Using Simulation To Implement Business Theory Without A Potentially Large Cost Of Errors Business Essay

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Simulation is the one of method on learning to operation business by using of business study knowledge. This simulation exercise enabled me to practice how to operate business instead of just reading the textbooks. Myself I notes the wrong decision made by managers end up costing the company millions of money. Simulation gave me knowledge to help firm to implement business theory without a potentially large cost of errors.

I was appointed to be manager is group E for the aim of learning how to make decision. I worked with other three member of my classmate. Every Monday of the week we met for making decision by improve technology capacity, interior, styling, safety, minor upgrade and so on. We work together and final we manage to make decision for those four periods.

From the simulation, I was able to gain a practical understanding of business strategy and how various factors interact and affect one another. I appointed as manager in order to set firm goals and objectives. My firm was one of the seven competitors in the StratSim environment and we were manufacturer and selling efficient motors, which are Efizz, Echo and Egad.

Efizz was a family car type

Echo was an Economy car type

Egad was a Truck car type

2.0 Mission and Vision

The overall mission is to specialize in high quality, low mileage, hard to find, previously enjoyed vehicles at a fair price. Also to make sure average cars can be found anywhere else.





Politically our firm E draws attention to rules, regulation and laws about vehicles emissions.


Economically there was a slight fluctuation during the exercise of the simulation. Firm starting strongly when starting and then drop after.


A firm dealing with car manufacturing the aim is to put more cars in the road for the sake of the firm business. When happened there more cars in the road means there is a high level of pollution, road car accidents and cause of queue.


Regarding our simulation there was no option of introduce new technology such as purely electric car. There was an option of using a combination of electricity and normal fuel (hybrid models)


Car business rules is to obey laws and regulation when operates. This rules applies especially on automobile industry in connected to obey regulations, laws and safety standard.


Automobiles manufacturer to obey the environment aspect seems to be difficult. As we can see pollution knows days become a problem. So the challenge on how to minimize the pollution is high to members of the car industry.


Threat of substitute

There are threats of substitute for cars themselves. Life know days are more delicate so people prefer to walk, cycling and use public cars. This is due to either for make body fit or economic situation.

Bargaining power of buyers

It was difficult to differentiate a cars from the other competitors, this is due to vehicles were similar (economy, family and truck classes). Firm A up to firm G, started the business in same positions, before decide to go to another direction, meaning consumer/buyer may decide to move from firm A to firm E with inconvenience to themselves.

Bargaining power of suppliers

Obvious there are few suppliers for vehicles parts. This means a car manufacturer has limited choose when it reaches the point of select suppliers. So this gives suppliers high bargaining power.

Threat of new entrants

There was no threat of new entrants due to new firm not allowed to emerge during the simulation exercise.

However reality in life situation, the cost of produce motor vehicle and barriers to entry are seems to be high.

Rivalry among competing firms

Rivalry was very high according to the factors which mentioned above. As mentioned all firms were started in same situations, so firms were trying to look different from others. Firms were forced to choose to price segregation.

3.3 SWOT


When simulation starts all competitors start in the same position with the same vehicle, which are Economy, Family and Truck classes. Market segments are open as potential so that new markets could enter into business. Also there was an untapped market, every firm moved in with 100% of their share market.


When simulation exercise start, every firm was an identical situation,

The threat is, it might happen that, our competitors moving to our planned vehicle before us, and pick up substantial market share.

Also the new laws regarding safety of the cars may be introduced, and face the operation.

Environment pressure and bad publicity has to be satisfied in order to avoid conflict or problem with them.


4.1 Basic strategy

"Strategic choices involve the options for strategy in terms of both the directions in which strategy might move and the methods by which strategy might be pursued."[Johnson et al, 2009, p15] Firm E business strategies made up with good decision from management team and the success depends on the how macro environment be understandable among management team and industry which is compete. Also to understand the nature of competitors and how they operate their firm and their internal capacity is very important.

