Rockers Gaming Inc - Organizational Structure - Case Study Example

ROCKERS GAMING STORE: E-BUSINESS PLAN Name Name of Class Name of Professor Institution Affiliation City and State Date Introduction The video gaming industry has undergone a period of tremendous growth over the past two decades, a period that has seen it emerge as one of the most successful industries on the globe. New technologies, innovation as well as better computer hardware have facilitated the development of more interesting games, a fact that has led to an increase in the global population of people who play video games on a daily basis (Campbell, 2015). Today’s market is quite bigger, involving traders stocking different genres of games for the different market segments. The main platforms for video games are PC, console and mobile (Superdataresearch, 2016). With the increased utilization and penetration of the internet across the globe, most video game fanatics now prefer to purchase their favourite games online. The available statistics show that, as of February 2016, the digital sales market was up by 10% to $ 6.2 billion, with the digital console segment experiencing the fastest growth compared to the mobile and PC segments (Superdataresearch, 2016). The industry is now moving its focus to the emerging economy, thus presenting an opportunity for the establishment of an online gaming store in these markets. Rockers Gaming Inc. seeks to offer gaming enthusiasts in the emerging economies of South America with instant and easy access to a wide range of video games. The online store will allow users to purchase a wide variety of games on the three main platforms (Mobile, PC and Console) and at competitive prices. Apart from the games, the business will also offer gaming consoles and related hardware. Rockers gaming store is not only an innovative business opportunity, but is also easy to start given the low operating costs required for online operations compared to traditional physical stores. The business has the potential to provide a profitable revenue stream due to the increasing popularity of video games in the emerging economies as well as other regions of the world. Recent estimates indicate that by 2017, the global revenues in the video gaming industry will be $ 107 billion. The mobile gaming is predicted to be the main driver of this revenue growth. Unlike other online stores that focus on one specific platform, Rockers Gaming seeks to address the gaming needs on all the three platforms namely mobile, PC and Console. Overview of the Organizational Structure Rockers Gaming Inc. is a technologically driven company that seeks to conduct its operations via the internet. Thus, the business is an e-commerce enterprise. The business aims at meeting the diverse gaming needs of the growing population of gamers in the emerging economies. Besides, it seeks to build online revenue of $ 5 million in its first year of operations. Since it is an e-business enterprise, most of Rockers Gaming Inc. operations will be different from those carried out by businesses that do not rely on the internet for most of their activities. Combe (2012, p.34) describes e-business as the utilization of the internet to network and empower business processes, organizational communication and collaboration with various stakeholders including customers and suppliers. E-business enterprises depend on the internet, intranets, extranets and other networks in their commercial activities. The differences in how e-business ventures conduct their activities when compared with traditional business ventures calls for a slightly different organization structure (Weijun Wang, 2008). Taylor (2006, p.51) points out that there are three basic types of organizational structures, namely the functional, project management and matrix organizational structure. Rockers Gaming Inc. utilizes a functional organizational structure in which different groups of individuals within the organization are assigned different roles. This type of organizational structure divides the business according to specialty. Rockers Gaming Inc. has four departments, namely the human resource department, the sales department, the customer service department and the marketing department. A manager heads each of these departments. Each department manager reports to an executive manager, who is also the head of the business. Overview of the Video Game Retailing Industry The video game retailing industry is experiencing a shift, with more buyers choosing to purchase new games through online channels or by directly downloading the games to their devices and consoles (Gordonbrothers, 2016). This has had a negative impact on most of the physical gaming stores that were once popular. Most of these physical stores have experienced a significant decline in their sales, a factor that has seen many popular stores close down business. According to a recent survey, video game retailers have reached a tipping point, with most of the revenues coming from downloads as opposed to physical sales (Gordonbrothers, 2016). Digital sales have outpaced physical sales, resulting in lower sales for market leaders such as GameStop Corp. As a result of lower sales, most retailers cut back on their expenditures. More people currently have access to high-performance mobile devices through which they can download and play their favourite games. This increased popularity of mobile devices and mobile games has also contributed to the declining in the overall sales of physical games. A recent survey shows that most of the leading game publishers generated more revenues from game downloads than the physical selling of gaming discs (Gordonbrothers, 2016). Superdataresearch (2016), reports that the increase in the digital market sales over the past few years has also been accompanied by higher Additional Content purchases. Gamers are not only purchasing games, but they are also buying extra content, thus offering video game retailers an excellent opportunity to market other content such as software and game updates. Many analysts are of the view that a shift from physical stores towards online stores and digital sales is not only unique in the video gaming industry. Other retailing segments are also experiencing a similar trend (Gordonbrothers, 2016). This is an indicator that consumers are becoming increasingly concerned about having to struggle with crowds and personally bargaining in physical stores. More consumers are choosing to purchase commodities from the comfort of their homes. Rockers Gaming Inc. seeks to exploit this trend, which is slowly gaining popularity in emerging countries. Rockers Gaming Inc. SWOT analysis SWOT analysis allows for the evaluation of a business’s strength, weaknesses, opportunities and threats. It is an easy and cost effective framework of understanding a business and identifying key issues that affect a business. It allows an organization to come up with strategies and goals that will help address the key issues Strengths The gaming industry is a multi-billion industry The business offers a wide range of games covering the most popular genres and playable on a wide range of devices The product the business seeks to offer is popular Huge distribution network Fair Pricing Weaknesses The business depends on