Business Report: SimVenture

lineage Report SimVentureThis reveal is based on the engagement with SimVenture a leaf nodeele simulation which al poors us as a team to frame-up and run our virtual federation and learn al to the highest degree backup and creation an entrepreneur. This tarradiddle evaluates team action and last making within the vista of results achieved in the simulation at the end of three virtual geezerhood. This report likewise reflects the drop of relevant entrepreneurial theories into practise while making decisions in the backup and clearly stating the financial achievements at the end of it. The report flummoxs you done the initial six calendar months of the phone line in details where the critical st judgegies were form there aft(prenominal) the illustration is only on a one-half yrly basis.A question with m apiece an(prenominal) answers is that what drives people to turn into entrepreneurs to begin companies? Frequently we as individuals be not completely sure ourselves, and the answers to the questions atomic r verbotenine 18 apt to change over m as our perception keeps changing. The reasons bathroom be divided into two broad categories. First, the re participating reasons world things those are objectionable closely working for differents. They are the negatives that push us out. And due southly, the active reasons being things that are attractive about having our own transaction. They are decreeds that quilt us out. Starting a new company is an immense dispute and to those with entrepreneurial impulse, it is very appealing (Kurtako et al, 2001). The attri neverthe slightes that a supremacyful entrepreneur should birth while the start-up of a telephone line is a agonistic mind-set, one in which flexibility, speed, innovation, and strategical leadership are valued juicyly. With this mind set, strongs can set and completely exploit opport building blockies that emerge in a new matched landscape. These opportunit ies surface primarily because of the disequilibrium that is created by ceaseless change. More specifically, although uncertainty and disequilibrium oft result in seemingly hostile and intensely rivalrous conditions, these conditions whitethorn simultaneously yield significant harvest-time driven growth opportunities. by means of telling entrepreneurial leadership, growth firms can adapt their behaviours and exploit oftentimes(prenominal) opportunities (Kurtako et al, 2001).It is interesting to see the differences between mind-set of an Entrepreneur, Manager and a bureaucrat from the self ex transfer offatory Fig 1.Scenarios and assumptions at the beginning of the gameprevious to the beginning of our short letter, we assumed to take a crap a finance of 10,000 for start up. The melodic phrase was supposed(a) to commence with a one man show by our virtual entrepreneur, who had already been working for 40 hours a week in another business. But as a team we had decided all(p renominal) individual to take the decision making responsibility of a finicky department, with me being the one in charge of marting. We initially decided to quiver our entrepreneur working part time for this new venture at a monthly salary of 500. He had been selling computers to friends and families for the aside few years and always had a knack towards technology and compendium computers. Having only one gross sales run in hand for the offset month, our entrepreneur intended to begin his business from home so as to maintain his costs as low as possible. At this wooden leg the aspects which are of utmost concern are that he has particular(a) experience in sales, foodstuffing and about his local anaesthetic competitors.Our new business was godlike by the venture development forms, namely New Venture Development, Start-Up Activities, harvest, Business Stabilization, and Innovation (Kurtako et al, 2001). Of these five stages the startle stage consisted of activities associated to initial formulation of the venture, which has been mentioned in a higher place. The stages into which our business activities over the 3 years of simulation could be split into are Start-Up Activities and Growth.Start-Up Activities StageThe Start-Up Activity encompasses the foundation work needed in seek for capital, carrying merchandising activities, taking up competitor analysis and developing effective entrepreneurial skills. This stage is typified by strategic and operational planning gaits knowing to identify the firms competitive advantage and uncover funding sources. With the approachability of limited skills and working hours, in the figure of speech 1 base month we decided to outsource our firms competitor analysis and market enquiry activities to specialized external agencies, the first-string intention behind outsourcing being to get expert and skilled operate efficiently. A legal advisor had been pick outd to specify the equipment casualty of a node contract, not only keeping in mind the benefits of elaborate the scope of work and means and methods of payment, but likewise with a early view to gain trust from prospective clients (a contract can alike be seen as a marketing in any casel) and establishing a strong human relationship with them while negotiating the terms of the contract. Other major customer awareness activities of the first month were to publish a press release for the launch of the company joining a business networking group and creating a standard website, patterned and supported in-house to balance time and expenses of our working entrepreneur. obscure from these we had plan to take up a book based writing skills fostering prevail for our virtual entrepreneur, to bequeath him with the expertise of business parleys which most teeny-weeny business owners lack in. And we planned to invest on a distributer research, because it is difficult and very expensive to r separately a market with m any customers with a nowly employed sales force. unless distributors by and striking aim to win business on sales rather than skillful go. And our core competence being technical expertise we decided to use distributors to enhance our sales, although they bought crossings from us at a glower rate. After evaluating the suppliers on the criteria of their hurts and flexibility to pay on account, we decided to choose ProSupply as our supplier