The Business Simulation of Dark Shoes - Case Study Example

The Business Simulation of Dark Shoes Table of Contents Introduction 3 Competitive Strategy 4 PESTLE ANALYSIS 5 Porter Five Forces Analysis 9 SWOT Analysis 11 Decision Taken 12 Final Results 14 Strategic Direction 15 Strategic Principles 15 Conclusion 15 Reflection 16 References 18 Introduction Business has changed significantly over the years owing to the advancement of technology along with the challenges that is prevailing within the external business environment. In any particular sector, the role of proper and sustainable strategies is deemed quite crucial in order to get competitive advantage and sustainability for a longer period within the marketplace. In this regard, it has been noted that various external factors that can one way or the other affect the overall operations of any particular business unit (Reeves & Deimler, 2011). These external factors include the policies of the government, the changing nature of the external business environment within the industry sector along with the operational efficacy and effectiveness of the unit at large. The impact of the aforementioned external and internal business environment in the present day scenario is deemed to have greater impacts on the operations of the business units functioning within the e-commerce or online sector of the world. With the advancement of technology and the prevalence of internet, online domain of the world has enhanced significantly in the recent years. This development with regard to the popularity of the online business sector is certainly owing to some of the extensive benefits associated within the same at large (Thornes, 2001). Notably, the online business sector for any particular industry has been quite popular due to the aspects of convenience and price benefits associated with the same. Correspondingly, in the current scenario, the global footwear industry has developed immensely. In this particular study, focus has been levied on analysing the external market of a particular company i.e. Dark Shoes, which deals with selling footwear products of different kinds. The company is one of the notable names within the global footwear domain. It has been comprehended that the company operates in the markets of the Europe, Africa and the markets of other continents. In this regard, in order to ensure proper decision making of the business, approach should be adopted on understanding the external and internal business markets of the company at large. In this regard, secondary research would be conducted to understand the global footwear industry, which will further enable to take better decisions regarding long term sustainability and competitive positioning within the global business sector (McGraw-Hill Education, 2015). Competitive Strategy In the modern day business environment, companies need to ensure effective operations towards attaining long term sustainability and competitive advantage. This aspect is also prevalent within the global footwear industry, which is filled with large number of notable players. The company, i.e. Dark Shoes, has been slowly and steadily moving towards establishing a unique positioning for itself within this particular marketplace (Magretta, 2013). The company is known to operate in alignment with the interest of the stakeholders of the business, which further enable it to receive maximum attention of the customers along with the investors within the global business domain (Porter, 1983). It has been observed that the company primarily operates in four markets including Europe-Africa, Asia-Pacific, North America and Latin America. It is quite evident that each of the regions has its own structure with regard to the footwear sector. In this context, the company has to deal with competition from various players in the four regions that have been mentioned above. Some of the competitors that the company needs to deal with include Amer Sports in Latin American market, North American Shoe Company and global brands like Nike among others (Sengupta, 2005). Correspondingly, for the purpose of ensuring higher level of sustainability, the company i.e. Dark Shoes needs to adopt unique strategies that can further influence their market positioning in a positive manner altogether (McGraw-Hill Education, 2015). The prime strategy of the company in this context is to manage the business in such a manner where maximum expectations of the investors and the customers can be met, further ensuring a competitive positioning for the same within the global market. Correspondingly, in order to ascertain competitive advantage for a longer run, the company will seek to emerge with diverse range of footwear products based upon the demands of the customers with special inclusion of the market in which the business operates. This can be regarded as differentiation strategy for attaining long term sustainability and competitive advantage (Sengupta, 2005). The structure of the industry where the company operates can be analysed with the help of the industry analysis of the footwear sector that has been presented hereunder. PESTLE ANALYSIS Political Environment The political environment of any particular nations has significant impact on the operations of the companies established within the same. This is quite apparent in the present day scenario where political issues and events influence the operations of the business units either positively or negatively. The impact of political factors on the operations of the shoe industry can be determined apparently in this context, to have a better understanding of the environment in which Dark Shoes operates within the global business sector. Notably, one of the prime materials that are used for the purpose of manufacturing shoe is leather. However, in many of the markets within the Latin American and Asia Pacific regions, the use of leather has certain strict restrictions. This particular aspect tends to influence the operations of the company in a significant manner. Apart imbalanced tax system of any particular nation also