suppliers since it does not develop its own games Limited areas of operation Inadequate financial resources to expand operations to the many emerging economies Opportunities Many individuals in the emerging markets are developing a gaming culture which in turn provides a large scope of expansion Expansion of product offerings to include other products such as movies and books Expected major console releases over the next few years Demographic shifts in which even older individuals are consumers of video games. Threats Increased competition from other online retailers and game developers who are opting to sell games directly to consumers Piracy, which means that potential consumers now have easy access to cheap or free cracked versions of video games Major cuts in video game prices by key competitors means that potential consumers may be lured to competitors at the expense of the company Sales and Marketing Plan Rockers Gaming Inc. will conduct its sales through an online portal. Customers will have to set up an account on the company’s website in order to browse through and purchase the different games on sales. Potential customers who have not set up an account will be limited to only browse through the company’s website and viewing the different games and related products on sale. Consumers who wish to purchase any game will be offered two options, physical delivery or direct download. However, for consumers wishing to purchase mobile games, the only available option will be through direct download. A variety of payment options will be made available, including PayPal, Moneybookers (Skrill) and MasterCard. The marketing strategy will incorporate both the internet-based approaches and traditional channels such as the print media and television. To popularize the Rockers Gaming Inc. brand name, a rigorous social media campaign will be conducted. Another online marketing strategy the business seeks to utilize is search engine optimization. Other strategies that will be incorporated into the marketing plan include pay per click advertising and analytics. Distribution and Operations Distribution centres will be established in the region in which the business will be operating. Orders that require physical delivery will be delivered to their destinations through various means depending on the distance from the distribution centres. Over short distances, the purchased games will be delivered by land. For customers located far away from the distribution, delivery will be made through air transportation. Customers will also be allowed to download their favourite games directly from the company’s website after paying the required fee. The General Manager will be responsible for overseeing the whole organization and business operations. Human resource operations will be under the control of the human resource manager while the sales manager will be responsible for selling and stocking all the products the business offers. The marketing manager’s responsibility will be coming up with effective marketing strategies while the IT manager will be responsible for all IT related activities including data security and management of the company’s website and customer portal. Finance (Cash flow and Start-up funding needs) A business cannot start without any start-up funding. The total amount of start-up funds that Rockers Gaming Inc. requires is approximately $ 5,000,000. Besides personal investment from individual investors, other sources of start-up funding available for the business include loans from financial institutions, grants and subsidies as well as equity funding. To sustain its operations, the business will require a healthy supply of cash. The company expects to get most of its revenues from the sales of video games and related products. Similarly, it is expected that most of the costs will be due to operational costs such as marketing, hiring and distribution of purchased products. The following table shows the expected cash flow over the next one year. Risk Management Just like traditional enterprises, e-business enterprises also have a fair share of risks that they have to deal with. Proper risk management in e-business begins with identifying some of the possible risks Rockers Gaming Inc. will be exposed to, both internal and external risks. The internal risks may emanate from four potential sources, namely processes, people, technology and strategy while external risk sources may include the legal environment, economic conditions, insecurity as well as political stability. To counter the negative effects of these risks on business operations, frequent assessments will be conducted to evaluate the seriousness and potential impact of these risks. Identifying and assessing the possible impact of each risk will allow the organization to prioritize each risk and to establish an effective mitigation response. Measuring Success Measuring success requires the identification of performance metrics upon which an organization can determine whether it has accomplished its objectives or not. In Rockers Gaming Inc.’s case, the main objective is to build online revenue of $ 5 million in its first year of operations by meeting the diverse gaming needs of video gaming enthusiasts in the emerging economies. The key metrics that will be used to measure performance, in this case, are financial viability, customer satisfaction, sales volume as well as the business’s contribution to the society. Summary and Recommendations The global video gaming industry has become lucrative over the past few years. The fast pace at which technology is growing has made it possible for video game developers to come up with video games that are more realistic. Similarly, existing technology allows video games to be accessed through a wide variety of devices such as mobile phones, gaming consoles and personal computers. The demand and interest in video games have skyrocketed, making it one of the most lucrative industries to invest in. Rockers Gaming Inc. seeks to establish itself in one or two emerging economies in South America as an e-business enterprise. The e-business approach will not only be in line with the existing trend in which consumers prefer to buy most things online, but will also help the business globalize its operations much faster. Similarly, the costs of running an e-business are relatively lower compared to running a traditional business. References List Campbell, C. (2015). Worldwide video games market will grow 9.4 percent this year, says report. [online] Polygon. Available at: http://www.polygon.com/2015/4/22/8471789/worldwide-video-games-market-value-2015 [Accessed 25 Apr. 2016]. Combe, C. (2012). Introduction to E-Business. 2nd ed. New York: Routledge. Gordonbrothers, (2016). Industry Insights| Retail: Books, Music, Video & Games. [online] Gordonbrothers.com. Available at: http://www.gordonbrothers.com/expertise/industry-insights/R/Retail-Books-Music-Video-Games [Accessed 25 Apr. 2016]. Superdataresearch, (2016). [online] Available at: https://www.superdataresearch.com/blog/us-digital-games-market/ [Accessed 25 Apr. 2016]. Taylor, J. (2006). A survival guide for project managers. New York: American Management Association. Weijun Wang, Y. (2008). Integration and Innovation Orient to E-Society Volume 1. Springer US. Read More