“Venture Strategy”
Business Simulation
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Game Scenario
You are about to start a new company that will enter the microcomputer business. You will
be a totally integrated company that does it all from marketing to production to human
resource management. You will have limited financial resources and complete accounting
responsibility.
As the executive team, you will provide the seed capital (investment money) to start your
business. You can use this money to build a factory, open sales offices or a web site, and
design brands. You will invest 2 million in the first quarter and another 1 million in each of
the next two quarters. An additional 4 million will become available in quarter 4 from
venture capitalists, for a total of 8 million.
Your executive team has the next year and a half (6 quarters or decision periods) to get this
company off the ground. Within this time frame, you should become a self-sufficient firm,
earning substantial profits from your operations.
A balanced scorecard will be used to measure your firm's performance and to compare your
results with those of your competitors. The firm's total business performance will be based
upon financial performance, market effectiveness, marketing performance, investment in
the firm's future, human resource management, asset management and creation of wealth.
Your goal is to be the best competitor in the marketplace.
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Virtual Business World
Your company will be
responsible for introducing a
new line of microcomputers
into North America, South
America, Europe/Africa and
Asia.
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Background/Theme
Within the PC industry, other firms will be entering the
market at the same time as your company. The
microcomputer industry is in its introductory stage of the
product life cycle. There is no history and there are no
established competitors. All competitors, including your own
company, will start with exactly the same resources and
knowledge of the market.
All manufacturers will sell through company-owned sales
offices in four major metropolitan markets around the world
and also via a web channel. Your target market will be the
business sector. You will not be selling to the home market
and you will not sell through retail stores. Thus, your
marketing strategy will be tightly focused on direct sales to
business customers through a sales force and if you choose, a
website.
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Market Segments
There are three market segments to serve in the PC market. They are referred to as the Mercedes, Workhorse, and Traveler
segments.
The Mercedes segment is looking for a high performance computer to use in
engineering and manufacturing applications. Mercedes customers are willing to
pay extra for the high performance.
The Workhorse segment is the largest group of customers. They want an easy to
use PC for office workers. It should also have a modest price.
The Traveler segment wants a practical computer to use on the road. Traveler
customers are executives and sales people who travel a great deal. This segment
is also price sensitive.
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Explanation – Market Segments
The three segments are portrayed in the accompanying
graph. The circles are positioned to indicate the price
and performance requirements of each segment. The
size of the segment is portrayed by the size of the circle.
Each segment has different needs and wants and
requires a different market strategy to appeal to it. One
of your first decisions will be to select two market
segments to target. Having selected your target markets,
you will develop and then execute a very focused
strategy to profitably serve each segment.
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Decisions by Quarter
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Quarter 1:
Organize the firm and setup shop
Determine desired image of company
• Designate a company name
Focus on process of working as a team to achieve goals
• Assess team skills, and work styles, then assign corporate responsibilities
• Determine how to manage the organization and establish group norms
Review market survey results—evaluate segments, markets, and potential competition
• Analyze market opportunities
Establish corporate goals and strategic direction
• Select target segments
• Write mission statement
• Specify and rank order corporate goals
• Establish strategic direction
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Quarter 1: (Cont.)
Organize the firm and setup shop
Sell 2 million in stock to executive team
Create customer value—match components to benefits (Quality Function Deployment)
• Design a brand for each target segment
Select test market
• Open first sales office
• Open a web center (Optional)
Setup manufacturing operations
• Invest in plant capacity
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Quarter 2:
Go to test market
Sell 1 million in stock to executive team
Human resources
• Establish sales force compensation package
• Establish factory worker compensation package
Sales office management
• Hire sales people—assign to segments
• Open new sales offices (Optional)
• Hire and assign web center staff (If applicable)
• Select web traffic and productivity tactics (If applicable)
Brand design
• Revise brand designs for test market (Optional)
Advertising
• Ad copy design
• Media placement and ad frequency
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Quarter 2: (Cont.)
Go to test market
Pricing
• Designate brands available for sale
• Set brand prices—price promotions
• Set sales priority
Manufacturing
• Estimate demand per sales person
• Schedule daily production
• Run factory simulation
• Invest in plant capacity (Optional)
Purchase market research
Pro forma accounting
• Project cash flow
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Quarter 3:
Skillful adjustment
Market expansion
Evaluate financial performance
• Profitability analysis
Evaluate market performance
• Customer opinion—brand designs, prices and advertising
• Market demand—by company, brand and per sales person
Sell 1 million in stock to executive team
Revise marketing tactics as needed, and continue test marketing
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Brand designs
Brand prices, price promotions and sales priority
Sales force numbers and assignments
Web marketing tactics
Compensation packages
Advertising copy
Media placement and frequency
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Quarter 3: (Cont.)