tend to affect the operations of the companies within the footwear sector including Dark Shoes (Slideshare, 2013). Economic Factors The impact of economic condition upon any particular business unit is quite significant irrespective of the sector a particular operates. This particular perception is also applicable with the operations of the companies in the footwear sector. Some of the factors including increased cost of human resource, inflation along with the cost of raw materials with the nations companies operates, certain ensure noteworthy impacts on the performance of the business unit. However, strong economic growth of the nations including the regions of Asia-Pacific and Latin America will influence the business in a positive manner. In this context, economic growth in the markets of China and US would certainly influence the business of Dark Shoes towards attaining maximum success (Slideshare, 2013). Social Factors It is quite evident that society is eventually a place where the potential customers for any particular business prevail. In this regard, it can be depicted that the changing perceptions of the customers or the people within the society will significantly influence the sales of the company within the national boundary. In this regard, it has been noted that within the global shoe industry the perceptions and demands of the customers has been changing quite rapidly and on a continuous basis owing to which companies need to ensure the deliverance of diversified products and services to meet with ever changing demands of the customers. Correspondingly, Dark Shoes need to analyse and comprehend the demands of the customers and likewise design strategies for conducting the business accordingly. This trend is visible in most of the markets including Asia-Pacific and Latin America among others. It has been noted that the demand for sport footwear are increasing owing to the aspect that people are becoming much involved with large number of outdoor games and sports. This acts as an opportunity for the company i.e. Dark Shoes to conduct the operations of business in efficient manner with the prevalence of large customer base in the market of Latin America and Asia-Pacific (Slideshare, 2013). Technological Factors Technology plays a crucial role in the present day business context, especially with regard to ensuring utmost innovation within the business domain. The influence of this particular external environmental factor can also be seen within the global shoe industry. Notably, the use of cutting-edge technology is prevalent within the operations of the shoe industry. However, the development of technology within the footwear sector has certainly enabled better operation for the companies operating in the same. It has been comprehended that with the establishment of technology in this particular sector, companies has not only been able to design better products as well as services but at the same time they were also been able to deliver products that are cost effective at the same time. Within the footwear sector, companies including Dark Shoes seek to ensure higher quality for the products and services in which the role of advance and highly developed technologies is deemed crucial (Slideshare, 2013). Legal Factors Legal factors are among the most crucial aspect factor that affects the development of any particular company one way or the other. There are various laws prevailing within the footwear industry that is being practiced within various nations including Asia-Pacific and Latin America. Some of the laws that are required to be adhered and practiced by the concerned authorities include law related to Human Resource Management (HRM) practices such as recruitment, selection and employment opportunities, policies relevant to environmental safety and regulation and the prevalence of certain ethical norms among others. It has been observed that within the footwear sector, laws relevant to the employment of people are deemed to be the vital one that the company i.e. Dark Shoe needs to take into consideration. Notably, towards attaining long term sustainability and competitive advantage, companies will require to set a fair wage or salary policy for the labours so that they could be motivated towards attaining long terms goals of the business. In some of the nations of the world including Asia Pacific Region and Latin America, employment laws are deemed to be quite stern and need proper adherence (Slideshare, 2013). Environmental Factors These are among the most prominent factors that can create an impact on the performance of a particular business in any sector one way or the other. The environmental factors mainly include an aspect of negative impact that can be caused from the operations of a particular business on the surrounding environment. In order to govern this particular aspect from the viewpoint of the companies, approach has been taken by government of various regions within the Europe, Asia-Pacific and Latin American countries. The laws mainly include reduction of the emission of harmful chemicals, maintaining environmental quality and air quality and setting standards for dealing with climate change among others. In this regard, it can be depicted that within the footwear sector regulation prevails with regard to the use of leather as a material for making shoes. This aspect will certainly have an impact on the operations of the company i.e. Dark Shoes within the market of Latin America, Asia Pacific and others (Slideshare, 2013). Porter Five Forces Analysis In order to get a better comprehension with regard to the present day context of the footwear industry, an industry analysis of the same has been taken into consideration, which has been presented in detail hereunder. Bargaining Power of the Buyers Notably, within the footwear industry of the world, a number of players operating in the same are quite large in number. This aspect further ensures a wide range of options for the customers to choose from, which enhanced their buying power to a significant extent. This aspect might not be