because of its 60 days credit offering, at an additional expense of 0.5 per component. Apart from the legal liabilities of a limited company to maintain accurate knowledge on its financial transaction which includes sales, purchases, income and payments by an organization, book keeping assists any entrepreneur to maintain the business on top of its competition by easily watching how the business is performing. Thus having a small shell start up business we decided to keep this particular application in house.The second month of our busi ness started on a positive note as we received two grants disbursed by the government, 500 each one was for training and the other was for research activities to be conducted. Although we had invested time on the application care for for this funding, as a new company with limited finances this allowance was much needed to us. We also happened to receive our customer research report, followers which we decided to choose our intent customers to be Corporation. This decision was completely based on a few concomitantors from our customer research report market size, ordain size, order frequency and typical price. These cardinal factors provided us inputs to calculate the average orders generated per year and the probable sales for each segment. Analysing our market research report (Fig 3) closely we noticed that there were much similarities in the fruit preferences sections of Corporations and ICT Businesses and both customers catered to a similar typical price range of 630-680 . This made us decide to build a product with preferences that would suffice both the customer segments providing each one of them differentiation on certain product attributes.Referring to Porters generic strategies framework, we were serving a narrow market which demanded product uniqueness, so we decided to use a differentiation reduce system to emergence our market share rapidly. Also a firm using a differentiation focus strategy enjoys a luxuriously level of customer loyalty which discourages other firms to compete directly. Analysing the competition and market report together, we designed our product offering to cater for both the target segments with the following attributes extreme features, good tone of voice, extreme performance, good mien. Thus the product was differentiated for the Corporations with extreme performance, where they had demanded only for a good performance, and for the ICT Businesses with good quality and good style, where they had demanded for abov e average quality and above average style only. The unit cost of the product was 452.62 and it was priced to the customers at 679 initially, which was pretty high as compared to what our competitors were offering. I individually fancy for market penetration a lower price was required.The marketing activities for this month were placing an advert in a local newspaper and joining a business community network where we could draw and quarter our target customers aware of our unique selling points. Apart from this we spent our entrepreneurs remain time in negotiating contracts with our distributors, namely Norman, Harton Brothers, Rad, and Aztak, and manufacturing three product units in-house anticipating the future demand. We negotiated with our distributors in terms of size of orders per month, price of each unit of product and the methods of payments. The rule behind choosing three of them as our distributors was because Normans had the maximum share in ICT Businesses followed by Solo Businesses and Corporations, Harton Brothers had 20% share in ICT Businesses and Rad captured 30%market share for ICT and Solo Businesses. Although Aztak held very little market share with ICT Businesses or Corporations but we still went with them, which I personally feel might not view been an appropriate move.Since at the end of the previous month, the anatomy of enquiries were too low to sustain our business, thereof the tierce month was very crucial for us where we had to take our strategic moves very carefully. Therefore we intended to hire a consultant to carry on a customer research, which we thought would help us find the reason behind the low number of enquiries. Along with a lucky break which resulted in good furtherance for our company in the local media, this month we planned to go for a direct marketing campaign with 3000 basic leads bought as a database and promotional materials being designed in house. In the remaining time we planned manufacturing 9 produc ts for future sales.On the fourth month of our business, we received the customer research results which provided us with the statistics of what our customers thought about our product and how did they hear about us. We used this information to fine tune our product design, work out the best marketing approach and get the price decent with take to be to our competitors. We understood that previously we had set up a very high price for our product to maximise short term mesh, which was the reason for us to receive lower number of enquiries which hardly turned into orders. As quoted by Dolgui and Proth (2010), High price is accepted if it agrees with the value of the product perceived by the customers, otherwise such a strategy leads to commercial failure. While a low price can lead to a commercial success depending on the number of clients attracted by the product, but a low tolerance should be compensated by a higher number of items sold. Moreover with a high or a low price stra tegy the image of the items sold by the company is somewhat frozen and a long term price expectation is established, which can reduce the flexibility of the decision-making system. Thus justifying the aforesaid analysis we had to set the unit price of our product neither too high nor too low, at 660, while we were operational in a range where customers were ready to pay from 630-680. On the marketing nominal head we managed to attend the monthly business club meeting and award ourselves at the Business2Business matters along with a direct marketing campaign to 3000 leads. Since by now our entrepreneur was overdoing his hours every month which was gradually making him tired, thus we decided to increase his part time working hours to 51 hrs a week and increasing his salary by 100 to keep him happy.This was the fifth part month of our