Globus Report

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Globus Simulation Game Report – Shahab Niaz (Company D)

Introduction

The energies of this report shall be directed towards the documentation, explanation and analysis of our group strategy in playing the Globus Business Strategy Game, and also the outcomes of our decisions. In doing so, aspects that I will attempt to analyse and explain our decisions relate to production design, marketing, assembly (for both entry-level and multi-featured cameras), compensation and labour, discount bids, corporate citizenship, finance and cash flow.

A breakdown of our overall long-term strategy as well as the year-by-year decisions and review will follow in order to assess how well we met investor expectations as well as attempting to beat competition from rivals in being the most profitable company in the industry. In making an assessment of our strengths and weakness as a company and our overall success in achieving our goals and aims it must firstly be delineated as to what constitutes success in the simulation game. The five criterions on which each company playing the game were assessed consisted of earnings per share, credit rating, stock price, return on equity, and image rating. Our Company known as “Company D” competed with twelve other companies from our class.

Our Business Strategy and Company Ethos

Any successful company needs to be fully geared towards satisfying customer needs and building their reputation as a customer-centric focused company in order to be an industry leader. In addition to this, taking into consideration the current fiscal business climate of recession and global economic downturn, we made a contentious decision right from the outset to become a low-cost supplier and indeed a “no-frills” leader in the market. By making cuts on what we mutually deemed as non-essential features and services, we could offer the lowest prices on our units. Any good marketing strategy is all about improving your chances of making sales and we wanted to achieve this not only by making more potential purchasers aware of our products, but by making consumers aware of the desirable qualities of our products, in our case the main selling feature being our price vis-à-vis or competitors.

The success of low-cost, no-frills businesses in recent years is evident. Examples that can be cited are as vast and diverse as IKEA in the furniture industry, Primark in the clothing industry to Ryan Air and Easy Jet in the flight Industry. In addition to this price leadership we wanted to mimic “the world’s best retailers which reflect several common characteristics: inspirational leadership, a motivational organisational culture, innovativeness, adaptability and consumer and community relevant behaviours”[1]

Taking into account Porters Generic strategies, we were aware of the risks that accompany a segmentation strategy whereby niche specialist products are retailed at a high price and result in a narrow market scope. We wanted to have a more populist appeal with a broader market scope through low cost competency and leadership:

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Having stated this however, a distinction that needs to be made here is the disparity between low cost strategies and best-cost strategies. Some analysts make this distinction as they claim that a low cost strategy is rarely able to provide a sustainable competitive advantage, citing that in most cases firms end up in price wars. Instead, they claim a best cost strategy is preferred. This involves providing the best value for a relatively low price. This is a concept of which I became aware through my own research of business strategies whilst playing the game, and which in retrospect may have worked. However whilst this may hold water in the real world of business retail, in the Globus simulation game we did find that cost leadership did indicate a key marker of fiscal success and indeed we did also find that a price war ensued throughout the years with our biggest rival who also...
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