considered as beneficial with regard to the decision making of the company i.e. Dark Shoes (Thompson & Martin, 2010). Bargaining Power of the Suppliers Similar to that of buyers, the bargaining of the suppliers in this particular sector is also high. This is because of the fact that the industry and the companies operating in the same is largely inclined or dependent on the material required for shoe manufacturing delivered by the suppliers. Moreover, the fact that there is prevalence of only few major suppliers within this particular sector also augments the bargaining power of the suppliers in a considerable manner altogether (Thompson & Martin, 2010). Threats of Substitute In this particular industry, the threat for any substitute is quite less comparably to other industries. This is because of the fact that companies operating in this particular sector provide products to the customers that are being used by the customers on a day-to-day basis. However, at the same time, it can also be depicted that the behavior of the buyers with regard to the low switching cost can be a matter of extreme concern for the business unit at large (Thompson & Martin, 2010). Barriers to Entry Companies that are seeking to enter into the footwear industry need comparatively less investment when compared to other industrial sector. Correspondingly, it can be depicted that the barrier to entry for new entrants are quite less in this particular industry sector. Moreover, relaxed governmental policies also allow new entrants to enter into this particular sector quite easily. These aspects can be regarded as a matter of concern for the business units that are operating in this particular industry sector including Dark Shoes (Thompson & Martin, 2010). Rivalry amid the Existing Firms It has been noted that the rivalry amid the existing firms in this particular sector is quite fierce in nature. There is large number of companies that is operating in this particular industry with considerable brand name including Nike, Adidas and Puma among others. These aspects will certainly create problems for new entrants including Dark Shoes to face the competitive challenges that is likely to be quite tough indeed (Thompson & Martin, 2010). SWOT Analysis Internal business analysis primarily determines the manner in which a particular business has been able to position itself within the marketplace. Correspondingly, the market positioning of Dark Shoes would be crucial to be discussed by analysing the strengths and weaknesses of the same (Faro, 2010). Strengths The strengths of Dark Shoes mainly include its ability as well as reputations of delivering quality products and services to the customers within the footwear market. Moreover, the strength of the company also include its approach for delivering diversified range of products for the potential customers, which further ensures their loyalty to a considerable manner. Apart from the same better CSR operation, can also be seen as a benefit that can contribute positively towards the growth of the business in a comprehensive manner (McGraw-Hill Education, 2015). Weaknesses The weaknesses of the company include its lesser market presence within the global industry. However, the company is involved with the operations of the business in many of the markets of the world, its prevalence in the emerging shoe markets of that including China and India is quite negligible. Apart from that, lack of competitive pricing can also influence the operations of the company in a negative manner (McGraw-Hill Education, 2015). Opportunities The growth of the global show industry can certainly be seen as a beneficial prospect for the business operating in the long run. This is because of the fact that the number of customers in this particular industry is increasing rapidly owing to the aspect that association of people all over the world with different kind of sports is noted to be following the latest trend, which can be regarded as an opportunity for the companies operating in the same (McGraw-Hill Education, 2015). Threats The threats for the company i.e. Dark shoes can mainly be viewed to be in the form of increasing competition in this particular sector. Notably, the prevalence of noteworthy players like Nike and Adidas, which possess a large percentage of the market share within the industry certainly threatens the existence of other companies including Dark shoes within the same industrial domain (McGraw-Hill Education, 2015). Decision Taken Several decisions have been taken with regard to the operations of the company i.e. Dark Shoes in the five years of its business within the footwear industry. This decision thus taken has been provided in detail for the five years hereunder. First Year In the first year of the business, decisions have been taken with regards to ensure awareness regarding the products and services delivered by Dark Shoes to its customers. In this context, decisions were taken mainly to adopt different marketing strategies of the business with the help of social media tools to ensure wider awareness and better business performance. In this regard, decision was also taken to use of digital and print media for marketing in order to reach large customer base with the products and services mainly in the markets of Asia Pacific region and Latin America among others. Second Year Subsequently, focus has been levied on comprehending the importance of product differentiation strategy within the business domain. Notably, the company in its second year focused on delivering diversified range of products to the potential customers including shoes for all ages and gender. Correspondingly, the company decided to begin production of sportswear products during the second year of its operations. Third Year In the third year of its operation, the business decided for ensuring expansion in various unexplored markets within the global footwear industry. In this regard, the company has decided to move and establish its operations within the markets of Latin America and North America. This approach was adopted with