business where we already had sales of 4 products from our last month and another new order for 4 products to be sold this month. The business was gra dually taking its pace, but there were financial hurdles in front of us. Due to lack of cash in our account we were unable to pay our suppliers on time. The options we had to borrow money were either through wedge loans or friends and family or overdraft or by selling equity. We thought the most viable option we had was to take a loan of 50,000 for three years at an interest rate of 13% from the slang. Our monthly instalment to the argot summed up to 1684.70 for three years which was lesser than our monthly estimated net after selling units to distributors (refer Appendix 1). I individually thought we should have taken our first loan from friends and family instead of a bank because the interest rate was only 5.25%. Eventually in the next month we could have taken a bank loan.There was a business exhibition which was supposed to be held in the month of February, the next year. Having carryed the fact that such events would provide us a platform to bring our product in front of the targeted customers and make them aware of it, we booked a place for our entrepreneur in this event, bearing in mind that Corporations were our primary target segment. Apart from this we also booked two much exhibitions for our entrepreneur to attend during the next month. angiotensin-converting enzyme was an exhibition at New Ventures and the other was at Sparks. We heavily started relying on exhibitions primarily as a mean of marketing and advertisement for our business.We had a very clear marketing plan as a start-up company, which was the process of determining a comprehensive approach to the creation of customers. For developing this plan, the following elements were critical to usMarketing research determining who the customers were, what they want and how they buy. gross sales research promoting and distributing products according to market research finding.Sales forecasting set up personal judgement with reliable personal information.Marketing plan formulating plan for achieving long term marketing and sales goal.Evaluation identifying and assessing deviations from marketing plans.(Kuratko and Hodgetts, 2007)As a marketing mix (refer Fig 5) for our Product offering we were having a strategy of focus differentiation to targeting only two business client segments. Our Price was set neither too high nor too low and was rationalized by setting it to 660. We Placed our product through distribution take, direct and indirect selling and also had a retail shop in place from the sixth month. And for Promotion we used individual communication channels like word of mouth, networking, public relations and direct marketing, and mass communication channels like exhibition, website and advertising.The sixth month was a fortune food turner for us when we received 9 orders for the next month. Anticipating this huge number of orders, we already had been manufacturing products from the previous few months, even though at times we didnt have a single order to de liver. Our application for bank loan had been sanctioned and we were able to successfully raise 50,000 to clear all our pending bills. Having the right communication and marketing skills because of our previous training in the relevant departments this month we decided to create a small advert in-house, for a swap magazine. Since our business was growing bigger, this was the time when we had to decide relocating to a retail unit from the next month which was 100 sq. ft and 208 of rent per month. Also appliance is an issue for most shoppers, whether its business or individual shoppers, and so sales location can have a major bearing on sales performance. Since we were only operating in a B2B environment we developed the following business model (refer Fig 6) where our products were poke outed to our customers either buy the distributors (which gave us less profit but large number of sales) or through our retail shop (which gave us higher profit but lesser number of sales). Because of the sudden rise in sales, hereafter we had to follow a model where most of our manufacturing had to be outsources and the remaining was to be built in-house. This month onwards we transited from the Start-Up Activities stage to the Growth Stage of our business.Growth StageThe Growth stage often requires major changes in entrepreneurial strategies, which is reformulated because of competition and other marketing forces (Kurtako et al, 2001). Thus now onwards our primary focus became the counsel of various departments involved in our business including the various stakeholders direct customers, distributors, suppliers etceteraThe planning of operations was a major part of our start up venture. From the self explanatory Fig 7, we had adopted the bottom-up and the market requirements perspectives to design our operational strategy. The bottom-up view of operations strategy was to see strategic decision making as an accumulation of practical experiences. After all, our business woul d find it difficult to invent strategies in a total vacuum. Our ideas were organize from our previous months experience of dealing with customers, suppliers and their own processes. These were strategic ideas which emerged over time as our organisation begun to understand the realities of the situation. The market requirements perspective begun from the commonsense model that our operations strategy should reflect what our business was trying to do in its markets. Our competitors competed in different ways some competed primarily on cost, others on the excellence of their products or services, others on high levels of customer service, others on customising their products and services to individual customer needs, and so on. Our operations function therefore had to resolve to this by providing the capabilities which allowed us perform in an appropriate manner to replete the requirements of our market (Slack et al, 2007).After the initial breakthrough in the sixth month of our bu siness, the next six months were more or less running at a constant pace, with 7-9 orders every month on an average. We did have to amend our product design based on the Customer Research results and by comparing our offerings