Firm E gives priority to family vehicle, the Efizz.

4.2 Technology

"Each firm in the StratSim world has technological capabilities that parallel the vehicle attributes of interior, styling, safety and quality. To keep measurement relatively straightforward, these are rated from 1 to the current maximum. Firms also have the ability to expand their capabilities up to current technology limits through investments in technology limits through investments in technology capabilities." [StratSim Case] Firm E expand their capabilities of interior, styling, safety and also quality fro Efizz (family car), Egad (Truck car) and Echo (Economy car). Firm E made Minor upgrade. There was a maximum limitation capacity as range from 9-11.

4.3 Financial control

Financial management in StratSim was essential. In addition firm was choosing among investments in technology, manufacturing capacity, retooling, and platform development; a firm must also manage cash flow and investor expectations.

"Firm E were understand that advertising plays an important role in establishing vehicle awareness and shipping consumers' perception of product. So we take responsible for setting an advertising budget and an advertising theme. That budget was settled according to region basis, also budget are set at the product level and include special incentive programs and general promotion activities." StratSim Management case manual"

Firm E also set budget for upgrade, training and support and other areas which shows on attached appendixes. Training includes dealers training also, so that they get knowledge of product which they sell.

4.4 Marketing

"Marketing deals with identifying and meeting human and social needs. One of the shortest definitions of marketing is "meeting needs profitably" When eBay recognized that people were unable to locate some of the items they desired most and created an online auction clearinghouse or where IKEA noticed that people wanted good furniture at a substantial lower price and created knock-down furniture, they demonstrated marketing savvy and turned a private or social need into a profitable business opportunity."[Kotler, P et al (2006) pp5-6]

Marketing involved company reputation, market share, customer satisfaction, customer retention, product quality, service quality, pricing effectiveness, distribution effectiveness, sales force effectiveness, innovation effectives and geographical coverage. Firm E considers all about those and tried to maintain. [Kotler, P et al (2006) p53


I learned that, work in group there are some difficulties especial meeting time and day, but firm E we manage to overcome that difficulties. To work in group bring challenges, share ideas, knowledge and so on. One of team member may know something which myself I never head, so by work together makes others gain knowledge.

Also I learn that employee or manager makes a mistake which costing company millions of money. For example manager may decide not to put enough budgets on advertisement, which will end up of drop sales. Advertisement and promotion should be an almost unconscious part of Firm everyday sales plan. As we understand that Advertisement and promotion is very important to any company which deal with sales. Advertisement reaches the public and may reach people which before were not interested of buying, but after seen advert, they might be interested and bring additional customer to the industry. Advertisement deserves greater consideration as a part of the solution to certain global problems.

I learned also is very important to understand competitors, what they doing and take action against these competitors. Firm has to develop uniquely based on how the competitors interact, what new products are introduced, and how these products are supported.

Also I learned that this simulations exercise is very challenging especial the when happened that the purpose and priorities of each firm were not established clearly when starting strartsim exercise. In firm E we faced difficulties to set our objectives and developing pace in order to achieve our objectives in short term even in long term.


Good decision making is that one which involved all team members and no one make any decision changes without involving others. Most of the firm put more effort on matters which concern with Manufacturing, finances and marketing. Every member takes part on studying area which helps to gain more information for the decision making. The team was trusted other decisions because they take more time to studying the area. However other team member has to raise question when clarification needed.


For future direction, organization was use strategic model to enable firm to make good plan logically. On Simulation exercises, model mentioned at the time of decision in order to get results which are effectively. Also on simulation, firm E makes sure that, each area was given to the specialists in order to get quality information and decision feedback which was been made.

An overall action for firm E is managed to match objective by given priority to family market, Efizz was marketed well also performance was good.

The task of the management term was to maintain long term profitability in the context of an increasingly competitive and changing environment. Customer needs and tastes were evolving. Competitors was battling for market share and entering new product classes. Technologies and cost structures for the firms were change over time.