Strategic Simulation Exercises in Business

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Table of Contents

Introduction
Monopoly
Oligopoly
Perfect competition
Conclusion
References

Introduction

To sustain product value and market presence, business executives develop strategic market decisions using different financial models (Chang & Weng, 2012). Using Tata simulation, Quasars executives can develop a successful marketing strategy. The simulation game provided real experiments in various market structures. Thus, the simulation game will improve a firms market decision.

The interactive simulation game provides business insight in a market environment (Chang & Weng, 2012). As a result, business investors can understand market trends in a monopolistic, oligopolistic, and perfect market structures (Dibb, 2002). The simulation game influences product demand and increases profit. As a result, Quasar can improve its competitive advantage using simulation games.

Monopoly

We will consider various market structures to understand the importance of the simulation exercise. The features of monopoly market include homogenous products, market dominance, and price regime. As a result, the features of monopoly market influence product demand. Let us consider the price regime of $2500 to increase market profit to $1.29 billion.

Thus, at the point of intersection, the marginal cost of the product equals the revenue. If the companys investors want to maximize profits through expansion, advertisement budgets must be approved (Jedidi, Mela, & Gupta, 1999). As a result, annual budget for advertisements will increase by 200%. By calculation, 7.7 million units of the products will generate the anticipated revenue.

The increase in the cost of advertisements will influence product demand. In the second scenario, we discussed the effects of the production process on demand. Thus, an efficient production process will increase the daily production rate. As a result, we will increase profit if we produce 9.4 million units at $2200 (Rothaermel, 2012).

The simulation game revealed that advertising is an effective marketing strategy. Thus, marketing trends determine the change in strategy and production. From the above scenario, we can deduce that advertisements create product awareness better than other marketing factors. Thus, product dynamics can be improved through advertisements (Porter, 2012, 2013).

However, the firms production process can be upgraded in two ways. First, we could increase production inputs such as equipment and raw materials. For example, upgrading production plant from manual to digital would improve the production capacity of the organization.

Thus, more products will be produced to generate profit. Second, we could upgrade employees efficiency to reduce waste (Chang & Weng, 2012). Thus, employee training will increase the efficiency of the production department.

Oligopoly

We will analyze the importance of the simulation exercise in the oligopoly market structure. The market structure faces similar products and competitive price regime. As a result, must protect its stock value to increase demand. Thus, lowering the price of a substitute product, the company will pull more customers to increase profits. Product differentiation can be achieved through cost leadership.

Thus, cost leadership is a factor that causes barriers for new entrants. Previous studies revealed that customers value influenced the demand for a particular product. Thus, we can alter the demand for a particular product using similar market principle. For example, customer feedback can be used to access the quality of the product or service. However, a decline in customer relation will affect the firms competitive advantage.

The oligopoly market structure has substituted products that decrease the comparative advantage of an organization. Thus, price review and product quality will improve the competitive advantage of the firm. The simulation game provides valuable information for profit maximization. Consequently, customer satisfaction can be improved using cost leadership strategy and service feedback.

Perfect competition

A perfect market structure requires the strategic alliance. As a result, a firm will lose its comparative advantage if the demand decreases. Thus, strategic investment is a major factor that influences profit maximization (Kotler & Keller, 2009). In a perfect market, the cost of advertisements does not affect demand. Thus, customer value and satisfaction will improve product demand (Noble & Kumar, 2008).

The features of the perfect market structure include homogenous product, new entrants, zero investments, and market dynamics. As a result, price differentiation will not affect product demand. The simulation exercise revealed that effective operations, motivation, customer relationship, corporate citizenship, and good business ethics improve the value of a firms product.

As a result, consumers know the market trends and environment. In a perfect market structure, customers control the demand for a particular product or service. Thus, executives can improve customer relations to generate profit. Customer management must be upgraded to reflect market trends. A satisfied client will return for the same product or service.

Conclusion

The simulation exercise exemplifies the benefits of strategic market information (Grant, 1991). Thus, profit maximization depends on the marketing strategy. Business executives can formulate the marketing stagy using strategic simulation exercises. Thus, strategic marketing and operations determine the competitive advantage of an organization (Grant, 1991).

The simulation game revealed the importance of business strategies, and product value. From the analysis, we revealed that alliance, system upgrade, customer value, brand value, product differentiation, and price regime influences profit maximization. Consequently, company executives must upgrade their infrastructure to align with market trends.

References

Chang, W. & Weng, S. (2012). Revisiting customer value by forecasting e-service usage. Journal of Computer Information Systems, 21(1), 41-49.

Dibb, S. (2002). Marketing planning best practice. The Marketing Review Journal, 2(1), 441-450.

Grant, M. (1991). The resource based theory of competitive advantage: Implications for strategy formulation. California Management Review, 33(3), 122-345.

Jedidi, K., Mela, F., & Gupta, S. (1999). Managing advertising and promotion for long-run profitability. Marketing Science Journal, 18(1), 1-22.

Kotler, P. & Keller, L. (2009). A framework for marketing management (4th ed.). Upper Saddler, NJ: Pearson Education.

Noble, H. & Kumar, M. (2008). Using product design strategically to create deeper consumer connections. Business Horizons, 51(2), 441-450.

Porter, M. (2012). The five competitive forces that shape strategy: In HBRs 10 must reads on strategy. Economics Journal, 7(1), 537-560

Porter, M. (2013). The five competitive forces that shape strategy. Cambridge, USA: Harvard Business Publishing Video.

Rothaermel, F. (2012). Strategic management concepts. Irwin, USA: McGraw-Hill.

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