with that of our competitors. We attended a marketing exhibition and carried out marketing campaigns with other sales activities almost every month to keep our enquiries and order numbers high. Apart from that, instead of failing to cater to our increased order rate every month, we kept manufacturing products by primarily outsourcing the major hatful of it at (452.62+80) 432.62 per unit and partially building it in-house. By the end of the first year our business had again dried up in cash, thus making us unable to pay suppliers on time. It was time to consider a funding option again to cater to our growing business needs. As overwork was making our entrepreneur tired, this affected the scheduled tasks being incomplete in few of the months during this brace of six months. We had the option of recruiting an employee for our business which I individually thought as the wisest option, but as a group we thought it wouldnt have been affordable for our entrepreneur in terms of time and money to opt for a new employee at this stage of our business. Thus we increased his part-time working hours and paid him a bigger salary, doing our best to keep him happy and motivated. Previously and in future we not only did motivate him with only extrinsic factors like money but also encouraged him with intrinsic motivational factors like relevant training in various departments, namely Production, writing skills, design and development, basic finance, business management, IT, communications skills, marketing and sales which helped him build a entrepreneurial identity operator of his own (enhancing his business qualities as an entrepreneur).In the first six months of the second year our main focus was to look out for the most executable source of finance to our business. With the various options available in simventure, a bank loan of 30,000 was the most viable option, which got approved within a duad of three months. There was a noticeable increase in number of orders, the average being around 11 orders monthly, but on a couple of occasions the count had spiked to 16 and 17 orders which resulted in generating cash inflow for our business in the later months. During this period we also realised that the insufficiency of cash in our account was due to the fact that some of our customers did not clear their bills on time. Thus we had to take on the Credit Control strategy to closely observe all our customers who owed us money. A process was implemented which adhered to three steps. The first step was to send our customers a written reminder to clear their dues. If this didnt work the second step was to give them a phone call in the same regards. And if the first two steps failed then the final step was to take a legal action against the defaulter by hiring a third fellowship agency who charged us 20% of the recovered money. In this process we had to compromise on shedding off a part of our profits rather than agonising our suppliers by failing to pay them on time, which could have lead to termination of our contract with them.During the last six months of our second year we had an average of 13 orders which was more than before. There had also been a absorb in orders to 9 in number during the month of November and December. During this period we also decided to hire a few resources (namely aid Equipments, Premium Furniture, Premium Tools, Premium Transport) for our retail space to cater to the smooth running of the business as we were constantly growing. The marketing, advertising and sales activities were more or less similar to the previous half of the year, with our entrepreneur planning to attend more number of exhibitions for ICT Businesses apart from Corporations.The first six months of the third year cut a little decrease in orders, with the average being 11 orders a month. Because of this our entrepreneur had more time than the previous six months, which he decided to invest in an aggressive marketing campaign to create a base for the last six months of the third year of our business. He had also suffered from illness for 5 days during this period.The last six months of our third year was the straddle in our business where we received the most number of orders, the highest being 19 in the month of August. Our business had an added advantage, i.e. the economy became stronger resulting in rising of customers confidence in us. With Net Assets of 240,077.47, Fig 8 depicts the financial health of our business at the end of the third year. And Fig 9 highlights the sales vs. Profit for the 3 years showing that although there had been continuous increase in sales over the three years, but the profit maximization was only achieved in the 2nd year of our business. This is because of t he fact that with the increase in cost of sales in the third year of our business we didnt increase the product price, which resulted in decrease of profit margins, when compared to the previous year. certaintyThroughout the span of this report we have been focussing on the competitive and entrepreneurial mindset of a start-up business owner, by recognizing and exploiting the opportunities that came across. We have been discussing about the entrepreneurs engagement in key areas of strategy, marketing, operations, finance and HR which enhanced the performance of our organization. The critical evaluation of decisions taken over the three years span of our business has given us an understanding of how differently various breastwork could be tackled. We begun from the star-up activity stage of a business simulation and happened to reach the growth stage in our business, by developing and nurturing our abilities as an entrepreneur while taking vital decisions at various junctures across the span of three years of entrepreneurship.Appendix 1DistributorOrder sizePrice / unitFixed cost / unit budget items cost*Profit / unitCost of total saleProfit per month per distributorNormans10599452.629056.385,426.20563.80Harton Bros15594452.629051.388,139.30770.70Aztek5604452.629061.382,713.10306.90Rad25589452.629046.3813,565.501,159.50Total552,3861,810.48360215.5229,844.102,800.90*Note Overhead cost is estimated by adding Manufacturing cost (i.e. 80 for any order above 25 units) and miscellaneous cost ( i.e. 10 kept as a margin)Table Distributor AnalysisSource Adopted from SimVenture