the intention to ensure better market share for the business in the global footwear sector. Fourth Year In the fourth year of operation of the business, focus has been levied on attaining cost leadership within the markets where the business operates. This aspect was decided to be done with the development of competitive pricing of the products being delivered to the customers. This aspect was expected to ensure competitive advantage for the business within the global marketplace. Fifth Year In the fifth year of decision making for the business, focus was on depicting strategies that could ensure long turn sustainability for the company within the global footwear sector. In this context, diversified approach has been considered in the process of conducting the business at large. Final Results In course of involvement with the simulation gaming, the business of Dark Shoes has been able to attain certain specific results, which were in alignment with the goals of the business at large. Notably, within the last few years of operations, Dark Shoes has been able to attain a unique positioning within the industry owing to the deliverance of quality products and services to the customers. The company has been able to emerge with diverse range of products and services that has certainly helped it to meet the demands of the customers and likewise improve its market share in a significant manner altogether. The company has also been able to expand its operations in the markets of Asia Pacific and Latin America, which further worked towards improving the market presence of the unit within the global footwear industry. It has been noted that the company has been able to operate as per the interest of its stakeholders. This has further enabled the unit to get the trust of the customers and the stakeholders in a comprehensive manner. All the above stated factors that resembles with the operations of the company has further contributed towards ensuring unprecedented growth of the business in the long run. Strategic Direction Though the company has been able to meet the demands of the customers and the changing external market in a comprehensive manner, there are certain specific strategies that the company will need to adopt to continue its success for a longer period of time. This strategy is to be in the form of ensuring proper use of technology to certify improvement in design of the products so that the ever changing demands of the customers within the industry could be addressed. Furthermore, product diversification might also be a potential approach that can be adopted in the future context (Harrison & John, 2009). Strategic Principles There are certain strategic principles that the company must need to adhere while conducting its operations within the global footwear industry. In this regard, continuous deliverance of quality products along with aftersales services should be the prime intent of the business irrespective of its market positioning. Since the industry is filled with large number of players, continuous improvement in products and services is the ultimate approach that needs to be adopted (Harrison & John, 2009). Conclusion From the overall analysis of the paper, several key facts relevant to the operations of the company can be taken into consideration that can further provide a better understanding for the research topic. In this context, it has been analysed that the footwear industry of the world has experienced a considerable growth over the years, owing to the advancement of technology along with the increase in the number of customers within the global industry. However, at the same time, the prevalence of large number of big players in this particular sector will certainly be a threat for the new entrants including the company i.e. Dark Shoes. Correspondingly, in order to ensure long term sustainability within the competitive business environment, focus has been levied on strategies like product diversification, business expansion and cost leadership by the company. Hence, it can be concluded that this factors will certainly enhance the market share of Dark Shoes in the long run. Reflection From this particular experience of business establishment with the help of simulation gaming, my learning regarding business strategies has enhanced significantly. Notably, while my association with this particular experience, I was able to learn about various aspects of business decision making on the basis of external and internal business structure. In this context, my learning was also enhanced with regard to conducting internal and external business environment with the help of various tools and techniques such as SWOT analysis, Porter Analysis and PESTLE analysis among others. This has further helped me in ensuring better decision making at large. This learning experience from the simulation gaming will certainly help me with my future business endeavours. References Faarup, P. K., 2010. The Marketing Framework. Academica. Harrison, J. & John, C., 2009. Foundations in Strategic Management. Cengage Learning. Magretta, J., 2013. Understanding Michael Porter: The Essential Guide to Competition and Strategy. Harvard Business Press. McGraw-Hill Education, 2015. Coaporate Lobby- Dark Shoes. Home. [Online] Available at: http://www.bsg-online.com/users/CorporateLobby.html [Accessed March 25, 2015]. Porter, M. E., 1983. Cases in Competitive Strategy. Simon and Schuster. Reeves, M. & Deimler, M., 2011. Adaptability: The New Competitive Advantage. HBR. [Online] Available at: https://hbr.org/2011/07/adaptability-the-new-competitive-advantage [Accessed March 25, 2015]. Slideshare, 2013. Analysis on Footwear Industry. Home. [Online] Available at: http://www.slideshare.net/djsam13/analysis-on-footwear-industry [Accessed March 25, 2015]. Sengupta, S., 2005. Brand Positioning: Strategies for Competitive Advantage. Tata McGraw-Hill Education. Thornes, N., 2001. The Competitive Business Environment. Business & Economics. Thompson, J. L. & Martin, F., 2010. Strategic Management: Awareness & Change. Cengage Learning EMEA. Read More