Skillful adjustment
Market expansion
Sales office management
• Open new sales office (Optional)
Establish production plan for quarter
• Review production results from previous quarter
• Forecast demand by brand
• Set daily production schedule for each brand
• Run factory simulation
• Invest in plant capacity (Optional)
Purchase market research
Pro forma accounting
• Project cash flow
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Quarter 4:
Invest in the future
Evaluate financial performance
• Use activity based costing (ABC) to evaluate profitability of brands and sales offices
Evaluate market performance
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Customer opinion—brand designs, prices and advertising
Market demand—by company, brand and per sales person
Competitor tactics—segments targeted and selection of marketing tactics
Conduct demand analysis to estimate brand, price, advertising, and sales force elasticity
Develop one year business plan
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Goals—marketing, financial and ownership
Marketing strategy
Manufacturing strategy
Financial strategy
Pro forma cash flows and financial statements
Size of equity request, number of shares offered, and share price
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Quarter 4: (Cont.)
Invest in the future
Present business plan to venture capitalists and negotiate equity investment (consult your instructor or Marketplace
processing center for details)
• Consider taking out conventional loan
Invest in R&D for new brand components
Begin global roll out of business plan
Revise marketing tactics as needed
• Brand designs
• Brand prices, price promotions and sales priority
• Sales force numbers and assignments
• Web marketing tactics
• Compensation packages
• Advertising copy
• Media placement and frequency
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Quarter 4: (Cont.)
Invest in the future
Sales office management—expand market coverage
• Open new sales office(s)
Revise production decisions as needed—improve production economies
• Forecast demand by brand
• Set daily production schedule for each brand
• Run factory simulation
• Invest in plant capacity
Purchase market research
Pro forma accounting
• Project cash flow
Prepare tactical plan
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Quarter 5:
Expand the business strategy
Evaluate team performance—self-assessment of roles played, contributions made, and adjustments needed
Evaluate performance—financial, marketing, and competitive
Manage strategy
• Unanticipated competitive moves
• Financial capability
• Skillfully adjust strategy
Marketing—make incremental changes in tactics
• Review market research
• Use activity based costing (ABC) to evaluate profitability of brands and sales offices
• Conduct demand analysis to estimate brand, price, advertising, and sales force elasticity
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Quarter 5: (Cont.)
Expand the business strategy
Brand design—increase demand
• Brand ratings
• Continuously improve component selection (R&D)
• Introduce new brands with new R&D components
• Explore R&D licensing opportunities and strategic alliances
Human resources—motivate employees
• Compensation packages
Sales channels—expand market coverage
• Open new sales office(s)
• Increase sales force
• Revise sales force assignments—target most profitable segments
• Web marketing tactics—increase visitor sales and customer satisfaction
Advertising—increase demand
• Ad copy ratings
• Media placement and frequency
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Quarter 5: (Cont.)
Expand the business strategy
Pricing—increase demand
• Brand prices, price promotions and sales priority
Revise production decisions as needed—improve production economies
• Forecast demand by brand
• Set daily production schedule for each brand
• Run factory simulation
• Invest in plant capacity
Purchase market research
Pro forma accounting
• Project cash flow
Prepare tactical plan
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Quarter 6:
Refine the business strategy
Evaluate performance—financial, marketing, team and competitive
Manage strategy
• Unanticipated competitive moves
• Financial capability
• Skillfully adjust strategy
Marketing—make incremental changes in tactics
• Use activity based costing (ABC) to evaluate profitability of brands and sales offices
• Conduct demand analysis to estimate brand, price, advertising, and sales force elasticity
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Quarter 6: (Cont.)
Refine the business strategy
Revise marketing tactics as needed
• Continuously improve brand features (R&D)
• Brand prices, price promotions and sales priority
• Sales force numbers and assignments
• Web marketing tactics
• Compensation packages
• Advertising copy
• Media placement and frequency
Manufacturing
• Fixed capacity
• Scheduling options
Purchase market research
Compute pro forma cash flow
Prepare tactical plan
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Contact Us
Phone: 0124-6500650
Mob: 09289289500
Email: info@skillcube.in
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