorne effect theory is not practical in SimVenture like in the actual world. The theory provides the usage of real individuals so as to monitor and influence their productivity during their normal operations. Defects cannot be influenced by the management in the SimVenture model like in the Six Sigma’s context (Ma, Oliveira, Petersen & Hauge (2013). Limitations SimVenture lacks virtual management to implement the changes as used in the Hawthorne’s effect theory. The theory measures qualitative variables like employees motivation, which the SimVenture cannot initiate due to the lack of visible subjects (Adetule, 2011). Organization Similarities SimVenture share the same characteristics of modern theory due to the use of information systems. The theory provides the use of technology in solving organizational issues. SimVenture contain organizational system applications which can assist the organization in enhancing its reputation. Postmodernism theory is also a component of SimVenture model due to the changes in traditional thinking concept. (Bush, 2011). SimVenture and Post modern theory provides the management of organization(s) from a different perspective which actually does not exist before. Differences The Modern theory is a hypothetical concept which has not yet been fully explored unlike the SimVenture model which is practically being used in the real world. Postmodern theory observes the attitudes and culture of the organization, while SimVenture is mainly concerned with the operations of the organization (Brigham & Ehrhardt, 2008). Limitations The Postmodern Theory having not been fully confirmed, it becomes difficult to implement and evaluate the concept. SimVenture lacks objectivity of the organizational variables like culture and management structure. (Zenios & Ziemba, 2006). In Postmodern theory, knowledge is achieved by language and social processes which SimVenture cannot employ due to lack of subjectivity. Strategies Sales and marketing The computer business company used marketing mix as its key strategy in promoting the SWOT Analysis objectives. The company employed advertisements so as to achieve so as to promote brand name and market share. Sponsorship of common events can also be encouraged in order to build the SimVenture business. Personal selling was also boosted through the use training, in order to strengthen SimVenture business brand name, by creating a strong sales force. Sales promotion was also embraced through the provision of sales discounts and gifts, in promoting the company’s brand-name (Glynn & Woodside, 2009). The company also used social media so as to increase the computer company opportunities. The simulated company further used the pricing strategy in order to outdo its rival companies. The company having location advantage reduced its prices near margin so as to force new entrants out. Differences The simulated company could not evaluate brand value which on the contrary could easily be approximated when using the SWOT technique. The effect of personal selling could not be quantified like in the case of SWOT Analysis. Time factor effect affecting the marketing mix strategies could not be determined bearing in mind the time consuming effect of personal selling (Mahadevan, 2010). Limitations The predicted sales values in reference to advertisements and sponsorships could not be determined due to estimations. The simulated projections further delayed the realization of the company’s goals due to overestimation. The sales team undertaking personal selling also faced motivational issues to lack of target optimization and the continuous nature of the job (Hughes, 2005). Finance Similarities The company implemented budgeting like in the case for Going Concern Theory in order to stay abreast with the economic conditions of the company. Budgeting is implemented in many functional companies so as to prevent them from experiencing bankruptcy in the near future. The simulated company further employed the use of Accounting Systems like QuickBooks which is adapted by many profit oriented firms. The Accounting Systems necessitate planning and control of accounting activities which can be difficult to monitor during normal business operations (LeytonBrown & Shoham, 2008). SimVenture business model also contain forecasting functionality which is present in the Going Concern Theory in facilitating planning. Forecasting strategy promotes the evaluation of funds in relation to the current and present nature of the business. Differences SimVenture lacks credibility of the financial figures due to lack of monitory policies. Taxes, duties and inflation rates are not catered for in the financial output of SimVenture simulations. Furthermore, the forces of demand and supply are ignored in SimVenture business simulations (McCain, 2009). The demand and supply forces determine the market price of the product and its subsequent financial returns. Operations Similarities SimVenture business further incorporates differentiation which is used in Six Sigma management theory. Differentiation is normally adapted by companies in solving management crisis like imitation. Differentiation further assists the SimVenture business in penetrating new markets and increasing its products portfolio. SimVenture business has similar intervention functions with the Supply Chain Networking Theory in terms of the monitoring and control strategies. The simulated business undertakes monitoring in order to establish variation between the set standards and the actual performance of the business. Like in actual business environment, SimVenture business undertakes operations management where it controls the variance in the operation (McCain, 2009). The tasks normally involve termination or correction of the defect in the system. In both principles, cost is a fundamental objective. Operations management strives to run their businesses in cost efficient manner. Differences The management style used in both perspectives is different. In SimVenture business management, the company is operated through assumptions and projections, while in the Six Sigma Theory, it requires an actual manager to implement the change (Mccain, 2009). In the Supply Chain Network theory, the management can track and monitor the products life cycle, while in the SimVenture business; a product’s life cycle can only be governed through estimation. Limitations In SimVenture operations variance can be overlooked due to lack of practical exposure (Tadelis, 2013). The challenge can then lead to delays and improper allocation of vital resources leading deficiencies or surpluses within across the company’s sectors. Organization Similarities In modern theory and SimVenture business, both entities undertake business functions for long term expansion objectives. SimVenture business is normally simulated with cost efficiency perspective so as to promote the long term existence of the company. Employment of modern technology forms the basic characteristic of saving costs. Both SimVenture and Modern theory depend on the recruitment of effective human resources who can adapt modern technology in the achievement of the organization’s set objectives. In both situations, working time is evaluated for effective functionality of the organization. In SimVenture and postmodern theory, succession training is administered for the maintenance and existence of the organization (Tadelis, 2013). The managers can train the employees regularly through induction and delegation in order to promote continuity. In SimVenture and Postmodern theory, the managers conduct training in order to reduce performance gaps within the organization. In both SimVenture and Postmodern theory, the organizational culture is enforced through the organization’s values, ethics and policies. Differences In modern theory, culture can be evaluated through qualitative methods like observation unlike in SimVenture business. SimVenture model lacks outward appearance which can be used to ascertain its perceived norms and values. Modern and Postmodern theories incorporate the society’s culture which the SimVenture model ignores (ECRM & Mcclean, 2012). Modern and Postmodern theories can undertake development of its employees through training which SimVenture model cannot perform. Limitations When using the modern theory, assessment of the organization’s expansion capabilities in SimVenture can be difficult to determine. SimVenture depends on projections of the company’s existence based on tentative assumptions, which can be difficult to validate in regards to growth (ECRM & Mcclean, 2012). Conclusion and Recommendation SimVenture employs management theories like SWOT Analysis, Going Concern theory, Supply Chain Networking theory, modern theory among others which can be used to validate their functionalities. Some of the theories like SWOT Analysis and going concern can be difficult to quantify due to lack of tangible or virtual elements of their existence. Therefore, further research can be done in order validate their assumptions on the model. Reference list Adetule, J. (2011). Handbook On Management Theories. Bloomington, Author House. Brigham, E. F., & Ehrhardt, M. C. (2008). Financial Management: Theory & Practice. Mason, Ohio, Thomson Business And Economics. Bush, T. (2011). Theories Of Educational Leadership And Management. London, Sage. European Conference On Research Methods, & Mcclean, R. (2012). Proceedings Of The 11th European Conference On Research Methods: University Of Bolton, Uk, 28-29 June, 2012. Gallagher, K. (2013). 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